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Full text of "Investigation of concentration of economic power. Hearings before the Temporary National Economic Committee, Congress of the United States, Seventy-fifth Congress, third Session [-Seventy-sixth Congress, third Session] pursuant to Public Resolution no. 113 (Seventy-fifth Congress) authorizing and directing a select committee to make a full and complete study and investigation with respect to the concentration of economic power in, and financial control over, production of goods and services .."






■i.: I 



INVESTIGATION OF CONCENTRATION 
OF ECONOMIC POWER 



HEARINGS 

BEFORE THE 

TEMPOEABY NATIONAL ECONOMIC COMMITTEE 
CONGEESS OF THE UNITED STATES 

SEVENTt'-SIXTH CONGRESS 

FIRST SESSION 
PURSUANT TO 

Public Resolution No. 113 
(Seventy-fifth Congress) 

AUTHORiZiKO AND DIRECTING A SELECT COMMITTEE TO 
MAKE A FULL AND COMPLETE STUDY AND INVESTIGA- 
TION WITH RESPECT TO THE CONCENTRATION OF 
ECONOMIC POWER IN, AND FINANCIAL CONTROL 
OVER, PRODUCTION AND DISTRIBUTION OF 
GOODS AND SERVICES 



PART 6-8 



LIQUOR INDUSTRY 



MARCH 14, 15, .16, AND 17, 1939 



Printed for the use of the Temporary National Economic Committee 




UNITED STATES 
GOVERNMENT PRINTING OFFICE 
J3MM WASHINGTON : 1939 



TEMPORARY NATIONAL ECONOMIC COMMITTEE 

(Created pursuant to Public Rea. 113, 75th Cong.) 

JOSEPH C. O'MAHONEY. Senator from Wyoming, Chairman 
IIAITON W. SUMNERS. Reprosentatlve from Texas. Vice Chairman 
WILLIAM E. BORAH, Senator from Idaho 
WILLIAM FI. KINO, Senator from Utah 
B. CARROLL REECE, Representative from Tennessee ' 
CLYDE WILLIAMS, Representative from Missouri 
TIIIRMAN W. ARNOLD. Assi.stant Attorney General 
•WENDELL BERGE. Special Assistant to the Attorney General 
Representing the Department of Justice 
^ _ WILLIAM O. DOUGLAS. Chairman 

•JEROME N. FRANK, Commissioner 
Representing the Securities and Exchange Commission 
GARLAND S. FERGUSON. Chairman 
•EWIN L. DAVIS. Commissioner 
Representing the Federal Trade Commission ; g 

ISADOR LUBIN, Commissioner of Labor StatL-itics 
•A. FORD llINRICnS, Chief Economist, Bureau of Labor Statistics 
Representing tiie Department of Labor 
JOSEPH J. OTONNELL. Jr., Special Assistant to the General Counsel 
•CHRISTIAN JOY I'EOl'LES. Director of Procurement 

Representing the Department of the Treasury 

RICHARD C. PATTERSON. Jr., A.sslstant Secretary 

Kepiesentlng tli*- Department of Commerce 

LEON HENDERSON, Executive Se«-retary 

•Alternates. 



II 



REPRINTED 
BY 

WILLIAM S. HEIN & CO., INC 

BUFFALO. ISI. Y. 
1968 



CONTENTS 



Testimony of^- ^*" 

. Balfe, T. W., vice president and general sales manager, National 

■Distillers Products Curpuratioii, JNew Yitrk City :Juy2-2u96 

Bowman, A. Smith, Sr., president, A. Smith Bowman Distillery, 

Sunset Hills, Fairfax County, Virginia 2042-2546 

Bulliugton, Col. U. McC, member, Virginia Alcohol Beverage Con- 
trol Board, Bichmoud, Virgiuia 2572-2582 

Doran, Dr. .James M., Technical Advisor to Distilled Spirits Insti- 
tute, Washington, D. C :_ 2628-2G51 

Friel, James E., vice president, Joseph E. Seagram & Sons, Inc., 
New Yoik City — 2503-2526,2548 

Jacobi, Lester E., president, Schenley Distillers Corporation, New 

Yorli Ci ty — 2.-.26-2.'>35 

Keidel, Louis A., New York City 2547-2548 

Kelly, Archibald, president, Distillers Co., Ltd., of Delaware, New 

York City 2596-2601 

Marks, Lionel, president, William Jameson & Co., Inc., New York 

City 2584-2586 

Newman, Joseph J., president, Browne-Vintners Co., Inc., New York 

City 1 .. 2801-2612 

Porter, Setou, president, National Distillers Products Corporation, 
New York City ^^ — 2450-24U4, 2496-2501 

Sturges, Dr. Wesley A., executive director. Distilled Spirits Insti- 
tute, Inc., Washington, D. C - 2651-2673 

Tunney, Ueue, chairman of the Board, American Distilling Co., 
New York City 2568-2572 

Wachtel, W. W., president, Calvert Distillers Corpoi-ation, New 
York City 2548-2568 

Walton, Howard R., vice president and general manager, Uiram 
Walker & Sons, Inc., Detroit, Michigan . 2535-2541 

Wile, Oscar J., vice president, Schenley Import Corporation, New 
York City-J 2587-2590 

Williams, William J., secretary and general counsel, Canada Dry 

Ginger Ale, Inc., New York City 2013-2627 

Statement of — 

Buik. Phillip E., general counsel. Federal Alcohol Administration, 

Washington, D. C — 1 2420-2450 

Presentation of conditions in the liquor industry . 2419 

Detinition and description of types of whisky 2420 

Legal background of the industry 2423 

State systems of liquor control 2425 

The Federal Alcohol Administration Act 2426 

Production of whisky in the United States for years 1933-1938 2428 

Stocks of whisky In bonded warehouses for years 1933-1938 ;_ 2428 

Whisky withdi-aWn tax-paid from bonded warehouses 2429 

Liquor production exceeding consumption ._ 2432 

Production by four largest units compared with total production 2436 

Amount of whisky held in bonded warehouses by four large companies 

in cofliparison with whole industry's stocks 2437 

Total stocks of 4-year-old-and-over whiskies held by entire industry as 

compared with holdings of .^ur major.companies 2439 

United States Bottled in Bond Act _— ^^___ 1 2441 

Total whi.sky imported in the United States^ 2446 

History and organization of National Distillers Products Corporation 2451 

m 



IV ' (.'ON'JlE'NTS 

Page 
Item of $11,400,000 designated in National Distillers balance sheet as 

for "Brands, Trade-Marks, Patents, and Goodwill" 2468 

Prices of 2-year-old and 4-year-old whiskies 2475 

Directors of National Distillers Products Corporation and the companies 

with which they are connected 2493 

Corporate structure of Distillers Corporation Seagrams, Ltd 2504 

Banking connections of Seagrams 2507 

Advantage of holding company set-up to producer 2510 

Distilling operations and brands owned by Seagrams 2511 

Overproduction of whisky not reflected in price to consumer 2518 

Spread between production cost and price to consumer 2522 

Corporate organization of Schenley Distillers Corporation 2527 

Banking arrangements of the Schenley Corporation 2528 

Schenley's acquisij:ion of whisky stocks 2529 

Importance of aging whisky 2532 

Corporate organization of Hiram Walker-Gooderham & Worts, Ltd 2536 

Hiram Walker's financing operations 2539 

Increased assets of four largest distributors 2541 

Cost to small distiller of producing "quality" whisky 2542 

Bankers loan agreements with Schenley and Seagrams 2547 

"Missionary" type of marketing employed by Calvert 2549 

Minimum prices suggested by Calvert in "ppen" states 2552 

Distribution of liquor in "monopoly" states 2553 

Effect of fair-trade laws on whisky prices 2556 

Whisky prices dependent on quality 2560 

Price maintenance to support retailers 2563 

Corporate organization of American Distilling Company 2569 

Extension of credit to wholesalers 2570,2592 

Aims and purposes of the National Conference oif State Liquor Adminis- 
trators 2573 

Price concessions to distributors in "open" states sought by "monopoly" 

states 2574 

Method of purchase by Virginia Alcohol Beverage Control Board 2577 

Production and control of whisky in British Isles 2584 

Allocation of brands to importers in United States through exclusive 

agency contracts 2587 

Comparison of consumer costs of Scotch whisky in London and New 

York 2590 

Operations of D. C. L. and its subsidiaries in marketing Scotch whisky 2567 

Typical sole agency contract- 26015 

Retail whisky prices fixed 2605 

Sole agency contract for Johnnie Walker and Haig & Haig whiskies 2613 

Question of enforcing price maintenance by large retailer 2615 

Method of determining retail liquor prices 2620 

Canada Dry's retail liquor price maintenance policy 2623 

Advertising expenditures of four largest distributors 2627 

Inception and operations of Distilled Spirits Institute 2629 

Activities of the Institute 2632 

Office and personnel of the Institute _i 2637 

Interest in liquor tax legislation 2642 

Receipts and disbursements of Distilled Spirts Institute—- 2651 

Membership and their contributions to the Institute 2655 

Duties of director and other officers 2657 

Bootlegging problem involved in increased taxation 2666 

Salaries of the director and public relations counsel 2668 

Schedule of exhibits v 

Tuesday, March 14, 19ii9 (Afternoon session)- ""II 2^9 

Wednesday, .March 15, 1939 i^, 2445 

Thursday, March 16, 1939 __" .-^l^ -2503 

Friday, March 17, 1939 . I"_I_ 2583 

Appendix I_ZZZ__ZZ™ 2675 

Supplemental data . 2720 



Index. 



I 



CONTENTS 
SCHEDULE OF EXHIBITS 



Number and summary of exhibits 



Intro- 
duced 
at page 


Appears 
on 
page 


2425 

2428 
2428 
2429 


2675 
2676 
2676 
2677 


2432 


2677 


2435 


2678 


2436 


2679 


2437 


2680 


2439 
2442 


2681 
2681 


2446 


2684 


2450 


0) 


2450 


(0 


2477 


2685 


2496 


2686 


2503 


2687 


2506 


Facing 
2687 



394. Chart: Systems of state liquor control 

395. Chart: Production of whiskey in the United States 

396. Chart: Stocks of whiskey in bonded warehouses, 1933-1938. 

397. Chart: Whiskey withdrawn tax paid, 1933-1938 

398. Chart: Whiskey distilleries in operation, annual capacity and 

production, 1933-1938 

399. Chart: Whiskey distillers operated and whiskey produced — 

four companies compared with entire industry, 1934-1938. 

400. Chart: Production of whiskey in the United States by four 

companies compared with total production, 1934-1938 

401. Chart: Stocks of whiskey in bonded warehouses held by four 

companies compared to total stocks, 1933-1938 ^ 

402. Chart: Total stocks of whiskey four years old and over re- 

maining in bonded warehouses as compared with such 
stocks held bv four companies, 1934-1938 

403. Text of United States Bottling in Bond Act 

404. Chart: Total Whiskey imported into United States, 1934- 

1938 

405. Report on Whiskey Trust Investigation (52d Cong., 2d Sess.), 

House Report No. 2601, March 1, 1893 

406. Summary of the report on The Whiskey Combinations, of 

the Digest of Evidence in the Preliminary Report on Trusts 
and Industrial Combinations made by the Industrial Com- 
mission 

407. Consumer cost of four-year old and two-year old whiskies, 

distilled by the same company 

408. Chart: National Distillers Products Corporation directors 

and companies with which they are connected --_ 

409. Copy of telegram from Sam Bronfman, president, Distillers 

Corporation-Seagrams, Ltd., to Philip E. Buck, general 
counsel. Federal Alcohol Administration, expressing his 
inability to appear before the Committee 

410. Chart: Corporate organization of Distillers Corporation- 

Seagrams Limited 

411. Bank Credit Agreement Between Distillers Corporation- 

Seagrams, Limited, et al., and Bankers Trust Company; 
Manufacturers Trust Company; First National Bank of 
Boston; Continental Illinois National Bank and Trust 
Company of Chicago; Bank of the Manhattan Company; 
Pennsylvania Company for Insurance on Lives and Grant- 
ing Annuities; Security-First National Bank of Los 
Angeles; The First National Bank of Chicago; First ' -a- 
tional Bank, Atlanta; National Bank of Detroit; ^ irst 
National Bank in St. Louis; Northwestern National Bank 
and Trust Company, Minneapolis; The National City 
Bank of Cleveland; Harris Trust & Savings Bank, Chicago; 
First National Bank, Philadelphia; Citizens Union Na- 
tional Bank, Louisville, Kentucky; First National Bank of 
Jersey City; First National Bank of Baltimore; The Boat- 
men's National Bank; Empire Trust Company; Union 
Trust Company of Maryland 

412. Chart: Distillers Corporation-Seagrams Limited, directors 

and companies with which they are connected 

413. Price list for Metropolitan New York district of Seagrams 

whiskies, effective January 27, 1939 

Minimum consumer bottle prices established by Seagrams 
under the fair-trade contract effective February 11, 1939. . 

414. Distribution list prices of Seagrams to wholesalers — quart 

size, August 1934-July 1938 

' On file with the Committee. 



2509 
2514 

2522 
2525 



2687 

Facing 
2694 



2695 
2696 



VI 



CONTENTS 

SCHEDULE OF EXHIBITS— Continued 



Number and summary of exhibits 



Intro- 
duced 
at page 



Appears 
on 
page 



415. Chart: Schenley Distillers Corporation, directors and com- 

panies with which they are connected 

416. Chart: Hirarrt Walker-Gooderham & Worts, Ltd., directors 
and companies with which they are connected 

Chart: Financial data, consolidated, four major distilling 
companies 

Chart: Consumer cost of popular spirit blend, comparison 
between license and monopoly States. 

419. Commonwealth of Virginia A. B. G. Board retail price list 

effective February 1, 19.39 

420. Chart: Standard consumer cost of Scotch whiskey, compari- 
son between New York and London 

Sole agency agreement between White Horse Distillers, Ltd., 
and Browne-Vintners Co., Inc 

Import agreement between White Horse Distillers, Ltd., and 
Browne-Vintners Co., Inc ' 

Import agreement between Wm. Sanderson & Son, Ltd., and 
Park & Tilford Import Corporation re "Special Reserve".. 
424. Import agreement between Wm. Sanderson & Son, Ltd., and 
Park & Tilford Import Corporation re "Vat 69" and "Rare 
Old Liq uer" : , 

Copy of Canada Dry Ginger Ale, Inc., import agreement 

Price schedule for New York Metropolitan area of Canada 
Dry Gmger Ale, Inc., products, effective November 1, 1938. 

Table, prepared by Federal Alcohol Administrfition, showing 
advertising expenditures of four major distilling companies 
for years 1934-1938 

Scrapbook, prepared by Federal Alcohol Administration, of 
advertisements of liquors appearing currently in news- 
papers and magazines , 

Financial statement of Distilled Spirits Institute, Inc., 1934- 
1938 

Code regulating the sale and distribution of alcoholic bev- 
erages in Ohio z , 

432. Letter, dated March 21, 1939, from Archibald Kelly, presi- 

dent, Distillers Co., Ltd., of Delaware, to Philip Buck, 
general counsel. Federal Alcohol Administration, contain- 
ing a list of the principal brands owned or controlled by the 
Distillers Company Limited (Edinburgh), now being im- 
ported by American distributors. Entered in the record 
May 1, 1939 

433. Retail price lists published by Commonwealth of Virgmia 

Alcoholic Beverage Board effective July 16, 1937, Feb- 
ruary 1, 1938, and October 1, 1938. Entered in the record 

May 1, 1939 . 

516. Letter, dated April 6, 1939, frr)m Seton Porter, president. 
National Distillers Products luj., rp., to Phillip Buck, general 
counsel, Federal Alcohol Administration, enclosing a list of 
that company's subfidiaries as at December 31, 1924, De- 
cember 31, 1933, and December 31, 1938; and the principal 
brands owned oy the company as at 1924, 1933, and 1938. 

Entered in the record May 10, 1939 

67§. Table showing the •sales of domestic whisky by brands na- 
tionally by Calvert Distillers Corp. for fiscal years <^nding 
July 31, 1937, and July 31, 1938. Entered in tl^e record 

June 7, 1 939 

List of active and associate members of Distilled Spirits In- 
stitute, Inc. Entered in the record September 27, i939 

Unnumbered. Letter, dated November 1, 1939, from National 
Distillers Products Corporation to tne Committee, containing 
additional information regarding the itcmm Notes and Accounts 
Receivable of the Corporation and its wholly owned subsidiaries. 



• 17. 
418. 



421. 
422. 
423. 



425. 
426. 

427. 



428. 



429. 
430. 



1172. 



2535 
2540 
2541 
2576 
2578 
2591 
2602 
2603 
2612 



2612 
2615 

2620 



2628 

2628 
2654. 
2659 



2696 
2697 
2697 
2698 
2698 
2703 
2703 
2V05 
2709 



2711 
2714 

2716 



2717 

(0 

2718 
2719 



2720 



2721 



2745 

2748 
2748 

2760 



INVESTIGATION OF CONCENTKATION OF ECONOMIC POWEB 



AFTERNOON SESSION — TUESDAY, MARCH 14, 1939 

United States Senate, 
Temporary National Economic Committee, 

Wshaington, D. C. 

The committee met at 2:45 p. m., upon expiration of the noon 
recess, in the Caucus Koom, Senate Office Building, Senator Joseph 
C. O'Mahoney presiding;. 

Present: Senators O'Mahoney (chairman) and King; Representa- 
tives Reece and Williams; Messrs. Ferguson; Davis; O'Connell; 
Lubin; Henderson; Berge; Thomas C. Blaisdell, Jr., representing 
Securities- and Exchange Commision; Ernest Tupper, representing 
Department of Commerce ; Milton Katz, representing Department of 
Justice. 

Present also : Willis J. Ballinger, Director of Studies and Economic 
Adviser to the Federal Trade Commission; Phillip Buck, General 
Counsel ; and John P. Brown, attorney, Federal Alcohol Administra- 
tion. 

Tlie Chairman. The committee will please come to order. My 
apologies must again be presented to the members who have been de- 
layed here and to others in attendance, but my presence on the floor 
of the Senate was necessary during the consideration of the Treasury 
and Post Office appropriation bill by reason of several amendments 
which I had to sponsor. 

Mr. Ballinger, are you ready to proceed? 

presentation of conditions in the liquor industry 

Mr. BALLiNctR. Yes, sir, Senator. We are presenting a study of 
monopoly and monopolistic conditions in the liquor industry in the 
United States. This study was prepared under the direction of the 
Federal Trade Commission with the assistance of Mr. Phillip Buck, 
Chief Counsel of the Federal Alcohol Administration. Mr. Buck 
will begin the proceedings with an opening statement and will then 
put on witnesses and cross-examine them in behalf of the Federal 
Trade Commission. 

The Chairman. Perhaps it may be appropriate for me to add to 
what Mr. Ballinger has said that the word "monopoly" is frequently 
misunderstood. It may be used with a connotation of condemnation 
and it may be used without any such suggestion at all. I think it 
ought to be made clear that from the very beginning, when this com- 
mittee was established, it has been the purpose aim program of the 
committee not to imply any condemnation. We recognize the fact 
that many monopolies exist by reason, sometimes, of geographical 
conditions,, by reason of public grant, and for other reasons too 

2419 



2420 CONCENTRATION OF ECONOMIC POWER 

numerous to mention. There are other monopolies which are built up 
through the use of practices which the common judgment of our 
people has condemned from the earliest times. But those who ar© 
summoned here to testify before this committee may come to the 
committee without any feeling whatsoever that they are being brought 
here for purposes of persecution, for that is certainly not the case. 

This committee is interested primarily in developing facts. Now in 
developing those facts it may, of course, be that circumstances will be 
revealed from time to time which some persons will feel are worthy of 
condemnation ; but if I were to make a comparison I should say that 
no business, no industry, in this country, needs fear the activities of 
this committee atiy more than a patient need fear going to a hospital. 

Perhaps we are not as good doctors as they are in the hospitals, but 
we are trying to do the best we can. 

Mr. Buck, the committee will be very glad to hear from you. 

STATEMENT OF PHUIIP E. BUCK, GENERAL COUNSEL, I'EDERAL 
ALCOHOL ADMINISTRATION, WASHINGTON, D. C. 

Mr. Buck. Mr. Chairman, gentlemen of the committee : It is not 
my purpose here to prove a case. I have tried to assemble' economic 
data as they relate to this industry that might be of interest to this • 
committee under the resolution of Congress. 

This particular industry is unusually technical in its make-up, dif- 
ferent from most industries. The product itself is what might be 
determined a technical product in that it is divided into many classi- 
fications, all of which are set up under Government regulations, and 
I believe for the benefit of the committee it may be well in the begin- 
ning of this hearing to define the classifications of whisky. I wish to 
say here for the record that this study does not deal with alcoholic 
beverages in general ; it deals only with the whisky industry, as dis- 
tinguished from the entire industry. 

DEFINrnON AND toESCRIPTION OF TTPES OF WHISKY 

Mr. Buck. "Whisky," as defined by the regulations of the Federal 
Alcohol Administration, is : 

An alcoholic distillate from a fermented mash of grain distilled at less than 
190° proof, in such manner that the distillate posse^es the taste, aroma, and 
characteristics generally attributed to whisky, and withdrawn from the cistern 
room of the distillery at not more than 110° and not less than 80° proof, whether 
or not such proof is further reduced prior to bottling to not less than 80° proof, 
and also includes mixtures of the foregoing distillates for which no specific 
standards of identity are prescribed herein. Those types of whisky specified in 
subsections (c) through (;) below shall be deemed "American-type whiskies." 

I am now reading from regulation 5 and the amendment to those 
regulations of the Federal Alcohol Administration. 

Rye whisky, bourbon whisky, wheat whisky, malt whisky, or rye malt 
.whisky is whisky which has been distilled at not exceeding 160° proof from a 
fermented mash of not less than 51 percent rye grain, corn grain, wheat grain, 
malted barley grain, or malted rye grain, respectively, and, if produced on or 
after March 1, 1933, stored in charred new oak containers, and also includes 
mixtures of such whiskies where the mixture consists exclusively of whiskies 
of the same type. 

Corn whisky is whisky which has been distilled at not exceeding 160° proof 
from a fermented mash of not less than 80 percent corn grain, stored in un- 



CONCENTRATION OF ECONOMIC POWER 2421 

charred oak containers or re-used charred oak containers, and not subjected, in 
the process of distillation or otherwise, to treatment with charred wood, and also 
includes mixtures of such whisky. 

Straight whisky is an alcoholic distillate from a fermented mash of grain 
distilled at not exceeding 160° proof and withdrawn from the cistern room of 
the distillery at not more than 110° and not less than 80° proof, whether or not 
such proof is further reduced prior to bottling to not less than 80° proof and 
is (1) aged for not less than 12 calendar months if bottled on or after July 1, 
1936, and before July 1, 1937 ; or (2) aged for not less than 18 calendar months 
if bottled on or after July 1, 1937, and before July 1, 1938 ; or (3) aged for not 
less than 24 calendar months if bottled on or after July 1, 1938. 

The term "straight whisky" also includes mixtures of- straight whisky which, 
by reason of being homogeneous, are not subject to the rectification tax under 
the Internal Revenue Laws. 

Straight wheat whisky is straight whisky distilled from a fermented mash 
of grain of which not less than 51 percent is wheat grain. 

Straight malt whisky and straight rye malt whisky are straight whisky dis- 
tilled from a fermented mash of grain of which not less than 51 percent of 
the grain is malted barley or malted rye, respectively. 

Blended whisky (or whisky — a blend), is a mixture which contains at least 20 
percent by volume of lOO-proof straight whisky and, separately or in combina- 
tion, whisky or neutral spirits, if such mixture at the time of bottling is not less 
than 80° proof. 

Blended rye whisky (rye whisky — a blend), blended bourbon whisky (bour- 
bon whisky — a blend), blended corij whisky (com whisky — a blend), blended 
wheat whisky (wheat whisky — a blend), blended malt whisky (malt whisky — 
a blend) or blended rye malt whisky (rye malt whisky — a blend) »is blended 
whisky which contains not less than 51 percent by volume of straight rye 
whisky, straight bourbon whisky, straight corn whisky, straight wheat whisky, 
straight malt whisky, or straight rye malt whisky, respectively. 

Does the committee feel ithat this is important? I think it is 
because of the technical nature of the price structures. 

The Chairman". It might probably be helpful if there is much more 
of that, if you put it in the record as part of your presentation. 

Mr. Buck. I am about half through with the standards of the 
product. I can put that in the record if the committee would prefer 
that to be done. 

The Chairman. Well, we want to da what is desired by those who 
are presenting the hearing. 

Mr. Buck. Senator, I think it is important in order to understand 
the thing as it develops in the future. 

The Chairman. You may proceed. 

Mr. Buck (continuing to read) : 

Spirit whisky is a mixture (1) of neutral spirits and not lesa than 5 percent, 
by volume of whisky, or (2) of neutral spirits and less than 20 percent by 
volume of straight whisky, but not less than 5 percent by volume of straight 
whisky, or of straight whisky and whisky, if the resulting product at the time 
of bottling be not less than 80° proof. 

Those are types of American whisky. 

The following are types of standard foreign whiskies : 

Scotch whisky is a distinctive product of Scotland, manufactured In Scotland 
in compliance with the laws of Great Britain regulating the manufacture of 
Scotch whisky for consumption in Great Britain, and containing no distilled 
spirits less than 3 years old: Provided, That if in fact such product as s6 
manufactured is a mixture of distilled spirits, such mixture is "Blended Scotch 
whisky" (Scotch whisky — a blend). Scotch whisky shall not be designated as 
straight. 

Irisu whisky is a distinctive product of Ireland, manufactured either In the 
Irish Free State or in Northern Ireland, in compliance with tie laws of those 
respective territories regulating the manufacture of Irish whisky for consump- 
tion in such territories, and containing no distilled spirits less than 3 years 
old : Provided, That If in fact such product as so manufactured is a mixture of 



2422 CONCENTRATION OF ECONOMIC POWER 

distilled spirits, such whisky is "Blended Irish whisky" (Irish whisky— a 
bleml). Irish whisky shall nnt be desij^nated as straight. ^ r^ a 

Canadian whisky. Canadian whisky is a distinctive product of Canada, 
manufactured in Canada In compliauce with the laws of the Dominion of 
Canada regulating the manufacture of whisky for consumption in Canada, and 
containing no distilled spirits less than 2 years old: Frvvided, That If in fact 
such product as so manufactured is a mixture of distilled spirits, such whisky 
is Blended Canadian whisky (Canadian whisky— a blend). Canadian whisky 
shall n(it be designated as straight. 

Blended Scotch type whisky (Scotch type whisky— a blend) is a mixture made 
outside of Great Britain and composed of (1) not less than 20 percent by 
volume of 100° proof malt whisky or whiskies distilled in pot stills at not 
more than 100° proof, from a fermented mash of malted barley dried over peat 
fire, whether or not such proof is subsequently reduced prior to bottling to 
not less than 80° proof, and (2) not more than 80 percent by volume of neutral 
spirits, or whisky distilled at more than 180° proof, whether or not such proof 
is subsequently reduced prior to bottling to not less than 80° proof. 

Blended Irish type whisky (Irish type whisky— a blend) is a product made 
outside Great Britain or the Irish Free State and composed of (1) a mixture 
of distilled spirits distilled In pot stills at not more than 171° proof, from a 
fermented mash of small cereal grains of wluch not less than 50 percent is dried 
malted barley, and uumalted barley, wheat, oats, or rye grains, whether or 
not such proof is subsequently reduced prior to bottling to not less than 80° 
proof; or 

(2) A mixture consisting of not less than 20 percent by volume of 100° proof 
malt whisky or whiskies distilled in pot stills at approximately 171° proof, from 
a fermented mash of dried malted barley, whether or not such proof is subse- 
quently reduced prior to bottling to not less than 80° proof ; and 

(3) Not more than 80 percent by volume of neutral spirits or whisky distilled 
at more than 180° proof, whether or not such proof is subsequently reduced 
prior to bottUng to not less than 80° proof. 

Those standards are the standards under which American whiskies 
are manufactured and sold to the American consumer in this country, 
and they also consist of the standards under which whisky is im- 
ported into the United States and admitted into oui* country for 
distribution in commerce. 

As to the proposed economic data to be submitted at this hearing, 
I should like to make a preliminary statement in regard to the mate- 
rial which we propose to submit to the committee on the whisky- 
distilling industry and on certain aspects of the importing industry 
now being carried on in th& United States. I, of course, am not here 
as a representative of the Federal Alcohol Administration, but rather 
as an assistant to the Trade Commission, and this committee, in 
,,i . ^ying the economics of the w^hisky-distilling and whisky-import- 
ing industry. The story does not involve enforcement orsocial or 
moral questions. Such a stud^ would require much additional mate- 
rial. Our interest is in economic fact and behavior. 

The purpose of this statement is to indicate the scope of the pro- 
posed inquii y and to portray the background of the testimony which 
IS to be give ' by representatives of the industry. 

At the \/'-rv outset I wish to point out a striking characteristic 
of the liquo ^ lustries. Their history dates from December 5, 1933, 
when the twenty -first amendment to the Constitution became effec- 
tive. Hence, we are dealing with a new industry, as distinguished 
from long-established industries with a consecutive history, such as 
steel, automobiles, cement,_or glassware. This gives us, in one way, an 
incomparable advantage in the study of the liquor industry, and I 
may add that it is also in a measure a handicap, because of the lack 
of materials, because of the short life of the industry. We can see 



CONCENTRATION OF ECONOMIC POWER 2423 

almost at a glance the growth of \he industry from its commencement 
in 1933 through to its extraordinary development in 1938/ We can 
study the development of its price structure, of its merchandising 
methodSj, of its advertising activities, and the position of its leading 
units, with an ease not possible in the study of older industries. 

This is an unequaled opportunity for economic study. The indus- 
try is large, touching both production and distribution in a highly 
integrated manner.' Its rapid growth has compressed into a capsule "^ 
an economic trend which might be recognizable in an older industry 
only after a study covering many years. 

The prohibition interlude enables interesting comparison between 
new and old forms of industry. The price mechanisms involved 
cover the range of regulation and private control. The methods of 
distribution rang? equally wide. 

I do not hope to present a complete picture. Questionnaires which 
were sent to the industry have not been completely analyzed, and - 
many were not fully answered due to many causes. One was the 
lack of ability, apparently, of many of the larger companies to get 
complete answers. Certain gaps exist in our information which 
may be filled in only from testimony by the industry. We hope to 
round out the picture by a further report to the committee if that 
be the committee's pleasure. 

LEGAIi BACKGROUND OF THE INDUSTRY 

Mr. Buck. A survey of the legal background is essential if we are to 
follow the story. The distilling industry has a statutory background 
unlike any other industry. As far back as 1642 liquor became the sub- 
ject of legislation when in that year Pennsylvania passed a law making 
it legal to sell alcoholic liquors to the Indians. The early colonial stat- 
utes were, of course, principally for revenue, or fell under the "blue 
law" classification. In 1790 the Congress for the first time took notice 
of liquor when it passed a law establishing a rum ration for the 
Army, and in 1791 levied a tax upon the sale of distilled liquors, 
which latter act, you will recall, brouirht on in Pennsylvania the 
Whisky Rebellion. Throughout the nineteenth century there was 
increased agitation to enable thp States to handle their own liquor 
problems. In 1890 came the Wilson Act, which provided that all 
intoxicating liquors transported into any State or remainincr therein 
for consumption, sale, or storage, were, upon arrival in such State, 
to be subject to the operation of State laws. This was followed, in 
1913, by the Webb-Kenvon Act, which prohibited the shipment or 
transportation of intoxicating liquors into any State to be used 
therein in violation of the laws of such State. 

You will recall that the constitutionality of the Webb-Kenyon Act 
was sustained by the Supreme Court in 1917 in the leading case of 
ClO'ck Dhtilling Co. v. Western Maryland Railway Company (242 
TJ. S. 311), in which the Court held that the purpose of the Webb- 
Kenyon Act was "to prevent the immunity characteristic of interstate 
commerce from being used to permit the receipt of such ^iquor 
through such commerce in States contrary to their laws, and thus in 
effect afford a means by subterfuge and indirection to set such laws at 
naught." And it was in the Clark case also that the Supreme^ Court 



2424 CONCENTRATION OF ECONOMIC POWER 

emphasized the unique position of liquor as the subject for congres- 
sional legislation, when it said: 

In other words, the exceptional nature of the subject here regulated is the 
basis upon which the exceptional power exerted must rest. 

In 1917 came the Reed bone-dry amendment which made it a crime 
to order, purchase, or cause intoxicating liquors to be transported in 
interstate commerce into any States whose laws prohibited the man- 
ufacture or sale of intoxicating liquors for beverage purposes. 

Then on January 16, 1920, the eighteenth amendment became the 
law of the Nation and by it the manufacture, sale, or transportation 
of intoxicating liquors for beverage purposes was prohibited. We 
can pass rapidly over the prohibition era, 1919 to 1933. It is highly 
important to note that in those years powerful forces were at work 
whose effect is still felt upon the whisky industry today. By 1932 
the appropriation for enforcement had reached a high of $16,000,000, 
and the country was flooded with illicit liquor and in many respects 
dominated by bootleggers or their allies. Huge stocks of whisky 
manufactured by Canadian and Scotch distillers found their way into 
this country. Distribution systems were organized with all the skill 
and attention to detail of vast, modern commercial enterprises. All 
of this necessarily had its effect upon the new industry. 

I may say that when the Federal Government first took upon itself, 
late in 1933, supervision of the alcoholic beverage industries through 
the Federal Alcohol Control Administration, set up under Executive 
order pursuant to the National Industrial Recovery Act, painstaking 
efforts were made to eliminate from the new industry those who had 
participated in the illegal production and sale of spirits. But the 
power at the disposal of the agency was inadequate to the task and 
undoubtedly a certain number of those persons entered the new 
industry. 

Since the establishment of the Federal Alcohol Administration, 
under the act of Confess of August 29, 1935, to which I shall refer 
later on, the same policy has been followed. While that statute mate- 
rially limited the discretion of the Administrator in passing upon 
applications for permits to engage in various phases of the industry, 
his powers have nevertheless been upheld by court decision. For 
example, in a case decided in the Fifth Circuit Court of Appeals in 
1937 and which the Supreme Court refused to review a permit for 
the wholesaling of beer was denied to an applicant corporation on 
the ground that the corporation was a mask to cover a particular 
individual who had achieved a record for disregarding the law. 

And finally, we come to the twenty-first amendment, which, as I 
mentioned before, became effective December 5, 1933. As you know, 
section 1 repeals the eighteenth amendment, and section 2 prohibits 
the transportation or importation into any State, Territory, or pos- 
session of the United States for delivery or use therein of intoxicat- 
ing liquors, in violation of the laws thereof. 

The twenty-first amendment modifies the Commerce Clause of the 
Constitution in its application to intoxicating liquors. In other 
words, any State may now enact legislation in respect to intoxicating 
liquors whether or not such legislation places a burden upon inter- 
state commerce in liquor. For instance, a statute adopted in Call- 



CONCP^NTRATION OP ECONOMIC POWER 2425 

fornia soon after repeal requires an importer of beer produced out- 
side the State to pay a special fee of $500 for selling such beer in 
California. The constitutionality of this act was upheld in 1936 by 
the Supreme Court in the case of State Board of Equalization of the 
State of California v. Young'' s Market Go. (reported in 299 U. S. 51). 
This case has been followed by several others in the Supreme Court, 
with which you are no doubt familiar, all sustaining State laws 
which undoubtedly burden interstate commerce in liquor, some of 
which discriminate in favor of certain products to the exclusion of 
others, and are even frankly retaliatory in nature. 

STATE SYSTEMS OF LIQUOR CONTROL 

Mr. Buck. The States, as you know, have set up different types of 
enforcement within their respective borders, and we have prepared a 
chart — I don't know whether the committee can see it to any advan- 
tage at that distance ; it is in the prepared pamphlet before the com- 
mittee. 

(The chart referred to was marked "Exhibit No. 394" and is in- 
cluded in the appendix on p. 2675.) 

Mr. Buck. You will note from the chart that there are 15 States 
which maintain a monopoly over retail sales and one over wholesale 
sales. 

The Chairman. It seems to me, Mr. Buck, that you might have 
referred to the one first in view of the circumstances that it is my own 
that maintains the wholesale monopoly. 

Mr. Buck. The sale of beer is now legal in every State of the 
Union. The sale of spirituous liquor is legal in all but 3 States. Of 
the 45 wet States 

Representative Reece (interposing). I see you have taken cog- 
nizance of Tennessee's repeal a few days ago. 

Mr. Buck. I had to remake the map, as a matter of fact, to ac- 
commodate the action of the Legislature of Tennessee. 

The Chairman. I think that isn't the first time the map has had to 
be remade on account of what Tennessee does. 

Mr. Ferguson. Or North Carolina and Wyoming. 

Mr. Buck. North Carolina is a great State. 

Mr. Ferguson. What about Wyoming? 

Mr. Buck. Well, it is a great State, of course. 

Each of the 45 wet States has a special statute covering the manu- 
facture and sale of intoxicating beverages. That I might say, Mr. 
Chairman, is a good thing to keep foremost in our minds as we go 
along in a consideration of this study. 

In some cases these follow the pattern of the Federal law, par- 
ticularly in relation to such things as labeling, advertising, and 
fair-trade practices. 

I might say there that is particularly true since the establishment 
of labeling provisionsby the Federal Alcohol Administration. They 
have in a general way, I believe, been accepted by the States as more 
or less standard regulations for labeling of the product for con- 
sumers' benefit. 

Now you can see that in addition to the 45 State statutes regulat- 
ing the distribution of this product you have to deal also with certain 



2426 CONCENTRATION OF ECONOMIC POWER 

retaliations of the Federal GoYemraent. There are very few dupli- 
cations in the matter of regulation, however. 

A statement on the statutory background of the industry would 
not be complete without reference to the Federal Alcohol Adminis- 
tration Act and of the agency set up thereunder. 

THE FEDEBAL ALCX)H0L ADMINISTRATION ACT 

Mr. Buck. Following the decision of the Supreme Court in the 
Schechter case in May 1935 and the resulting collapse of organiza- 
tions deriving authority from the National Industrial Recovery Act, 
you will recall ^at Congress passed the Federal Alcohol Adminis- 
tration Act. The act became effective August 29, 1935. Let me men- 
tion briefly the essential provisions of the act- In the first place, 
the act is described in its preamble as one to regulate interstate and 
foreign commerce, to protect the revenue and to enforce the postal 
laws, all with respect to distilled spirits, wines, and malt beverages. 
It creates a Federal Alcohol Administration headed by an Adminis- 
trator who is charged with carrying" out the pravisions of the act. 
Permits are required and the Administrator is authorized to issue 
permits to engage in the business of importing distilled spirits, wine, 
or malt beverages; distilling, rectifying, or blending distilled spirits, 
or producing wine; and wholesaling' distilled spirits, wine, or malt 
beverages. You will notice that the brewers are not included' in the 
permit system. I have a statement in my prepared report that no 
doubt they should be. I think that is a matter of opinion. 

The Administrator is also charged with the enforcement of section 
6 of the act, which relates to unfair competition and unlawful 'prac- 
tices; he is likewise responsible for labeling and advertising under 
definite standards prescribed by the act. He must see to it that sales 
of whisky in bulk, that is, otherwise than in bottles, are not made ex- 
cept under specified narrow limits. And he must supervise all ap- 
plications which involve interlocking directorates among companies 
which might be in compe<:ition. The act was amended on June 26, 
1936. by the addition of a further title which abolished the Federal 
Alcohol Administration as a division of the Treasury Department 
and established an independent three-man board or commission. This 
new provision, however, was to take effect upon the appointment 
of a majority of the members of the board, and thus far has not 
become effective. 

Mr. Buck. The Federal Alcohol Administration is a comparatively 
small agency. With a total personnel in the neighborhood of IQO, 
and an appropriation of but $450,000 for 1938, it must deal Nvith 
supervision of the liquor industry all over the United States. In- 
deed its field force comprises a mere corporal's guard of 2111161^, less 
than half a man per State, which is obviously inadequate. 

In dealing with the importing of whisky, we must keep in mind 
that whisky is made principally in two countries, the United States 
and Great Britain. May I add there the Irish Free State wliich 
wasn't included. The laws of Great Britain, such as the Finance Act 
of 1933 and the Merchandise Marks Act, should be studied in con- 
nectiori with this statement in order that we may more thoconghly 
understand the background. As this committee well knows, Englanii 



CONCENTRATION OF ECONOMIC POWER 2427 

maintains a policy entirely different from ours in respect to monopo- 
lies and trusts. 

Must whisky manufactured for export from Scotland, which consti- 
tutes a lar<^e percentage of imports into the United Stales, is con. 
trolled by Distillers Co., Ltd., conmionly known to the trade as D. C. 
L., and it controls predominant interests in companies producing 
most of the Scotch whisky. This unified control at the source of pro- 
duction manifests itself here in our commerce through what are called 
sole-agency contracts for well-known and well-advertised brands of 
Scotch whisky. These exclusive-brand agencies, in turn, are imple- 
mented by American importers through franchise, or. agency agree- 
ments, to wholesalers and by resale-piice maintenance contracts, un- 
der the various State laws and the INIilier-Tydings Federal law, car- 
rying the control right down to the consumer. 

Just for the purpose of keeping the record in order for students of 
the subject who may desire to study it, I might say there is addi- 
tional source material to be found in the report of the British Royal 
Commission of 1909, which was a study set up in Great Britain, I 
think, in 1909, to study the whisky conditions and the conditions of 
manufacture and what is whisky in (Jreat Britain under their laws. 
There is also some source material to be found in the opinions of re- 
l^orts of the Attorney General of the United States about 1909, where 
you will find ^^hat is commonly known to the trade as the Taft report. 
This question involved what is whisky under the old trade, and the 
matter has been tranaferred around apparently from one Atiorney 
General to another, from Bonaparte's time down to two or three admin- 
istrations until finally it landed on the desk of President Taft, appar- 
ently, and he settled the matter by writing what is known as the Taft 
report, defining whisky. It is simj)ly interesting material to any- 
one who wishes to pursue the record. 

The Chairman. I assume it will be your desire to present these 
charts for printing in the record in order that the testimony may be 
clarified. 

Mr. Buck.- That is right. 

The Chairman. Let it be understood, then, that the charts will be 
admitted to the record without any further requests. 

Mr. Buck. Now, Senator, in presenting these charts, which have 
been carefully, as carefully prepared as possible, from as reliable a 
source as it is possible to obtain, in my opinion, I still want to say 
that as in the case of most statistics when dealt with in a general 
way, I do not want to repreent them as being exactly accurate. They 
are approximately accurate, and as accurate as general statistics, in 
my opinion, can be. 

The Chairman. They have been carefully prepared from the mate- 
rial which has been diligently gathered by the Federal Alcohol 
Administration and the Federal Trade Commission 

!Mr. Buck. That is the case. 

The Chairman. And not particularly gathered for the purpose of 
proving a particular case, but for the purpose of showing the facts 
as they exist. 

Mr. Buck. That is the point, exactly. The wholri study, in fact, 
has been prepared with that view. 



2428 CONCENTRATION OF ECONOMIC POWER 

PRODUCTION or WHISKY IN THE UNITED STATES FOB YEARS 1933-1938 

Mr. Buck. The first chart I think we should consider is a chart 
which shows the production of whisky in the United States from 
1933 to 1938. ^^ „ J . 

(The chart referred to was marked "Exhibit No. 395" and is 
included in the appendix on p. 2676.) 

Mt Buck. Keeping in mind that the twenty-first amendment 
became effective December 5, 1933, you will observe that we started 
off with 1933 with 17,000,000 gallons on hand, approximately. The 
1932 figure is 1,710,000. but that was before repeal of the eighteenth 
amendment. 

In 1934 ihe production stepped.'up to 108,000,000; in 1935 produc- 
tion progressed further to 184,^60,000. In 1936 apparently we 
reached the peak of production in whisky in the United States, and 
I might say I think it is a banner year for all time, the highest in 
t'*e History of the Government so far as I can find out, and that fig- 
ure was 245,470,000 gallons. 

The Chairman. Do you wish to say the banner year or the peak 
year ? 

Mr. Buck. Peak year, I suppose, would be more appropriate. 

Production began to drop off perceptibly after 1936. The reasons 
the committee might gather from the facts as they are presented 
hereafter. I have my own opinions, but I take it the committee is 
not particularly interested in those. 

The Chairman. You will develop testimony on that point ? 

Mr. Buck. Yes, sir ; I shall try to do so. 

Beginning with 1936 the distillery production began to drop off, 
and it dropped from 245,470,000 in 1936 to 155,670j000 in 1937, which 
is a considerable drop, and the downward trend m production con- 
tinued even to last year, 1938, when it dropped to 94,990,000, which 
you will see is less than in 1934. 

Mr. Davis. Gallons? 

Mr. Buck. Yes ; that is in tax gallons. 

Those statistics are basically interesting in considering the devel- 
opment of the industry from the date of repeal of the eighteenth 
amendment. They picture that particular angle of it, I thmk, very 
accurately. 

The Chairman. Are we to assume that consumption also declined 
with production ? 

Mr. Buck. The next chart. Senator, will give you an indication of 
that. 

stocks of whisky in bonded warehouses for years 193 3-1938 

Mr. Buck. The next chart indicates the stocks of whisky in bonded 
warehouses for tlie years designated there, beginning with 25,100,000, 
running up to the peak now, and I think that is an all-time pealc for 
the history of the country, which shows total stocks on hand to be 
466,800,000 gallons of whisky in the United States. 

(The chart referred to was marked "Exhibit No. 396" and is in- 
cluded in the appendix on p. 2676.) 

Mr. Buck. The principal value of that chart, as I see it, is that is 
shows the reserve whiskies on hand in the United States as being 
466,800,000 gallons. 



CONCENTRATION OF ECONOMIC POWER 2429 

The Chaibman. Would the conclusion be iustified from these two 
charts that the consumption has not actually kept pace with pro- 
duction ? 

Mr. Buck. Oh, very definitely so, very definitely so. You see, that 
466,800,000 practically represents a surplus over consumption for a 
period of 5 years. That is the practical indication. 

Mr. Davis. In other words, for the last 3 years the consumption 
has averaged around 70,000,000 gallons, has it not? 

Mr. Buck. I beg your pardon ? 

Mr, Davis. I say for the last several years the consumptipn in the 
United States has averaged in round numbers about 70,000,000 gal- 
lons. 

Mr. Buck. I think that is a good approximate figure, although 
the next chart, I believe, will give you the actual figure. 

Mr. Davis. But just in line with the question of the chairman, the 
amount in the warehouse of 466,000,000 gallons would be approxi- 
mately six times the annual consumption. 

Mr. Ballinger. Senator, these charts are very important when we 
come to consider the effect of this very large reserve supply of liquor 
upon the price structure. 

Mr. Buck. Judge Davis, I think your statement is about the pic- 
ture. 

whisky withdrawn tax-paid from bonded warehouses . 

Mr. Buck. The next chart shows the withdrawal of .whisky from 
bonded warehouses in the periods indicated, and that is the best indi- 
cation of consumption that I know of. I may be wrong on that, but 
that is my opinion, that withdawal from bonded warehouse is about 
the best indication of consumption. Of course you have always got 
to keep in mind floor stocks on hand, in commerce, and in trade. 

(The chart was marked "Exhibit No. 397" and is included in the 
appendix on p. 2677.) 

Mr. Buck. The peak withdrawal year was 1936. The withdrawals 
there, Judge Davis, were 72,473,000 gallons, which is approximately 
the same figure that you mentioned, 70,000,000. 

We began in 1933 — you remember we had only 1 month to go in 
1933, that was December of that year when repeal came — by with- 
drawing 6,115,000 gallons. In 1934 which was a clear year so far as 
Federal law was concerned but may have been under some handi- 
cap so to speak in respect to State laws, some of the States may not 
have gone wet in that period, I don't know offhand — 38,000,000 
gallons was the withdrawal for that year. In '35 it ran up to 61,- 
873,000. In 1936, apparently it reached its peak of 72,473,000 gallons. 
In 1937 it dropped off a little oyer 2,000,000 gallons, and in '38 it 
dropped off approximately a million gallons again. 

The point there may be whether or not imported whiskies have 
increased during the same period that domestic whisky consump- 
tion has dropi)ed off. These charts deal only with domestic whiskies. 

Representative Reece. But the withdrawals there appear to be 
rather uniform during recent years after the States had oppor- 
tunity to adjust their laws after repeal of the Federal law. 

Mr. Buck. Yes; they are fairly uniform. There is a difference 
of only a little more than 3,000,000 as between '36 and '38. 

Representative Reeoe. Which is a very small percentage. 



2430 CONCENTRATION OF ECONOMIC POWER 

Mr. Buck. Which is a small percentage. The total imports, I 
think, will show up to be approxnnately 14,00U,U00 gallons a year 
as their high, and they have increased from year to year. 

The highest preprohibition withdrawal might be interesting, shown 
by the figures on the bottom of the chart to be for 1917, and 1 assume 
that that peak in withdrawals for thai year was due to the fact that 
prohibition signs were gathering in the skies and som^ people were 
fixing up their cellars for a long siege. 1 don't know, of course. It 
shows 1917 as being the highest preprohibition withdrawal year, 
83,591,000 gallons. That is higher than any of the years so far, and 
that also poses a question that seems to flunk many experts in trade, 
as to why it is that withdrawals for consumption since the repeal 
of the eighteenth amendment are less than they were at least for that 
year, in preprohibition times. The population of the country, of 
course, has increased considerably in the last 18 years, and 1 have 
heard it said, I don't know, that even ladies drink liquor now that 
didn't drink before, and all that sort of thing, but even with the 
increase in population for the country- and what is generally assumed 
to be an increase in the number of people who drink liquor, we ap- 
parently still are not consuming as much whisky as we were before 
prohibition. 

The average, however, for preprohibition, the average from 1901 
to 1919, is less than the present consumption, so those hgures are set 
out there for whatever value they may be to the coiimiittee m study- 
ing the statistics. 

The Chairman. On what do you Dase your statement that the con- 
sumption now with the increased population is less than it was? 

Mr. Buck. I base it on the high year of 1917, of 88,591,000 gallons. 

The Chairman. But you exi)lained that hgure upon the supposition 
that it may have been due to preparation for proliibition, 

Mr. Buck. 1 have offered a possible explanation; I have just set 
that forth. 

The Chairman. But don't you think that was really a very sound 
explanation ? 

Mr. Buck. That is my private opinion. Senator, and I call your 
attention to that portion in the statistics because there is consider- 
able talk in the industry generally and by the public to the effect that 
we are not consuming as much whisky now as we were before prolii- 
bition. 

The Chairman. Well, it will be observed from your chart that in 
1935 there was withdrawn an amount of whisky in excess of the aver- 
age for the entire period of 1901 and 1919. 

Mr. Buck. Slightly j yes. 

The Chairman. So it would seem to me that the conclusion which 
you drew from the chart was scarcely justified. I think a better con- 
clusion woiild be based upon the average withdrawals for the pre- 
prohibition period than upon the withdrawals for a single year. 

Mr. Buck. I don't know. Senator, I suppose there are some ex- 
perts here on figures; I am not much at figures. But what is the 
average between 1934, for instance, and 1938? That would give you 
a better indication or better answer to your question, I think. 

Mr. Davis. Would it be proper to say in 1934? We had hardly 
had time to manufacture a great deal of whisky from the passage of 



CONCENTRATION OF ECONOMIC POWER 2431 

the twenty-first amendment up to that time, and what whisky had 
been manufactured then was new green whisky? 

Mr. Buck. Judge, I don't know whether the fact that it was green 
whisky retarded consumption or not. I wouldn't know. 

The Chairman. Well, when we bear in mind the fact that Con- 
gressman Reece has testified this afternoon that Tennessee only re- 
cently repealed the State prohibition law, I think we will see the 
explanation for the low consumption in 1934. [Laughter.] 

]\fr. Buck. I think that is about right. 

Representative Reece. Has it been advanced at any time as a pos- 
sible explanation for the decrease in consumption since repeal that 
the effects are less than they might have been during prohibition? 

Mr. Buck. My experience is that the population generally doesn't 
learn much from experience. 

Senator, the price of whisky might have some point there. I don't 
know. It is there, I mean the figures are there. Of course, the price 
of whisky now is much higher than it was before prohibition, and 
the price of all whiskies 1 think is higher. Too, you know we have 
had a depression, someone told me, and a lot of people maybe can't 
buy whisky. 

Representative Williams. Would the consumption of illicit 
whisky have anything to do with it? 

Mr. Buck. That is a question I can't answer. I would say that 
how much illicit whisky, that is, non-tax-paid whisky, is consumed 
is more or less a matter of personal opinion. Those are statistics of 
which I don't know the accuracy. It is about as indefinite as my old 
friend Judge Perkins once said, as indefinite as a school of mullet in 
the middle of the Atlantic Ocean. You can't tell. I don't think any- 
one can tell definitely what amount of un-tax-paid whisky is con- 
sumed. There are, however, some very respectable figures on the 
subject. We have some collection of those figures and would be glad 
to submit them if they are of interest. . 

' Representative Williams, Would it be fair to assume that there is 
considerably more since prohibition repeal than there was before we 
had prohibition? 

Mr. Buck. That I wouldn't be able to answer. T am sorry, but I 
just wouldn't have anything that would be dependable on that. 

I might say that the reports of the Treasury Department proper 
show the destruction of considerable production by the Alcohol Tax 
Unit in this respect. That is, they have destroyed a tremendous 
number of illicit distilleries through the operation of the Alcohol 
Tax Bureau. That number I am npt exactly sure of. 

I have here now a more definite statement on that which shows 
according to this report that there were approximately IG.OOO stills — 
16.142— destroyed by or captured by the Alcohol Tax Unit for the 
year 1937. That, of course, may account for a considerable amount 
'of un-tax-paid whisky. 

Bootleg whisky: That is a confusion of terms to me, because it 
may mean whisky that is tax paid ; I mean there is such a thing as 
Ibbotleg tax-paid whisky— that is, whisky that is bootlegged, for 
instance, in Tennessee • before legalization. It may be tax-paid 
whisky. 



2432 CONCENTRATION OF ECONOMIC POWER 

The Chairman. Perhaps we had better stop talking about Ten- 
nessee. [Laughter.] 

Kepresentative Reece. However, we were not entirely dependent on 
outside sources. [Laughter.] 

Mr. Buck. I am glad to see that someone recognizes home industry. 

Now, this chart may be of interest to the committee. 

LIQUOR fRODUCTION EXCEEDING CONSUMPTION 

Mr. Buck. This exhibit, as you will see, purports to show the num- 
ber of distilleries engaged in the business for the years indicated to- 
gether with the annual capacity of those production units, and also 
proposes to show the annual production. This chart is based on 
fiscal years, whereas the previous charts, Senator, were based on 
calendar years. I couldn't account for the discrepancies involved 
here. 

(The exhibit referred to was marked "Exhibit No. 398" and is in- 
cluded in the appendix on p. 2677.) • , 

In 1933 it shows 7 distilleries in operation ; in 1934 it shows 44 ; in 
1935, 79 ; in 1936, 112 ; in 1937, 126, and in 1938, 108. You will notice 
considerable dropping off there in the number of distilleries from 
1937 to 1938. 

The Chairman. Now this chart taken in connection with your pre- 
vious charts upon production and warehouse stocks indicates rather 
clearly that the capacity to produce has been steadily increasing. 

Mr. Buck. That is right. 

The Chairman. While the production increased for a time and is 
now being cut down. 

Mr. Buck. That is right. 

The Chairman. So that here again you appear to have presented a 
condition which exists in so many industries of a larger production 
of the commodity than is actually consumed. 

Mr. Buck. That is right. 

The Chairman. So that the question of maintaining the price arises 
in this industry just as it arises in the farm industry, for example, 
with respect to wheat. 

Mr. Buck. I think the general rule would apply on that point. 
< Mr. Davis. Mr. Chairman, of course you have in this industry the 
importance of aging whisky. I think there is a general effort to gel 
enough whisky in stock that they can sell whisky 4 years old or 
more, on the whole. Whisky is one of the few things that improves 
with age. In the case of farm products generally, and manufactured 
articles, the reverse is true, but a surplus in the whisky business is not 
such a liability as it is with regard to many other products. 

The Chairman. Well, Judge, the committee is very glad of course 
to hear from another Tennessee expert. 

Representative Reece. Referring again to the chart that you had 
on display a few moments ago — it is not necessary to exhibit it again — 
the chart showed some 460,000,000 gallons in bonded warehouses.^ 

Mr. Bucks. Stocks on hand; yes. 

Representative Reece. Is all of that whisky 4 years old? 

1 "Exhibit No. 396," appendix, p. 2676. 



CONCENTRATION OF ECONOMIC POWER 2433 

Mr. Buck. Oh no, no. I have a further chart on that that shows 
what proportion is 4 years old. 

In "Exhibit No. 398" the principal value perhaps to the committee, 
as Senator O'Mahoney said, is that it shows the tremendous production 
possibility of the industry as it now stands. It seems as though 
everyone tried to produce as much whisky the first 2 or 3 or 4 years 
as they could. It was sort of a race to get surplus stock to age, the 
idea being that the whisky could age, and in doing that they have 
established in the industry an annual capacity of 434,986,000 gallons, 
whereas the necessity, according to consumer demands, would be ap- 
proximately 70,000,000 gallons. 

Mr. Katz. Mr. Buck, is a license from the Alcohol Administration 
necessary before a distillery may be built? 

Mr. Buck. That's right ; before it may be operated. 

Mr. Katz. Well, in passing upon an application for a license, do 
the statutory standards require the administration to take account of 
the relationship between capacity and current demand? 

Mr. Buck. No. 

Mr. Katz. What sort of standards are laid down in the statute ? 

Mr. Buck. The standards are more or less those, you might say, 
that pertain to social questions, that is whether or not the man has 
been previously convicted of crime and whether his trade connections 
are such as that he will likely comply with the law in the manu- 
facture of whisky, and things of that sort. The Alcohol Adminis- 
tration has no authority in the issuance of permits to restrict or to 
allocate production. It may be that in the early days — I am not 
quite clear under the codes that were set up under the N. R. A. 
whether that condition prevailed or not, I am inclined to believe it 
may have prevailed at that time. 

You will observe, also, from this chart the fact that whereas we 
have now 108 distilleries with a production capacity of 434,000,000- 
odd gallons, in 1914 we had 352 distilleries with a production we don't 
know. We don't know what the potential possibilities of the dis- 
tilleries were before prohibition, but we know that they did produce 
. 88,000,000 gallons annually. 

Representative Williams. Has the Administration the right under 
the law to revoke one of these permits ? 

Mr. Buck. Yes, sir. 

Representative Williams. Has that been done? 

Mr. Buck. Oh, yes ; in a number of cases. 

Representative Williams. Does that account for the reduction of 
the number there in 1938? 

Mr. Buck. No ; not in this chart. The Administration has revoked 
numbers of permits, some for nonuse. The statute provides that if 
a permit isn't exercised for a period of 2 years it may be revoked 
and then it may be revoked in addition after violating the other 
provisions of the statute relating to labor or trade practices under 
the statute. It wouldn't show here because this chart is based upon 
distilleries in operation, annual capacity and production. I don't 
think it would show up there, and I am sure that doesn't account for 
it, because enough distilleries of any consequence have not been put 
out of business to make any appreciable dent in that situation. 



2434 CONCENTRATION OF ECONOMIC POWER 

As T say, it mijjht be siprnificant to notice that in 1914 we had 352 
distilleries in operation, according to our information, whereas. in 
1938 we have 108 distilleries. We have less than one-third the num- 
ber of distilleries now that we had in the old days. 

Mr. Ballinger. Mr. Buck, were any distilleries bought up by the 
large companies and closed down ? 

Mr. Buck. During what period? 

Mr. Ballingfr. This period where it drops from 126 to 108. 

Mr. Buck. Well, I would say to no appreciable extent. Certain 
stocks of whisky have been bought by the large concerns, but the 
distilleries haven't changed hands to any appreciable extent. They 
may switch them around from one subsidiary corporation to another, 
but very few change in management. That is my information on the 
subject. 

Still, I say we have apparently one-third of the distilleries, less 
than a third as many distilleries now as we had in 1914. 

Mr. Davis. Mr. Buck, in giving the number of distilleries operated, 
you have it in 1938 as 108. Do you ,mean by that there are that 
many companies operating distilleries or that many physical distil- 
leries in operation? 

Mr. Buck. I mean by that that those are physical distilleries. 

Mr. DA^^s. Have you any figures or information as to how many 
of those distilleries are owned, two or more, by an individual com- 
pany? 

Mr. Buck. Yes, Judge ; I think we have that on the next chart. 

Again, you can see that for 1914 we were producing in excess of 
88,000.000 gallons of whisky a^year, whereas in 1936 I think we pro- 
duced 245,470,000. That comparison may be of some interest as we go 
along with this matter. 

Representative Williams. But it appears that the still per unit 
produces about seven times as much as the old one. Is that right? 

Mr. Buck. I think that is about right; yes, sir. I account for 
that in my own way by the fact that the whisky industry now is in 
the hands of large companies and great progress has been made in 
distilling apparatus, as always follows the integration of commercial 
needs, and the large companies have developed, or other people devel- 
oped for them, new distilling apparatuses that are much larger — 
mass production, you might say, as compared with single production 
before. 

Mr. Davis. In connection with this question of acquirement, you 
may be intending to go into it later, and if you are I don't want to 
interject the question at this time; but I should like to inquire 
whether you contemplate making any explanation of the buying, up 
by themajor companies of old whisky brands which during the past 
have contained more or less reputation and goodwill. 

Mr. Buck. Judge Davis, that is a question that I couldn't asce^*- 
tain from statistics or history — I could from history, I know the 
change of hands, of course, of old brands in the industry; but I think 
it is one of the points that ought to be discussed when we bring the 
witnesses on for examination. I think that would be the appropriate 
and best place to develop that point. 

Representative Reece. May 1 aj5k a question, if you please? Do 
you intend to make a study, or have you made a study, to JBnd out the 



CONCENTRATION OF ECONOMIC POWER 2435 

reason for the falling-off of the number of distilleries since 1937, with 
a view of ascertaining to what extent they may have been bougl»t up 
by other larger distilleries and sold by the purchaser ? 

Mr. Buck. I am afraid that we haven't the answer to that, Con- 
gressman. 

Kepresentative Reece. That may be developed later. 

Mr. Buck. It may be developed by witnesses in the hearing. 

Mr. Davis. In that connection I wish to call attention to the fact 
as shown by the figures on the chart, that while the number of dis- 
tilleries operated in 1937 dropped from 126 to 108 in 1938, yet the 
annual capacity only dropped from 435,814,000 gallons to 434,986,000, 
or a relatively small reduction in capacity, not at all comparable to 
the reduction in numerical distilleries operated. 

Mr. Buck. That, Judge, would indicate to me that the distilleries' 
capacity has remained approximately the same, and I might also say 
that this chart relates to distilleries in operation. It doesn't neces- 
sarily mean that the distillery has been destroyed or even changed 
hands. It may mean that, as the figures indicated on the previous 
chart, they have been closed for the purposes of preventing a larger 
accumulation of stocks. They may have been closed and remained in 
status quo. 

The Chairman. You may proceed. 

Mr. Buck. Just for the sake of comparative figures, we undertake 
to show, in an approximate way, the relation of four of the largest 
units in the industry to the whole structure, and the chart we intro- 
duce now is of interest because it does compare in an approximate 
way, as I have said, the four-company position as against the entire 
industry in repect to distilleries operated and whisky produced. 

(The chart referred to was marked "Exhibit No. 399" and is 
mcluded in the appendix on p. 2678.) 

The Chairman. You are now referring to the chart showing the 
amount of whisky produced by the four major companies as com- 
pared with the entire industry ? 

Mr. Buck. Yes, sir; the entire industry, you see — this is on the 
calendar year for 1938--had 97 distilleries in operation. Four com- 
panies operated 20 of those 97 distilleries. That figure may not 
appear so important until you consider the production. The entire 
industry for 1938, for instance, produced 94,990,000 gallons. The 4 
companies produced 60,400,000 gallons of that total. That gives you 
an idea of how large in production capacity the 20 held by the 4 
companies may be as contrasted against 77 for the entires industry. 
Twenty held by the four large companies produced approximately 
two-thirds of the total for the year 1938, and, of course, for the year 
1936 the percentage is much higher.' It is 111 as against 245. 

Mr. Ballinger. That is all whisky, isn't it, Mr. Buck? 

Mr. Buck. Everything I am showing you is whisky. 

Mr. Bajllinger. There is a liigher concentration in the 4-year-old 
whisky? 

Mr. Buck. That is to be brought out in its regular order as we 
progress. 

The third break-down on this chart shows the entire industry as an 
average per distillery. The entire average for the entire industry, 
per distillery, is 979,000 gallons production. The four companies 



2436 CONCENTRATION OF ECONOMIC POWER 

average per distillery is 3,020,000 as against 979,000 for the entire 
industry average per distillery. That gives you an idea of the differ- 
ence in size and capacity of the distilleries held by the large com- 
panies as against the general average size and capacity of the dis- 
tilleries in the trade. 

That is about all, I think. 

Mr. O'CoNNELL. ^Vhen you speak of the 4 companies and the 25 
distilleries owned by the 4 companies, does that figure include, or is 
it intended to include, all companies aflUiated with or controlled by 
the large companies ? 

Mr. Buck. My information is that that number, 20 units, includes 
all subsidiaries held by the main 4 big corporations. That is the 
position. Most of the subsidiaries, I might say, are wholly owned. 

Mr. Ballinger. What are the names of the four large companies? 

Mr. Buck. They appear on the chart : Schenley Distillers Corpora- 
tion ; National Distillers Products Corporation ; Joseph E. Seagram 
& Sons, Inc. ; and Hiram Walker & Sons, Inc. 

My investigation is to the effect that -they constitute the four largest 
in the industry when taken together with their subsidiaries. 

PRODUCTION BY FOUR LARGEST UNITS COMPARED WITH TOTAL PRODUCTION 

Mr. Buck- The next chart shows the total production of whisky 
in the United States for the years 1933 to 1938 inclusive, and the 
percent of total production by four corporations for each year except 
1933. I have taken that off. 

Mr. Ferguson. These are the same four companies ? 

Mr. Buck. The same companies. The four largest units, as I say, 
in my opinion, in the industry for 1934, produced 60 percent of all 
the whisky. In 1935 they produced 46 percent, although they appar- 
ently produced more whisky than they did in 1934, but less in pro- 
portion to the total. 

In 1936 the four companies produced 45 percent and still pro- 
duced more whisky than they did in 1935. Now that was the peak 
year, as we saw by the total production charts heretofore submitted. 

(The chart was marked "Exhibit No. 400" and is included in the 
appendix on p. 2679.) 

Mr. Buck. Something happened in the industry. What it was — 
it may have been good sense — I don't know. But anyway it appeared 
to be the purpose of the industry beginning with 1936 to retard pro- 
duction over their previous years and the total production dropped 
from 245,000,000 to 155,000,000, and the four companies produced 47 
percent of that total. 

In 1938 the total production experienced a more radical decline 
from 1936. It dropped from 245 high in 1936 to 94 low in 1938. 
In that year, however, the 4 compames produced 64 percent of all 
the whisky. 

Mr. Ballinger. Mr. Buck, between 1937 and 1938 did the large 
companies purchase many competitors? 

Mr. Buck. 1936 and 1938? 

Mr. Ballinger. 1937 and 1938. 

Mr. Buck. As I have said before, I don't know offhand about the 
purchase of competitiors. 



CONCENTRATION OF ECONOMIC POWER 2437 

Mr. BALLiNdER. Or acquire control by merger, combination, or 
anything else? 

Mr. Buck. That is a matter I think we will have to develop with 
the witnesses as we go along in the hearing. 

As I said before about the other charts, it may have been a lay- 
ing by of production capacity, instead of an acquisition. 

Mr. FuRGBSON. Mr. Buck, when you speak of production you mean 
the new whisky that is produced by the distillery, without reference 
to the 4-year ? 

Mr. Buck. Yes; that is per year production. It is all each year's 
new whisky. 

Dr. LuBiN. Mr. Buck, I am very much interested in your exhibit 
3A,^ which apparently shows the greatest decline in production oc- 
curred in the distilleries that were owned by the so-called smaller 
companies; in other words, the relative drop in the black section' of 
your bars is much smaller than the drop of the cross-hatched section. 
I noticed in your chart 5A,* which you showed a few minutes ago, 
that the same was true in regard to the number of distilleries in op- 
eration, that whereas the 4 companies had 18 distilleries in 1936 and 
20 in 1937 and 20 in 1938, your smaller companies declined in num- 
ber from 129 in 1937 to 97 in 1938. Does that mean, then, that the 
actual cutting down in production took place for the most part in 
those distilleries 

Mr. Buck (interposing). In the smaller distilleries. 

Dr. LuBiN. That were independent of these four companies, 

Mr. Buck. That would be the conclusion that I would draw from 
those figureSj Dr. Lubin. 

The Chairman. You may proceed. 

AMOUNT OF WHISKY HELD IN BONDED WAREHOUSES BY FOUR LARGE 
COMPANIES IN COMPARISON WITH WHOLE INDUSTRY'S STOCKS 

Mr. Buck. The chart entitled "Stocks of Whisky in Bonded Ware- 
houses Held by" Four Companies Compared to Total Stocks" which 
I promised I wouldn't mention but can't help but mention, shows 
the amount of stocks of whisky in bonded warehouses held by the 
four large units in the industi*y from 1933 to 1938, inclusive, as 
compared with the total of all whisky stocks in bonded warehouses. 

(The chart referred to was marked "Exhibit No. 401" and is 
included in the appendix on p. 2680.) 

Mr. Buck. The percentage, of course, runs from high in 1933. As 
I said before, we had only 1 month of operation for that year-— a high 
of 71 percent of total over-all control by 4 companies in stocks. In 
1934 there was 60-percent control; in 1935, 65 percent; in 1936, 48 
percent ; in 1937, 52 percent ; and in 1938, 54 percent. So you see, not- 
withstanding the sloughing off in over-all production as shown by the 
previous charts, the four companies have developed continuously in 
their percentage control of the whole stock. In 1936 the production 
was the high year, and in 1937 the production was way down, yet the 
percentage increased in the hands of all 4 in the whole of the stocks. 
The same thing is true in 1938. While production had radically de- 

1 "Exhibit No. 400," appendix, p. 2679. 
•"Exhibit No. 399." appendix, p. 2678. 



2438 CONCENTRATION OP ECONOMIC POWER 

clined in 1938 — the over-all production in the industry had radically 
declined in 1938 — still the percentage of the 4 companies in the total 
whiskies on hand had increased. 

Mr. TuppFR. INIr. Buck, I assume that these stocks may be acquired 
by purchase from other manufacturers? 

Mr. Buck. Stocks of whisky? 

Mr. TuppER. Yes. . 

Mr. Buck. There is no doubt but what they may be acquired by 
purchase as well as manufacture, and oftentimes are acquired, of 
course, by purchase. I mi^ht say there, in further explaining the 
mechanics of the industry, that there is a class of business in the in- 
dustry known as rectifiers, as distinguished from distillers. This 
deals with distillers. A rectifier is a man who buys whisky, as a rule; 
sometimes he produces his own. But as a general rule I think they 
purchase whisky in the market and blend it or -mix it and put it out in 
that way. So your question as to whether or not stocks may be ac- 
quired by purchase as well as production is, of course, correct. 

The Chairman. The percentage of stocks owned by the 4 large com- 
panies does not appear to vary greaUy after 1934, does it? It is 55 
percent for 1935, 48 percent for 1936, 52 percent for 1937, and 54 per- 
cent for 1938. 

Mr. Buck. That is in the percentage. Senator, of stocks on hand; 
but my point is there that 1937 and 1938 were declining years in pro- 
duction, yet it had no effect at all on their percentage m the whole 
stocks, in fact, their percentage in this whole stocks developed, not- 
withstanding the radical decline in the production of those years. 

The Chairman. Well, if the large companies were reducing their 
production, it might also be presumed that they were reducing their 
withdrawals from the warehouses. 

Mr. Buck. That isn't the fact. 

The Chairman. It is not? 

Mr. Buck. No; they were increasing their withdrawals. The busi- 
ness of the large companies was increasing each year tremendously. 

Mr. CCoNNELL. May I ask a question, Mr. Chairman, on the per- 
centages that are shown of stocks held in bonded warehouses by the 
four companies? Is that necessarily accurate as to the percentage 
of whiskvs owned by the four companies, or is it taken from records 
that indicate the persons to whom warehouse-receipts stocks have 
been given? 

Mr. Buck. It is my opinion that the large companies perhaps don't 
acfjuire very many gallons of whisky by the purchase of warehouse 
receipts. That trade is usually indulged in, as I say, by the rectifiers. 
Of course, there are instances where the large companies may buy 
warehouse receipts, but that is a negligible factor, 

Mr. O CoNNELL. I didn't intend to indicate I thought they did, but 
are the percentages taken from warehouse-receipts ownership? 

Mr. Buck. No. 

Mr. O'CoNNELL. I mean how did you amve at the percentages? 

Mr. Buck. They are based on production; the company reports on 
what they sold. 

Mr. Ballinoer. "WTiat is your explanation of how they inci'Gase 
their control over the reserve supply, the four companies? 

Mr. Buck. What is my explanation? 



CONCENTRATION OF ECONOMIC POWER 2439 

. Mr. Ballinoer. Yes. 

Mr. Buck. One explanation is that they have, of course, tremen- 
dous producing facilities. That is one explanation. The other is 
that apparently they did not quit producing when the general run 
of distilleries began to quit producing in 1936, or to restrict their 
production. 

The Chaibman. It is true, is it not, that "Exhibit No. 400" shows 
that in 1938 the four companies produced 64 percent of the total 
production for that year? 

Mr. Buck. That is right. 

The Chairman. And that probably would be one important ex- 
planation of the situation? 

Mr. Buck. Yes. At this, point it might be of interest to the com- 
mittee to discuss the importance of age in whisky, as Judge Davis 
has already indicated ; and I won't attempt to match my knowledge 
of quality of whisky with Judge. Da vis, of course, because I come 
from Maryland. 

The Chairman. We are not going to test the qualifications of the 
committee members at this time. 

Mr. Davis. We have no material with which to make any tests, 
unfortunately. 

Mr. Buck. It is generally believed, however, and it is understood 
that proper aging is a necessary factor in the production of a pal- 
atable whisky. To this point the Congress in 1897 enacted the Bot- 
tled in Bond Act, which lays down the qualifications and the methods 
of producing and aging bottled-in-bond whisky. Bottled-in-bond 
whisky since that time, in my opinion, has generally been understood 
by the consumer to be the standard American whisky. Whether this 
consumer assumption is correct or incorrect, we will not discuss here. 
Suffice to say that 4-year-old whisky is looked upon generally as be- 
ing a matured whisky, and might therefore be used as a standard in 
our consideration of the subject of whisky so far as quality is 
concerned. 

I should like to introduce t*he chart entitled "Total Stocks of 
Whisky 4 Years Old and Over Remaining in Bonded Warehouses as 
Compared with Such Stocky Held by Four Companies." 

(The chart was marked "Exhibit No. 402," and is included in the 
appendix on p. 2681.) 

M r. Buck. Considering the importance of 4-year-old whisky in the 
industry 

The Chairman (interposing). You have identified this chart? 

TOTAL stocks OF 4 -TEAR-OLD- AND-OVER WHISKIES HELD BY ENTIRE 
industry AS COMPARED WITH HOLDINGS OF FOUR MAJOR COMPANIES 

Mr.' Buck. Yes, Senator. This chart shows the total stocks of 
whisky 4 years old arid over remaining in bonded warehouses as com- 
pared with such stocks held by four companies. This shows the 
holdings of the four largest units in relation to the total of 4-year- 
old-and-over whiskies. 

Mr. Ferguson. Mr. Buck, these are the same companies? 

Mr. Buck. The same four companies are used throughout the en- 
tire study. For tlie first 3 years the chart indicates the percentages 



2440 CONCENTRATIftN OF ECONOMIC POWER ■ 

held by two companies only, that is Schenley Distillinf; Corporation 
and National Distillers Products Corporation. Those two companies 
according to my information in 1934 held 72 percent of all four-year- 
old-and-over whisky. In 1935 the two companies held 79 percent of 
all 4-year-old-and-over whiskies. In 1936 they held 78 percent of all 
4-year-old-and-over whiskies. Now, in 1937, we include the four 
companies, that is, Schenley, National, Seagram, and Hiram Walker. 
In that year the folrr companies' percent of control is 91. In 1938, 
when the stocks had greatly increased, the four-company control over 
4-year-old whiskies is still 78 percent of the total. . 

This point, I might say, is to me very important and very signifi- 
cant because it is my opinion again, and I don't vouch for its value, 
that 4-year-old bottled-in-bond whisky makes tlie top level of prices 
in the industry. 

Mr. P ERGUsoN. May I ask, Mr. Buck — I am not sure whether you 
have stated for the record or not — but these charts and your testi- 
mony constantly refer to 4-year-old whiskies 

Mr, BuoK (interposing). Four years old and over. 

Mr. Ferguson. Is that because whisky that is under 4 years old 
cannot be legally sold? 

Mr. Buck. Oh, no. 

Mr. Ferguson. Wliat is it? 

Mr. Buck. In this country, as distinguished from Great Britain, 
whisky may be sold at any age. The only difference is in the stand- 
ard of the whisky. For instance, no whisky can be sold as straight 
whisky in this country unless it is, I think, at least 2 years, old now. 
All straiglil whisky must be 2 years old, but whisky might be any 
age and it may be a composition of whisky and neutral spirits, and 
water, and so forth. It doe=^n't all have to be straight distilled 
whisky. 

Senator King. The licensed vendor must indicate, must he not, the 
character of what he is selling? 

Mr. Buck. The regulations under the Federal Alcohol Adminis- 
tration Act require the whisky is to be labeled according to its stand- 
dard fixed by that Administration; therefore, in order to label any 
whisky "straight whisky," "straight rye," or "straight bourbon," it 
must be,' for instance, 2 years old and have contplied Avith other 
requisites of the standard. 

Senator King. You haven't answered the question. Has your or- 
ganization made such investigation so that you are able to state 
whether there is any considerable quantity of whisky or spirits sold 
by bootleggers or by. those who have private stills ; or have the stills 
and the bootleggers been pretty well eliminated ? 

Mr. Buck. Senator King, just before you came in we were on that 
point. 

Senator King. That is all right. I will read the record. 

Mr. Buck. I am perfectly willing to go over it. 

Senator ICing. I had another committee and couldn't be here. 

Mr. Buck. The statistics available to me as to the gallon basis — 
I don't know whether they are dependable — the report of the Alcohol 
Tax Unit shows that approximately something over 14,000 distil- 
leries were destroyed last year, 16,000 distilleries were destroyed last 
year. How much of that is sold, no one knows, Senator, and I don't 
know any way to find out. 



CONCENTRATION OF ECONOMIC POWER 2441 

Mr. Davis. Mr. Buck, isn't it a fact, ho^Yever, with rare exceptions 
these wildcat distilleries have very srnall productive capacity? 

Mr. Buck. That is my information, and I might say it is my 
experience. Judge. 

Representative Williams. Mr. Chairman, may I ask a question? 

The Chairman. Certainly, Congressman Williams. 

Representative Williams. Mr. Buck, I am not sure you put into 
the record what is necessary for a whisky to be bottled in bond and 
so labeled. 

Mr. Buck. I have that right here. It is a short statute. I will 
read it if the committee will prefer or I will oifer it for the record. 
It is the Bottled in Bond Act of 1897 with its amendments. 

The Chairman. Suppose you state what the act provides and then 
let it go into the record. 

Senator King. Were there not some regulations after the transfer 
from the Treasury Department to the present Alcohol Administra- 
tion promulgated Avhich changed or modified the act to which you 
are about to refer? 

Mr. Buck. Senator King, I have been counsel for this Adminis- 
tration since it was set up, and it is my opinion that we are not 
authorized to change the statute by regulation. We therefore .must 
recognize the statute. 

Senator King. My recollection is ratiier indistinct. I had some- 
thing to do with that transfer to your organization. I thought we 
gave you some authority which we repealed by implication, if it did 
not do it directly, some of the provisions of the act to which you are 
about to refer. 

Mr. Buck. I have in mind what you have in mind. It is a regu- 
lation passed some years ago, providing that we might do that. 
Yes; you are right about that. Senator, as usual. You are always 
right. 

But I know what you refer to, and you are correct. We have 
not changed the standards fixed by the statute. 

The Chairman. Now, suppose you tell the rest of us what you and 
Senator King understand. 

Mr. Buck. I always grant the Senator that. 

Mr. Davis. Did that law become effective without regard to the 
appointment of the Federal Alcohol Commission ? 

Mr. Buck. I don't quite understand you, Judge Davis. 

Mr. Davis. Did the act with which you and Senator King seem 
to be more familiar than the rest of us become effective also upon 
the appointment of the Federal Alcohol Commission, which was the 
case with respect to the general amendment to the law ? 

Mr. Buck. Judge, no. My recollection is that the amendment . 
which Senator King has reference to was attached to and part of a 
taxing act. 

The Chairman. Let me interrupt to ask you to answer Congress- 
man Williams' question, and that will present the whole matter and 
we will all understand it. 

UNITED STATES BOTTLED IN BOND ACT 

Mr. Buck. It is commonly referred to as the Bottled in Bond Act 
of the United States, "An Act to allow the bottling of distilled spirits 



2442 CONCENTRATION OF ECONOMIC POWER 

in bond (Act of March 3, 1897), as amended by Act of March 2, 1929; 
Act of June 26, 1930, and as amended by Act of Juy 9, 1937." That 
is the amendment Senator King had reference to, and provides: 

Be it enacted, etc.. That whenever any distilled spirits deposited in the in- 
ternal revenue bonded warehouse have been duly entered for withdrawal before 
or after tax payment, or for export in bond, and have been duly gauged and 
the required marks, brands, and tax-paid stamps (if required) or export staiups, 
as the case may be, have been aflBxed to the package or packages containing the 
same, the distiller or owner of said distilled spirits, if he has declared his pur- 
pose so to do in the entry for withdrawal, which entry for bottling purposes 
may be made by the owner as well as the distiller, may remove such spirits to 
a separate portion of said warehouse which shall be set apart and used exclu- 
sively for that purpose, and there, under the supervision of a United States 
storekeei)er-gauger in charge of such warehouse, may immediately draw off 
such spirits, bottle, pack, and case the same. For eoiiveuience in such process 
any number of packages of spirits of the same kind, differing only iu proof, but 
produced at the same distillery by the same distiller, 

these are the qualifications of bottled-in-bond whisky — they must be 
spirits of the same kind, 

may be mingled together in a cistern provided for that purpose, but nothing 
herein shall authorize or permit any mingling of different products or of the 
same products of different distilling seasons. 

In other words, the whisky must be distilled by the same distiller in 
the same distillery, and at the same season. 

I might say there that there are two seasons in the whisky busi- 
ness, summer and fall. That is wliat is usually referred to. 

Of the addition or subtraction of any substance or material, or the application 
of any method or process to alter or change in any way the original condition 
or character of the product except jps herein authorized; nor shall there be at 
the same time in the bottling room of any internal revenue bonded warehouse 
any spirits entered for withdrawal upon payment of the tax and any spirits 
entered for export. Every bottle, when filled, shall have aflSxed thereto and 
passing over the mouth of the same a stamp denoting the quantity of the dis- 
tilled spirits contained therein, and evidencing the bottling in bond of such 
spirits under the provisions of this section and of the regulations prescribed 
under paragraph 3. 

They are the regulations. 

Representative Williams. I see the expression is used in the statute, 
"duly aged." What is that 

Mr. Buck. Four years. 

Representative Williams, Well, all right. And what is the proof? 

Mr. Buck. One hundred proof. 

Representative Williams. It must be 100 proof and 4 years old? 

Mr. Buck. That is right, and it must all have been distilled by the 
same distillery, by the same distiller, in the same season and at all 
times kept under the supervision of thie Government. That is the 
point in the statute. That isn't all the statute, and I will ask to have 
it included in the record in its entirety. 

The Chairman. Tt is so ordered. 

(A copy of the act was marked "Exhibit No. 403" and is included 
in the appendix on p. 2681.) 

Mr. Buck. Mr. Chairman, this is as far as I had intended to 
proceed this afternoon. 

The Chairman. You were not planning, then, to call any witnesses 
this afternoon? 



CONCENTRATION OF ECONOMIC POWER 2443 

Mr. Buck. T am not. Mr. Seton Porter* is here, and T am willing 
to call him if he wishes to be called. I would prefer to call him in 
the morning, however. He told me if he could get away by noon 
tomorrow it would be satisfactory, and I can get through with him 
by noon. 

The Chairman. If that is satisfactory between you and Mr. Porter, 
it is satisfactory to the committee. It is now 20 minutes to 5, and 
you have completed all you have to say this afternoon? 

Mr. Buck. Yes, sir. 

The Chairman. Are there any questions to be propounded to Mr. 
Buck by any member of the committee ? . If not, the committee will 
stand in recess until 10: 15 tomorrow morning. 

("Whereupon, at 4:40 p. m., a recess was taken until Wednesday, 
March 15, 1939, at 10: 15 a. m.) 

^ President, National Distillers Products Corporation, see testimony, infra, p. 2450 
et seq. 



INVESTIGATION OF CONCENTRATION OF ECONOMIC POWER 



wednesday, march 15, 1939 

United States Senate, 
Temporary National Economic Committee, 

Washington, />. G. 

The committee met at 10:40 a. m., pursuant to adjournment on 
Tuesday, March 14, 1939, in the Caucas Room, Senate Office Build- 
ing, Senator Joseph C. O'Mahoney presiding. 

Present: Senators O'Mahoney (chairman) and King; Representa- 
tives Reece and Williams; Messrs. Henderson; Davis; Ferguson; 
Arnold; Berge; O'Connell; Patterson; Lubin; Thomas C. Blaisdell, 
Jr., representing Securities and Exchange Commission; and Ernest 
Tupper, representing Department of Commerce. 

Present also : Senator Pat McCarran, Nevada ; Federal Trade Com- 
missioners William A. Ayres and Charles H. March; Willis J. Bal- 
linger. Director of Studies ai>d Economic Adviser to Federal Trade 
Commission; Phillip E. Buck, Chief Counsel, and John P. Brown, 
attorney. Federal Alcohol Administration, 

The Chairman. Will the committee please come to order? I tliink 
there are enough of us around to begin the hearings. Mr. Ballin^r, 
are you ready to proceed? 

Mr. Ballinger. Yes, sir. Mr. Buck will continue the presentation 
of the Federal Trade Commission. 

The Chairman. Mr.. Buck, are you prepared? 

Mr. Buck. Mr. Chairman, when the committee recessed yesterday 
I think we had "Exhibit No. 402" on the board. This, of course, illus- 
trates the percentages held by first two companies, for the years '34, 
'35, and '36, in 4-year-old whisky and over. The last two columns 
illustrate the percentages held by four companies in all whiglfy stocks 
4 years old and over, and as I said yesterday, I think this chart is 
important as we proceed in the discussion of prices. I think perhaps 
the chart might be significant there. 

Some question arose yesterday as to the volume of imports. We 
have another chart entitled "Total Whisky Imported Into United 
States, 1934-38" 

Senator King (interposing). Mr. Buck, is it the contention of your 
organization that there is a monopoly in the whisky business, that 
prices have been fixed, that the laws, the Federal Trade Commission 
Acts and the monopoly laws, have been violated, or are you just try- 
ing to present the facts as to the condition for the committee to draw 
its own conclusion from the facts that may be presented ? 

Mr. Buck. Senator King, yesterday I made the statement that 

I am not making an effort to prove a case of any sort. 

2445 
124491— 39— pt. C 3 



2446 CONCENTRATION OF ECONOMIC POWER 

Senator King. Yon are jnst presenting the facts, then? 

Mr. Buck. Just presenting the facts of the industry. What they 
will show; that, I think, is the committee's judgment. 

Mr. Ballinger. Senator, may I say that in our prograrn here we 
selected certain industries which we believe exhibit monopolistic prac- 
tices, and after looking this study over we thought it exhibited 
monopolistic practices. 

Senator King. May I say unfortunately some of us have other 
committees. I have three this morning and it will be impossible for 
me to be here during the entire hearing as it v.-as yesterday impos- 
sible for me to bo present, but I will read the record. 

Ihe Chairman. I think, in view of the question asked by Senator 
King and the answers, particularly that of Mr. Ballinger, it may be 
proper to point out again that no conclusions can be voiced with 
resjioct to this committee except by the committee itself. 

Mr. Ballinger. That's my understanding. 

The Chairman. This is not, in other words, a grand jury investi- 
gatii^n with a prosecuting agency presenting evidence to secure an 
indictment. That, of course, is the farthest thing from our 
thoughts 

Mr. Buck. Yesterday avc noticed some decline in withdrawals of 
whisky which we use in tliis study to indicate consumptron; that is, 
withdrawals of domestic whisk}-, and some thought was expressed 
b^' m5^self, I believe, tliat maybe imports had increased and thereby 
causinj^ thfe decline in the consumption of domestic whisky. 

Total whisky imported into the united states 

Mr. Buck. This chart shows total import of whisky in proof gal- 
lolls from 1934 to 1938. 

(The chart referred to was marked "Exhibit No. 404" and is in- 
cluded in the appendix on p. 2684.) 

Mr. Buck. It began in '34 with five-million-six-hundred-and-some- 
odd thousand; '35 was five-million-eight-hundred-odd thousand; '36, 
13,375.39>y gallons, but observe that that is a considerable increase in 1 
year. The following year imports had reached the peak, according 
to our figures of 14.348.000 jiallons, and in '38 this began to decline 
and dropped to 10.320.000. The chart also 

The Chairman (interposing). Do you happen to know, Mr. Buck, 
whether the reciprocal trade agreenient with Great Britain contains 
any provision that would be li^iely to affect the importations of liquor 
from Groat Britain? 

]\Ir. Buck. It is my recollection, Senator, that under the trade 
agreement with Groat Britain and Canada the tariff on 4-year-old 
whisky is reduced to $2.50 as against $5 contained in the original 
tariff act. I think that is correct. 

The Chairman. On what age? 

Mr. Buck. Four-year-old whisky, whisky 4 years old and older. 

The Chairman. I understand that in 1938 there was apparently a 
substantial falling off of the importation of Canadian whisky. 

]\Ir. Buck. I will give you my opinion of that. I think it is sub- 
stantiated by the conditions in the industry. In the beginning, such 
companies as Seagram — Seagram is priir^arily, I say, a Canadian com- 



CONCENTRATION OF ECONOMIC POWER 2447 

pany, and Hiram Walker has definite Canadian connections, though I 
don't know whether they consider themselves a Canadian company 
or an American company 

The Chairman (iilterposing) . Do you happen to know where they 
are incorporated? 

Mr. Buck. Well, there are so many corporations, the parent com- 
panies, I think, are all incorporated in Canada. 

The Chairman. Of Seagram and Walker? 

Mr. Buck. And Walker. You see, when repeal came in 1933 there 
was a considerable lack of aged whiskies in the United States. These 
two companies undoubtedly had storehouses of whisky in Canada, 
and they imported considerable stock to this country for the purpose 
of making blends, you see, using the old Canadian whiskies, whiskies, 
that they owned themselves, and mixing them with neutral spirits 
or ethyl alcohol in making what is known as a blended whisky. 

The drop in 1938 may be due to the fact that during the 4 years 
those two companies, which are among the largest, have laid up 
stocks in the United States and no longer import their Canadian 
stocks for that commercial purpose. 

Senator King. Mr. Buck, is this a correct statement of the present 
tariff law with respect to liquor, that first paragraph, as well as the 
second? Please read it.^ 

Mr. Buck (reading) : 

The duty rates on imported whisky from about 1926 to the present time have 
been $5 a tax gallon. From this«> should be subtracted $2.50 a tax gallon for 
whisky stored at least 4 years in wooden containers and entered for consump- 
tion or withdrawal from consunjption on and after January 1, 1936. 

Senator King. Read the ftext paragraph. 

Mr. Buck. That is not all the second one. Do you want me to 
complete the second? 
Senator Kjng. Yes. 
Mr. Buck (continuing reading) : 

The effective date of the Canadian trade agreement under the most-favored- 
nation principle applied to whisky from all countries with the following excep- 
tions: (1) Germany, including Austria and part of Czechoslovakia when re- 
cently incorporated into Germany, and (2) Australia, for the period from 
August 1, 1936, to February 1, 1938. To these duties should, of course, be 
added the excise tax, the rates being $1.10 a tax gallon in 1933, $2 a tax gallon 
in 1934, through the first 6 months of 1938, and $2.25 a tax gallon for July 1, 
1938. 

Senator Iving. Then the excise tax plus the tariff on bonded whisky, 
4 years and over, would be approximately $5. 

Mr. Buck. It is a little in excess of that, and I have those figures 
to come along later, Senator. 

Senator King. What you have read is a correct statement, is it not ? 

Mr. Buck. That is my opinion. 

Dr. LuBiN. Mr. Buck, may I ask this question. I was very much in- 
terested in this chart on total whisky imported,- and if you tie that up 
with the chart you showed us yesterday on total domestic production 
or withdrawals, one gets a pretty good picture of the consumption of 
the country. Yesterday you made certain comments relative to the 

» Senator King handed Mr. Buck a schedule prepared by Federal Alcohol Administration 
from internal revenue laws. 

2 "Exhibit No. 404," appendix, p. 2684. 



2448 CONCENTRATION OF ECONOMIC POWER 

decline in consumption, at least on a per capita basis. Do the figures 
you thus far have submitted include alcohol which has been blended 
with whisky so we get the total gallonage of consumption? 

Mr. Buck. Let me see, you mean do the figures in this present 
chart include neutral spirits? 

Dr. LuBiN. No ; this plus the figures yesterday ^ would give us some 
idea as to consumption in the country as a whole, in other words, 
domestic plus imported. Do the domestic figures also include such 
alcohol which is added in blending liquor, so that the total gallonage 
would represent not only the straight whisky, as it were, but all liquor 
consumed, including alcohol? 

Mr. Buck. I think not, because the charts we used yesterday were 
based upon the production of whisky, and the storage and with- 
drawal of whisky as such. This chart is also based upon whisky. 
I see your point and it is a very interesting one. I may illustrate 
it in this manner. Take the 10,000,000 gallons imported in '38. If 
all of that had been used for blends, that is, say, a blend consisting 
of 25 percent whisky and 75 percent alcohol — that is known as recti- 
fying under our system — you would then have approximately 40,000,- 

000 gallons to the consumer. I see your point, and these figures, as 

1 understand them, are based upon whisky. 

Mr. Davis. In other words, the imported whiskies we are talking 
about have not been blended prior to their importation into the United 
States. 

Mr. Buck. Jud^e, you have it both ways. If the whisky is im- 
ported in bottles, it has been blended. If the whisky is imported in 
bulk, it is usually imported for the purpose of blending in the United 
States, or it may be. 

And it may be imported in bulk, of course, for bottling in this 
country, but once it gets into the hands of the rectifier it may be 
mixed into blends or sold as straight whisky, or all whisky, you see. 
But, for instance, if you import a blended whisky from Canada, to 
get to the point, the blend may be 25 percent whisky and 75 percent 
alcohol in Canada, but once it is bottled it is imported as whisky. 
Do you see? Therefore, if it is imported in bottles, it is usually 
whisky. 

Mr. Davis. But if it is imported in barrels, it is imported in the 
original barrels? 

Mr. Buck. That is my understanding ; yes, sir. 

Tlie Chairman. Proceed. 

Mr. Buck. This chart, again,- of course, is broken down into classi- 
fications of vrhisky. The Canadian whisky is shown by the black 
sections, and the percentages are stated. In 1934, 56 percent of all 
imports were Canadian ; in '35, 54 percent ; in '36, 55 percent ; in '37, 
62 percent. You see in '38 it dropped down to 35 percent. I would 
say it indicates the two companies using American stocks instead of 
their Canadian stocks, Senator O'lNIahoney, as we discussed. 

United Kingdom whiskys are indicated, and that is principally 
Scotch ^'liisky. Now Scotch whisky is a blended whisky also. It 
is a^ ..xiisky -'nir is made from a certain percent of highly flavored 
or una -acter: 3t c mdt mixed with what they call plain British spir- 
its. Ti ere if f ome v ontention among the experts in the industry as 

iSee Exliibit I o. 398," a jpendix, p. 2677. 
» "Ej libit No. -1 J4." appen ix, p. 2684. 



CONCENTRATION OF ECONOMIC POWER 2449^ 

to what is the difference between what is known under the British 
law as plain British spirits and under our law as ethyl alcohol. The 
Scotch Avhisky is usually a blend of heavy Scotch malt whisky with 
plain British spirits. 

The peculiarity about those factors is this: Under the British sys- 
tem in the making of Scotch whisky they age plain British spirits 
before it is mixed with the Scotch whisky in order to get a blended 
whisky. In the United States, we don't look upon the aging of 
neutral spirits as being of any advantage. 

The Chairman. When you say "we," whom do you mean? 

Mr. Buck. This country, the industry. 

The Ch.virman. Do you mean the distillers or the consumers? 

Mr. Buck. The distillers, the experts. 

The Chairman. Well, is there any substantial difference, aside 
from this factor of aging, between domestically manufactured whisky 
and this imported Scotch ? 

Mr. Buck. There is a difference in the characteristic of the whisky. 
They taste different. One has a heavy, smoky flavor which comes 
from the grain having been dried over peat fires before it is dis- 
tilled. That is how you get the Scotch flavor. It is a smoky flavor; 
it is about the only way you can describe it. It is true, it is charac- 
teristic, because it actually comes from having been smoked. 

The Chairman. That is not simulated in the domestically manu- 
factured product? 

Mr. Buck. You mean in the alcohol that is mixed with it? 

The Chairman. Perhaps I should ask, first, is there a product 
manufactured in the United States which is called Scotch whisky? 

Mr. Buck. No, Senator. The regulations of the Alcohol Admin- 
istration provide that they may make what is known as a Scotch-type 
whisky, not a Scotch whisky, but a Scotch-type whisky, in the United 
States. The Scotch-type whisky made in the United States is a mix- 
ture of a certain percent of Scotch malt whisky, imported, with 
ethyl alcohol, in this country, you see. The reason, one reason, why 
it can't be called Scotch whisky is because the regulations require all 
Scotch whisky to be made ir Scotland. 

The Chairman. Perhaps I am causing you to devote too much 
attention to the inherent characteristics of whisky. There naturally 
is a division of opinior jn that, and lots of people express the opin- 
ion that all whisky is bad and others express the opinion that all 
whisky is good, so we won't go into that. 

Mr. Buck. That's right. I don't have any opinion on it. 

You will notice "other whiskies," a very small percent running 
through the chart classified as "other whiskies," 6 percent in 1934, 
4 percent in 1935, and the percentage is so small in the other years I 
can't see them from here. That, I believe, consists principally of 
Irish whiskies. There again you have a definite line of demarcation 
in whiskies. There is a certain similarity between Irish whisky and 
Scotch whisky, yet there is a very definite line of demarcation 
between the two. 

The Chairman. Inasmuch as your charts yesterday ^ indicated that 
there is a substantial domestic overproduction, what, in your opinion, 

^Soe "Exhibits Nos. 394, 395, 306. 397, 398, 399, 400, 401, and 402, appendix pp. 
2075 to 2681: 



2450 CONCENTRATION OF ECONOMIC POWER 

is the reason for the importation? Is it based upon a normal and 
natural demand for a foreign product 'i 

Mr. Buck. Senator, my opinion is that it is based upon an acquired 
taste by the consumer, to a large extent; and, too, the foreign 
whiskies, especially the Scotch whiskies, are old, you see. Some of 
our people are very age conscious about whisky. They like a whisky 
8 or 10 years old. 

Now you can't get that in this country as a general rule. You can, 
of course, get some, but here they can get what is known as 8- and 10- 
year-old wJiisky at about the same price that you get bottled-in-bond 
whisky for, and another factor involved in it, I think, is the price 
. relationship between the imported Scotch whisky and the highest 
domestic whisky, the bottled-in-bond. 

I don't know what the answer would be to that situation if bottled- 
in-bond whisky was cheaper than Scotch, any appreciable amount 
cheaper. 

There is, I might say — in this miscellaneous percentage of whisky — 
there might be a little whisky from other countries but none of any 
consequence. 

Yesterday I made reference to certain material that might aid 
anyone who may read this record. I forgot to include two refer- 
ences, one was to^the report on the whisky-trust investigation of the 
Fifty-second Congress, second session, which I now make for the 
record. It may be found in House Report No. 2601, of March 1, 
1893. The other is the report made by the Industrial Commission, 
to be found in volume 1, pag^s 74 to 93, of that Commission's' reports 
of 1900. It was entitled 'The Whisky Combination." I just make 
these references. I don't think it is necessary to include the reports 
in the record, but anyone who may be interested in exploring the 
subject will have the references. 

I believe that is about all. 

(The reports referred to were marked "Exhibits Nos. 405 and 
406," respectively, and are on file with the committee.) 

The Chairman. Are you ready to proceed with the witnesses? 

Mr, Buck. Yes, sir. 

The Chairman. Call your first witness. 

Mr. Buck. Mr. Seton Porter. 

The Chairman. Do you solemnly swear to tell the truth, the whole 
truth, and nothing but the truth, in these proceedings, so help;, you 
God? 

Mr. Porter. I do. 

TESTIMONY OF SETON PORTER, PRESIDENT, NATIONAL DISTILLERS 
PRODUCTS CORPORATION, NEW YORK CITY 

Mr. Buck. Will you state your name, please, and your address? 
Mr. Porter. Seton Porter, 120 Broadway. 
The Chairman. New York? 
Mr. Porter. New York. 

Mr. Buck. What is your business, Mr. Porter? I will ask you: 
Are you connected with the National Distillers Products Corporation? 
Mr. Porter. I am the president. , 

Mr. BpcK. Presifieut of tlie National Distillers Products? 



CONCENTKATTON OF ECONOMIC POWER 2451 

Mr. Porter. Yes. 

^Ir. Buck. Have you been connected with the corporation since its 
organization? 

^Ir. Porter. Yes. 

]Mr. Buck. Do you know the history of the corporation very well? 

Mr. Porter. Yes. 

Mr. Buck. I wonder if you could and would give the committee 
the history of the corporation and its organization and what might be 
termed "its evolution," on through. 

Mr. Porter. It is quite a long story. 

Mr. Buck. Well, we'll listen. 

The Chairm.xn. 'When was it chartered? 

Mr. Porter. In 192-1. 

The Chairman. In what State? 

HISTORY AND ORGANIZATION OF NATIONAL DISTILLERS PRODUCTS 

CORPORATION 

Mr. Porter. Virginia. The history, briefly, would be about as 
follows: At the time of the enactment of prohibition the largest unit 
in the whislcy business, having sold practically all the whisky it had, 
had a considerable sum of money arid entered the food business, the 
yeast business, the industrial-alcohol business. I am speaking now 
from the history, not from my own knowledge. They apparently had 
experience almost solely in the whisky business; the result of that was 
that that company went into bankruptcy. There were two classes of 
creditors; there were bonds held by the public, there were loans held 
by banks. There was a receivership in Kentucky, a bankruptcy in 
New York. The two sets of creditors got in a dispute. I was an 
engineer, a partner of an engineering firm, and we were called in to 
make an examination of what properties there were. As I recall it, 
Mr. George Rublee was the trustee in bankruptcy in New York orig- 
inally, and I Was ultimately asked to succeed him, and a reorganiza- 
tion was worked out during, I should say, 1922 and 1923, and in 1924 
such assets as were left were put into a new company known as the 
National Distillers Products Corporation, and I became pl*esident of 
that company, which had all the remaining assets of the previous 
bankrupt company. We continued the operation. 

The Chairman. What was the name of the previous company? 

Mr. Porter. The previous company was the United States Food 
Products Corporation. That, in turn, had been a successor corpora- 
tion to the Distilling Co. of America, and other companies which had 
been engaged in the whisky business prior to 1914. 

The Chairman. When the Distilling Co. of America ceased to 
produce liquor as the result of prohibition 

Mr. Porter. The name was changed to the United States Food 
Products Corporation. 

The Chairman. Where was the distilling company chartered, in 
what State? 

Mr. Porter, I couldn't say that. 

The Chairman. How about the food company? 

Mr. Porter. I couldn't tell you that ; it is 15 or 17 years ago. 

Mr. Buck. This organization, is that what was commonly called 
the old Wliisky Trust, or something of that sort? 



2452 CONCENTRATION OF ECONOMIC POWER 

Mr. Porter. That, I believe, was started in 1890 and was first 
called the Distilling Cattle Feeders Co., or something of that kind. 

Mr. Buck. That was involved in the investigation that I have re- 
ferred to here this morning ? 

Mr. Porter. I assume so. 

During prohibition this company owned a considerable number 
of small and inactive distilleries, and it had a considerable stock of 
whiskies. It was a very small stock, measured in present-day figures, 
and that whisky was sold for medicinal purposes, which was the only 
way the law permitted it to be sold. And of course when re])eal 
came, that company naturally possessed what was a considerable part 
of all the old whiskies in America, and whereas one of the charts 
that I think was shown you yesterday showed 65 percent of all the 
whisky over 4 years old being owned by this particular company that 
I speak of, at the time of repeal it had, I think, about 65 percent of 
all the old whisky in America. And then another company was 
added to it, and another, and another. I am speaking of the charts. 
There were four companies apparently, on these charts that have over 
60 percent of the 4-year-old whisky. 

Is that a sufficient answer? <• 

Mr. Buck. No ; it isn't what I have in mind. 

Mr. Porter. I am sorry ; I didn't want to go into too much detail. 
I could tell you a very long story of it. 

Mr. Buck. What was the size of National Distillers Products Cor- 
poration in 1933, at ther time of repeal ? 

Mr. Porter. Wliat do you mean by size? 

Mr. Buck. What Were the assets, in round numbers, if you know. 

Mrl' Porter. We filed all this with you, sir. I haven't it with me. 

Mr. Buck. How many subsidiaries do you have? 

Mr. Porter. We had a great many in '33, 1 imaoine. 

Mr. Buck. I will run over these with you, Mr. Porter, if you 
don't object. The Crown Fruit & Extract Co., Inc., New York; is 
that a subsidiary of National Distillers, or was it in 1933-34 ? 

Mr. Porter. Yes. 

Mr. Buck. Alex D. Shaw & Co., New York, importers. 

Mr. Porter. Yes. 

Mr. Buck. How was Al,ex Shaw acquired by National ? 

Mr. Porter. That was acquired prior to repeal, to handle our 
imports. 

The Chairman. Mr. Buck, may I interrupt? Is the National Dis- 
tillers Products Co. an operating company? 

Mr. Porter. It is today, sir. 

The Chairman. Was it when it was organized? 

Mr. Porter. No; it was not. It was a holding company when it 
was organized, and was not engaged in any direct operations. It 
owned this company that you just speak of, the Crown Fruit, and 
the Shufeld Co. Those are two small companies engaged in the 
importation of olives and the packing of cherries, and the way that 
_came__aboutwas that in the failure of the old company, in the old 
days, theyTia^^ar^mall company that produced all those odds and 
ends. 

The Chairman. What was its capitalization? 

Mr. Pqrter. About $100,000. 



CONCENTRATION OP ECONOMIC POWER 2453 

The Chairman. What sort of stock ? 

Mr. PoRTEK. Just ordinary shares, of which National Distillers 
owned all, always. 

The Chairman. I was referring to the National Distillers. What 
was the capitalization of National Distillers? 

Mr. Porter. Today it is 2,000,000 shares, and originally it was 
167,000. 

The Chairman. One hundred and sixty-seven thousand shares of 
what kind? 

Mr. Porter. Ordinary shares, common stock. 

The Chairman. Par value or no-par value? 

Mr. Porter. I think no-par value, I am not sure. 

The Chairman. And how was that owned? 

Mr. Porter. After the receivership which I spoke of, in order to 
form that company, in the first place, preferred shares were issued to 
the creditors, those that owned bonds and the bank creditors, and they 
received 11,500,000 of 6-percent cumulative preferred stock. There 
was no working capital, and for working capital there was sold about 
3,000,000 or 3,500,000 of debentures. To make those attractive and to 
make it possible to sell them, they were sold with common shares, so 
that when the corporation was started in 1924 it had about ^3,500,000 
of debentures, about 11,000,000 of 6-percent cumulative preferred ' 
stock. 

The Chairman. These figures indrcate dollars? 

Mr. Porter. Dollars, and 167,000 shares of common stock, which 
was mostly sold in the debentures. That was the original capitali- 
zation. 

The Chairman. What was the value of the common stock ? 

Mr, Porter. The common stock at that time represented, of course, 
a great deal of past goodwill and hopes and expectations, but it had 
very little value at that time. It sold for, I imagine, seven or eight " 
dollars a share ; I don't remember exactly. 

The Chairman. Did you say whether or not it was par- value stock ? 

Mr. Porter. I think it was no-par value originally. It is no-par 
value today. 

The Chairman. The actual financing of the corporation, then, was 
by means of the preferred stock which was issued in exchange for 
assets, and the debentures which were issued in exchange for cash; 
is that correct ? 

Mr. Porter. Preferred stock was issued to pay creditors, and the 
only cash came from the sale of common shares and debentures, which 
was about $3,000,000. 

The Chairman, By "creditors" I assume you mean those who were 
selling the physical assets of the corporation. 

Mr. Porter. No ; they were people who had lent the money or who 
had bought bonds — bondholders and bank creditors. 

The Chairman. How about the physical assets, how were they 
acquired? 

Mr. Porter. They were part of the bankrupt estate. 

Mr. Buck. And at what period was that ? 

Mr. Porter. That was consummated in 1924. 

Mr. BucK>* As I understand it, you are an engineer by profession. 

Mr. J?oRTER. Yes, sir. 



24-54 (JONCEM'KA'l ION OK i:i,H).\o311C J'OWKU 

Mr. Buck. You had been an engineer prior to that time? 
Mr. Porter. Yes, sir. 

Mr. Buck. And you had never had any connection with the whisky 
business until after tlie adoption of the twenty-first amendment. 

Mr. Porter. Except that this company was engaged in the medici- 
nal-whisky business durmg the i^eriod of prohibition. 

Mr. Buck. When did you firsc become associated with the %vliisky 
business ? 

Mr. Porter. At this time, in 1924. 

Mr. Buck. Was it a major part of your activity, or just a side line? 
Mr. Porter, No ; it takes a major part of my time. 
Mr. Buck. You also had an engineering corporation that j^ou 
operated throughout the country? 
Mr. Porter. Yes. 

Mr. Buck. Did you have any other questions? 

The Chairman. No; I don't want to interrupt your line of inquiry. 
Mr. Buck. 1 am just trying to get the thing set with one date. 
Now, Alex D. Shaw & Co. — who are they, aiid what are they? 
Mr. Porter. Alex D. Shaw was a company that had for many years 
been engaged — that is, prior to prohibition — in the importation of 
foreign spirits and wines; and so that we might have an importing 
branch to our business, we acquired control of wliat had been for many 
years an inactive business. 
Mr. Buck. When was that? 
Mr. Porter. Prior to repeal ; in 1933, 1 suppose. 
Mr. Buck. Just a few months before repeal? 
Mr. Porter. Six or seven months, perhaps. 

Mr. Buck. You acquired it under the anticipation of repeal of the 
eighteenth amendment ? 
Mr. Porter. Yes. 

Mr. Buck. And Alex Shaw is an old-established importing firm in 
~^ ;:, has been there for many years; is that correct? 
^ Mr. i^ORTER. That is right. 

Mr. Buck. And just before repeal National acquired a control in 
Alex Shaw ; is that so? 
J^Ir, Porter. Yes. 

Mr. Buck. What is the status of the Alex Shaw- Co. now with 
National? 

Mr. Porter. We own it. 
Mr. Buck. You own it whojly now? 
Mr. Portlr. Own it wholly; yes. 

Mr. Buck. You now own lUO-percent control of Alex Shaw? 
Mr. Porter. That is right. 

Mr. Buck. Was John de Kuyper & Son, Inc., a subsidiary of Na- 
tional at one time ? 
Mr. Porter. Yes. 

Mr. Buck. What is the business of John de Kuyper & Son? 
Mr. Porter. Well, the firm of Jobs de Kuyper & Z)on, of Rotter- 
dam, have been engaged for many, many years in the manufacture of 
cordials in Holland, which tKey sell all over the world, and we and 
:hey conceived the idea that they should be manufactured in America 
to ser\'fe this market, and we formed a small company, in partnership 
with them, whereby, using their formula and skill and knowledge, 



CONCENTRATION OP ECONOMIC PO\yER 2455 

under the supervision of their experts, the cordials are made in this 
country. That company has, I think, a capitalization of about $100,- 
000. Wp own 70 percent of the stocks, and our Holland partners own 
30 percent. 

Mr. Buck. In other words, that is a subsidiary organized by Na- 
tional with this Holland concern after repeal for the purpose of 
making certain specialties in the. business ? 

Mr. Porter. That is correct. 

Mr. Buck. And you own about what — 60 percent of that? 

Mr. Porter. Seventy percent. 

Mr. Buck. National Pure Spirits Corporation: When did you 
acquire that? 

Mr. Porter. How is that? National what? 

Mr. Buck. National Pure Spirits, a Delaware corporation organ- 
ized in 1934. 

Mr Porter. I don't know, sir. 

Mr. Buck. You don't know? It is apparently an experimenting 
company for aging of whisky, or something of that sort? Maybe 
you have forgotten about it. 

Mr. Porter. T don't think that is an active company. 

Mr. Buck. You think not? 

Mr. Porter. No; I am sure not. 

Mr. Buck. Medicinal Holding Corporation: Wliaf is that? 

Mr. Porter. Oh, I think tl^at was a company that must have been 
formed in the process of dissolving many of these companies. Yiou 
see, if I may explain : At the time of repeal, or shortly thereafter, 
National was a holding company, as I previously stated, owning 
a number of subsidiary operating companies, not itself engaged 
directly in doing business. Then, as you know, the laws were very 
much changed, and in step with the change in laws we made Na- 
tional a direct operating company, dissolving as rapidly as we could 
all the subsidiary companies that the law permitted us to dissolve. 
We have to have some to comply with different state laws. 

Mr. Buck. Yes ; but I am asking you about a period when these 
things were being acquired. Now you are talking about a period 
when you are divesting. 

Mr Porter. That company may have been formed in a period of 
acquisition, I am not sure. 

The Chairman. May I suggest that you ask the witness to give 
us the list of subsidiaries at the time the company was organized 
in 1924 and then the list of subsidiaries now so that we can make 
the comparison. 

Mr. Buck. Do you have such a list, Mr. Porter, of the subsidiaries 
of vour corpora<^ion as it existed in 1934? 

Mr. Porter. In 1934? 

The Chairman. No; in 1924 when it was organized. 

Mr. Porter. I havan't it here. 

The Chairman. You see, the suggestion which one draws from 
these questions and from your testimony is that because of changed 
conditions the character of the corporation was changed. You 
acquired apparently some subsidiaries at the time of organization 
and then you divested yourself later on. I think the committee 
would like to know just what the status of the subsidiary organizf^- . 



2456 CONCENTRATION OF ECONOMIC POWER 

tion was when you were organized, at the time that repeal took 
effect, then in 1933, and then at the present time. 

Mr. Porter. I think I can answer that in a general way. I can- 
not answer about each specific company. In 1924, Mr. Chairman, 
these properties which National Distillers acquired were primarily 
as follows: Shufeld Co., engaged in packing cherries and olives, 
which we still own today; a company called the Kentucky Alcohol 
Co., which was engaged in the business of industrial alcohol. We 
were in prohibition, so it couldn't be sold for beverage purposes. 
A yeast company called the Liberty Yeast Co., and a whisky com- 
pany called the Kentucky Distilleries & Warehouse Co. 

As I have said, the parent company had just enough cash to start 
its operations and my task was to try to develop some of those busi- 
nesses that had been inherited from the bankrupt estate. 

The Chairjvian. But at that time when you speak of operations 
you were not referring to the actual production of products? 

Mr. PoRTiiR. Yes, sir; we were making yeast; we were making 
alcohol, and we were owners and holders and sellers of whisky as 
far as the law permitted. 

The Chairman. Were you doing that through the subsidiaries or 
the parent company ? 

Mr. Porter. Through the subsidiary companies. 

The Chairman. That is what I mean. The parent company was 
not an operating company. 

Mr. Porter. It was a holding company entirely. 

The Chairman. It managed the other companies ? 

Mr. Porter. It managed the other companies, owned all their 
securities. 

The Chairman. It was then a financial agent for the other 
companies. 

Mr. Porter. Thatds correct. 

The Chairman. And its principal function was to secure capital 
for them, and I suppose if necessary to direct the sales policy of the 
subsidiaries. 

Mr. Porter. That is correct. 

The Chairman. Anyching else? 

Mr. Porter. No. 

The Chairman. Did the parent company direct the essential manu- 
facturing policy of the subsidiaries? 

Mr. Porter. Well, in reality it was practically^ all one. I was the 
head of all those companies, so I was responsible for all the op- 
erations. 

The Chairman. Are you an expert distiller? 

Mr. Porter. No ; I am not an expert distiller. 

The Chairman. I assume that the distilling, the actual distilling, 
was probably done b> experts in the subsidiaries. My question was to 
elicit information as to whether or not the parent company exercised 
any policy control over the actual production by the subsidiaries, or 
was that largely left to those companies. 

Mr. Porter. It was really one organization, although for cor- 
porate purposes it was a holding company. We directed the policies 
of the subsidiary companies. 



CONCENTRATION OF ECONOMIC POWER 2457 

The Chairman. Then proceed with the development. 

Mr. Porter. Those were the principal companies in 1925, sir. The 
yeast business w^as develoyed and it was sold to the Fleischmann 
Co., and the cash that we got out of that was used in part to pay off 
some of our debts and to add to our working capital. In about 1928 
or the beginning of 1929 we were rather fortunate in selling our 
alcohol business and received about 16 — I think exactly I6I/2 millions 
in cash for it, and with that cash we were able to call 11 million of 
preferred stock that had been given to the creditors at the time of 
the reorganization. That wiped that debt out and gave us some 
additional cash. We then had nothing left in the company except this 
cherry and olive business, except the whisky business. Medicinal 
whisky was not sold in very large amounts, but it was a reasonably 
profitable business and we had more or less been forced into it, and 
we had then some additional working capital and for the first time 
were free of debt, and we started then in 1929. I was rather opti- 
mistic about it. 

The Chairman. What, was the year in which you were first free of 
debt? 

Mr. Porter. About '29. And we acquired additional whisky prop- 
erties and additional whisky which was used for medicinal purposes, 
so that when some years later repeal came the National Distillers 
found itself the owner of some 60 percent perhaps of the whisky that 
still remained in America, which was a very small quantity of whisky, 
but still a very large proportion of what was left. 

We were then confronted with the opportunity, perhaps also the 
responsibility, if repeal fcanie, to try to develop as rapidly as we could 
a whisky busir^ess. Having, as I say, a considerable part of the exist- 
ing stocks an(J owning a number of old properties which of course 
hadn't been operated, we set to work to get as many of them in op- 
eration as rapidly as possibly. 

The Chairman. When did you acquire those old properties? 

Mr. Porter. We owned most of them. 

The Chairman. That combination of the old properties, then, was 
the result of operations which took place 

Mr. Porter (interposing). During prohibition? 

The Chairman. During prohibition. 

Mr. Porter. That is-correct. We acquired some additional prop- 
erties, but the bulk of what we had was owned all the time. 

The Chairman. That is part of the story, Mr. Porter. I was ask- 
ing you to detail- 



[r. Porter. Up to date. 
,.' The Chairman. Up to date. Did you acquire any other operating 
companies after '29? 

Mr. Porter. Yes; we acquired the Overholt and Large properties. 
The Overholt is p, very old distillery in Pennsylvania, and a large dis- 
tillery. 

The Chairman. When did you acquire that? 

Mr. Porter. That, I think, was just prior to repeal; at the time 
when repeal was well anticipated to be nearby. We acquired that 
with the purchase of shares; in other words, we gave shares of our 
company in exchange for these physical properties that we bought 



2458 CONCENTRATION OF ECONOMIC POWER 

The Chairman. On what basis? 

Mr. Porter. Mr. Buck has all the details. I would say that we 
issued, I don't remember the exact number of shares, but it was in 
excess of 100,000 shares, for these physical properties of the Over- 
holt and Large Distillery Cos. 

The Chairman. Any bonds? 

Mr. Porter. No. 

The Chairman. No preferred stock ? * 

Mr. Porter. No. There was some small paymeftit in addition to 
the shares, but the shares were the major part. 

Mr. Davis. Mr. Porter, as far as these various distillery properties, 
was it the general custom to give them National t)istillers stock in 
exchange for the properties or in exchange for their stock, as you 
did in the Overholt case? ' ) 

Mi". Porter. In exchange for the j/roperties, I think, sir. 

Mr. Davis. In other words, you generally « gave them stock in the 
National Distillers rather than payment in cash, did you, as you 
did in the Overholt case? 

Mr. Porter. Well, we did that in the Olerholt case. That was, 
I think, the only large distiller}^ that we bought. 

Mr. Davis. You said you bought up quitCj a number after you had 
made this sale of your industrial-alcohol business in 1929. 

Mr. Porter. I perhaps gave you the wrorlg impression. It wasn't 
so much distilleries as perhaps it was whis%, because there were no 
distilleries. 

Mr. Davis. In other words, whisky in bond. 

Mr. Porter. Yes. There were no distilleries in operation during 
prohibition. 

Mr. Da\t[s. I know, but you referred to them as old properties. 

Mr. Porter. Yes. 

Mr. Davis. I suppose you meant the old distillery plants. 

Mr. Porter. Those were bought at cash, mostly. 

Mr. Davis. Now, in buying these whiskies in bond did you gener- 
ally purchase the brand names and good will? 

Mr. Porter. The company inherited a great number of the best- 
known brand names in the country, and then Overholt and Large 
were acquired, and certain other brand names were acquired when 
we purchased whiskies, but generally speaking most of the brands 
that the company owns today were an inheritance from the long-dis- 
tant past. 

Mr. Davis. Do you mean brands that were owned by the old dis- 
tillery company? 

Mr. Porter. Yes, sir; many of them. 

Mr. Davis. Could you give us the names of your brands that you 
owned at that time when you organized in 1924 and those which you 
have acquired since? 

Mr. Porter. We have got several hundred. It would be a very 
difficult thing. We, of course, could supply them, sir. I don't know 
that I could do it here. 

Mr. D WIS. It will be sufficient if you supply a list of those for 
the record.- 



1 Mr. Porter supplied the information In a letter, dated April 6, 1939, which was 
irked "Exhibi.t No. 516" and is included in the appendix on p. 2745. 



marked 



CONCENTRATION OF ECONOMIC POAVER 2459 

Mr. Porter. I think that in Mr. Buck's questionnaire that we 
submitted t here are the names. I will give it to you anyway, sir. 

The Chairman. Is there a distinction between brands and prop- 
erties? 

Mr. PoRTi.R. Yes, yes. . 

The Chairman. So that when you buy a brand without buying 
property you buy the right to call a particular whisky by this 

Mr. PoRTFH (interposing). Trade-mark; a trade-mark. 

Mr. Buck. Not necessarily a trade-mark. All brands aren't neces- 
sarily trade-marked. 

Mr. Porter. No ; preferably so. 

The Chairman. Periuips 1 could expedite this, Mr. Porter, if I 
should ask you quickly these questions. You have spoken now of 
acquiring the Overholt Co. in about ]929. 

Mr. Porter. No ; about 1933, I should say. 

The Chairman. How about C^"own Food & Extract Co.? 

Mr. Porter. Owned from the inception. 

The Chairman. Henry H. Shufeld & Co. ? 

Mr. Porter. From its beginning. 

The Chairman. xVlex D. Shaw & Co. ? 
^Mr. Porter. From about 1933. 

The Chairman. National Distillers Corporation of New England? 

Mr. Porter. Incorporated at the time of repeal in order to comply 
with the laws of the several States so that we could do business there. 

The Chairman. A 100-percent owned subsidiary? 

Mr. Porter. One hundred percent. 

The Chairman. Shewan-Jones Co. ? 

Mr. PoRTEii. That is a company we have just acquired in Cali- 
srfornia, engaged in the brandy and wine business. 

The Chairman. That is a new acquisition? 

jMf. Porter. -Just in process of acquisition today. We felt we 
should like to have an interest in ilic domestic brandy business. 

The Chairman. The Sunny Brook Distillery Co.? 

Mr. Porter. That is an old distillery in Louisville that was ac- 
quired, 1 should say, about — from memory — I should say about 1930. 

The Chairman. The Black Gold Distillery Co. ? 

Mr. Porter. That is the name of a company that simply owns =; 
brand and has no property. 

The Chairman. The Blue Grass Distillery Co.? 

Mr. Porter. Today that is the same thing. 

The Chairman. Just a brand? 

Mr. Pc^er. Just a brand and a compan} ? 

The Chairman. The Bond & Lillard Distillery Co.? 

Mr. Porter. The same. 

The Chairman. The Cedar Brook Distillery Co.? 

Mr. PoRiER. The same. 

Th^ Chairman. The Chicken Cock Distilling Co. ? 

Mr. Pointer. The same. 

The Chairman. Crab Orchard Distillery Co. ? 

-Mr. Por.TEH. The same. 

The Chairman. Farmdale Distillery Co.? 

Mr. Porter. The same- 

The CnAiEmAN. Gwynnbrook Distillery Co. ? 



2460 CONCENTRATION OP ECONOMIC POWER 

Mr, Porter. The same. 

The Chairman. Hannis Distillery Co.? 

Mr. Porter. The same. 

The Chairman. Hermitage Distillery Co. ? 

Mr. Porter. That is a brand name company only. 

The Chairman. No property? 

Mr. Porter. No. 

The Chairman. Hill & Hill Distillery Co.? 

Mr. Porter. The same. 

The Chairman. Mellwood Distillery Co.? 

Mr. Porter. The same. 

The Chairman. Mount Vernon Distillery Co. ? 

Mr. Porter. I think that is only a brand-name company. I am 
not certain about that. The distillery is in Baltimore, and its prop- 
erty, which is a very old property and which belonged to the company 
in 1924, and as National is now a direct operating company, I think 
perhaps we are conducting that operation directly in our own name 
in Maryland, but the existence of that company would be to hold 
the brand. Of that I am not certain. ' 

The Chairman. The Old Crow Distillery Co.? 

Mr. Porter. That is a brand-name company, but there is, of course, 
a property, but I think again there it is owned by the National 
Distillers. 

The Chairman. The Old Grand Dad Distilling Co.? 

Mr. Porter. The same situation. 

The Chairman. The Old McBrayer Distillery Co.? 

Mr. Porter. The same. 

The Chairman. The Rewco Distillery Co, ? 

Mr. Porter. The same. 

The Chairman. The Spring Garden Distillery Co. ? 

Mr. Porter. The same. 

The Chairman. W. A. Gaines & Co. ? 

Mr. Porter. The same. 

The Chairman. Penn-Maryland Corporation. 

Mr. Porter. The same. 

The Chairman. Where is the whisky manufactured to which these 
various brands are given? 

Mr. Porter. Well, in dissolving the operations, if it has been 
completely done, which I think it has, of a company like the Old 
Taylor Distilling Co., National Distillers ownsUhat property and 
operates it, although I believe the permit would stand in the name 
of the Old Taylor Distilling Co. 

The Chairman. Well, you have just testified to a number of inci- 
dents in which the corporate names represent only a brand and not 
a property. Now, with respect to those, where is the whisky manu- 
factured that is sold under those particular brands ? 

Mr. Porter. Well, would you like me to tell the different distil- 
leries Ave have and what is made there? 

The Chairman. Yes; I was going to ask you about that. 

Mr, Porter, In Baltimore we own the Mount Vernon Distillery 
where Mount Vernon rye whisky is manufactured solely. At Over- 
holt, Pa., the Old Overholt whisky is made solely. At Large, Pa., 
Monongahela rye whisky is made. Those three distilleries manu- 
facture what are called eastern rye whiskies. 



CONCENTRATION OF ECONOMIC POWER 2461 

In Kentucky we have a distillery near Frankfort called the Old 
Crow Distillery, and in that distillery Old Crow and Hermitage 
whiskies are made. Two brands are made there. Nearby, about a 
mile away 

The Chairman (interposing). Were they always made there? 

Mr. Porter. Always made mere, for many, many years. Nearby, 
about a mile, is the Old Taylor Distillery, where Old Taylor whisky 
is made. In Louisville there is a distillery called the Old Grand 
Dad Distillery. 

The Chairman. In answer to my first question with respect to 
both Old Crow and Grand Dad, I understood you to say that the 
company had acquired only the brand and not any property. 

Mr. Porter. No ; I am afraid I didn't make myself clear, Senator. 

The Chairman. I may have misunderstood you. 

Mr. Porter. No; we own the brand and the whisky and the dis- 
tillery and the whole thing in all these cases. In Louisville there is 
the Grand Dad Distillery and also the Sunny Brook Distillery. 
At Grand Dad primarily Grand Dad whisky is made, but at Sunny 
Brook a great many others of these Bourbon whiskies, the names of 
which you have read, have also been made. Those are four distil- 
leries in Kentucky, three in the eastern rye district, and we have 
two' additional distilleries, one at Cincinnati where we make 
straight whiskies. We make no bottled-in-bond whiskies there, 
where we have a large blending plant and where we also make gin. 
There is another plant at Peoria where we also make lighter whis- 
kies and younger whiskies and no bottled-in-bond whiskies and 
where we make spirits. That makes nine distilleries. 

Dr. LuBiN.- Mr. Porter, what became of the various distilleries that 
you acquired when you bought these brand names ? Were they shut 
down and the production concentrated in tha remaining distilleries in 
your possession? 

Mr. Porter. No, sir; we never bought any distillery and shut it 
down. 

Dr. LuBiN. When you say you bought a brand name and when you 
bought the brand name you bought the whisky and the distillery and 
there are a whole series that were read off by the Senator, and yet 
there are only nine left. What happened to the others ? 

Mr. Porter. Perhaps I might explain a point that I think will 
throw some light on that. This whole company that I have spoken 
of that I have been the head of was formed in 1924, as the result of 
the old whisky business, and it owned, as I recall it, about 50 differ- 
ent distilleries in Kentucky alone. By distilleries I mean real dis- 
tilleries, properties, physical properties. I should think at least 60 
of them. 

Mr. Buck. That was under the old Whisky Trust? 

Mr. -Porter. Yes, sir; and that bears on this point, at least I think 
it does, in answer to your question. The Government during pro- 
hibition passed what was called a concentration act because the Gov- 
ernment is required to have revenue agents at -each plant where 
there is whisky in order to collect taxes in regard to property; and 
in order to save thp Government money the Government ordered 
what they called the concentration of whisky. Our company, for 
example^ was ordered to remove from about 40 or 50 distilleries 
whisky into one or two concentration houses, as they called them. 

124491— 39— pt. 6 4 



2462 CONCENTRATION OF P^CONOMIO POWER 

There were, I think, only 10 or perhaps 15 concentration houses in the 
United States. We had to dismantlasome 40 or 50 distilleries in Ken- 
tucky and move the whisky that Avas left in -tlieni into Louisville 
into a concentration warehouse. For instance, the Chici:en Cock, for 
example, that you mentioned, was an individual old distillery in 
Kentucky, owning its own property, making its own brand of 
whisky. That whisky was moved into Louisville and the distillery 
discontinued, and we still own that company and still own that 
name, but the distillery has never been rebuilt. 

We have rebuilt a few of these distilleries. We have not gone out 
.•md acquired from here and there brands and distilleries and closed 
them down. There has been nothing of that kind. We owned -bout 
200 brands or names of whiskys in 1924, I imagine. Wliile we liave 
acquired a few since, they have only been the ones mentioned liere 
such as Overholt and Large and one or two more. 

Dr; LuBiN. In other words, these corporations which were men- 
tioned by the Senator were already in your possession beforcr 1954 
or before prohibition. 

Mr. Porter. A great man}-, at least. ' 

The Chairman. Perhaps I might suggest, Mr. Buck, inasmuch 
U.6 the corporation has^appareiitly answered one of the questionnaires, 
to facilitate the heaf'ing, that there might be prepared on behalf of 
the _witness and with the cooperation of yourself a memorandum 
uf "statement to go intorthe record showing the number of distilleries^^ 
separate distilleries, owned by the National Distillers Products. Co . 
the number of names, trade brands, owned without any distilleries, 
and those which are accompanied by distilleries, "the date upon which 
each of these was acquired, and the maane)- ifl whicli tlic purchase 
was made elfective. 

Mr. Porter. I will be very glad o f irnish this.'' 

The Chairman. Thank you. I was going to suggest hat there„ 
are also the fo lowing subsidiaries which miglit be included in tha^' 
statement; W. '^ A. Gilbey, Ltd., of AVjiich I uttderstand you own 
60 percent of the voting stock. 

Mr. '■Porter. That is correct. 

The Chairman. Is that a foreign company? 

Mr. Porter. No; that "s an Americim company. 

The Chairman. An American corporation? 

Mr. Porter. iV.n American corporation but ora* i artnerp are Eng- 
lish who own the other stock. 

M^. Buck. Who are they, Mr. Porter? 

Mr. Porter. W. and A. Gilbey of England. 

The Chairman. Let me add to tliis table a statement of the state 
in which each of these subsidiaries is incorporated. 

Mr. Porter. Yes, sir. 

The Chairman, Then John de Kuyper & Son, Inc. 

Mr. Porter. Yes. 

The Chairman. Is that a foreign company cr an American com- 
pany ? 

Mr. Porter. No; that is an American company whicli we formed 
in partnership with these ^^ntlemen at HoUana for the manufac- 
ture of cordials in this country. 

1 Included in the letter cited in footnote 1, p. 2458, supra. 



CONCENTRATION OF ECONOMIC POWER 2463 

The Chairman. You were testifying to a moment ago? 

Mr. PoETER. Yes. 

The Chairman. When did you form that? 

Mr. Porter. Shortly after repeal. 

The Chairman. The Chickasaw Wood Products Co. 

Mr. Porter. That is a company in "which w(i own an interest, but 
have no active participation, a barrel manufacturing company. 

The Chairman. Train & Mclntyre, Ltd. 

Mr. Porter. That is a Scotch company. 

The Chairman. Are there any other subsidiaries? 

Mr. Porter. I think that is all, Senator, the principal ones at 
least. 

Mr. O'CoNNELii. I would like to ask you a question. At the time 
of the organization or the reorganization of the company in 1924, 
were the properties that you speak of as having been acquired or 
having been owned from the beginning all a part of the bankrupt 
estate of the company that was in receivership ? 

Mr. Porter. Yes. 

Mr. O'CoNNELL. In other words, there were a number of inde- 
pendent or separate properties owned by the corporation in reorgani- 
zation, or rather in receivership. 

IVIr. Porter. That is correct. 

Mr. O 'Con NELL. And they were a part of the assets acquired by 
the new company? 

Mr. Porter. That is correct. 

Mr. O'CoNNELL. To verify in my own mind, at the time of tlie 
organization .of the new company, the creditors of the company ii 
receivership received preferred stock in return for their claim on the 
assets. 

Mr. Porter. That is right. 

Mr. O'CoNNELL. And in addition to that some three or three and 
a half million dollars of debentures were issued for working capitai 

Mr. Porter. That is correct. 

Mr. O'CoNNELL. And as an incentive to the persons from whom 
the money for working capital was to be received, the ownership of 
the new company, that is the common stock of the new company, was 
given to those who financed the new company. 

Mr. Porter. That is what I said, but I think as an actual matter 
of fact a considerable part of the common shares also went with the 
preferred as a further sop to the creditors. I did say that but J 
don't think I was right on that. I think only part of it went into 
debentures. 

Mr. 0'CoNNEi.L. You w<:)uldn't know what part? 

Mr. Porter. It is all a matter of record. It was all sold or given 
to the creditors, one or the other. 

Mr.' O'CoNNELL. Between 1924 and 1929 did any new capital come 
into the company ? 

Mr. Porter. Yes; as I have explained, through the sale of those 
properties. 

Mr. O'CoNNELL. Through the sale of the properties acquired as the 
result of the reorganization? 

Mr. Porter. The sale of the yeast business. 

Mr. O'CoNNELL. That is the sale of property which was a part of 
the bankrupt estate, I take it. 



2464 CONCENTRATION OP ECONOMIC POWER 

Mr. Porter. Yes. There was no new financing. 

Mr. O'CoNNELL. So between 1924 and 1929, by a sale of properties 
acquired as the part of the reorganization, thft new company was 
built up and acquired substantial sums in cash. I just wanted to 
get the picture of what happened. 

Mr. Porter. That is correct. 

Mr. O'GoNNELL. So I take it there was a substantial increase in the 
assets of the company between 1924 and 1929. 

Mr. Porter. Oh, very substantial. 

Mr. O'CoNNEiJL. But without new capital. 

Mr. Porter. No new capital: 

Mr. O'CoNNELL. I think you said before 1929 they paid dff the 
preferred stock. 

Mr. Porter. Paid it off in 1929. 

Mr. O'CoNNELL. But that was without new capital. 

Mr. Porter. Without new capital. 

Mr. Davis. Mr. Porter, with respect to your explanation of the 
concentration required by the Internal Revenue Department, result- 
ing in your assembling the whisky in bonded warehouses and dis- 
mantling those plants, did this order of the Government have rela- 
tion merely to the concentration of whisky in bond or did it involve 
an order to discontinue these various distilleVies involved ? 

Mr. Porter. No ; it involved only the concentration of the whisky, 
because no distillery was in operation, so that when the properties 
were abandoned, they were mostly dismantled. 

Mr. Davis. In other words, it was impractical to continue the op- 
eration of those distilleries. 

Mr. Porter. It was illegal. 

Mr. Davis. That is what I was asking. 

Mr. Porter. Yes ; illegal to operate them. 

Mr. Buck. Was it illegal to retain the distilleries? 

Mr. Porter. Oh, no, no ; illegal to operate them. 

Mr. Davis. That is what I was trying to get at, whether the order 
was directed to the question of concentrating the whiskies in the 
warehouses or also against the further operation of these distilleries. 

Mr. Porter. The order wq^ for the concentration of the whisky, 
that was all. 

Mr. Davis. But it was impractical to continue the operation of the 
distilleries and you had to transport the whisky to the concentration 
warehouse. Was that the result of that discontinuance? 

Mr. Porter. Yes, sir ; it was illegal to operate the distillery. Once 
the whisky was taken away the property was useless. 

(Representative Reece assumed the Chair.) 

Mr. Buck. The order didn't require you to destroy physical prop- 
erty. 

Mr. Porter. Oh, no ; oh, no. 

Mr. Davis. Was this order predicated upon the productive capac- 
ity of the different distilleries? 

Mr. Porter. Production was illegal. There was no production. 

Mr. Davis. What was the limit thlt was made legal? In other 
words, what size distilleries were banned by the order? 

Mr. Porter. There were no distilleries in operation. It was ille- 
gal to operate them. There were no distilleries in operation at all 
that time 



CONCENTRATION OF ECONOMIC POWER 2465 

Mr. Davis. This order of concentration of whisky was during the 
prohibition days? 

Mr. Porter. Yes. 

Mr. Davis. And the distilleries were not in operation ? 

Mr. Porter. No distillery in the country was in operation. 
. Mr. Da^s. Of course, if you get a permit, the operation of any of 
those distilleries could be resumed since the twenty-first amendment. 

Mr. Porter. Oh, yes. 

Mr. Buck. Mr. Porter, as I understand the status of the situation 
now, you are to put into the record a statement of the subsidiaries 
of National as of 1924, 1933, and 1938. 

Mr. Porter. Yes, sir. 

Mr. Buck. Together with a statement of the brand names con- 
trolled by National as of those dates. That will take care of your 
domestic subsidiaries in the operation.^ What foreign connections or 
subsidiaries do you have? 

Mr. Porter. We own a controlling interest in a Scotch firm known 
as Train & Mclntyre. 

Mr. Buck. That is a Scotch bonded house or distillery ? 

Mr. Porter. That is a Scotch whisky concern owning control of 
Scotch whisky distilleries and a stock of Scotch whisky, generally 
engaged in the Scotch whisky business. 

Mr. Buck. What other foreign subsidiaries or association does 
National have? 

Mr. Porter. That is the only operation outside of the United 
States in which we are interested. 

Mr. Buck. What about Jameson Co.? Are you interested in 
them? 

Mr. Porter. No. We are interested as small stockholders in Jamie- 
son Co., which is only engaged in business in the United States as far 
as I know. It is controlled, I believe, by an English company. We 
have no interest in the English company. 

Mr. Buck. Are you part owners of Jameson, together with an 
English company? 

Mr. Porter. There are a number of other interests in it. We have, 
I think, about 20 percent. 

Mr. Buck. What is the business of that company ? 

Mr. Porter. They are importers of Irish whisky. 

Mr. Buck. Then, as I understand it, in your foreign connections 
you have this association in Scotland and also in Ireland through the 
Jameson Co. 

Mr. Porter. No, sir ; we have no interest in Ireland. 

Mr. Buck. You use Irish whiskies? 

Mr. Porter. We are using Irish whiskies, if you mean by that that 
we also represent a number of foreign manufacturers. That is, we 
sell their merchandise in America. We have no interest in their 
foreign business, and we have no interest in the Jameson business in 
Ireland. 

Mr. Buck. Do you have any relation or association with the D. C. L. 
of Great Britain? 

Mr. Porter. No. 



^Included in "Exhibit No. 516," appendix, p. 2745. 



2466 CONCENTRATION OF ECONOMTC POWER 

Mr. Buck. Did you at one time attempt to negotiate a connection 
withb. C. L.? .^ ^ 

Mr. Porter. We have had many business relations with them, and 
we were agents for one of their brands of whisky for a long time. We 
sell them spirits in this country. 

Mr. Buck. Do you sell them spirits here? 

Mr. Porter. Yes. 

Mr. Buck. Do you also market their brands in this country? 

Mr. Porter. No; we do not. 

Mr. Buck. None? 

Mr. Porter. No. 

Mr. Buck. Wliat is the D. C. L. in Great Britain? 

Mr. Porter. That is a large question. It is tile dominant company 
in the British spirit business. It owns, controls, and sells, I believe, 
about 80 percent of the spirits that are.sold iri Great Britain, and it 
is very actively engaged in the export business, and like most Eng- 
lish businesses, it derives most of its profit in foreign countries, and 
it does a very large business here. 

Mr. Buck. Do you have any connections or business associations 
with the Canadian side of the whisky industry? 

Mr. Porter. No ; we have no interests in Canada. 

Mr. Buck. None at all? 

Mr. Porter. No. 

Mr. Buck. Now that takes care of the subsidiaries in a general 
way in the United States and abroad; is that true? You covered 
that entirely? 

Mr. Porter. I will repeat, -our only interest, that is interest that 
we have in the foreign operation of any size that I know of, is our 
interest in Train & Mclntyre, a Scotch whisky concern in Scotland, 
which we have the controlling interest of. 

Mr. Buck. Now let's step out of the direct whisky business for the 
moment. What affiliation or connection do you have in the cooperage 
business? 

Mr. Porter. Shortly after the time of repeal, in order to get bar- 
rels, the cooperage business having, of course, like the whisky busi- 
ness, been inactive for many years, we furnished capital to the 
Chickasaw Co. We furnished quite a considerable amount of capital 
to them, and among other things that we received from them was 51 
percent of their stock, which gave us a protective control. Now that 
company has during these several recent years paid back most of its 
indebtedness to us, and I believe it will not be much longer before we 
will perhaps divest ourselves of interest in that concern. We have no 
desire to be in the cooperage business. 

Mr. Buck. That is your only cooperage affiliation? 

Mr. Porter. That is the only one ; that is the only one we have any 
'financial interest in. It is a relatively small financial interest. 

Mr. Buck. It is control. 

Mr. Porter. Yes; but we have nothing to do with the^ operation of 
the business. It is a very old concern. 

IMr. Buck. Now let's take the glass side. Glass is important in 
your business, I understand. 

Mr. Porter. Everything we sell is in glass. 

Mr. Buck. You don't sell any bulk whisky at all ? 



CONCENTRATION OF ECONO.MIC I'OWEll 2467 

Mr. Porter. No. Well^ we-may have sold it here and there, but 
it is infinitesimals 

Mr. Buck. What affiliations do yon have in the glass industry? 

Mr. PuKTLR. We have no affiliations ourselves. Two of the direc- 
tors of our company are officials of one of the big glass companies. 

Mr. Buck. What company? 

Mr. Porter. Owens-Illinois. 

Mr. Buck. They arc directors in National? 

Mr. Porter. They are directors in our company ; yes. 

Mr. Buck. And who are they? 

Mr. Porter. William E. Levis ^ and Harold Boeschenstein. 

]\Ir. Buck. Does that account for your association in the glass in- 
dustry entirely? 

Mr. Porter. Yes. 

Mr. Buck. How important to the merchandising of whisky are 
brands; brand names? 

Mr. Porter. Very vital. 

Mr. Buck. As a matter of fact, it is one of the very vital factors. 

Mr. Porter. Oh, yes. 

Mr. Buck. Let's go back to 1933, at the time of repeal, which 
legally took place in December of 1933. The position of your com- 
pany at that time was to acquire as many well-known brands as pos- 
sible; would that characterize it correctly? 

Mr. Porter. I don't think that is in line with my answers. We 
owned, as I have said, a very large number of brands that we had 
owned since the incorporation of the company. We acquired some ad- 
ditional properties, but it would not be, I think, a fair statement to 
say it was our purpose to go out and acquire brands. We already had 
a great many. 

Mr. Buck. Well, assmning that you did have a great many, you 
did acquire more? 

Mr. Porter. We acquired, as I said, the Overholt and the Large 
distilleries, and except for that since 1933 — I would like to have the 
opportunity of correcting this if I am wrong, but I am inclined to 
think we have not acquired anything else. I don't know to what you 
refer. You have a questionnaire, but my recollection is that we have 
acquired nothing. 

Mr. Buck. Let's take the Old Overholt as an illustration. How im- 
portant is Old Overholt in your business? 

Mr. Porter. Have we acquired anything else? Am I wrong? 

Mr. Buck. I don't know. 

Mr. Porter. You have asked all these questions, you know, and we 
answered them. 

Mr. Buck. I am not quite sure that I asked them in that way, or 
that you have answered them. I am not certain on that. But liet's 
take Old Overholt as an illustration. How important is Old Over- 
holt in your business? 

Mr. Porter. It is a very important part of it. 

Mr. Buck. It is one of your important brands ? 

Mr. Porter. Yes. 

Mr. Buck. That was acquired just before repeal, wasn't it? 



1 Mr. Levis testified before the committee December 13, 14, and 15, 1938. See Hearings, 
Part II, p. 474, et seq. 



2468 



CONCENTRATION OF ECONOMIC POWER 



Mr. Porter. Just before repeal; yes. 
Mr. Buck. The Large Distillery? 

Mr. Porter. That was the same purchase, both bought at the same 
time, the same seller. 
Mr. Buck. Mount Vernon is an important brand? 
Mr. Porter. Yes, very. ^,1^1.1^ 

Mr. Buck. What strata of the whisky market does Old Overholt 

occupy? 

Mr. Porter. It is a bottled-in-bond whisky. 

Mr. Buck. And what about Mount Vernon? 

Mr. Porter. The same, it is a bottled-in-bond whisky. 

Mr. Buck. What about Old Taylor? 

Mr. Porter. That is bottled in bond. 

ActingChairman Reecb. Mr. Buck, it is now 10 minutes after 12 
and I understand the committee wishes to resume at 2. When it is 
convenient for you to stop, I think it might be well to do so. 

Mr. Buck. I can stop right here. Congressman, if it suits the com- 
mittee. Mr. Porter wants to get away today. 

Mr. Porter. I am at your service, of course. 

Mr. Buck. I am trying to get him finished. 

Acting Chairman Reece. Do you wish to finish with him before 
noon ? If so, that is agreeable. 

Mr. Buck. I am afraid it. would take too long, and if you can 
come back until 3 or 4 o'clock, Mr. Porter, we will continue. 

Acting Chairman Reecb. The committee will stand adjourned until 
2 o'clock. 

(Whereupon, at 12: 10 p. m.", a recess was taken until 2 p. m. of the 
same day.) 

afternoon session 

The hearing was resumed at 2 : 15 o'clock upon the expiration 01 
the recess. 

The Chairman. The committee will please come to order. Are you 
ready to proceed, Mr. Ballinger? 

Mr. Ballinger. Yes, sir, Senator. Mr. Buck will continue his 
direct examination of Mr. Seton Porter. 

The Chairman. I have to repeat a statement which I have made on 
several occasions here, that it has been the ordinary policy of the 
committee to permit the witnesses to proceed with their story under 
interrogation by the representative of the agency which is making 
its presentation, and that members of the committee ordinarily should 
refrain from interrupting that examination until the conclusion. 
Though I have repeatedly announced that policy, I have repeatedly 
offended against it, but I am going to make it again and try to per- 
mit you, Mr. Buck, to proceed uninterrupted this afternoon with your 
'story so that we may handle the matter as expeditiously as possible. 

Mr. Buck, Thank you, sir. 

The Chairman. You may proceed. 

item of $11,400,000 designated in national distillers balance shebi 

AS FOR "brands, TRADE-MARKS, PATENTS AND GOODWILL" 

Mr. Buck. Mr. Porter, just before the recess of the committee we 
were discussing the importance of brand names in the industry and 



CONCENTRATION OF ECONOMIC POWER 2469 

ill a general way discussing the acquisition of certain brand names by 
your corporation just before repeal. I notice in the consolidated 
balance sheet of National Distillers Products Corporation for 1934 an 
item among the assets designated "brands, trade-marks, patents, and 
goodwill" at a value of $11,400,000,- Could you tell the committee 
what part of that sum would be represented by brand names held 
by your company at that time under the valuation that is fixed by 
the corporate directors? 

Mr. Porter. The goodwill item you refer to results from the or- 
ganization of the company, which 1 attempted to describe this morn- 
ing briefly in the following way : Following the old receivership it 
was literally necessary in setting up the new corporation to have an 
item of about $11,0(X),000 that was not expressed by any tangible 
assets; in other words, the debts exceeded the value of the properties 
by about that much. On the other hand, this great number of names 
of brands of whisky was worth a very large sum of money provided 
they ever could be used again, and therefore there was one item on 
the balance sheet represent the goodwill and brand names. Subse- 
quently that whole amount has been written off. There is no such 
item on tlie balance sheet today. 

Mr. Buck. D^ I understand that in order to get the company 
started you found where you had about $11,000,000 more liability 
than you did assets; is that .vhy you needed some? 

Mr. Porter. More than we did physical property or current assets. 
In other words, what I am trying to say is that $li,000,000 was oot a 
valuation fixed for the valuation of those brands, because that was 
during the period of prohibition, and if prohibition had continued, 
brand names would have had a very slight value compared to what 
they Avould have iiad if prohibition was repealed. They had a very 
great value. I never attempted to place any dollar value upon them. 

Mr. Buck. I am trying to understand your statement to the effect 
that at that time you found that the liabilities exceeded the assets by 
approximately $11,000,000, and therefore it was necessary to fill in. 

Mr. Porter. That is correct. 

Mr. Buck. You didn't fill in just for the purpose of filling in — ^I 
mean, after all, it was evalued, wasn't it? 

Mr.' Porter. There has never been a valuation of those brands as 
such. There has been no appraisal, no opinion passed on what the 
value of such a brand as Overholt might be. We have never at- 
tempted to do that, and today we cari'y those brands at no value. 

Mr. Buck. As a matter of corporate finance, however, you don't 
simply make the two sides balance. I mean, it is based on some ade- 
quate appraisal, isn't it? 

Mr. Porter. I am trying to explain that growing out of the receiv- 
ership and the reorganization, that $11,000,000 item was created by 
tlie court and the proper legal authorities that brought that company 
into court. That item originated with the incorporation of the 
company. 

Mr. Buck. The court didn't require you to put $11,000,000 in your 
assets ? 

Mr. Porter. No. 

Mr. Buck. And the court didn't require you to fix that value? 

Mr. Porter. No. 

Mr. Buck. The value was fixed by the board of directors ? 



2470 CONCENTRATION OF ECONOMIC POWER 

Mr. Porter. Presumably; yes. 

Mr. Buck. You are a member of the board of directors ? 

Mr. Porter. Yes. 

Mr. Buck. What, if any, investigation was indulged in by the 
board of directors to the point of arriving at the true market value 
of those items at the time? 

Mr. Porter. In 1924? 

Mr. Buck. 1934. 

Mr. Porter. Oh, I thought you were talking about '24 when this 
item appeared on the balance sheet. 

Mr. Buck. It appears in '34. 

Mr. Porter. In '34 it is still the same item ; it's never been changed 
between those dates. I was trying to expkiin to you how it origin- 
ated. It has not been originated by an appraisal of the value of the 
brands. In my opinion those brands are worth vastly in excess of 
that sum if they are permitted to be used in ordinary commerce 
under normal business conditions. 

Mr. Buck. You sav there was no appraisal made "at the time you 
valued them at $11,400,000? 

Mr. Porter. Of the brands; no, sir. 

Mr. Buck. You have the charge to brajids among your assets in 
your report to stockholders. And you wouldn't be able to tell the 
committee what proportion of this sum of $11,400,000 is represented 
by brand names held by the corporation at that time? 

Mr. Porter. Practically all of them* 

Mr. Buck. Practically all. There was no individual assessment 
mnde as against individual brands? 

Mr. PoRT-^R. No, sir. 

Mr. Buck. How werfe they appraised? 

Mr. Porter. T have already said they were not appraised, Mr. 
Buck. 

Mr. Buck. They were not appraised?. 

Mr.>PoRTER. They were not appraised individually. 

Mr, Buck. Were they appraised in lump? 

Mr. Porter. Yes, sir. 

Mr. Buck. What was the appraisal based upon? How did you 
arrive at the value? 

Mr. Porter. Well, I will, try to explain again. I am sorry if .1 
don't understand. In 1924 when this company was formed as a re- 
sult of the bankruptcy, that item was created by the people that 
formed the company, the lawyers, the accountants, the receivers, and. 
others', and I would say in a general way, as I have said before, it was 
a balancing item. If it is important as to how that was created in 
1924- — • ^ ^ 

Mr. Buck (interposing). This is 1934 I am talking about. 

Mr. Porter. Mr. Buck, the item was created in 1924. It remained, 
I believe, exactly the same figure and was jiever altered from the 
incorporation of the company during a period of a great many years, 
during "which time a good deal of property was sold, debts were dis- 
charged, and the company reached a position where it created a suf- 
ficient earned surplus to permit the entire item to be retired from 
earnings, and it has now disappeared. How it was created in 1924, 
if it is important and you desire further information on it, I can 
certainly give it to you. I have tried to give you a rough sketch of 



CONCENTRATION OF ECONOMIC POWER 2471 

my recollection of what happened in 1924. I believe the brands of 
whisky owned by our company today are worth in ordinary com- 
merce, if we are permitted to use them, a sum vastly in excess of that 
valuation that used to be on our^books. No attempt has ever been 
made to put a figure against this brand or that brand or the other 
brand, and we have never had any data, any reports, or any supposi- 
tion of that kind. There is no such thing existing. Estimates could 
be made, of course, based on earning power, based on prestige, that 
might be of interest, but we have no such thing, or we haven't been 
asked for it. 

Mr. Buck. Then that item has been retired through earnings in the 
corporation since 1934? 

Mr. Porter. Entirely, 

Mr. Buck. Regardless of what its value was as appears here? 

Mr. Porter. Yes, sir. 

Mr. Buck. You testified that your brands are worth far in excess 
of that sum at the present time. That wouldn't necessarily be true 
as of 1934. You don't know what they were worth then, do you? 

Mr. Porter. Well, they were worth something. As a brand re- 
ceives public acceptance, as the product obtains wider sale, naturally 
it gradually has a greater value. I didn't mean to state specifically 
about it; I gave as my opinion that these brands were worth sub- 
stantially more than that sum today. That is simply my own opinion. 

Mr. Buck. That goes to the point I am trying to reach, the point 
as to the value of these brands in your own company finance. From 
the consumer standpoint of the brand, or the public standpoint, why 
are these brands valuable? 

Mr. Porter. Well, any brand of whisky or liquor is valuable be- 
cause of its quality, because the consumer has confidence in its con- 
tinuity of quality, because people like it, because it is fairly priced, 
because it is fairly sold, because the public believes that the manu- 
facturer is going to be able to continue to supply it, if it is 3-year-old 
or 4-year-old whisky or what-not, that he has accumulated sufficient 
stocks to continue to fill the orders; in general, the same thing ap- 
plies to whisky that would apply to almost any otl;ier article in com- 
merce, except that in whisky one has to plan a good many more 
years ahead than in most other businesses, because good whisky, as we 
all know, must be 3, 4, 5 years old, therefore it has to be made for 
5 or 6 years before, and that requires a lot of foresight and a lot of 
patience. 

Mr. Buck. To sum it all up, isn't it a matter of fact that they are 
valuable because the consumer has learned to associate a particular 
claes of goods with the particular brand name ? 

Mr. Porter. Class of goods? Yes. 

Mr. Buck. Or particmar kind of goods. 

Mr. Porter. Yes, sir. 

Mr. Buck. Now, these brands were in disuse for a long time, say 
from 1920 until 1933, 13 years? 

Mr. Porter. On the contrary, most of the most valuable ones were, 
to such extent as they could be, kept in continual use, and that helped 
their value to survive. 

Mr, Buck. I understood you to testify this morning that during 
prohibition you weren't allowed to sell any whiskies. 

Mr. Porter. No. 



2472 CONCENTRATION OF ECONOMIC POWER 

Mr. Buck. Or to market any whisldes. 

Mr. Porter. You must have misunderstood me, because, Mr. Buck, 
you must be aware that during prohibition thel-e was what they call 
medicinal whisky, and our company, as owning a considerable quan- 
tity of whisky, supplied the medicinal trade, and insofar as we pos- 
sibly and humanly could, we tried to keep the brands that had value 
and that the public knew in circulation as far as was legally possible. 

Mr. Buck. That, as a matter of fact, was then being sold as a drug, 
as a medicine? 

Mr. Porter. Yes, medicinal liquor, it was called. 

Mr. Buck. It was called and was, as a matter of fact, wasn't it, 
under the law ? 

Mr. Porter. Medicinal whisky. 

Mr. Buck. You didn't sell whisky for general distribution to the 
consumer as a beverage ? 

Mr. Porter. That was illegal. 

Mr. Buck. Therefore, so far as the general public and consumers 
were concerned, for beverage purposes these brands had been in dis- 
use from January 1920, to December 1933 ? 

Mr. Porter. Technically ; yes, sir. 

Mr. Buck. What do you mean, "technically"? 

Mr. Porter. Technically there was no beverage liquor during that 
period, but I have a recollection that there was a good deal sold in 
America at that time. 

Mr. Buck. None of your brands were being bootlegged? 

Mr. Porter. No ; they were all sold to the drug trade. 

The Chairman. And you hoped there was no bootlegging by the 
drug stores? 

Mr. Porter. Wi hoped so. Jt was a very limited business, very 
limited, very small. 

Mr. Buck. To get to the point of that, the reputation of these 
brands was established many years ago ? 

Mr. Porter. That is right. 

Mr. Buck. And it was established primarily by individual dis- 
tillers ; isn't that so ? 

Mr. Porter. Yes; different distillers. 

Mr. Buck. Individual distillers as distinguished from a corporate 
group such as you have now. 

Mr. Porter. Oh, no; they were mostly owned by corporations. I 
don't recall any that were owned by individuals. 

Mr. Buck. What about Old Overholt? 

Mr. Porter. The history as I read it — I only know it as I have 
read it — it belonged to a man called Abraham Overholt, then it was 
bought by Mr., Mellon, and then it was sold to someone else, and then 
we bought it. 

Mr. Buck. And. the brand was established by a man by the name 
of Overholt who was a distiller and more or less an artist in develop- 
ing whisky and making whisky ? 

Mr. Porter. Yes; 120 years ago. 

Mr. Buck. He isn't making the whisky now, is he? [Laughter.] 
So when he died, corporations picked up the brand and it has been 
kept in continuous use with the interruptions that I have mentioned, 
until now. 



CONCENTRATION OF ECONOMIC POWER 2473 

, Mr. Porter. That is correct. 

Mr. Buck. Is it necessarily true that the brand and type of whisky 
that was made by Mr. Overholt, wliich we might say established the 
reputation for this brand, is being made and bottled and sold under 
that brand name today? 

Mr. Porter. Yes; as nearly as it is humanly possible I should 
think it was, because the whisky has existed there for a great many 
years, and I presume with successive departures of one distiller and 
the coming in of another he has done the best he could to follow in 
the footsteps of his predecessor. He has always had the whisky there 
to follow. I presume as nearly as anything in 1938 it would be as 
it was 50 years ago. I imagine more nearly so; I imagine whisky is 
more nearly as it was 50 3'ears ago than anything else that we have 
to do with, perhaps, in this modern life. 

There have been very few improvements or changes in the art of 
making whisky. 

Mr. Buck. What about the difference between what is known as a 
continuous still. Did they have continuous stills in those days? 

Mr. Porter. No, sir. 

Mr. Buck. Does the type of distilling apparatus have a direct effect 
upon the type of the product? 

Mr. Porter. Yes; it would have; but a great deal of the best 
whisky is still not made by continuous stills. The Scotchman makes 
his whisky, and so does the Irishman, much the same way as he did 
many years ago ; sq do we. 

Mr. Buck. Do you make Old Overholt by the same distilling ap- 
paratus as 100 years ago ? 

Mr. Porter. No; the apparatus has been renewed many times, but 
the operation is very similar. 

Mr. Buck. As a matter of fact, the picture is entirely different 
today in the distilling industry from what it was, say, when Old 
Overholt became a well known and established brand. Today it is 
a matter of big corporate business and enterprise, whereas in those 
days it was a matter of individual pride in the development of a kind 
of whisky, isn't that so? 

Mr. Porter. No; I don't think that is so at all. I don't imagine 
that there is any corporation in the whisky business today that is 
anything like as large as the company of which this old food company 
that I described this morning was the successor to. 

Mr. Buck. That was the accumulation of a trust over a period of 
years, wasn't it? 

Mr. Porter. I don't know what it was, but it was a larger com- 
pany, had a great deal bigger capitalization, had a great deal more 
property, and as far as my study of the industry goes, I should say 
that it was as much in corporate hands before repeal as it is today. 

Mr. Buck. How many of the brands now owned by you were b^ing 
produced for medicinal purposes during prohibition? 

Mr. Porter. Production during prohibition was nonexistent until 
the Treasury Department, I think about 3 or 4 years before repeal, 
decided that the legitimate stock of whisky for medicinal j)urpose9 
was becoming perilously depleted, as they thought, so they issued a 
few permits to a few distillers to make a limited quantity of whisky, 
and we had two products of that kind and we were allowed, our 



2474 CONCENTRATION OF ECONOMIC POWER 

company, to make a limited amount of whisky during the few years 
before repeal. And other companies also had permits, of course. 
Otherwise, there was no production literally during the period from 
1917 or something like that, or 1916, to repeal in 1933. 

The Chairman. What were the two brands that you produced? 

Mr. Porter. I think. Senator, Mount Vernon, and we made a num- 
ber of brands of Kentucky in one distillery. I can't tell you exactly. 
I could have that looked up for you. I know we made Mount Ver- 
non and then, of course, Overholt was operating but we didn't' own it. 

The Chairman. You said your company was producing at 

Mr. Porter (interposing). Two places, one in Kentucky and one 
in Maryland. We made a number of brands in Kentucky and one 
in Maryland. 

The Chairman. You got two permits? 

Mr. Porter, I think so. 

The Chairman. And what did you make? 

Mr. Porter. Mount Vernon in Baltimore and two or three brands 
in one distillery in Kentucky. 

The Chairman. What were they? 

Mr. Porter. Probably Grand Dad, probably Taylor, probably 
Hill & Hill, probably Bkie Grass, and several other whiskies of that 
kind made at one plant. 

The Chairman. You say several others. Frankly, what I am try- 
ing to elicit from you is how many of these brands that we were 
talking about this morning were actually not being produced during 
the prohibition era. You must know that. 

Mr. Porter. Most of tliem were not being produced. I should 
think so, yes; it must be so. 

The Chairman. So that actually the brand is significant from the 
point of view of its commercial value? 

Mr. Porter. Correct. 

The Chairman. Of course, I suppose in the liquor business it is 
no different from many other businesses and in many other lines of 
commerce the public does attach value to a trade name. 

]\Ir. Porter. Very great value. 

The Chairman. I3ut the thought that is running through my mind 
is the extent to which the production of whiskies by four large dis- 
tillers is different from the production of whisky under the old days 
before the trust came into existence by individual distillers who were 
themselves operating. 

Mr. Porter. I don't think it is any different really, Senator, ex- 
cept that the methods have changed in time — I mean, the country is 
different and methods of doing business are different, but I don't 
think the characteristics are otherwise different. 

The Chairman. I probably haven't conveyed my thought to you. 
Is not the emphasis today upon merchandising rather than upon the 
manufacture of a particular type of whisky? 

Mr. Porter. No; I don't think so. I know in our own case we 
are very proud of what we make and its quality, and we spend much 
of our time on that. We are great believers in that in our own 
company. 

The Chairman. I wouldn't want to ask you the question as to 
which of these brands you are the most proud. I will let that go. 
Will you pardon me for violating my rule? 



<JUiMJi!>iN±liA±lUiN Ulf i^JUUJNUMlC i'UWER 2475 

Mr. Buck. That is perfectly all rin^ht, Senator. Glad to have you 
do it. Mr. Porter, yon. the corporation, spends considerable money 
in advertisino; each year? 

Mr. Porter. Yes; a larije sum. 

Mr. Buck. I believe in 1938 accordino; to the report yon made to 
the committee's questionnaire yon expended $3,136,999. What par- 
ticular brands have yon emphasized in your advertising? Do you 
emphasize certain particular brands over others? 

Mr. Porter. Well, we advertise all the brands that we sell, prac- 
tically siieakino;. We trv to ap]>ortion our advertising intelligently 
as we can between the different brands, depending upon how much 
Avhisky Ave have of each to sell and how hard a task it is to seU it. 
In gejTcral we have spent a good deal of our money in advertising 
newer and less-known brands, and we have advertised the older and 
well-known brands consistenly ever since we were permitted to after 
repeal. 

Mr. Buck. As a matter of fact, for the past year haven't you em- 
phasized four particular brands — Old Tavlor, Overholt, Old Grand 
Dad? 

Mr. Porter. Yes; and emi)hasizing there may not have been an 
advertisement run in Avhich they have been grouped, I believe. 

Mr. Buck. I don't mean an advertisement but a campaign of 
national importance. 

Mr. Porter. Yes; exactly, yes. 

Mr. Buck. And.those are all bottled-in-bond whiskies? 

INIr. Porter. Those four; yes, sir. 

prices of 2 -tear-old and 4 -tear-old whiskies 

Mr. Buck. I might here, Mr. Porter, go a little out of the routine 
that I have set up and ask you this question. Let's assume that 
a 2-year-old whisky sells to the consumer for, say $1.80 and a 4- 
year-olcl whisky sells to the consumer for $3.70, the same kind of 
whisky, straight bourbon Avhisky, w^e wall say. How would you 
explain by the economics involved the difference in price to the 
consumer between those two products? 

Mr. Porter. I think it is very hard to explain by economics what 
the consumer is willing to pay, but 

Mr. Buck (interposing). I didn't understand that. 

Mr. Porter. I say I think it is very hard to explain by economics 
what the consumer is willing to pay. But I can say this, that there 
are bottled-in-bond whiskies today that sell, roughly speaking, at $2 a 
bottle, and others that sell for very nearly $4 a bottle, and they are 
both straight whiskies, we will say. 

Mr. Buck. Yes; but I am speaking of two whiskies produced by 
the same distiller, same company, same kind, 

Mr. Porter. Oh! 

Mr. Buck. All paying the same tax. 

Mr. Porter. That is the pleasure of the distiller, I presume, the 
seller of that merchandise, to make those two different prices. I 
didn't know just what that was. I don't know whether I could 
answer it anyway. I couldn't explain that. 

Mr. Buck. You say it is the pleasure of the distiller to make those 
prices ? 



2476 CONCENTRATION OF KCONOMIC POWEP 

Mr. Porter. Yes; certainly; he sets his own price. We set our 
prices; yes. 

Mr. Buck. Are your prices based on, or do they bear any relation 
to, cost of the product? 

Mr. Porter. Yes; of course they bear a relation to cost. Every- 
thing one sells must bear a relation to cost or we would soon be in 
serious difficulty. But obviously, as a merchant you endeavor to get 
as good a price as you can for your product, and some things have 
to be sold very close to cost and on other things you can get a very 
wide margin of profit at times. 

Mr. Buck. Then do I unders. nd your answer to that (Question to 
be that it is a matter of the distiller fixing the price on his product, 
and it is not a matter of pricing based upon cost ? 

Mr. Porter. I think that is about the only thing that we are 
allowed to do, fix our prices — yes, fix our prices. 

Mr. Buck. I agree with you. 

Mr. Porter. Maybe that won't be long. 

Mr. Buck. Now let's assume that as a matter of fact the only dif- 
ference between the cost of the two products is the cost of carrying 
the whisky 2 years longer, isn't it? There is no dijfference in the 
taxes involved, there is no difference in the cost of aging for the 
period aged. 

Mr. Porter. No; all whisky costs pretty much the same. There 
isn't any very great difference if it is honestly made and well made. 

Mr, Buck. What does it cost to produce a gallon of whisky at the 
still? 

Mr. Porter. Forty or fifty cents a gallon, something like that. 
Isn't that right ? I don't know. 

Mr. Buck. You are the distiller, sir. 

Mr. Porter. It depends on what you are going to put into th© 
gallon of whisky, if 30U are going to count cooperage. 

Mr. Buck. I mean at the distillery. 

Mr. Porter. The raw whisky, without anything to put it in? 

Mr. Buck. That's right. 

Mr. PoRTEi;. Probably about 30 cents a gajlon, I should say. 

Mr. Buck. In operating these many distilleries, don't you as a 
matter of fact know the cost of producing a gallon of whisky? 

Mr. Porter. We have the most elaborate cost records; yes, in- 
deed. I am just giv^g you an off-hand opinion. I say about 28 
cents a gallon. There are very many quick ways of figuring it, be- 
cause spirits are made from molasses or corn. 

Mr. Buck. I am talking about straight bourbon whisky produced 
in Kentucky. 

Mr. Porter. Corn varies ver}- much in price. Today corn is very 
cheap. 

Mr. Buck. It hasn't varied much in the last 4 years, has it? 

Mr. Porter. Hasn't varied much in the last 4 years ? I should say 
it had. Heavens ! 

Mr. Buck. I didn't know the farmer had got anything in the last 
4 years. 

Mr. Porter. He used to get 80 or 90 cents or a dollar a bushel for 
corn. Today he is getting 46 cents. 

Mr. Ferguson. How many gallons can you make out of a bushel 
of corn ? . 



CONCENTIlAfl^N OE^ lOCOXOMIC POWER 2477 

Mr. Porter. Some of you experts will have to tell me that. 

Mr. Brown.^ Four and one-half. 

Mr. Porter. Four and one-half, I am told. 

Mr. Buck. Let's assume it costs you 28 cents a gallon to make it. 

Mr. Porter. Is that g, fair figure? 

Mr. Buck. I don't know ; I am not an expert on the thing. It costs 
the same thing to produce a gallon of bottled-in-bond whisky at the 
distillery, off the distillery, as it does if the whisky is sold at 2 years 
of age, doesn't it? 

]Vlr. Porter. If it is of the same quality, exactly the same, 

Mr. Buck. And both classes of whisky would pay the same Federal 
and State taxes? 

Mr. Porter. Exactly. 

Mr. Buck. Exactly the same, regardless of whether it is 2 or 4 
years old ? 

Mr. Porter. That's right. 

Mr. Buck. Now, you say you cannot justify the differential be- 
tween the two prices to the consumer as a matter of economics; you 
think it is a matter of having the distiller fix his own price on the 
goods. Is that true ? 

Mr. Porter. No; I didn't say I couldn't justify the difference in 
price between the two. You asked me as a matter of economics if I 
could explain why somebody paid $4 for one thing and $2 for an- 
other, as I recall your question. The difference, the reason that some- 
one might pay more for one*'product than another would obviously 
liave to do with the brand, and the quantity, and the age. 

Mr. Buck. If one is $4 and one is $2? 

Mr. Porter. If they are sold under the same brand ? 

Mr. Buck. Oh, no; of course not. You know you don't sell the 
same brands under two ages. 

Mr. Porter. I don't quite get the point, sir. I'm sorry. 

Mr. Buck. I am asking you these questions because I understand 
you want to go today". 

Mr. Porter. I would appreciate it. 

Mr. Buck. I shall submit the chart entitled "Consumer Cost of 
Four- Year-Old and Two- Year-Old Whiskies." 

(The chart referred to was marked "Exhibit No. 407" and is 
included in the appendix on p. 2685.) 

Mr. Buck. Mr. Porter, those figures I am advised are approxi- 
i\iately correct, and they are priced on the market today, this week. 
It is the same whisky and distilled by the same company, straight 
bourbon whisky, both 1 quart, 100 proof. 

Mr. Porter. One hundred proof? 

Mr. Buck. Yes. 

Mr. Porter. Is it a secret what this is? 

Mr. Buck. I just didn't want to disclose brands. I could. 

Mr. Porter. No, no. 

Mr. Buck. Could you explain to the cpmmittee where the eco- 
nomics involved in the manufacture and distribution of those 2 quarts 
of whisky 

The Chairman (interposing). Mr. Buck, before the witness an- 
swers, may I suggest that it might be a good plan for you to explain 



I Mr, John P. Brown, attorney, Federal Alcohol Administration. 
124491— 93— pt. 6 5 



2478 CONCENTRATION OF ECONOMIC POWER 

to the committee the making of this chart and what it undertakes to 
represent. 

Mr. Buck. I might say, Mr. Chairman, that the price represents 
the price in New York City and that market was selected, because it 
would show one of the highest State taxes; I wanted to get the 
highest one so the taxes would be high. 

The Chairman. Now, the first column, as I read the chart, repre- 
sents the cost to the consumer of 4-year-old whisky, $3.79. 
Mr. Buck. That is right. 

The Chairman. Which you divide into three items; namely, 81 
cents to include all Federal and State taxes. 
Mr. Buck. Yes, sir. 

The Chairman. $1.46 to cover the cost and the profit to the dis- 
tiller, and $1.52 to cover the wholesaler's and retailer's share in the 
consumer's dollar. 

Mr. Buck. Yes ; that is on one bottle of whisky. 
The Chairman. Now was this chart prepared from the actual 
statistics on a particular brand? 

Mr. Buck. Yes; the chart is prepared from quoted prices in the 
market. 

The Chairman. In other words, it is an actual case and not £^ 
hypothetical case. 
Mr. Buck. That is the fact, sir. 

The Chairman. And then the other column represents the cost 
to the consumer of the same whisky except that it is 2 years old 
instead of 4 years old. 

Mr. Buck. That is true. The only difference there is this. The 
2-year-old whisky was originally 90 proof. We have figured it on 
a basis of 100 proof to make it correspond in dollars and cents. 
The Chairman. Now what is your question ? 

Mr. Buck. The 90-proof bottle sold at $1.89. We put the value 
at $1.92 by raising the proof. 

The Chairman. What is the question to the witness ? 
Mr. Buck. The question to the witness is whether or not he can 
show the committee where by the economics in the manufacture and 
production and distribution of these two bottles of whisky, the 
consumer should be paying one price for 2-year-old whisky and 
another price for the 4-year-old whisky. 

Mr. Porter. I don't think I can explain by economics why the 
consumer pays one price or another, but in an effort to answer your 
question as frankly as I can, I can only say that it seems to me you 
have taken in the column here of the bottled-in-bond whisky the 
maximum price being asked today by any manufacturer for the 
finest bottled-in-bond bourbon whisky in the highest price market. 
Mr. Buck. I understand that is your whisky, sir. 
Mr. Porter. I didn't know that, but that $3.79 looks like an all- 
time high at the moment. That carries with it whatever demand for 
value the public may give to such a brand. Now, in the other column 
. you have got a 2-year-old straight bourbon whisky which, as I under- 
stand it, has no great appeal for a brand name, and people, as you 
know, buy a package of cigarettes or anything else because of a 
brand name, and because they think they are getting, or are getting, 
something of quality. This you just stated, as I understand it, wai 



CONCENTRATION OF ECONOMIC POWER 2479 

a 90-proof whisky, and you have done some mathematics with it 
and made it 100 proof. 

Mr. Buck.- We had figured it on the basis of 90. 

Mr, Porter. But tlie consumer who is buying 90-proof whisky, 
Mr, Buck — I don't think you can translate that price around as to 
what you think he mi^ht have paid if he» was buying 100-proof 
whisky. Furthermore, is that, as a matter of fact, a Kentucky bour- 
bon whisky? 

Mr. Buck. I am told it is a straight bourbon whisky. 

Mr. Porter, Made where? 

Mr, Buck. Illinois, The one was distilled in Illinois. Is that an 
answer? 

Mr, Porter, I think it is an answer ; yes, sir. 

Mr. Buck, What economics would make it an answer ? Could you 
demonstrate the economics involved? 

Mr. Porter. Only that it is generally recognized that bourbon 
whisky made in Kentucky has a higher value than it has in any other 
bourbon State. 

Mr, Buck. Does it cost any more to produce it ? 

Mr. Porter. No, sir. Well, it costs a little more because the State 
of Kentucky, recognizing that value, imposes a great many kinds of 
special taxes and has for upward of 30 or 40 years, on whisky in 
Kentucky. 

Mr. Buck, How much do all the State taxes in Kentucky amount 
to on that quart of whisky? As a matter of fact, it is 1^ cents, 
isn't it? 

Mr. Porter, I couldn't say. Your State, county, hospital, produc- 
tion taxes — I don't know what they all amount to. They are rather 
substantial. 

Mr. Buck, Five cents a gallon. 

Mr. Porter. Oh, no; I think they are very much more than that. 
I am not certain. The Kentucky Legislature has several times had a 
production tax. I don't know where it stands today. Somebody 
here must know that. 

Mr. Buck. I am advised it is 5 cents a gallon. 

Mr. Porter, Well, that is right. 

Mr. Buck, That would be I14 cents a quart. 

Mr. Porter, Except for that, it costs no more to make whisky in 
Kentucky than in Illinois, 

The Chairman, May I interrupt, Mr. Buck, violating the rule? 
Mr, Porter, just observing the middle item in each of these columns, 
in the 4-year-old column the amount assigned to distiller's cost and 
profit is $1,46. In the 2-year-old column the amount for the same 
items is only 33 cents. Now, in your opinion as an expert in the^ 
production of whisky, what is the actual difference in cost between 
producing 4-year-old whisky and 2-year-old whisky by the distiller? 

Mr. Porter. In kind of cost that could be actually accounted for, 
the only difference there needs to be would be the longer period 
of holding it. 

The Chairman. What cost goes into that ? 

Mr. Porter. It would not be very great. It need not be very great. 

The Chairman. Is it very great? 

Mr. Porter. No ; I would say not. 



2480 (;«)N'» ENTKA'noN ok kcoxomic power 

The Chairman. How great is it? 

Mr. Porter. Well, if you make a high-giade whisky and kept it 
for 2 years and had sufficient money to carry.it for 2 years more, all 
you would have to figure would be insurance, storage, taxes, and 
interest on your money. 

The Chairman. What do you estimate would be added actually to 
the cost of the whisky by that 2 years — to the actual cost of producing, 
the cost to the distiller ? 

Mr. Porter. A very few dollars a gallon would cover that, a very 
small amount. 

The Chairman. Then the ditference between the items in these two 
columns would have to be assigned principally to profit ; is that 
correct ? 

Mr. Porter. This item in the smaller colunm, I would say the 
producer, if that thing is correct, w-as probably losing money. No; 
that is per bottle. He would probably be just about getting along. 

The Chairman. Would it be a correct assumption for me to make 
that the distiller gets a much larger profit,' a large profit on the 
4-year-old, than he does on the 2-year-old ? 

Mr. Porter. Oh, yes. In that particular brand. Senator, that par- 
ticular sample, the prcxlucer is making a very large, what you might 
say was perhaps an unusual profit on that particular sample, which 
is the highest price, the most expensive brand, or the highest priced 
whisky which happens to be selling at the moment. 

The Chairman. Is that typical ? 

Mr. Porter. No; it is not typical; and if I mi<^ht, I would like to 
state here this bottled-in-bond whisky we are discussing constitutes 
probably less than 6 percent of the wdiisky that is consumed in 
America. It is only a trifling thing in the whole story, 6 percent, 1 
would guess, not more than 7 percent, or all that the distilling in- 
dustry did in the year 1938. Among the American public, for in- 
stance, the consumption of bottled-in-bond in '38 was 5, 6, or 7 percent 
of the total whisky sold. 

The Chairman. I have heard it said that a lot of whisky much less 
than 2 years old is sold, too; probably not by National Distillers. 

Mr. Porter. Yes; so you are speaking of a very small part of the 
total industry. 

The Chairman. That may be, but the question before us was this 
particular type at this time. 

Mr. Porter. That is a very large profit. 

The Chairman. It is accurate so far as this particular type of 
whisk}' is concerned, is it? 

Mr. Porter. I never saw it before. I suppose it is. 

The Chairman. You wouldn't (juestion it? 

Mr. Buck. It is your whisky, Mr. Porter. 

Mr. Porter. No ; it must be right. It must have been taken from 
the information we furnished Mr. Buck. He has put it in a chart, 
but the one on the right I am not clear on. 

x>-"' Cttatt^an. So as to make the matter perfectly fair, I ob- 
serve the price which is added to the 2-year-old whisky for the whole- 
saler and the retailer is also considerably less than the price which 
is added to the 4-year-old whisky. 

Mr. Porter. Oh, yes. 



CONC'IOA TKA TiON OK ECONOMIC POVVKK 2481 

The Chairman, In your opinion is that very large, extra large, 
profit for the 4-year-ol(l justified upon tlie basis of cost, or justified 
on the basis of age? 

Mr. Porter. Well, I don't think that you can say maybe that it is 
justified on the basis of the cost of that particular bottle of whisky; 
no; but I believe in the long run that it is not an unfair price. 
Prices are gradually declining as the whisky becomes more plenti- 
ful and those prices will probably decline further. They are 
declining. 

The Chairman. All right, Mr. Buck, I am finished. 

Mr. Buck. Right here, ]\Ir. Chairman, I would like to have the 
committee again refer to the chart heretofore exhibited showing the 
holding of the 4-year-old and over whiskies. 

Mr. i)AVis. Mr. Porter, you referred to a 4-year-old straight bour- 
bon whisky to the consumer as being at the peak price. Will you 
explain the price of your company to the wholesaler of your dif- 
ferent brands of 4-year-old bourbon whisky? 

Mr. Porter. Explain the price? 

Mr. Davis. Tell what the price is. In other words, if $1.46 is your 
top-notch price, what are your other prices that differ from that ? 

Mr. Porter. Of course, we sell in cases, and this is a bottle price 
to a consumer in a package store in New York. The prices, I think, 
of our two bottled in bond bourbon whiskies, which apparently are 
what this bottle is one of, are about $23 a case today. Rye whiskies, 
I think, are about $21; that is the price that we sell them to the 
wholesaler, I think. 

Mr. Davis. Don't you sell all of your bottled-in-bond 4-year-old 
whisky by the case? 

Mr. Porter. Yes, sir; yes, sir; we have to by law. It is all sold, 
to wholesalers by the case. 

Mr. Davis. Wlien you gave a price of $21 for your 4-year-old rye 
Avhiskey in bond, what did you say was the price of the bourbon 
4-year-old ? 

Mr. Porter. About $2 more, as I recall it. 

Mr. Davis. $2 more? 

Mr. Porter. About. 

Mr. Da\i8. Is that your minimum price or average price ? 

Mr. Porter. That is the price. 

Mr. Davis. The price. 

Mr. Porter. Yes. 

Mr. Davis. And there are 24 quarts in the case ? 

Mr. Porter. Twelve quarts in the case, 24 pints, as a rule. 

Mr. Davis. Are those full quarts or fifths? 

Mr. Porter. They might be either, depending on how the particu- 
lar whisky is packed. ' 

Mr. Davis. I meant for which you receive $21 a case of 12 bottles 
or $23 for bourbon. Are those full quarts or fifths? 

Mr. Buck. Here is one of your price lists, Mr. Porter. It might 
help you. 

Mr. Porter. Those are quarts, sir. 

Mr. Buck. As I understand it. Judge Davis is asking you the case 
price on all of the bottled-in-bond goods. 

Mr. Porter. Yes. 



2482 CONCENTRATION OF ECONOMIC POWER 

Mr. Buck. Do you wish to read them in the record? 

Mr. Porter. Not unless somebody wants them. I shouldn't think 
so. It seems to be very voluminous. 

Mr. Davis. I think in this connection it might be informative to 
do it. 

Mr. Porter. There are pages of it here. 

Mr. Buck. Just the bottled in bond, as I understand the question. 

Mr. Davis. Yes; that is sufficient. 

Mr. Porter. Was this filed with you? 

Mr. Buck. We have it anyway ; I don't know whether it was filed 
or not. We may have gotten it from some wholesaler. 

Mr. Porter. This is quite old ; September 6, 1938. 

Mr. Buck. That isn't so long ago. 

Mr. Porter. Do you wish all this read, sir? 

Mr. Davis. No. 

Mr. Buck. Just the bottled in bond. 

Mr. Davis. It was just suggested that you might let the reporter 
write into the minutes all of your bottled-in-bond whisky that you 
sell by the case. 

The Chairman. The witness has marked certain items in response 
to Judge Davis. Won't you see that it is properly received? Of 
course, the witness doesn't know to whom he should hand it. Take 
it, Mr. Buck, please. Let's identify what he has marked. 

Mr. Buck. The marks are on Old Taylor, straight bourbon whisky, 
bottled in bond, 100 proof, quarts, price bulletin No. 4, September 6, 
1938; $24.25; fifths, $19.65; pints, $24.85; half pints, $25; one-tenth 
pints, $29.05. Mount Vernon, Maryland straight rye, bottled in bond, 
case price, quarts, $21.50; fifths, $17.45; pints, $22.10; half pints, 
$22.85; one-tenth pints, $21.50. 

Mr. Davis. That is 4-year-old that you are quoting? 

Mr. Buck. That is Baltimore price. Cincinnati prices are a little 
different, Louisville prices are a little different, and so on. That is 
the primary price. 

The Chairman. If I recall, you testified a little bit earlier that 
by and large the cost per gallon of making whisky was about 28 
cents. 

Mr. Porter. That was just a rough guess; but yes, sir, I did so 
testify. 

Mr. Buck. Not over that? 

Mr. Porter. I was just guessing that; I would be glad to get an 
accurate figure for you. I think that is a fair figure; yes, 28 or 30 
cents. It fluctuates with the price of grain very much. 

Mr. Davis. Mr. Porter, in saying in response to Commissioner Fer- 
guson that you got about 41/2 gallons per bushel of corn, is that 
sweet-mash process? 

Mr. Porter. It doesn't vary very much between either process; 
yes, sir. 

Mr. Davis. Your company doesn't make any whisky by) the sour- 
mash process, does it? 

Mr. Porter. I am not cer^in whether we do today or not. I think 
probably not. ^\ 

Mr. Davis. How much gallortage do you average on rye? The 
same? 

Mr. Porter. You mean per bushel of rye ? 



CONCENTRATION OF ECONOMIC POWER 2483 

Mr. Davis. Yes. 

Mr. Porter. It is about the same, I think, sir. 

The Chairman. Now, would it be proper to say that whisky of the 
character represented in this 2-year column could be manufactured 
at approximately 28 cents a gallon? 

Mr. Porter. Yes, sir. 

The Chairman. And therefore, that being a representation of a 
quart, the allocation to the cost of manufacture of this 2-year-old 
would be approximately 7 cents? 

Mr. Porter. Yes. 

The Chairman. And that would mean on the 2-year-old whisky 
that the profit was 26 cents? 

Mr. Porter. Twenty-eight cents. 

Mr. Buck. Senator, you have to add in the aging there. 

The Chairman, We will get to that. At 28 cents a gallon, I asked 
the witness if it was a proper inference 

Mr. Porter (interposing). Four quarts to a gallon; it would be 7 
cents. 

The Chairman. And you answered yes. 

Mr. Porter. Yes, sir. 

The Chairman. Then I subtract 7 cents from 33 cents, which is 
the amount there, leaving 26 cents, the distiller's profit. 

Mr. Porter. It isn't exactly profit, you see, because I think when 
I was asked — in the first place, Mr. Buck asked me, as I recall it, 
what this whisky would cost coming out of the end of the still, if it 
wasn't to be put into anything, as I recall it. We have to put it in 
a barrel, and the barrels cost five or six or seven dollars. Of course 
we have to have a distillery and we have to have all the different 
things that go with a manufacturing plant. 

The Chairman. I assume the cost of the distillery goes into the 
original 28 cents, 

Mr. Porter. I don't know; I would say that was just the manu- 
facturing cost of the plant without putting in interest, or perhaps 
other items that would belong in there. Nor do we carry the cost 
of the barrel or any of the general overhead cost. 

The Chairman, What would be your estimate of the various items 
that go into the cost? 

Mr, Porter, I would think if you got around nearer 50 cents a 
gallon it should come nearer a fair figure that might cover these 
different things, including cooperage, instead of just the cost of 
making the alcohol. 

The Chairman, Fifty cents a gallon would include the cooperage? 

Mr. Porter. Yes, sir. 

The Chairman. That would mean the cost would be 12i^ cents? 

Mr. Porter, Yes, 

The Chairman. If we subtract that, we have 20i/^ cents for your 
profit. 

Mr. Porter. Then, you see, Senator, you still have to put that 
whisky in a bottle. 

The Chairman. Let's get all the little items you are going to cut 
out. How low will the profit get? 

Mr, Porter. Roughly speaking, without any papers in front of 
me, I would offhand, as I said before, imagine that this second 
column, where there was 33 cents, would not have any large amount 



2484 CONCENTRATION OF ECONOMIC POWER 

of profit in that. I think you just would about get along on that. 
It is a sort of horseback guess. 

The Chairman. Making your horseback guess, do you want us to 
assume now that 30 cents per quart is the actual cost ? 

Mr. Porter. No, sir; I don\ think that I would. I think if the 
committee wishes some precise data on that that ought to be a little 
more carefully gone at. I would hate to be quoted without reference 
to data as to actual costs. 

The Chairman. I know you can't give the exact figures now, but I 
am trying to make some sort of an approximation. Would 33 cents 
all cost be too high an estimate? 

Mr. Porter. For a bottled whisky? 

The Chairman. This is 2 years old. 

Mr. Porter. That is $3.60 for a case, isn't it. Senator ; and we have 
to have bottles and cases and caps and cartons and whisky. There 
is very little profit in that figure, very little ; very little, if any. 

The Chairman. All right. Let's assume, for the sake of this pres- 
entation, now that there isi no profit, that 33 cents represents all your 
cost. Does that cover it all ? You wouldn't want to put any other 
items in ? You have your cooperage and you have your cartons ; you 
have your bottles and you have your insurance. The distiller is not 
selling this at a loss. 

Mr. Porter. Well, I don't know. It looks pretty bad. 

The Chairman. Let's assume that he is losing 2 cents on each quart. 
We will make it 35 cents. How will that do? 

Mr. Porter. No; there is something all wrong with this. I don'i 
think — you can't get by with 33 cents. 

The Chairman. Forget that; never mind. Let's get dowui to facts. 
If I were to say that 35 cents were an item to cover the cost of manu- 
facturing 2-year-old whisky in all of the process, would that be an 
overstatement ? 

Mr. Porter. How much again? 

The Chairman. 35 cents. This column said 33 cents ; I am adding 
2 cents. 

Mr. Porter. Really, Senator, I feel the question is so important 
and I am not — ^I am anxious 

The Chairman (interposing). Of course you are. You see just 
where I am leading now. You are becoming uncertain. You weren't 
uncertain a moment ago when you testified 28 cents a gallon. 

Mr. Porter. Yes ; but. Senator, 28 cents a gallon — what I was say- 
ing then was the cost of converting corn into alcohol or whisky with- 
out getting it into containers. 

~ The Chairman. Reco-^nizing all of those qualifications, I added 
enough to make it 50 cents. 

Mr. Porter. Yes; well, 50 cents 

The Chairman (interposing). And that, of course, meant 12i/^ 
cents a quart. 

Mr. Porter. Getting a bottle price down from a case price requires 
some little calculations. We figure cases 

The Chairman (interposing). Observe now what we have done, 
Mr. Porter. You said 28 cents a gallon. I said 50 cents a gallon. 

Mr. Porter. Yes. 



(1()N('j:nti{ati()n of ecjonomic I'owek 2485 

The Chaikman. Fifty cents a gallon would be 12i/^ cents a quart. 
You said that didn't cover your cartons and a few other items, so I 
went all the way Avith you and went to 33 cents and took everything 
as to( cost, and you weren't satisfied as to that, so I added 2 cents 
more; so you are in a position now of having a (juart of whisky upon 
which you have lost 2 cents. Now, is that too much ? 

Mr. Porter. How much is this quart now, 33 cents? 

The Chairman. I have it up to 35 cents. 

Mr. Porter. That is $3.60 a case. You are endeavoring to find 
out whether I think that 35 cents 

The Chairman (interposing). No; this is my line of thought. 
Assuming that the cost of producing 2-year-old whisky is 35 cents 
a quart and that cost includes everything imaginable, I have in 
mind your testimony in response to an inquiry of mine that aging 
this whisky 2 years more would add only a few cents to it. 

Mr. Porter. That is correct. 

The Chairman. So if this 2-year-old should cost 35 cents, which 
means you are selling at a 2-cent loss, and instead of a few cents we 
were to add 10 cents to this, making 45 cents, the cost of the 4-year- 
old whisky, you would on the basis of this exhibit be selling your 
quart of whisky at a profit of $1.01 according to this tabulation, 
isn't that correct? 

Mr. Porter. Yes ; that is right. 

The Chairman. What enters into the making of that price to the 
consumer ? 

Mr. Porter. Do you mean the price to the consumer? 

The Chairman. What justifies that profit of $1.01 ? 

Mr. Porter. To the consumer? 

The Chairman. Congressman Williams calls my attention that that 
is the price to the wholesaler. What justifies — on your testimony 
with respect to the cost of making the whisky and the small cost of 
aging — a profit to the distiller on his sale to the wholesaler of 
$1.01 ? In reaching that figure of profit I have given you all of the 
best of it in every estimate all the way down the line. 

Mr. Porter. You are referring now to the cheaper whisky? 

The Chairman. To the 4-year-old whisky. Your, profit now is 
figured at $1.01 a quart. 
. Mr. Porter. You ask what the justification is. Those whiskies 
have been in very limited quantity and the prices of them 

The Chairman (interposing). Before you go any further will you 
let me tell you what is in my mind. This liquor industry is not 
standing here by itself so far as I am concerned, and I am sure 
so far as any member of the committee is concerned. What we are 
trying to find out is what is tlie effect of this concentration which 
has been demonstrated here upon the whole economic picture? Does 
the concentration of ownership, of production, of control — four com- 
panies controlling more than 50 percent of this trade? Does that 
concentration have the effect of raising the price to the consumer 
and of closing out other competition, or does it not? 

Now that doesn't cast any reflection upon you, Mr. Porter, because 
this noon between the time of the adjournment of this committee 
and its reassembling, I was discussing the problem of sugar. It is 
a very important problem to our people out in Wyoming. In sugar 
there is an overproduction just as there appears to be an overpro- 



2486 CONCENTRATION OF ECONOMIC POWER 

duction in whisky. There is more sugar than the fanner can sell 
at the cost of production. I mean he can't derive the cost of pro- 
duction out of the sugar beets and the sugarcane that he sells. The 
world is just crowded with sugar that is rushing into this market 
here and we are having a terrible time getting any profit for the little 
fellow, for the masses. There is more coal than can be mined and 
sold with a profit, the big coal companies complain. The coal miners 
complain. The coal dealers complain. They can't make money. 

That is one of the factors that goes into our very distressing eco- 
nomic problem. 

The farmer who produces wheat and the miller who makes the 
flour are facing the same identical problem, and I could list One 
after another of the commodities upon which our economic life de- 
pends of which this is true, and in every instance we find that the 
distributing factor has been concentrated. The producing factor, so 
far as agricultural products are concerned, is not concentrated ; indi- 
viduals are operative there ; small-business men, and I assume some 
small distillers, complain to Congress that they can't get credit. It 
is one of the pressing problems of today. We want to find out to 
what extent the integration or concentration of these large com- 
panies affects that. That is all we are looking for. You understand 
the purpose, therefore, of my question. 

Mr. Porter. Surely. 

The Chairman. Therefore, I want to know if four big corpora- 
tions, as indicated in this chart that was issued here yesterday — what 
chart was that, Mr. Buck, that showed the production? 

Mr. Buck. It is shown in several ways. 

The Chairman. In "Exhibit No. 400" it shows the production of 
whisky in the United States by four companies compared with the 
total. 

Mr. Buck. "Exhibit No. 399" also shows the four companies' pro- 
duction, 60,000,000, as against 94,000,000. 

The Chairman. "Exhibit No. 400" shows that in 1938 four compa- 
nies produced 64 percent of all the whisky in the United States, and 
"Exhibit No. 399" shows that these four companies in 1938 had 20 
out of 97 distilleries and that they produced 60,400,000 tax gallons as 
compared with 94,990,000 tax gallons of the entire industry. All this 
has an effect upon price. That is what we are trying to determine, 
and then in turn what the general effect of this is upon the entire 
economy. Does a large corporation which gains control of the dis- 
tributing facilities of any contmodity, be it sugar or coal or liquor or 
what not, or livestock, for example, by that simple fact acquire the 
power to levy a higher price upon the consumer than would otherwise 
be levied, and what is the effect upon employment and general busi- 
ness? That is what we are trying to get at. That is why I am 
trying to find out about these prices. Now would you be good 
enough to give us your opinion of it ? • 

Mr. Porter. As far as this liquor industry is concerned, it is my 
honest opinion that the 3xistence of four companies which have been 
picked out who, as you say, do 60 percent of the business, the four 
largest companies doing 60 percent, we will say, I do not think results 
in an increase of price or a maintenance of price. Those four com- 
panies are in the keenest possible competition. I think the high price 
indicated in that chart that you were just looking at was largely due 



CONCENTRATION OF ECONOMIC POWER 2487 

to the fact that those are special brands of which there are relatively 
small quantities available and which sell at relatively very high prices 
and constitute but a fraction of the entire market. I believe that the 
bulk of the whiskys being sold to the American public today, the great 
bulk of them, are being sold at a profit to the wholesaler, the retailer, 
and the distiller not more than sufficient to give him hardly a reason- 
able return. 

The Chairman. I was impressed with your testimony this morning 
that your company got completely out of debt in 1929, which was the 
year in which most of the people in the United States found them- 
selves going very deeply in debt. That was the year of the big 
collapse. 

Mr. Porter. We were very lucky to sell at peak prices. 

The Chairman. There were particular reasons why it should be so. 
Eepeal came along and of course there was a great rush to consume 
the legal liquor, so to speak, and various other circumstances. But 
here again we have chart 3A,^ which shows the total of production, 
and I observe that in 1936 the total production of all of the companies 
was 245,470,000 tax gallons. In 1937 that had dropped off to 155,- 
670,000, and in 1938 to 94,990,000.. To what do you ascribe that 
remarkable drop in production? 

Mr. Porter. Well, you see, following repeal, as soon as many dis- 
tillers could get into operation they started to lay up a supply of 
whisky for aging, and that reached its peak in that year, and then 
after that they gradually slowed down. For the last 2 years our own 
company has been producing just about an equal amount to what it 
has been selling. Our own company does not more than 15 percent 
of the Nation's business — less than that. 

The Chairman. And how about your price all this time? 

Mr. Porter. Our prices have all the while been coming down. 

The Chairman. Have they been reduced in the same proportion 
that the production has been reduced? 

Mr. Porter. That is a little hard to say. They have come down 
very materially in this 4-year period. 

The Chairman. Isn't it a matter of fact that the prices have not 
come down in anything like the proportion that the production has 
come down? 

Mr. Porter. Well, if you want to talk about bottled-in-bond 
whisky for example, the same whisky on the chart, we were getting 
$75 and $80 a case for it 4 years ago; this same Old Taj^lor whisky 
or Mount Vernon whisky, in such small amount of it as it was, was 
retailing at $75 a case, and now it is down to $24. Two or 3 years 
ago, it was $40 a case. 

Mr. Davis. What was the age of that that you got $75 or $80 for? 

Mr. Porter. If was a good deal older whisky. 

Mr. Davis. It was bottled in bond before the prohibition amend- 
ment? 

Mr. Porter. It was made before, but it was the same brand that 
was bottled in bond. 

The Chairman. Now we have chart 5,^ which shows in another 
way the same reduction of operations. Your capacity is much 
greater, though, than it was in 1935. For example, in 1935 the an- 

1 'Exhibit No. 395." appendix, p. 2676. 

2 "Exhibit No. 398," appendix, p. 2677. 



2488 CONCENTRATION OF ECONOMIC POWER 

nual capacity of all distilleries was 303,660,000 tax gallons; in 1938 
it had increased to 434,986,000 gallons. But production in the same 
time decreased from 149,000,000 to 102,000,000, though the number 
of distilleries had increased from 79 to 108, and the thought that is 
running through my mind is whether, by any possibilit};, the liquor 
industry as a whole was reducing production in order not to have 
so great a supply of liquor that the price would be utterly lost. 

Mr. Porter. No; that is utterly — I'm sorry to say it is not true, 
I am afraid. The stocks of the country have steadily increased, as 
you will see from Mr. Buck's chart 2A, so that they are now 466,- 
000,000. In spite of that fall-off in production, the total stocks, as 
he calls them, or the inventories, are larger than they have ever been 
in the history of the Nation, and the curtailment of production has 
been, I imagine, largely the result of the distillers feeling that those 
stocks were becomng mora than ample, or ample. 

The Chairman. The stocks were increasing; the production was 
in excess of consumption. 

Mr. Porter. It still has been. 

The Chairman. So naturally you were driven to i-educe your pro- 
duction in order that your price should not become low. Is that 
right? 

Mr. Porter. Well, if that had been one individual, but we have a 
completely competing industry, and if one distiller felt that if he 
made liis own particular kind of whisky and had a market for it, 
he wouldn't care much what the other man did. It has been impos- 
sible; there is no way of controlling the production to suit the de- 
mand and to suit the price. For instance, we have kept on replen- 
ishing the stocks of these particular brands that you have been 
talking about, irrespective of whether the stocks of the whole comitry 
have increased or decreased, believing and hoping we could sell 
them. 

The Chairman. But despite this constant increase of the stocks 
on hand as indicated by chart 2A, nevertheless on this 4-year-old 
whisky you are apparently making a profit of at least $1 per quart. 

Mr. Porter. Yes. 

The Chairman. I was using the figure based upon the cost. 

Mr. Porter. That is, you see, only a trifling fraction of the total. 
That particular thing has been picked out of hundreds and hundreds 
of brands as the maximum topnotch price. 

The Chairman. Now, giving you the benefit of every cost that you 
suggested, we reached the conclusioJi that on a quart of this 4-year-old 
whisky you were making $1.01 profit to the distiller, and- the price to 
the consumer was $3.79, so that the distiller's profit alone, with every 
consideration granted to you on the basis of cost, was nuich more 
than 25 percent of what the consumer paid. 

Mr. Porter. I can only tell you, Senator, that over all, over a 
period of time, the net earnings of our particular company, after 
taxes, constitute during this period of considerable prosperity follow- 
ing repeal in the liquor industry, not much over 10 or 12 percent, I 
shouldn't think, roughly speaking, of our gross sales, a very good 
return as businesses go, but one that is diminishing, and durin<^ that 
period we have had to invest very large sums of monej^ to build up 
an industry which was nonexistent. I mean, we had to rebuild all of 



CONCENTRATION OF ECONOMIC POWER 2489 

(he distilleries — I speak of the whole industry — and put aside this 
large stock of whisky for maturing, and the over-all return during 
this 5-year period of our company, or of all the companies, the total 
sales, if they were taken in volume, and the net profit on those sales, 
I think would sliow what would be called a very reasonable return 
in a very competitive industry, and a constantly diminishing one. 

The Chairman. To what do you ascribe the fact that four com- 
panies dominate this industry? 

Mr. Porter. Well, it is very hard to say. You are speaking of 
industries. In the cigarette business there are four or five big ciga- 
rette companies. I don't mean to compare our industry with some 
of these much larger ones, because the liquor industry is a relatively 
small one, but it seems very much typical. 

The Chairman. It is characteristic of all industry. 

Mr. Porter. I wouldn't know how to account for it. I kno-^^ that 
our company, the one that I represent, had a very much larger in- 
terest in the industry, as I think I brought out, at the time of repeal 
than we have today, and other companies are growing, and I would 
say, in general, competition had materially increased. 

The Chairman. To what' do you ascribe this fact, this obvious 
fact, that four companies control much more than 50 percent of this 
business ? 

Mr. Porter. I don't know how to ascribe it excepting it is there, 
and it is more or less typical, as you say, of American industry. Of 
the four companies, the other gentlemen are here to speak for their 
own companies. I know our companj- when repeal came had about 
60 percent of the whisky in the country. 

The Chairman. Of course, the testimony shows, and I think it is 
a fact, that before prohibition there had grown up what was known 
as the Whisky Trust. It was investigated as such upon numerous 
occasions and there were reports on it. 

Mr. Porter. That was way back in the nineties. 

The Chairman. That was way back in the nineties, yes; and I 
suppose at the time of prohibition there was, as the result of those 
operations and that concentration, a concentrated ownership of the 
liquor which was in bond, isn't that true? 

Mr. Porter. Yes. 

Mr. Buck. That doesn't amount to a thing. Senator; in 1933 
there were only a few million gallons left in the United States. 

The Chairman. I see. Is it your view that this industry started, 
as it were, from scratch, after repeal? 

Mr. Porter. No ; I don't think that is quite true, because if you 
have a cornersfone you can build (juite a house on it, and if you are 
there first, you get quite a start. 

Mr. Buck. You didn't have any stocks for a cornerstone in pro- 
portion to the country's demand. 

Mr. Porter. No; but such stocks that existed were made the best 
use of to maintain those brands which had value. 

Mr. Buck. I agree with that. 

Mr. Porter. That is what I am trying to bring out, brands, of which 
there was a small quantity were used to the best advantage to inaintain 
tlie quality of older brands. 



2490 CONCENTRATION OF ECONOMIC POWER 

The Chairman. Do you think the concentration in th^ hands of 
the four big companies was based upon their ownership of the 
brands ? 

Mr. Porter. Well, I think our company, perhaps, and the Schenley 
companies, in addition to American, was based to a considerable 
extent upon ownership they had at the time of repeal, on existing 
facilities, stocks, brands, and properties. 

The Chairman. How much is due to the acquisition by these com- 
panies of the existing facilities? 

Mr. Porter. I should say very little. Our company has acquired, 
except for the Overholt and Large plants which I described, which 
were acquired just before repeal, nothing further in the way of 
whisky distilling businesses. 

The Chairman. But you have acquired brands. 

Mr. Porter, No. 

The Chairman. Have you acquired no new brands since 1933? 

Mr. Porter. I think there must be quite a misconception, or per- 
haps I have been very stupid in answering the questions. 

The Chairman. You have not been stupid, Mr. Porter. 

Mr. Porter. I am afraid I must have created a wrong impression 
here, Senator, because in our own company we acquired the Overholt 
and Large properties, which we had' had nothing to do with before. 
That was before repeal. 

Mr. Buck. Mr, Porter, I beg your pardon there, how soon? You 
acquired those things in anticipation just a month or two before re- 
peal, didn't you? 

Mr. Porter, I think it was 8 or 9 months before repeal, but in 
anticipation of repeal, yes; you are correct, entirely so. We cer- 
tainly wouldn't have acquired them otherwise, 

Mr. Davis. When did you acquire the Mt. Vernon ? 

Mr. Porter. That has belonged to these predecessor companies for 
50, 60, or 70 years as far as I know. It has always been there. 

Mr. Davis, When did your company acquire it? 

Mr. Porter. In the reorganization I referred to in 1924, it was one 
of the assets, it was given to us in the bankruptcy. We have ac- 
quired, Senator, no brands that I can think of, of any importance, 
since repeal. To make it quite plain, we owned at the time of repeal, 
or a considerable time before that, the Old Taylor brand and the 
whisky, and we owned the Old Crow brand ^nd such whisky as 
there was; we did not own the distilling premises, or what had been 
distilleries in Kentucky, and we acquired those after repeal^ that is 
such buildings as were on the site, and we completely rebuilt those 
two properties and started in production of whisky there. 

Mr. Buck. That is just the point I wanted to ask you, Mr. Porter. 
You say that your dominance is due to the 

Mr. Porter (interposing), I didn't say dominance. 

Mr, Buck, Whatever it is, your position. 

The Chairman, I used that word, and without any reflection. 

Mr, Buck. Your position in the industry was largely due to hav- 
ing the facilities. As a matter of fact, most of your facilities have 
been rebuilt since repeal, haven't they ? 

Mr. Porter. Yes, 

Mr, Buck, You aren't using any distilleries that were used before 
the eighteenth amendment, are you? 



CONCENTRATION OF ECONOMIC POWER 2491 

Mr, Porter. Yes. 
Mr. Buck. Physical properties? 

Mr. Porter. Yes; the Mt. Vernon distillery, the Grand Dad dis- 
tillery. 

Mr. Buck. But haven't you completely rebuilt them out of profits 
made ? 

Mr. Porter. No; we haven't completely rebuilt them. We hay© 
remodeled them to considerable extent, but they have both beam in ■■ 
continuous operation now for 6 or 7 years. 

Mr. Buck. They have been rebuilt out of profits made out of this 
industry since repeal, just as anyone else would have to rebuild; 
isn't that so? 

Mr. Porter. Yes; they have been rebuilt to considerable extent. 
Mr. Buck. Let's get back to the chart.^ You say you can't explain 
the difference in price to the consumer as between those two bottles 
of whisky by the economics of the transaction or the manufacture 
and distribution. Would the fact that four companies hold 78 per- 
cent of that class of whisky have any relation to the fact that it 
costs the consumer $3.79? 

Mr. Porter. I don't think the four companies hold it. The fact 
that we have Old Taylor whisky and there is a very limited amount 
of it, and has been up to date, and we have orders for it in advance 
of its being ready, has enabled us to get what apparently seems to 
you a very large price and a price which gives us a very good profit. 
Mr. Buck. You say it is Old Taylor whisky. Now, you were 
selling Old Taylor at 16 years' old, weren't you ? 
Mr. Porter. Yes ; we were selling it at 16 years' old. 
Mr. Buck. Now, you say age is the important factor. How old 
is it now ? 

Mr. Porter. It is now probably 4i/^ or 5 years old. It is more 
than 4. 

Mr. Buck. If age is a factor, why do you say that you are selling 
the same whisky today as Old Taylor as originally sold under that 
brand name? 

Mr. Porter. Because we are duplicating it is nearly as humanly 
possible. 

Mr. Buck. You can't duplicate it as to age, can you ? 
Mr. Porter. Oh, no ; if it improves with age up to a certain point, 
that is perhaps 7 years or thereabouts. It doesn't improve much 
thereafter. 

Mr. Buck. As a matter of fact, your company doesn't control all 
the 4-year-old whisky. There is competition in the 4-year-old whisky, 
isn't there? 

Mr. Porter. We filed with you a list, I think, of 25 or 30 competing 
brands in the bottled-in-bond class alone, and I think the prices you 
have before you show that those whiskies instead of selling at almost 
$4, a good many are now being sold at $2, so the public doesn't have 
to pay that $4 if it wants to buy one for $2. 

Mr. Buck. As a matter of fact, if there is competition between 

4-year-old whisky in the market, don't you believe that competition 

would drive the price down to a base upon costs, reasonable costs '{ 

Mr. Porter. If there is competition, that it would drive the price 

down 



1 "Exhibit No. 407," apppnrlix, p. 26S5. 



2492 



CONCENTRATION OF KCONoMlC 1H)WEU 



Mr. Buck (interposing). To a price based upon reasonable cost 
and profit. 

Mr. PoKTEK. You mean and stop right there ? 

Mr. Buck. I don't know where it would stop. My point is that if 
there is real competition, wouldn't competition bring the price down 
to some relation to cost instead of having it fixed, as you say, by the 
producer '( 

Mr. Porter. No ; I didn't say it was fixed by the producer. I said 
that there were 20 or 30, I think, bottled-in-bond whiskies selling 
on the market today at all the way, roughly speaking, from $2 a 
bottle to nearly $4, and the consumer didn't have to pay this $3.Ti», 
or whatever it is,- unless he wanted to. He can buy a bottle of whisky 
for $2 if he wants tx). 

Mr. Buck. Do you sell bottled in bond at $2 to the consumer? 

Mr. Porter. Not that I know of, but other people do. 

Mr. Buck. I want to say to the committee that I opened up this 
point simply because Mr. Porter was going off this afternoon. 1 
hadn't intended to get into it until toijiorrow. Now we will go back 
to the corporation. 

Mr. Blaisdell. I just wondered whether Mr. Porter wanted to 
leave the impression with the committee that the percentage of these 
4-year-old and older whiskies sold by his company was 6 or 7 percent 
of the sales of that company. He stated that was the percentage of 
(he total sales in the market of that. 

Mr. Porter. I meant to say, sir, that it was my opinion that the 
sales of bottled-in-bond whisky in the United States in 1938 con- 
stituted about 6 or 7 percent maximum of the total sales of whisky 
in the United States. 

Mr. Blaisdetx. Would you care to state what percentage it is of 
the sales of your company? 

Mr. Porter. What percentage bottled in bond is of the sales of our 
company ? 

Mr. Blaisdell. Yes. 

Mr. Buck. Dollar value? 

Mr. Blaisdell. Gallonage. 

Mr. Porter. I must have it here somewhere. Our company does a 
good deal more of the bottled-in-bond business than other companies. 
ft is a larger proportion. We have put this all in the questionnaire. 
I don't know that I carry that figure. 

Mr. Berge. Why do you think that the public only buys this 6 or 
7 percent? 

Mr. Porter. Up to date there hasn't been until fairly recently a 
great deal of it. It is very hard to say what proportion of the total 
market the bottled-in-bond whisky will ultimately have. I imagine 
if you asked someone in the trade they might tell you 15 percent as 
a maximum of the total. 

Mr. Berge. I suppose that these oversupplies that are accumulat- 
ing 

Mr. Porter (interposing). They will all be bottled in bond some 
day. 

Mr. Bfj^ge. Isn't most of that being held foi- bonded sale? 

Ml-. PoRTKR. That is very hard to say. It is in a great many dif- 
ferent hands, perhaps 100 ditterent distillers. 



CONCEiVrJlATION OF KCONOMTC rovvKK 2493 

Mr. Berge. When you talked about this oversupply requiring a cur- 
t ailment in current production, then you are not contending that 
I here is impending or is now an oversupply of bonded whisky. 

Mr. Porter. I don't know that, there is an oversupply of any 
whisky. I simply suggested that the supply having gotton so large 
that individual distillers were perhaps only replenishing their stocks 
as they made sales instead of piling up inventories as they had in 
the past. The total inventory of the country is now apparently stand- 
ing more or less still, not increasing any more. 

Mr. Berge. It puzzles me that there isn't more bonded whisky sold 
instead of the 2-year-old in view of what I. supposed is the universal, 
or almost universal, preference for the bonded whisky. It would 
seein to me that it could be accounted for in the difference in price 
unless you are prepared to say that the scarcity alone accounts for 
it, because it is clear that costs don't account for it, and I would sup- 
pose that the public would prefer the bonded whisky if they could buy 
it at approximately the same price. 

Mr. Porter. You see, when you talk of accurate costs, as I was 
trying not very successfully awhile ago to explain, it does not cost 
much more to make whisky and keep it for 4 years than it does to 
make it and keep it for 2 years, but we all know that keeping some- 
thing that you can't sell and perhaps at .a profit on a market for 
•2 or 3 extra years requires not only capital to do that but a certain 
amount of patience and courage, and a good many people undoubt- 
edly that have made whisky who had an opportunity to sell it at some 
profit, 1, 2, or 3 years old, sold it ; others may have kept it until it 
was 4 or 5 ysars old. It does require • omething to keep it. Do you 
see what I mean? There is another element in there perhaps than 
the strict mathematical cost. 

Mr. Buck. Mr. Porter, of the three factors you have mentioned as 
being necessary to keep it, capital, patience and courage, which of the 
three is most important? 

Mr. Porter. Well, capital is essential ; the others are incidental. 

Mr. Berge. I suppose that in considering the difference in cost 
when you said that a few cents a gallon would take care of the 
difference in cost, you were allowing for interest on the money neces- 
sary to hold it, and J supposed you were amply covering that factor. 

Mr. Porter. W^ell, I don't know whether I was amply covering it 
or not, but it is a small difference. I don't think there is any use 
trying to exaggerate it because I cfon't think mathematically there is 
a great difference there. 

directors vf national distillers products corporation and the 
companies with avhich they are connected 

Mr. Buck. We will have to get back now. Mr. Porter, first I 
would like to ask you, do you know the number of subsidiary corpora- 
tions to National Distillers Products, in round numbers? 

Mr. Porter. There are no very important operating companies. 
National does all the operations except a few subsidiaries that are 
mentioned there that have been covered, I think. 

Mr. Buck. How many are there? 

Mr. Porter. All together, subsidiary comj^anies? 

Mr. Buck. Yes. 

134491— 39— pt. 6 8 



2494 CONCE]STRATION OF ECONOMIC POWER 

Mr. Porter. Including those brand-name companies? 

Mr. Buck. Including all of them." 

Mr. Porter. There might be 50, I suppose. I never counted them. 

Mr. Buck. Fifty subsidiaries? 

Mr. Porter. I really don't know. 

Mr. Buck. You are president of the National Co. ? 

Mr. Porter. Yes, sir. 

Mr. Buck. Are these the directors of National Distillers Products 
Corporation ? 

Charles E. Adams, Harold Boeschenstein — ^liow do you pronounce 
it? 

Mr. Porter. Besh-en-stein. 

Mr. Buck. William C. Breed, Mortimer N. Buckner, Thomas A. 
Clark, R. L. Clarkson, Pierpont V. Davis, J. Russell Forgan, Charles 
L. Jones, William E. Levis, M. J. MacNamara, Charles S. Munson, 
Seton Porter, Paris S. Russell, and D. K. Weiskopf. 

Mr. Porter. That is correct. 

Mr. Buck. May we have the next chart? 

Mr. Porter, may I ask you if you have any objection to stating to 
the committee what other corporations you are a director or officer of 
besides National and its subsidiaries? 

Mr. Porter. No. I am a director of American Water Works & 
Electric Co. and a number of its subsidiary companies, the American 
Sumatra Tobacco Co., Twentieth Century Fox Film, General Theatres 
Equipment. Those are all, I think, listed on the stock exchange. A 
company called Electric Power Associates. I think that is about all. 

Mr. Buck. For the benefit of the committee I have prepared a chart 
showing the companies or corporations in which the directors of 
National Distillers Products Corporation are also directors or other 
officers according to Poor's Directory. Mr. Brown, will you read 
them off ? Take Mr. Charles E. Adanis. According to Poor's Direc- 
tory he is a director of 

Mr. Brown (reading from "Exhibit No. 408"). Mr. Adams is a 
director in the Air Reduction Co. ; Commercial Acetylene Supply Co. ; 
Cuba Distilling Co. ; Cuban Air Products Corporation ; Dry Ice, Inc. ; 
Magnolia Airco Gas Products Co. ; the Mutual Life Insurance Co. of 
New York ; National Carbide Corporation ; Sterno Corporation ; U. S. 
Industrial Alcohol Co.; U. S. Industrial Chemical Co.; Vanadium 
Corporation of America; Pure Carbonic Co., Inc.; Wilson Welder 
& Metals Co., Inc. ; Bank of New York & Trust Co. ; and 4 East 72d 
Street Corporation. 

.Mr. Buck. Mr. Harold Boeschenstein. 

Mr. Brown. Mr. Boeschenstein is a director in the Owens-Illinois 
Glass Co., Weco Products Co. of Chicago, Edwardsville (111.) Na- 
tional Bank & Trust Co., Owens-Illinois Pacific Coast Co., Libbey 
Glass Co., and Owens-Illinois Can Co. 

Mr. Buck. Mr. William C. Breed. 

Mr. Brown. Mr. Breed is an attorney and a member of the firm of 
Breed, Abbott & Morgan, the Agfa Ansco Corporation, American 
Rolling Mill Co., and Dictaphone Corporation. 

Mr. Buck. Mr. Mortimer N. Buckner. 

Mr. Brown. Mr. Buckner is a director in the New York Trust Co. ; 
the American Art Association; the American-Canadian Properties 



CONCENTRATION OF ECONOMIC POWER 2495 

Corporation; Carolina, CHnclifield & Ohio Railway; the Cheramy, 
Inc. ; Chicago, Milwaukee, St. Paul & Pacific Railroad Co. ; Columbia 
Graphophone Factories Corporation; Consolidated Gas, Electric 
Light & Power Co of Baltimore ; Fidelity Co. ; Fishers Island Corpo- 
ration ; Flood Credits Corporation ; .Globe & Rutgers Fire Insurance 
Co. ; the Home Insurance Co. ; Iloubigant, Inc. ; Interborough Rapid 
Transit Co. ; and International Power Securities Corporation. 

The Chairman. Mr. Buck, I suggest that you ask Mr. Brown to say 
"incorporated," because some persons might get the idea that we are 
talking about ink in whisky bottles.^ 

Mr Brown. I'm sorry ; I was trying to abbreviate. 

Mr. Buck. I agree. 

Mr. Brown. John P. Maguire & Co. ; International Power Securi- 
ties Corporation ; New York Life Insurance Co. ; New York World's 
Fair 1939^ Inc.; Northeast Baltimore Corporation; Pennsylvania 
Water & Power Co. ; the Provident Loan Society of New York ; and 
the Roseton Brick Corporation, Roseton, N. Y. 

Mr. Buck. Thomas A. Clark. 

Mr. Brown. Mr. Clark is a director in Alex D. Shaw & Co., Inc. ; 
A. Overholt & Co., Inc. ; Crown Fruit & Extract Co., Inc. ; Henry H. 
Shufeldt & Co. ; John de Kuyper & Son, Inc. ; W. A. Gaines & Co. ; 
W. & A. Gilbey, Ltd. ; Large Distilling Co. ; Penn-Maryland Corpo- 
ration ; and Chickasaw Wood Products Co. 

Mr. Buck. R. L. Clarkson. 

Mr. Brown, Mr. Clarkson is a director in Amerex Holding Corpo- 
ration; American Express Co.; the American Express Co., Inc.; 
American Sumatra Tobacco Corporation ; Consolidated Oil Corpora- 
tion ; Continental Baking Corporation ; General Theatres Equipment 
Corporation; Underwood Elliott Fisher Co.; Seaboard Air Line 
Railway Co. ; and Wells-Fargo & Co. of Coloi-ado. 

Mr. Buck. Pierpont V. Davis. 

Mr. Brown. Mr. Davis is a director of Brown, Harriman & Co., 
Inc., Dry Dock Savings Institution, Philadelphia & Reading Coal 
& Iron Co., Philadelphia & Reading Coal and Iron Corporation, and 
Philippine Railway Co. 

Mr. Buck. J. Russell Forgan. 

Mr. Brown. Mr. Forgan is a member of the firm of Glore, Forgan 
& Co. of Chicago, Blue Ridge Corporation, Borg Warner Corpora- 
tion, Italian Super-Power Corporation, Invisible Glass Co. of Amer- 
ica, and Rector Rolling Co. 

Mr. Buck. Charles L. Jones. 

Mr. Brown. Mr. Jones is a director of the Manufacturers Trust 
Co. and Bush Terminal Co, of New York. 

Mr. Buck. William E. Levis. 

Mr. Brown. Mr Levis is a director in Owens-Illinois Glass Co.; 
Weco Products Co., Kimble Glass Co., Owens Staple-Tied Brush 
Co., Owens-Illinois Pacific Coast Co., Libbey Glass Co., and Invis- 
ible Glass Co. of America. 

Mr. Buck. Mr. MacNamara. 

Mr. Brown. Mr. MacNamara is a director in Alex D. Shaw & Co., 
Inc., Crown Fruit & Extract Co., Inc., Henry H. Shufeldt & Co., 
John de Kuyper & Son, Inc., W. & A. Gilbey, Ltd., American Medici- 

^ Mr. Brown, In reading, used tbe abbreviated pronunciation for "Co." and "Inc." 



2496 CONCENTRATION OP ECONOMIC POWER 

nal Spirits Corporation of New York City, and Cliickasaw Wood 
Products Co. 
Mr. Buck. Charles S. Mimson. 

Mr. Brown. Mr. Munson is a director of Air Reduction Co., Inc.. 
Canada Dry Ginger Ale, Inc., Commercial Acetylene Supply Co., 
Cuba Distilling Co., Cuban Air Products Corporation, Dry Ice, Inc., 
Liquid Carbonic Corporation of Cuba, Macjnolia Airco Gas Products 
Co., National Carbide Corporation, Porto Rico Mercantile Co., Rein- 
surance Corporation of New York, Sterno Corporation, United Drug. 
Inc., United States Industrial Alcohol Co., United States Industrial 
Chemical Co., Wilson Welder & Metals Co., Inc., 4 East Seventy- 
second Street Corporation, Pure Carbonic Co. of America, and Drug, 
Inc. 
Mr. Buck. Paris S. Russell. I think he is a lawyer. 
Mr. Brown. He is. 
Mr. Buck. D. K. Weiskopf. 

Mr. Brown. Mr. Weiskopf is a director of Alex D. Shaw & Co., 
Inc., W. & A. Gilbey, Ltd., American -Medicinal Spirits Co., Amer- 
ican Medicinal Spirits Corporation, A. Overholt & Co., Inc., and 
Penn-Maryland, Inc. 

Mr. Buck. Thank you, Mr. Brown. As J understand this chart, it 
is taken from the Poor's Directory, as I have stated, and I assume it 
is an authentic designation. 
The Chairman. Who made the chart ? 
Mr. Buck. We copied it from Poor's directory. 
The Chairman. This is a transcript from Poor's directoi-y made by 
the Federal Trade Commission? 

Mr. Buck, The Federal Alcohol Administration. Poor's Manual. 
The purpose and perhaps the value of it to the committee is to see 
at a glance the corporate — -well, I don't know how to describe it, but 
there it is. 

(The chart referred to was marked "Exhibit No. 408" and is in- 
cluded in the appendix on p. 9,QSQ.) 

Mr. Buck. This chart does not purport to include the stockholders' 
connections at all. This chart only relates to the directors of National 
Distillei*s Products Corporation, and these directors of National are 
also directors or officers of the cor[:)orations mentioned upon the chart 
according to the manual. 

Mr. Porter, I believe we have stated the approximate advertising 
expenditures of your company in the promotion of sales for the year 
1938; it was $3,136,999. That I assume is about correct. That is ac- 
cording to your report, in answ^er to the questionnaire. Unless the 
committee has further questions for Mr. Porter, Mr. ChaiiTnan, I feel 
that that is about as far as I want to go. 

Mr. Ballinger. Mr. Porter, do you extend credit to wholesaler? 
Mr. Porter. To wholesalers? 
Mr. Ballinger. Do they buy from you? 
Mr. Porter. Yes; naturally, 

Mr. Baijjnger. Do you extend credit in excess of $100,000? Have 
you got anv account outstanding with wholesalers in debt to you 
more than $100,000? 
. Mr. Porter, Oh, yes ; I think so. 
Mr. Ballinger. When a wholesaler becomes in debt to you. does lie 
handle exclusively your brands? 



CONCENTRATION OF ECONOMIC POWER 2497 

Mr. Porter. No. 

Mr. Ballinger. He doesn't? 

Mr. Porter. No. 

Mr. Ballinger. You never required him to ? 

Mr. Porter. Never. 

Mr. Ballinger. And as a matter of fact he doesn't. He handles 
competing brands when he is in debt to you. 

Mr. Porter. Yes, indeed. 

Mr. Berge. When a distiller acquires a brand from another dis- 
tiller what does he get, what does he buy? 

Mr. Porter. When a distiller does what? 

Mr. Berge. Acquires a brand. You talked today about acquiring 
brands. You said sometimes you buy physical properties and some- 
times you just buy brands. Wliat do you get when you buy a brand, 
a trade name and a trade-mark, or what? 

Mr. Porter. We have bought very few, and if you just bought a 
brand — I don't know that we have ever bought a brand just as that. 

Mr. Berge. I understood this morning 

Mr. Porter (interposing). I was speaking of the acquisition of 
Overholt, I think, and said that we bought the assets rather than the 
stock. We bought the brand along with it. The brand would con- 
sist of the man's trade name, and if it was trade-marked and regis- 
tered you would get that right as well. He would assign to you all 
title and right he had, in it. 

Mr. Berge. Do you get along with that a fonnula or a process for 
making a particular kind of whisky? 

Mr. Porter. If you did such a thing you would ; yes. 

Mr. Berge. Suppose that you bought a plant including physical 
properties. Would you get a particular formula ? 

Mr. Porter. Yes; you might. 

Mr. Berge. Well now, do you mean by that that every trade name 
must be confined to a particular formula in manufacture? 

Mr. Porter. No ; I don't think it need be ; no ; it need not be. 

Mr, Berge. I am not asking these questions with reference to your 
particular practices or to try to suggest that you engaged in any of 
them, but what would there be to prevent a distiller from buying 
up brands and either not manufacturing them or putting out a kind 
of whisky that he has previously manufactured under an acquired 
brand, under a new brand name? Would there be anything in the 
law or in the ethics of the profession to prevent that? 

Mr. Porter. You mean buying up somebody's brand and then 
disusing it? 

Mr. Berge. Yes. Suppose you bought — let's take a hypothetical 
name — Green Light whisky, and it had been manufactured by some 
other outfit and you wanted to continue to use that name because 
of the certain goodwill attaching to it. Would there be anything to 
prevent you from putting out a whisky that you previously sold under 
some other name under this new name. Green Light, if you had 
acquired it? 

Mr. Porter. Unless the owner of that brand had advertised that 
he was selling under a certain fornmla, if it was just a brand of 
whisky and there had been no representation by the previous owner 
that it contained this, that, or the other thing, and a new owner 



2498 CONCENTRATION OF ECONOMIC POWER 

acquired it, he would be presumably free to change what he put into 
the bottle. Of course, if the customer had liked what was in there 
before and you changed it, you run the serious risk of losing all value 
to the brand. 

Mr. Buck. Mr. Berge, I might interrupt you there to say you will 
find an interesting case reported on that case, from the circuit court 
of appeals in Maryland last year, involving the law so far as the 
right to use a brand previously established is concerned. 

Mr. Berge. I don't want to extend this, but there are one or two 
more questions I would like to ask. Would you say that all these 
brands — and there must be hundreds on the market, certainly scores — 
that are well known and nationally advertised all represent whisky 
manufactured according to a different formula? 

Mr. Porter. Well, it is very hard for me to say what other people, 
what other distillers, do. All of our principal brands of whisky, and 
I am now speaking of straight whisky, are made with a different 
formula. Of course, the minute you get into the blended field the 
variety is unlimited. I mean the combinations that can be made, and 
the quantities, but speaking of straight whiskies, I can tell you only 
so far as our company is concerned. Our principal brands of straight 
whisk}' or bottled-in-bond whisky are all made under somewhat dif- 
ferent formulas. 

Mr. Berge. You said this morning that there were several brands 
made in one distillery. I don't know that that is true now. 

Mr. Porter. It was for a brief period during prohibition. 

Mr. Berge. And each of those 

Mr. Porter (interposing). .Was made under a different formula 
They were made at separate times. You had to make a complete 
adjustment. 

Mr. Berge. Well, I had a general impression, and I wanted to see 
how your testimony bore on that, that a great deal of this advertis- 
ing with respect to different brands Vv'as just built on a customer's 
notion of what is associated with a particular name, and sometimes 
there is something to it and sometimes there is not, and I wondered 
to what extent a company had to adhere to an original formula once 
it acquired the new brand name. 

Mr. Porter. I think if you got into litigation over it, and it was 
shown that you changed the formula around, you might- be — I am 
not a lawyer, but I think it might weaken your position very much. 

Mr. Buck. I think what Mr. Berge has in mind is this : So far as 
the law is concerned, you might draw six brands out of one and the 
same barrel. 

Mr. Porter. Yes; I imagine. 

Mr. Berge. There is no legal restraint on your doing that ? 

Mr. Porter. No; I think not. Well, of course, if it is a straight 
whislcy or bottled-in-bond whisky, it has to bear the name of the 
distiller, and if the same distiller has made all these different brands 
it is going to appear right on the bottle. 

Mr. Berge. But your four different whiskies are different only be- 
cause you wish to keep them so. 

Mr. Porter. They are made in different distilleries. They are as 
different as can be. Each of those whiskies has a different distillery 
making it. 



CONCENTRATION OF ECONOMIC POWER 2499 

The Chairman. Where do you make your Sunny Brook bourbon? 

Mr. Porter. In the Sunny Brook distillery. 

The Chairman. Wliere do you make the Black Gold? 

Mr. Porter. Black Gold is a weak whisky which has been made, I 
think, in two or three different places. As I understand the Black 
Gold, it is about the only weak whisky that has been made. 

The Chairman. Where do you make it ? 

Mr. Porter. We have made it in two or three different places. 
Sunny Brook and, I think, possibly Grand Dad. 

The Chairman. How about Blue Grass? 

Mr. Porter. There is no individual distillery existing for that 
brand. It has had to be made at another distillery. It has no dis- 
tillery all of its own. 

The Chairman. Where is it made? 

Mr. Porter. It was made in the so-called Grand Dad plant at 
Louisville. 

The Chairman. Any place else? 

Mr. Porter. I think not, unless it has been made perhaps at Sunny 
Brook, also. 

The Chairman. If it is made only at Grand Dad, then it has a 
distillery all its own, 

Mr. Porter. Well, but I mean it does not have a distillery exclu- 
sively devoted to its production. 

The Chairman. I SQe. 

Mr. Berge. Are whiskies necessarily different because they are made 
at different distilleries ? Wouldn't it be possible 

Mr. Porter (interposing). It is very difficult to duplicate them. 

Mr. Berge. Necessarily so? 

Mr. Porter. I wouldn't say that. It is difficult. 

Mr. Berge. Couldn't you make it according to the same formula 
if you had the same grains, etc.? 

Mr. Porter. I can only tell you the most striking example of that 
is if you travel north in England and go into Scotland you can't 
tell when you are passing out of England into Scotland. That is the 
oldest whisky manufacturing country perhaps in the world, and they 
have never succeeded, I am told, in making what they call Scotch 
whiskies in England. It is very hard to explain, but that seems to be 
true. 

Mr. Buck. Mr. Porter, let me ask you this question: How many 
brands do j-ou have all told? 

Mr. Porter. One hundred and fifty or two hundred. 

Mr. Buck. How many distilleries do you have? 

Mr. Porter. Nine. 

Mr. Buck. That is all: 

The Chairman. Any other questions ? 

Mr. O'CoNNELL. I would like to refer for a moment to your testi- 
mony when we were discussing the matter of price of 4-year-old 
whisky and the other whisky. As I recall it, you suggested in speak- 
ing about a reasonable return that you felt that the return that your 
company had realized was not an unreasonable one in view of the 
fact that it was not more than possibly 10 or 12 percent, based on 
gross sales. I am not particularly interested in discussing what is 
a fair price, but it did occur to me, since you had raised the question. 



2500 (X)N(JENTRATION OF KCONOMIC POVVKK . 

that there is another way of determining on a percentage basis what 
a fair percentage of return is, and it would probably be based upon 
invested capital or net worth, or something of that sort. That brings 
me to the question : Do you happen to know, in a general way, what 
the net worth of your company is at the present time? 

Mr. Porter. About $44,000,000. 

Mr. O 'Con NELL. $44,000,000. Do you happen to know what the 
gross sales of your company were in 1938, say? 

Mr. Porter. About $^4,000,000. 

Mr. O'CoNNELL. Do you happen to know what the net profits 
were ? 

Mr. PoRi-ER. About $7,500,000. 

Mr. O'CoNNELL. Going back to 1924, I recall that you said when 
the company which was in receivership came out of receivership, it 
represented the assets of the bankrupted concern, which were ac- 
quired by $11,000,000 of preferred stock paid to the creditors, with 
possibly some common stock, but you weren't sure about that, and 
in addition about $3,500,000 of borrowed money for working capital, 
represented by debentures plus some or all of the common stock of 
the new company. Is that correct? 

Mr. Porter. Some of the common stock with both the preferred 
and also with the debentures. 

Mr. O'CoNNELL. We didn't know this morning how it was di- 
vided up. 

Mr. Porter. That is the way it is. 

Mr. O'CoNNELL. By 1929 the preferred stock had been retired out 
of earnings or out of the sale of the corporate assets, in part, and at 
that time 1 think you said no new capital had come into the business. 

Mr. Porter. Except by way of earnings and the sale of assets. 

Mr. O'CoNNELL. Could you tell me between 1929 and 1938 how 
much new capital came into your company, I mean other than out 
of earnings? 

Mr. Porter. I think that that has all been submitted in question- 
naires, but, roughly speaking from memory, we have sold to the 
public an issue of debentures of the principal amount of 15,000,000 
shortly after repeal. I think that would be the principal. That is 
about the only source of capital from the public that w^e have ob- 
tained. 

Mr. O'CoNNELL. Are those $15,000,000 of bonds outstanding now or 
have they been paid off in part ? 

Mr. Porter. They are outstanding except insofar as they have 
been retired with the sinking fund. There are about 13,500,000 
outstanding of those today. 

Mr. O'CoNNELL. I see, so that except for that the present natural 
position of the company, or its net worth, is represented by earnings. 

Mr. Portek. By earnings. 

Mr. O'CoNNELL. Thank you. 

The Chairman. Are there any other questions? 

Representative Williams. No ; I think not. 

Tlvi Chairman. Mr. Blaisdell? 

Mr. Blaisdell. No. 

The Chairman. Judge Davis? 

Mr. Davis. No. 



CONCENTRATION OF ECONOMIC POWER 2501 

The Chairman. You are excused, Mr. Porter, and may I, on behalf 
of the committee, thank you for your very ready responses to the 
various inquiries that have been made to you this afternoon. 

Mr. Porter. Thank you for your courtesy, Senator. 

The Chairman. I am about to take a recess until tomorrow morning 
at 10 o'clock. What will be your program tomorrow morning, Mr. 
Buck? 

Mr. Buck. Senator, if you can hold over for a few minutes, it will 
help out a lot. I am running way behind in this. Does the committee 
wish to adjourn right now ? 

The Chairman. Of couree, there is a great desire on the part of 
some of us to attend to other matters. We will try to be more prompt 
tomorrow morning and probably will not internipt you so much. 

Mr. Buck. Thank you. 

The Chairman. What will be your program tomorrow? 

Mr. Buck. The earlier the better for me. 

The Chairman. Whom are you going to call ? 

Mr. Buck. Mr. Friel, Mr. Jacobi, and Mr. Walton. 

(The witness, Mr. Porter, wms excused.) 

The Chairman. The committee will stand in recess until 10 o'clock 
tomorrow morning. 

(Whereupon, at 4:25 p. m., a recess was taken until Thursday, 
March 16, 1939, at 10 a. m.) 



INVESTIGATION OF CONCENTRATION OF ECONOMIC POWER 



THURSDAY, MARCH 16, 1939 

United States Senate, 
Temporary National Economic Committee, 

Washington^ D. G. 

The committee met at 10:20 a. m., pursuant to adjournment on 
Wednesday, March 15, 1939, in the Caucus Room, Senate Office Build- 
ing, Senator Joseph C. O'Mahoney presiding. 

Present: Senator O'Mahoney (chairman) ; Representatives Reece 
and Williams; Messrs. Ferguson; Davis; Henderson; O'Connell; 
Patterson; Berge; Thomas D. Lynch, representing Securities and 
Exchange Commission; Willard Thorp and Ernest Tupper, repre- 
senting Department of Commerce. 

Present also : Federal Trade Commissioners William A. Ayres and 
Charles H. March ; Willis J. Ballinger, Director of Studies and Eco- 
nomic Advisor to the Federal Trade Commission ; William T. Kelley, 
chief counsel, Federal Trade Commission ; Phillip Buck, chief coun- 
sel, and John P. Brown, attorney. Federal Alcohol Administration. 

The Chairman. The meeting will please come to order. 

Mr. Ballinger, are you ready to proceed ? 

Mr. Ballinger. Yes, sir, Mr. Chairman. Mr. Buck has some more 
witnesses to examine this morning. 

The Chairman. Call the first witness, please. 

Mr. Buck. Mr. Friel, of Seagram's. 

The Chairman. Do you solemnly swear to tell the truth, the whole 
truth, and nothing but the truth, in these proceedings, so help you 
God? 

Mr. Friel. I do. 

TESTIMONY OF JAMES E. FRIEL, VICE PRESIDENT, JOSEPH E. 
SEAGRAM & SONS, INC., NEW YORK CITY 

Mr. Buck. Mr. Chairman, Mr. Friel is representing the Seagram 
Corporation, one of the four that we have had under discussion here- 
tofore. I might say in this connection that I have tried to obtain 
the presidents of each of these large incorporations; and I wanted 
Mr. Sam Bronfman to appear, but he was not in New York appar- 
ently and I talked with him over the telephone in Montreal, Canada, 
and asked him to come here. He was busy and couldn't come, so I 
telegraphed him and I have here his reply, I should like to submit it 
for the record. 

Acting Chairman Reece. It will be received. 

(The telegram was marked "Exhibit No. 409" and is included in 
the appendix on p. 2687.) 

2503 



2504 (J(JN(JENT}IAT10N UF ECONOMIC FoWEU 

Mr. Buck. Mr. Friel, wliat is your position with the Seagram 
Corporation ? 

Mr. Friel. I am vice president and treasui-er 'in most of the 
American companies. 

Mr. Buck. You are vice president and treasurer of all tlie Ameri- 
can companies'^ 

Mr. Friel. Practically all. 

Mr. Buck. What- companies are you not connected with, what 
American companies ? 

Mr. Friel. I don't know of any American active comi)any that I am 
not. Thei'e are some inactive companies that I am not an officer of. 

CORPORATE S'rRUCTURE OF DISTILLERS CORPORATION SEAGRAMS, LTD. 

Mr. Buck. What is the corporate organization of Seagrams? 

Mr. Friel. Well, the parent company is the Distillers Corporation 
Seagrams, Ltd. 

Mr. Buck. What sort of corporation is that ? 

Mr. Friel. It is a corporation organized in Canada. 

Mr. Buck. When was it organized ? 

Mr. Friel. It was organized in 1928. 

Mr. Buck. 1928 ? 

Mr. Friel. That is correct. 

Mr, Buck. Is that what might be termed the parent holding com- 
pany of the whole Seagram structure? 

Mr. Friel. That is a good way to put it. 

Mr. Buck. Is the parent company in Canada engaged in operating 
businesses there? 

Mr. Friel. The parent company as such does not operate. It owns 
the stocks of subsidiary companies. 

Mr. Buck. It is a holding company ? 

Mr. Friel, That is correct, 

Mr, Buck. Who owns it? 

Mr. Friel. It is a public company; shares are all listed on the 
exchange. 

Mr. Buck. When did it become a public company ? 

Mr. Friel. Right at its inception, in 1928, 

Mr, Buck. At the beginning the Seagram people had no organiza- 
tion in the United States prior to repeal of the twenty-first amendment? 

Mr. Friel. Not that I know of. 

Mr. Buck. How did they enter the United States through this cor- 
porate structure? 

Mr. Friel. They purchased the plant at Lawrenceburg, Ind., that 
had been operating, as I recall it, as a title 3 plant. 

Mr. Buck. Whose plant was that? 

Mr. Friel. Rossville Chemical & Alcohol Co., I think the name 
was. 

Mr. Buck. First, let's get the organization. How were they or- 
gtmized to enter? How did they organize to enter into the United 
Slates ? 

Mr. Friel. They bought the assets, they bought the plant, and 
they also bought a small corporation. 

Mr. Buck. What was that? 



CONCENTUATIUN OF ECONOMIC I'OVVKJt 2505 

Mr. Fkiel. K(jssville Union Corporation. After they bought both, 
they meroed the phmt into the corporation and changed its name to 
Joseph E. Seagram & Sons. 

Mr. Buck. They dichi't merge the plant. The cori)oration took 
the plant over, 

Mr. Friel. That is right. 

Mr. Buck. The Canadian company bought the plant and th( 
bought this corporation that you speak of? 

\fr. Friel. They bought both simultaneously. 

Mr. Buck. They bought two? 

Mr. Friel. That is correct. 

Mr, Buck. Then they transferred title to the plant to the cor- 
poration ? 

Mr. Friel. That is correct. 

Mr. Buck. And then the name of the original corporation was 
changed to Joseph E. Seagram Co.? 

Mr. Friel. That is correct. 

Mr. Buck. At that time what was the size of the American organi- 
zation, in dollars? 

Mr. Friel. At that time the plant itself I think was about 
$1,050,000. 

Mr. Buck. $1,050,000? 

Mr, Friel. That is correct. 

Mr. Buck. That was the origin of Seagram? 

Mr. Friel. Just the plant itself. 

Mr. Buck. What other capital did they have in the business in the 
United States? 

Mr, Friel. None in the United States. 

Mr. Buck. None in the United States, and that is the significant 
•"borning," you might say, of the Seagi'am corporate chain in the 
United States? 

Mr. Friel. That is correct.- 

Mr. Buck. What is the present size of the Seagram American 
chain ? 

Mr. Friel. As to plants or as to companies? 

Mr. Buck. As to number of corporations involved. I won't ask 
you to name them unless you wish to. 

Mr. Friel. Well, tliere are probably four or five really active cor- 
porations, oi)erating corporations. 

Mr. Buck. Is Calvert Distilling Co. a subsidiary of Seagram? 

Mr. Friel. Distillers Corporation, Seagrams, Ltd. 

Mr. Buck. Lets get that straight too. You see, you have thrown 
me out at first base. 

Julius Kessler Distilling Co. Who owns that? 

Mr. Friel. Distillers Coi^oratidn, Seagram, Ltd. 

Mr. Buck. When did it enter the United States ? 

Mr. Friel. It was formed as a corporation in, I think, 1935. 

Mr, Buck, Is that the old Joseph E, Seagram & Sons ? 

Mr, Friel, No ; it is a different corporation. 

Mr, Buck. Well, let's start back. You came into the United States 
through the Joseph E, Seagram Sons? 

Mr, Friel. That is correct. 

Mr. Buck. Now give us the chronological development. 



2506 CONCENTRATION OF ECONOMIC POWER 

Mr. Friel. As, I think, of about May 1, 1934, we bought the stock 
of Maryland Distillery, which was a company that had a plant in 
Baltimore and which had been operating but selling very little 
whisky. In July or August 1935, we organized the Jxilius Kessler 
Distilling Co., and about 1935 we organized the Joseph E. Seagram 
& Sons, a Delaware corporation which constructed a plant in Ken- 
tucky. They are the major units. Calvert Distilling Co. was orig- 
inally a subsidiary of Maryland Distillery and later became a direct 
subsidiary of the parent company. 

Mr. Buck. Mr. Friel, I hand you a chart that was given to me by 
your counsel some tinie ago. 1 ask you to look it over and state 
whether or not that corporate set-up indicated in that chart is ap- 
proximately correct. 

Mr. Friel. How long ago did you get this? 

Mr. Buck. Six months, I guess. 

Mr. Friel. That is right. 

Mr. Buck. That does depict the corporate set-up in the United 
States? 

Mr. Friel. Yes; and Canada. 

Mr. Buck. And is approximately correct as the status stands now ? 

Mr. Friel. Yes. 

Mr. Buck. I will submit it for the record, if it is agreeable, Mr. 
Chairman, and ask the committee if they would like to see it. 

Acting Chairman Reece. It may be received 

(The chart was marked "Exhibit No. 410" and is included in the 
appendix facing p. 2687.) 

Acting Chairman Reece. Y-ou want that printed in the record, I 
assume. 

Mr. Buck. Yes. 

Acting Chairman Reece. These will all be printed unless it is 
otherwise indicated. 

Mr. Buck. You started in the United States with a capitalization, 
you say, of a million some-odd thousand dollars ? 

Mr. Friel. That's right. 

Mr. Buck. What is the present size of the aggregate corporate 
holdings ? 

Mr. Friel. In the United States? 

Mr. Buck. Yes. 

Mr. Friel. Oh, I w^ould say roughly we have today invested in the 
United States about $60,000,000 to $65,000,000. 

Mr. Buck. Most of it earned? 

Mr. Friel. Yes. That is not the capital. 

Mr. Buck. Most of that earned since repeal ? 

Mr. Friel. No; not necessarily. 

Mr. Buck. What part of it, do you think? 

Mr. Friel. Well, actually the earnings in the United States, as 
such, for the American corporation since repeal, after taxes, have 
been somewhere, I would say, around $15,000,000. 

Mr. Buck. You say that is the earnings in the United States since 
repeal ? 

Mr. Friel. Of the American companies ? 

Mr. Buck. Of the American companies. 

Mr. Friel. That's right. 



CONCENTRATION OF ECONOMIC POWER 2507 

Mr. Davis. Does that include any profit employed in reinvestment 
or expansion? 

Mr. Fried. Well, we did not declare any dividends for 6 years so 
that we put all of our profits right back. 

Mr. Davis. Are you counting those 6-year profits you mention 
within the $15,000,000 in profits you speak of? 

Mr. Friel. $15,000,000, plus money that was sent down from 
Canada for investment. 

Mr. Davis. All right. 

Mr. Buck. Approximately how many subsidiary corporations are 
there now held by Distillers Corporation, Seagrams, Ltd.? 

Mr. Friel. If you will lend me that chart I will count them. 

Mr. Buck. I mean in the United States. 

Mr. Friel. I would say about 12. 

Mr. Buck. Twelve in the United States? 

Mr. Friel. Twelve direct. 

Mr. Buck, How many indirect, if there are any, in the United 
States? What I am trying to do is to get at your subsidiaries in the 
United States and those abroad, 

Mr. Friel. About 20 to 22 or so. 

Mr. Buck. In the United States? 

Mr. Friel. Yes, May I add there just for the minute that we are 
going through a simplification program right now consolidating a 
number of these corporations. 

Mr. Buck. This accumulation has taken place since repeal of the 
eighteenth amendment in 1933 ? 

Mr. Friel. That is correct. 

Mr. Buck, Are you engaged in any other business aside from in- 
toxicating beverages? 

Mr. Freel, None. 

Mr. Buck. How many subsidiaries are held in foreign countries? 

Mr. Friel, I would say three active and probably two or three 
inactive. 

Mr. Buck. Would you name those, please, sir, Mr. Friel? 

Mr. Friel, Distillers Corporation, Ltd.; Joseph E. Seagram & 
Sons, Ltd., and Robert Brown & Co. 

Mr. Buck, Do you have any holdings in Scotland? 

Mr. Friel, Robert Brown and Co. 

Mr. Davis, Where are they located ? 

Mr. Friel. In Glasgow. 

Mr. Davis. Where are the ones which are inactive ? 

Mr. Friel. There are a couple of inactive companies in Scotland 
that we just formed to protect names. 

banking connections of SEAGRAMS 

Mr. Buck, Let's take the domestic or American branch of your 
business. Who are your bankers? Whom do you borrow money 
from? 

Mr. Friel, We have 22; I think you have a list. We gave you a 
copy of our credit in answer to your questionnaire. 

Mr. Buck. Is this the list? 

Mr. Friel. That is it. 



2508 CONCENTRATION OF ECONOMIC POWER 

Mr. Buck. Is this the only bank-credit agreement you have? 

Mr. Friel. Yes. 

Mr. Buck. In negotiating this bank-credit agreement, was it done 
throiigh the Bankers Trust Co. in New York ? 

Mr. Friel. Not altogether. It was done through the Bankers 
Trust Co. and the Manufacturers Trust Co. of New York. 

Mr. Buck. Jointly by Bankers Trust and Manufacturers Trust? 

Mr. Friel. I discussed it with both of them. 

Mr. Buck. Is Mr. Keidel, of the Bankers Trust Co., the bankers' 
agent under this agreement? 

Mr. Friel. Yes. 

Mr. Buck. Is the agreement now in force and effect? 

Mr. Friel. Yes. 

Mr. Buck. Do you have any objection to filing this agreement Jii 
the record? 

Mr. Friel. I don't know. Is it necessary ? 

Mr. Buck. I think it would save me time of questioning about it 
if we could just file it in the record. 

Mr. Friel. I don't think it is necessary. I think there is a copy 
with the S. E. C. Why put it in the record? 

Mr. Buck. Mr. Chairman, I don't know just what to do in that 
case. I would like to file it in the record. I feel that it would be 
of interest to the committee. 

, Acting Chairman Reece. You feel that it should go into the 
record ? 

Mr. Buck. I think so. It helps give the corporate background 
and its connections, so to speak, and I also intend to show, m con- 
nection with another one of the four companies, that 

Acting Chairman Reece (interposing). Unless there is some valid 
reason why it should not go into the record, I think the committee 
would be disposed to receive it. 

Mr. Friel. It is just that it contains a lot of confidential informa- 
tion that I don't see how it could affect these purposes. 

Mr. Buck. I don't know. I want to comply with your request as 
far as possible and at the same time I want the committee to know 
the situation. My point hem is this: You have this picture of the 
Seagram Corporation, and I propose to show that there are other 
corporations in the same business being financed practically through 
the same sources. 

Acting Chainnan Reece. If it is agreeable, I would suggest that 
the committee accept it. If not, then it is a matter which tha com- 
mittee itself will have to determine, I presume, in executive session. 

Mr. O'Connell. Mr. Friel, did I understand you to say that a 
copy of that agreement was filed with the S. E. C. ? 

Mr. Friel. I am pretty sure it is. 

Acting Chainnan Reece. It would then be ])ublic information. 

Mr. O'Connell. If it is filed with the S. E. C, it would be filed as 
a public record. If that is so, I don't quite understand^ that it would 
be confidential. You don't know for sure whether that is filed with 
the S. E. C? ^ 

Mr. Friel. They don't, as a rule, look there. Now they are on notice 
where to look for it. 

Acting Chairman Reece. The committee will accept it and deter- 
mine what disposition shall be made of it. 



CONCENTRATION OF ECONOMIC POWER 2509 

Mr. Buck. All right, sir; thank you. 

(The agreement referred to WtiH marked '"Exhibit No. 411" and is 
included in the appendix on p. 2687.) 

Mr. Buck." Mr. Friel, ^ill you state the maximum allowance of 
credit by the banks under this agreement? 

Mr. Friel. At the present time? 

Mr. Buck. At its inception. 

Mr. Friel. At its inception, $20,000,000. 

Mr. Buck. I will keep the agreement for the committee. 

Mr. Davis. Did I understand that at the inception your company 
borrowed $20,000,000 from this bank? When was that, Mr. Friel? 

Mr. Friel. That isn't quite correct. That contract provides that 
we have the right to borrow $20,000,000, divided as follows : We could 
borrow up to $10,000,000 for a period of 2 years and then $10,000,000 
more seasonally. We never did borrow $20,000,000 under that con- 
tract. 

Mr. Davis. Hoav much have you paid back of what you did borrow? 

Mr. Friel. Well, we have been up and down. We have paid back 
as much as nine or ten million dollars of the maximum amount that 
we borrowed under that credit. 

Mr. Davis. Do you mean yon have paid back nine or ten million 
dollars all told, or'^out of each of the $10,000,000 periods? 

Mr. Friel. You reach peaks dunng the winter months of the year, 
say in December, and you reach a low point some time during the 
spring or summer. When I., say we paid back nine or ten million 
dollars I mean we had reduced the loan from the high point to the 
low point in the summer. 

Mr. Davis. You paid it back out of profits, I assume. 

Mr. Friel. Not necessarily. It may have been out of accounts 
receivable. The biggest part of the money was borrowed to finance 
the wholesaler who in turn was financing the retailer. 

Mr. Davis. Have you sold any securities in the United States since 
repeal ? 

INIr. Friel. We sold $15,000,000 worth of preferred stock. 

Mr. Buck. In other words, might this agreement be characterized 
as an open-credit agreement with a maximum limit pi $20,000,000? 

Mr. Friel. Yes; in other words it gives us a contract right to 
borrow. 

INIr. Buck. Over a period of time until 1942? 

Mr. Friel. No, sir ; until Julv 12, 1939. 

Mr. Buck. '39? 

Mr. Friel. That is correct. 

Mr. Buck. Has it been renewed? 

Mr. Friel. It hasn't expired. 

Mr. Buck. How is it secured? 

Mr. Friel. No security. 

Mr. Buck. Open agreement? 

Mr. Fjriel. Open agreement luisecured. 

Dr. Thorp. Was there any separate financing done by the > separate 
subsidiary companies, or does the whole structure act as a unit from 
!he point of view of financing arrangements? 

Mr. Friel. Each of die separate subsidiary companies that has 
.'ecome a part to this agreement has a right to borrow direct. They 
Jo so and their borrowings are restricted to the agreement. 

124491-39— lit. 6—7 



2510 CONCENTRATION OF ECONOMIC POWER 

ADVANTAGE OF HOLDING COMPANY SETUP TO PRODUCER 

Dr. Thorp. I wonder if I could just at this moment raise a ques- 
tion. We have had some discussions here in tlie committee with 
regard to the desirability or the usefulness of holding company ar- 
rangements. Is there anything that you could introduce that would 
indicate advantages to you of a structure in which there was si 
holding company with a series of subsidiaries rather than an organ- 
ization which was singly integrated? 

Mr. Friel. Oh, I think so, because one thing you would want sep- 
arate companies to protect your trade names. Further you need 
separate companies to comply in some cases Avith the separate State 
laws in the States where you operate. You just couldn't have one 
corporation. 

Dr. Thorp. How does it work with regard to protecting the trade 
names ? 

Mr. Friel. By giving the trade name right to the corporation it- 
self, qualifying it in a State or organizing in the State. It gives 
you at least a good start from which to proceed in protecting your 
trade names. 

Dr. Thorp. In other words, there are two levels with regard to the 
importance of names, the brand name and the name of the company, 
and by having a number of subsidiaries you can, therefore, have a 
number of company names which may also have a public appeal of 
some sort. 

Mr. Friel. To the extent that you want to merchandise the sep- 
arate brands. 

Dr. Thorp. So the tendency is, and that I suj^pose would be one 
reason for taking over certain of these old-established companies, to 
get the name of the company. 

Mr. Friel. We did not take over any old-established companies ; not 
in this country. 

Dr. Thorp. I don't quite follow the point, then. Or is it that you 
have set up separate companies so you would have separate names 
which you could develop ? 

Mr. Friel. We have developed separate names ourselves. 

Dr. Thorp. From the point of view of financial rcisponsibility, is 
there any advantage, financial risk, something of that sort, in having 
a number of subsidiaries ? 

Mr. Friel. No ; not that I know of. 

Mr. Buck. Mr. Friel, as a fnatter of fact it isn't necessary to have 
subsidiaries to hold brand names, is it ? 

Mr. Friel. Yes ; when you are using surnames, family names. 

Mr. Buck. Oh! How many brands do you have? 

Mr. Friel. We haven't got so many. I don't think we have all 
together more than 10 or 12 brands. 

Mr. Buck. Brands of whisky ? 

Mr. Friel. In the United States. 

Mr. Buck. Are each of them held by separate corporations ? 

Mr. Friel. Practically. 

Mr. Buck. Well, practically or not; I mean it is one way or the 
other, isn't it? They are or they are not. 

Mr. Friel. Will you repeat your question ? 



CONCENTRATION OF ECONOMIC POWER 251] 

Mr. Buck. Are each of your brand names held by separate cor- 
porations? 

Mr. Friel. Each of the trade names; not necessarily the brand 
names. 

Dr. Thorp. I wonder if I could ask one further question about 
what kind of State regulations there are which make it desirable to 
have these separate corporations in the different States. 

Mr. Friel. Some States won't issue a license to a corporation 
other than a local corporation. 

Mr. Buck. How many such States are there that you know of ? 

Mr. Friel. Oh, I would say three or four. 

Dr. Thorp. This is not for actual distilling, this is for distribu- 
tion purposes, for wholesaling ? Or is it for distilling ? 

Mr. Friel. For both. 

Mr. Davis. In wjiat States do you understand they do not issue a 
license except to local corporations? 

Mr. Friel. Massachusetts, I believe Wisconsin, and I think there 
are several others. I am not sure as to what they are. 

Mr. DA^^s. Are you certain that they require the corporation to 
take out a charter in those States as distinguished from complying 
with certain requirements of registration and power of attorney to 
some State officer who can be sued, upon whom service can be had 
against a company, things of that kind? 

Mr. Friel. You mean as to qualifying the foreign corporation? 

Mr. Davis. To do business jn that State. 

Mr. Friel. No ; I think the laws of Massachusetts provide that the 
corporation must be a domestic one, that a foreign corporation could 
not qualify as sueh. 

Mr. Buck. That is the only one that you know of ? 

Mr. Friel. The only one that comes to me that I am clear on, 

distilling operations and brands owned by SEAGRAMS 

Mr. Buck. Mr. Friel, do you laiow about the operations of the 
distilleries, and so forth, or would you prefer to have that brought 
out by someone else? 

Mr. Friel. It is just a question of how far you are going into it. 

Mr. Buck. What are the approximate stocks of liquor held by 
Seagram ? 

Mr. Friel. The affiliated companies in the United States? 

Mr. Buck. Yes. 

Mr. Friel. Oh, I would say about 71, 72 million. 

Mr. Buck. Seventy-one, seventy-two million-proof gallons? 

Mr. Friel. Original-proof gallons. 

Mr. Buck. So if the total of all stocks was 341,000,000, you hold i 
approximately 70 or 80 million gallons. The reason I ask you, I 
will tell you frankly, I just read an ad of yours in which some 
reference was made to 80,000,000-gallon reserve. 

Mr. Friel. They probably counted some whisky we have in 
Canada. 

Mr. Buck. How do you operate your American side of the cor- 
porate structure with the Canadian side? What are the respective 
jurisdictions there and how do you function? 



2512 CONCKXTKAl'ION Ol' lOCoNO.Mlc; l'(»\Vj;i; 

Mr. Friel. W^1^3 ^^^^^ of the. American corporations opera! os on 
its own responsibility. There is no connection in direct management 
between the Canadian affiliates and the United States affiliates. 
Mr. Buck. Yon say there is no connection? 
Mr. Friel. Other than the ownership. 

Mr. Buck. What about the Bronfman family? As a matter of 
fact, don't they dominate the whole thing? 

Mr. Friel. Dominate, if you mean by policy; laying down Ihe 
schooling of the men; yes. 
Mr. Buck. They run the structure, don't they ? 
Mr. Friel. They do not run the structure. 

Mr. Buck. You say they lay down the policy for the wliole busi- 
ness ? 

Mr. Friel. The board of 'directors of the parent company, of 
which the Bronfmans are twoy lay the policy down. 

Mr. Buck. How often does Mr. Bronfman come to the United 
States? 

Mr. Friel. That is a hard question, 
Mr. Buck. Would he spend any tihie here? 

Mr. Friel. I would say it would have to be a guess at best, it prob- 
ably would be one-third of the year — a quarter. 
Mr. Buck. Does lie maintain a home here? 
Mr. Friel. He does not. 

Mr. Buck. A large proportion of your whisky consists of blends? 
Mr. Friel. We market practically all blends. 

Mr. Buck. In making blends you imjwrt from your CanadiaT\ 
holdings, or have in the past? 
]\Ir. Friel. We have in the past. 

Mr. Buck. While you were drawing from your Canadian reserve 
for making blends, you were accumulating an American reserve over 
here? 

Mr. Friel. That is right. 

Mr. Davis. Do vou manufacture both bourbon and rye whisky in 
the United States'? 

Mr. Friel. That is correct. 

Mr. Davis. Anything else? Do you manufacture anything else? 
Mr. Friel. We manufacture our own neutral spirits. 
Mr. Davis. Where do you manufacture those in the United States? 
Mr. Friel. Neutral spirits at Lawrenceburg, Ind., and at Balti- 
more; or we will be manufacturing at Baltimore very quickly. 

Mr. Davis. You don't have any wine holdings in the United States? 
Mr. Friel. No. 
Mr. Davis. In Canada ? 
Mr. Friel. No, sir. 

Mr. Davis. What type whisky do you manufacture in Canada ? 
Mr. Friel. We manufacture Scotch whiskies, Canadian whiskies, 
gins, some ryes, and bourbons. 

Mr. DA^^s. "Wliat were the sales of your company, which was then 
exclusively a Canadian company, in the United States from the effec- 
tive date of the eighteenth, or prohibition, amendment up until the 
twenty-first amendment, as compared with your sales in the United 
States before that period? 

Mr. Friel. Well, I would say right a\vay that we didn't have any 
sales in the United States during prohibition. 
Mr. Davis. Not even for medicinal purposes? 



('ONCKN'L'ltATJON OF ECONOMIC i'OWElt 2513 

Mr. Friel, No, 

Mr. Davis. You exported no whisky into the United States during 
that period? 

Mr. Friel. Not into the United States; not as far as I know. 

Mr. Davis. All right. 

Mr. Buck. Mr. Friel, I think you stated a few minutes ago that 
you had only a few brands. Let me read you these: Five Crown, 
Seven Crown, Crowix Special, Bar Special, Special Reserve, Silver 
Dollar, Meadow Cream, Old Crony, Old Man River, Lincoln Inn 
Bourbon, Kessler, Calvert Reserve, Calvert Special, Old Drum, Pri-^ 
vate Stock, Old Durham, Durham Bar Special, Kentucky Prido^ 
Maryland Club, Little Straight Rye, Virginia Club, Calvert Cliib 
Ancient Bottle Aged, Pedigree, Seagrams Bourbon, VO, Eighty-threev 
Silver Dollar, Five Crow^n — we read that before. 

Those are all your brands, aren't they? 

Mr. Friel. They are all our brands. Some of them are Canadian 
brands. 

Mr. Buck. Sold in the United States? 

Mr. Friel. Some of them. 

Mr. Buck. Practically all of them are sold here, aren't they? 

Mr. Friel. Practically all of the Canadian brands. 

Mr. Buck. Aren't all these brands sold in the United States? 

Mr. Friel. Some of them I would say haven't; if they have been 
sold, the sales are very s'mall here recently. 

Mr. Buck. My point was whether you had in existence a corpora- 
tion for each brand. You said you didn't know. I asked you how 
niany brands you had, and you said, "I forget ; five or six." 

Mr. Friel. I said| about 10 or 12. When I said that I meant the 
active brands. 

Mr. Buck. Wliat are your expenditures in advertising in the 
United States? 

Mr. Friel. I would have to refer to the figures, which you have 
a copy of. 

Mr. Buck. Let it go. I will put it in later.^ 

As I understand it, you had no stocks of whisky in the United 
States at the time of repeal, in 1933. 

Mr. Friel. That is correct. 

Mr. Buck. And what stocks you have now are accumulations since 
that time? 

Mr. Friel. That is correct. 

Mr. Buck. That is the situation. That is all I have, Mr. Chair- 
man. 

Acting Chairman Reece. Have you developed if the stocks which 
are now in the United States were manufactured here? 

Mr. Buck. Yes; I understand he testified that there were between 
70,000,000 and 80,000,000. 

Acting Chairman Reece. It was all produced here? 

Mr. Buck. That is right. 

Mr. O'CoNNELL. Do I understand that all 

Mr. Buck (interposing). Just one mintue. Mr. Friel, will you 
name your directors? Let me read them to you. Are the follow 
ing a list of your corporate directors : Samuel Bronfman ; Harvey D. 

^ The figures are on file with the Federal Alcohol Administration. 



2514 CONCENTRATION OF ECONOMIC POWER 

Gibson; Aime Geoffrion, K. C, of Montreal; Frank R. ^chwengel, 
New York City ; James E. Friel ; Allan Bronfman ; Thomas H. Mc- 
Innerny, William B. Cleland, H. F. Willkie. Does that compose the 
board of directors of Distillers Corporation, Seagrams Ltd.? 

Mr. Friel. Of the parent company. 

Mr. Buck. Let's have the chart [referring to "Exhibit No. 412"]. 
Mr. Chairman, this chart has been taken from Poor's Directory, and 
it shows the directors of Distillers Corporation, Seagrams Ltd., who 
were also directors or officers of the corporations set forth on the 
chart. 

Now there is one point I would like to ask Mr. Friel before using 
the chart. As I say, it is taken from Poor's Directory. I notice Mr. 
Willkie as being connected with Hiram Walker & Sons. Is that 
correct ? 

Mr. Friel. I don't think Mr. Willkie has been a director or officer 
in any of their important companies since about June 1, 1937, or 1938. 
I am not sure. 

Mr. Buck. He was until that time? 

Mr. Friel. Yes. 

Mr. Buck. I was wondering about that, and I wanted to call it to 
to your attention before using the chart, and that does show in Poor's 
Directory to be as indicated there as of 1938. 

Mr. Friel. He is not a director of those companies. 

Mr. Buck. At this time. With that explanation, Mr. Chairman, he 
was, and the directory apparently continues to carry him, but I would 
like to have the chart included m the record, with that expfenation. 

(The chart referred to was marked "Exhibit No. 412" and is in- 
cluded in the appendix facing p. 2694.) 

Mr. Buck. I will ask you to look over it and see'if there are any 
corrections to be made other than Wilkie. 

Mr. Friel, Cleland — J. A. Forest & Co., was a subsidiary which 
we have in Canada, so it is one of our own companies. 

Mr. Buck. Mr. Mclnnerny, who is in National Dairy Products 
Corporation, is on your board now. Is that so? 

Mr. Friel. That is correct. 

Mr. O'CoNNELL. Mr. Friel, I just wanted to clarify in my own 
mind something about the corporation set-up. All of the American 
companies are operating companies. Is that correct? 

Mr. Friel. There are probably five or six ^manufacturing com- 
panies and about three selling companies. 

Mr. O'CoNNELL. I mean there are no holding companies. 

Mr. Friel. Oh, no. 

Mr. O'Connell. And the Canadian company, that is the Dis- 
tillers Corporation, Seagrams, Ltd.? 

Mr. Friel. That is right. 

Mr. O'Connell. Does that company hold all of the stock of all of 
the companies that we are speaking of when you speak of the 
American companies? 

Mr. Friel. It does. 

May I at this time, Mr, Chairman, say this? The inference has 
been that these companies are a Canadian set-up. Ninety-five percent 
of the people, not 95, 85 percent of the people working for all of the 
affiliated companies, including the Canadians, are American citizens 



CONCENTKATION OF ECONOMIC POWEll 2515 

employed in the United States. Eighty-five to ninety-five percent of 
(he sales are in the United States; 85 percent of the assets are in the 
United States. The conrol, rather the largest number of stock- 
holders, the majority of the stockholders are in the United States. 
The majority of the value of all the stock issued is held in the United 
States, and the majority of the board of directors are United States 
citizens, 

Mv. O'CoNNELL. Are you speaking of the Canadian company ? 

Mr. FiUFX. Of the parent company. 

Mr. O'CoNNELL. You say the majority of the stockholders are 
American ? 

Mr. Friel. That is right. 

Mr. O'CoNNELL. Could you tell me further as to th^ amount of 
slock held in proportion to the amount of stock issued by Americans? 

Mr. Friel. I can't tell you that, but dollar value, the majority of 
the number of stockholders are in the United States and the majority 
of the value of the shares is held in the United States. 

Mr. O'Connell. The majority of the value of the shares? 

Mr. Friel. That is right. 

Mr. O'Connell. That would mean, then, that more than 50 per- 
cent of the shares, if I understand you correctly, are held by people 
in the United States. Do you mean that? 

Mr. Friel. Not necessarily, because some of the shares have no 
par value, a book value, say, of about $20. Some have $100. 

Mr. O'Connell. How many classes of shares are there, Mr. Friel? 

Mr. Friel. Two. 
■ Mr. O'CftNXFLL. Voting and non-voting, or par and no-par? 

Mr. Friel. Par and no-par, preferred and common. 

Mr. O'Connell. The common stock has no-par value? 

Mr. Friel. That is correct. 

Mr. O'Connell. Tlie preferred stock is par. 

Mr. Friel. Yes. 

Mr. O'Connell. The common stock represents the ownership of 
the company, does it not, the equity? 

Mr. Friel. As a going concern; yes. 

Mr. O'Connell. And they exercise the voting control. 

Mr. Friel. That is correct. 

Mr. O'Connell. Do you know, as regards the common stock, what 
the division would be along the lines we are discussing? 

Mr. Friel. As between the countries? 

Mr. O'Connell. Yes. 

Mr. Friel. I wouldn't say for sure. I would have to guess at 
that. 

Mr. Daa^s. Can you say where a majority of the common stock is? 

Mr. Friel. The majority of the stock is in Canada. 

Mr. Davis. Is all of your common stock voting stock? 

Mr. Friel. Yes, sir. 

Mr. Davis. And a majority of that you say is held in Canada? 

Mr. Friel. That is correct. 

Mr. Da\^s. In a relatively few persons? 

Mr. Friel. It is held by a family, the Bronfman family. 

Mr. Davis. By the Seagram family? 

Mr. Friel. By the Bronfman, family. 



2516 CONCENTRATION OF ECONOMIC POWER 

Mr. Davis. Who are some of the largest stockholders in the United 
States* 

Mr. Friel. I don't know who the really large stockholders are. 
There is a list of all the stockholders with the Treasury Department 
in the Alcohol Tax Unit. 

Mr. Davis. Did your company pay a dividend last year? 

Mr. Friel. Yes, sir. 

Mr. Davis. What dividend did it pay? 

Mr, Friel. It paid a dividend of $2, four dividends at 50 cents 
each. That is on the common. 

Mr. Davis. Non-par stock? 

Mr. Friel. On the non-par stock. 

Mr. Davis. How much did you pass to surplus last year ? 

Mr. Friel. Credit to surplus? 

Mr. Davis. Yes. 

Mr. Friel. As I recall it, about $3,000,000. 

Mr. Davis. That was for the parent company ? 

Mr. Friel. In consolidation. 

Mr. Davis. Do you mean that was the consolidated return? 

Mr. Friel. That is right. 

Mr. Davis. The parent company and the subsidiaries? 

Mr. Friel. Consolidated balance sheet, not a consolidated return. 

Mr. O'Connell. How many shares of common stock are outstand- 
ing for the parent company? 

Mr. Friel. 1,742,645. 

Mr. O'Connell. So that you paid dividends of about $3,500,000? 

Mr. Friel. That is right. 

Mr. O'Connell. And approximately the same amount was added 
to surplus, so that the net profits would have been in the neighbor- 
hood of $7,000,000. 

Mr. Friel. We had $850,000 preferred dividends. 

Mr. O'Connell. You paid those? 

Mr. Friel. That is right. 

Mr. O'Connell. You wouldn't include that in the amount added 
to surplus, certainly. 

Mr. Friel. No; the dividends on preferred and common together 
amounted to about $4,300,000. Consolidated profits were about $7,- 
300,000, so you had in consolidated surplus about $3,000,000. 

Mr. O'Connell. I see, you include the dividend on the preferred 
stock in the $7,300,000 of profits. 

Mr. Friel. That is correct. 

Mr. Davis. What do you find is the cost of producing or manu- 
facturing whisky? 

Mr. Friel. The cost of manufachiring whisky? 

Mr. Davis. Yes ; per gallon. 

Mr. Friel. I think that would depend entirely on what the particu- 
lar kind of '^jvhisky is and where it is made. 

Mr. D^ ■; Well, first take bourbon in the United States. 

Mr. Friel. BonrlDon in Kentucky would probably cost, as I recall 
lit, including the Kentucky tax and including the barrel, somewhere 
between 38 and 40 cents at its inception. 

,^ir. Buck. But you don't figure the cost of the barrel. I think 
what the Judge wants to know is the cost to manufacture the whisky 
off the still ; then we figure the aging and warehousing. 



CONCEXTIIATION OF ECONOMIC I'OWEll 2517 

Mr. Friel. You have to have the barrel or you can't have the 
whisky. 

Mr. Buck. That goes into another bracket of costs, that goes into 
tlie bracket of storage. What does it cost to manufacture and pro- 
duce a gallon of Bourbon whisky off the still ? 
Mr. Friel. Roughly somewhere between 25 and 30 cents. 
Mr. Buck. What does it cost to age it per year according to your 
experience, including barrels? 

Mr. Friel. I don't know. I would have to figure that out. 

Mr. Buck. Haven't you got a pretty good idea? 

Mr. Friel. No. 

Mr. Buck. How many gallons of whisky do you manufacture a 
year? 

Mr. Friel. All together? 

Mr. Buck. Yes. 

Mr. Friel. That I didn't check before I came down, but I imagine 
that we made last year somewhere around 20,000,000 gallons in the 
United States. 

Mr. Buck. Twenty million gallons a year and you don't know the 
cost of producing or aging it? 

Mr. Friel. Parts of the cost of aging it, Mr. Buck, are charged 
through to expense ; they are noncapitalizing items. 

Mr, Buck, Regardless of how it is charged or to whom it is 
charged, you mean to tell me that you, as treasurer of this big cor- 
poration engaged in nothing ^Ise but making and marketing whisky, 
can't say what the cost of aging a gallon of whisky is? 

Mr. Friel. Oh, I would say it would probably cost you somewhere 
between $1.50 and $2 a barrel, probably 5 cents a gallon per year. 

Mr. Buck. Five cents a gallon per year ? 

Mr. Friel. That is correct. 

Mr. Buck. That would cover all the cost? 

Mr. Friel. I would say so. That is on the original proof. 

Mr. Davis. You have told the cost in Kentucky. What is it in 
Illinois? 

Mr. Friel. Five cents less. 

Mr. Davis, That is on account of tax? 

Mr. Friel. Yes. 

Mr. Davis. State tax? 

Mr. Friel. That is correct. 

Mr. Davis. You make your rye in Baltimore? 

Mr. FijiEL. Yes, sir. 

Mr. Daves. What is the cost of that? 

Mr. Friel. Probably about the same. 

Mr. Davis. The same as Illinois? 

Mr, Friel, That is correct. 

Mr. Davis, You don't have this State tax in Baltimore, such as 
you have in Kentucky? 

Mr. Friel, Not at the present. 

Mr. Davis. What is the relative cost of bourbon or rj'e in Canada ? 

Mr. Friel. To produce? 

Mr. Davis, Yes, sir. 

Mr. Friel. I would say approximately th^ same. 

Mr. Davis. What is the Government tax on whisky in Canada now ? 



2518 CONCENTRATION OF ECONOMIC POWER 

Mr. Friel. I don't know very much about the Government tax in 
Canada. I am not an officer of any of the Canadian companies, but 
as I recall it, it is something like $4 on a British-proof gallon. 

Mr. Davis. Four dollars f 

Mr. Friel. But in addition to that, that is the only tax you have in 
Canada, as there is no local tax, no State tax. 

Mr. Davis. That covers all taxes. 

Mr. Friel. That is right, and that British-proof gallon is IV3 Amer- 
ican gallons. 

Mr. Davis. What is the present import duty in the United States 
on whisky from Canada? 

Mr. Friel. It is $2.50 per gallon. 

Mr. Davis. Did I understand you to say at this time your Canadian 
company was not exporting any liquor into the United States? 

Mr. Friel. I didn't say that; we are not exporting vei-y much into 
the United States. 

Mr. Davis. Immediately following repeal until you be^an to age 
your own whisky in the United States, I believe you said in reply to 
a question of Mr. Buck, you did export considerable into the United 
States immediately following repeal, in '33 on up until comparatively 
recently. 

Mr. Friel. We started using that whislcy about 6 months after re- 
peal. We did not get going until about 6 months after repeal. 

Mr. Davis. And then when did you cease exporting or importing 
into the United States any substantial quantities of Canadian 
whisky ? 

Mr. Friel. Within the past few months. 

Mr. Davis. You are not even continuing the importation into the 
United States of very much Scotch-type whisky? 

Mr. Friel. We are not bringing any Scotch-type whisky into the 
Uiiited States. 

Mr. Davis. You are not? 

Mr. Friel. No, sir. 

Mr. Buck. Mr. Friel, I think from Judge Davis' question maybe 
we aren't quite clear. Do you pay any Canadian tax at all on 
whisky that you export to the United States from Canada? 

Mr. Friel. I am not sure, but I believe there is a validation tax 
in Canada of 15 cents a United States proof gallon on whisky ex- 
ported out of the country. 

Mr. Buck. So that the ordinary export tax of $4 an imperial proof 
gallon isn't paid on whisky brought from Canada into the United 
States? 

Mr. Friel. No. 

Acting Chairman Reece. The committee appreciates your attend- 
ance. 

Dr. Thorp. May I ask a question ? 

Acting Chairmrn Reece. Pardon me". 

0\^ERPRODUCTI0N OF WHISKY NOT REFLECTED IN PRICE TO CONSUMER 

Dr. Thorp. How would you summarize the course of prices over 
the last few years to the consumer for whisky? 
Mr. Friel. Basic supply and demand.. 



CONCENTRATION OF ECONOMIC POWER 2519 

Dr. Thorp. Have the prices been declining? 

Mr. Friel. I would say they have. 

Dr. Thorp. As the prices have declined, is there any evidence that 
the lower prices have increased the volume of sales? 

Mr. Friel, I wouldn't say so. I don't think they have. 

Dr. Thorp. You don't think they have? 
(The witness shook his head in the negative.) 

Dr. Thorp. Your feeling is that lower prices of whisky will not 
affect the total sale? 

Mr. Friel. I don't think it will. 

Dr. Thorp. So that from the point of view of the industry lower 
prices will not be offset by increased sales, and therefore the lower 
prices represent a direct charge against profits. There is no gain, as 
most industries have, by an increased sale? 

Mr. Friel. I don't think there will be. You will have to wait until 
competition develops that point. 

Dr. Thorp. What happens with regard to brands, in your opinion ? 
If prices are lowered, do people move into higher priced brands, 
relatively speaking? In other words, do people say they are going to 
spend $1.50 for whisky, and if the prices fall, that permits them to 
move into a slightly better quality? 

Mr. Friel. A small percentage. I don't think there is any real 
effect on it. 

Dr. Thorp. That is, you would then feel that consumers are suffi- 
ciently loyal to given brands that the price relationship among the 
brands has no appreciable effect on their choice ? 

Mr. Friel. I don't think that so much as there is a development - 
on the part of the consumer to shift around in a certain field. 

Dr. Thorp. Well now, to shift that a little bit, how near capacity 
is the industry operating? 

Mr. Friel. I pouldn't tell you that. 

Dr. Thorp. Is it— I don't care for exact figures — operating close 
to capacity, or is it operating at 50-percent capacity, or what? Is 
there excess capacity in the industry? Perhaps we should put it 
that way. 

Mr. Buck. Charts show, Dr. Thorp, about 25 or a little better. 

Dr. Thorp. Twenty-five percent of capacity? 

Mr. Buck. Total capacity — a shade over that. 

Dr. Thorp. Has that changed appreciably during this period of 
the last few years? Was it nearer capacity, Mr. Buck, several years 
ago ? 

Mr. Buck. It was operating at two fifty-four with an approximate 
total capacity of four twenty-five 2 years ago. 

Dr. Thorp. Has the capacity been increasing in the last several* 
years ? 

Mr. Buck. No ; the capacity has remained about fixed, a sloughing 
off of about 2,000,000 gallons. 

Dr. Thorp. Mr. Friel, what do you see as to the future of the 
situation in which there is this large capacity in an industry in which 
the consumption cannot be increased by lower prices, as you say? 
Will the net result be that the industry will have to go through a 
period of reorganization in which a number of the present producers 
will have to be eliminated in order to get onto a stable basis? 



2520 CONCENTRATION OF ECONOMIC POWER 

Mr. Fbiel. Oh, I don't know. I think, of course, like many other 
industries, it is practically a new industry and over the period of 
time until it becomes stabilized certainly there will be some cas- 
ualties. 

Dr. Thorp. It would be reasonable to assume, wouldn't it, that a 
new industry in which there was no control over capacity other than 
as to which individuals should operate, but no control over the 
amount of capacity, and an industry which had to build up large 
stocks, would necessarily develop a capacity in excess of that neces- 
sary for maintenance, once the stocks had been built up ? 

Mr. Friel. Well, you are not going to get any further capacity cer- 
tainly until some other people, investors, are attracted into the 
industry. 

Dr. Thorp. And this existing capacity is going to be a continual 
pressure toward lowering prices? 

Mr. Friel. The public will decide that. 

Mr. Buck. Do you think you covild finance additional capacity 
with the present capacity so far over and above necessity? 

Mr. Friel. You might. You might have somebody come in and 
put up a plant with all new ideas. 

Mr. Buck. You have a great faith in the sucker market, Mr. 
Friel. 

Dr. Thorp. Do you think this same principle with regard to pur- 
chasing applies in connection with the higher-priced brands? In 
other words, I don't want to limit this just to the lower-price brands. 
That may have been what you had in mind in saying lower prices 
would not bring in more consumers, or wouldn't sell more liquor. 
Would the same thing be true for Scotch, for example? 

Mr. Friel. You mean lower prices on Scotch would develop more 
Scotch drinkers? I don't think so. 

Dr. Thorp. You don't think so? 

Mr. Friel. No. 

Dr. Thorp. You don't have a feeling that there are a lot of people 
who are drinking lower-price liquors who would shift into more 
aged liquors, more quality liquor, if the price of the quality liquor 
were lower? 

Mr. Friel. Your cheaper liquors are becoming older, when you 
are talking about age, as you go along, so that you get the increase 
in age in both the low-priced liquors and high prices. 

Dr. Thorp. So the difference between the cheaper liquor and the 
more expensive liquor is gettiilg less and less in terms of quality ? 

Mr. Buck. What was the difference before? 

Mr. Friel. You say the difference between the low-priced liquors? 

Dr. Thorp. Yes; as the low-priced liquors are becoming older, 
doesn't that mean that the quality difference between the low-priced 
liquors and the high-priced liquors is getting less and less? 

Mr. Friel. No ; because there probably would be a tendency on the 
part of the high-priced liquor to extend the age on those liquors. 
Competition will develop that. 

Dr. Thorp. But can you do much with quality except for some 
very highly educated and sophisticated consumers in convincing them 
that there is a difference between, let's say, 8-year-old whisky and 
20-year-old whisky? 



CONCENTRATION OF ECONOMIC POWER 2521 

Mr. Feiel. It would be all according to how the whisky was made 
at the start and how it was kept during the 8 or 20 years, what care 
was paid to it. 

Dr. Thorp. Suppose that very great care was taken in both cases; 
til is was a company operating at maximum efficiency so that they did 
the best they could and made the best 8-year-old liquor, and made the 
best 20-year-old liquor, would there be a difference between them 
sufficient to justify an appreciable price difference on the part of the' 
consumer? 

Mr. Friel. Yes. The man who wanted that 20-year-old whisky^ if 
it had been properly made and properly matured, would be willmg 
to pay the price for it. 

Mr. Buck. Any palpable distinction between the two? 
Mr. Friel. I don't know. 

Dr. Thorp. As far as that situation is concerned, then, it is con- 
ceivable that we may have to educate the drinkers of the country to 
appreciate these older liquors if you want to maintain a price differ- 
ence. 

Mr. Fkikl. Age of necessity is not the determining factor. Whisky 
might bo made to mature at an early age. 
Dr. Thorp. What would be the determining factor other than age ? 
Mr. Friel. The proof at which it was made; the formula of the 
grains. 

Mr. Buck. That wouldn't be true in the United States. 
Mr. Friel. Yes; it would. 

Mr. Buck. Aren't the standards for the whiskies fixed in the 
United States? 
Mr. Friel. By names, that is all. 
Mr. Buck. Yes; well, he is talking about types. 
Mr. Friel. Mr. Thorp is talking about types, but types can be 
manufactured and we can fluctuate the formula. 

Mr. Davis. Is there any material difference in the formulas em- 
ployed by the different distillers of bourbon whisky in the United 
States? 

Mr. Friel. Very much so. A bourbon whisky is one the content 
of which is more than 51 percent corn. The rest of it can be small 
grains and can fluctuate anywhere from 49 percent down to about 
10 or 12. 

Mr. Davis. I know, but I asked you whether there was any varia- 
tion in the bourbon whisky. 
Mr. Friel. If there was any what? 

Mr. Davis. Variation in the formulas of bourbon whiskies manu- 
factured, we will say, in Illinois. 

Mr. .Friel. That is just what I pointed out, the formula and the 
grain content. Bourbon whisky is one the contents of which is more 
than 51 percent corn. You might make it 51 percent of corn and 49 
percent of rye and malt. You could make the whisky at 150 and you 
could make it at 155. 

Mr. Davis. I know you can do it. 

Mr. Friel. As to the Avay the Avhisky is made and the fonnula ^ 

Mr. Davis (interposing). As a matter of fact, do they have an 
absolute definite stabilized formula which they follow without regard 
to price of grain ? 



2522 CONCENTRATION OF ECONOMIC POWER 

Mr. Friel. Very much so. 

Mr. Buck. Taking it by any formula, your cost of production 
you have given would be the tops? 

Mr. Friel. At the stills without the barrels, without any charge 
added on to it. 

Mr. Buck. It doesn't matter what formula it is made by. Now 
Dr. Thorp projected a very interesting point here, to me, that is 
whether or not consumption would increase if prices were reduced. 
Do you feel that — I might even ask Dr. Thorp if he feels that the 
fact that consumption would not increase would justify an unrea- 
sonable price ? Do you feel that way about it ? 

Mr. FrjEL. No. 

Dr. Thorp. I don't think anything justifies an unreasonable price, 
by definition, almost. I would like to follow one point here that still 
bothers me a little bit in this picture. I may have had an erroneous 
impression, but my feeling was that where you have a series of 
products somewhat interchangeable as these are, there usually de-. 
"veloped a price structure which involved relationships among the 
parts, certain things being regularly priced somewhat above other 
things, and that it was the usual belief that any serious shift in that 
price structure made for disruption and disorganization because con- 
sumers would then njove from one class of the commodity to another 
class of the commodity. 

" I get the impression from your testimony that you feel that the 
prices of these different grades of whisky can, more or less inde- 
pendently, that the price of Scotch, for instance, can go up or down, 
and it has no appreciable effect on the consumption of or necessarily 
on the prices of rye. I just want to be sure that I understand you 
correctly on that, because it is a rather unusual situation, if that is 
true. 

Mr. Friel. I think your Scotch drinker is a Scotch drinker as such, 
and your rye drinker is a rye drinker, and your bourbon drinker is a 
bourbon drinker. In other words, whatever whisky you want to drink 
is the drink you take. 

Dr: Thorp. And you think the consumers in America are rather 
confirmed in their habits and convictions with regard to particular 
types of liquor? 

Mr. Friel. I think so. 

Mr. Davis. I want to develop some matters to satisfy myself. 

Mr. Buck. Judge, would you permit me to put in a price list at 
this point, just in connection with Dr. Thorp's questions? 

Mr. Davis. That is what I was going to ask about, price. 

SPREAD BETWEEN PRODUCTION COST AND PRICE TO CONSUMER 

Mr. Buck. Mr. Friel, I hand you a Seagram's Metropolitan New 
York district price list, I suppose, where you have set up a minimum 
consumer bottled prices established under the fair-trade contract 
effective February 11, 1939. This price shows one brand of bottlcd- 
in-bond bourbon whisky to be fixed at $5.30 a quart, doesn't it? 

Mr. Friel. That is right. 

(The price list referred to was marked "Exhibit No. 413" and is 
included in the appendix on p. 2696.) 

Mr. Buck. How much would that be a gallon ? 



CONCENTRATION OF ECONOMIC POWER 2523 

Mr. Friel. That whisky is at least 8 or 10 years old. 

Mr. Buck. What? How much would that figure a gallon? 

Mr. Friel. $21.20. 

Mr. Buck. Is that imported from Canada? 

Mr. Friel. That is correct. 

Mr. Buck. You pay no tax in Canada on that gallon, do you? 

Mr. Friel. We pay 15 cents. 

Mr. Buck. Fifteen cents tax in Canada, and in the United States 
you pay what? 

Mr. Friel. $4.50. 

Mr. Buck. Four fifty? 

Mr. Friel. Four seventy-five. 

Mr. Buck. Four seventy-five? 

Mr. Friel. That is right. 

Mr. Buck. Per gallon? 

Mr. Friel. That is correct. 

Mr. Buck. State tax in New York is what? 

Mr. Friel. $3. 

Mr. Buck. Are they included in that price ? 

Mr. Friel. Yes, sir. 

Mr. Buck. What? 

Mr. Friel. They are included. 

Mr. Buck. $1. 

Mr. Friel. $3. 

Mr. Buck. Three? 

Mr. Friel. $1 a gallon. 

Mr. Buck. That is the total of all taxes, isn't it— $5.80? 

Mr. Friel. $5.90. 

Mr. Buck. $5.90 taxes. Now you say at the most it cost^ 28 cents 
to manufacture. 

Mr. Friel. No ; I didn't. 

Mr. Buck. What does it cost? 

Mr. Friel. That whisky might have cost $1, or $1.25. It was 
manufactured 10 years ago in Canada. 

Mr. Buck. How in the world could it cost $1.25 ? 

Mr. Friel. I would have to check that. 

Mr. Buck. It cost you 

Mr. Freel (interposing). It costs 5 cents a gallon to carry for a 
year. 

Mr. Buck. I am coming to that, but I am asking what it costs to 
manufacture the whisky and get it off the stills. 

Mr. Friel. I don't know, I would hWve to look back. 

Mr. Buck. My dear man, don't you know it couldn't have cost 
more than 28 or 30 cents? 

Mr. Friel. It might have cost double that or triple that. 

Mr. Buck. Let's say it did cost twice as much as that, let's say it 
cost 50 cents a gallon to get it off the still — which of course it didn't, 
in my opinion — and let's say it was 10 years old. It costs 5 cents 
a year to age it, doesn't it? 

Mr. Friel. That is right. 

Mr. Buck. That is another 50 cents. 

Mr. Friel. Right. 

Mr. Buck. The cost plus aging. is $1. 

Mr. Friel". You have a barrel in there. 



2524 CONCENTRATION OF ECONOMIC I'OWEK 

Mr. Buck. That was included in the 5 cents. 

Mr. Friel. No. 

Mr.' Buck. How much per gallon? 

Mr. Friel. Fifteen cents in Canada. 

Mr. Buck. Fifteen cents for a barrel. Any more? 

Mr. Friel. You have overhead. 

Mr. Buck. Isn't that included in the 5 cents for aging? 

Mr. Friel. No, sir. 

Mr. Buck. Your corporate expenses are not included, of course, 
but $1.15 and $5.90 — that is $7.05 for taxes plus known costs to manu- 
facture per gallon. 

Mr. Freel. T6u have your packing on there.. 

Mr. Buck. That is 40 cents. 

Mr. Friel. What? 

Mr. Buck. Packing — 10 cents a bottle. 

Mr. Friel. No ; it costs you more than that in Canada. 

Mr. Buck. Wliy does it cost you more to pack a bottle of whisky 
in Canada than in the United States? 

Mr. Friel. It does. 

Mr. Buck. Why? 

Mr. Friel. Because operating charges and basic costs are higher. 

Mr. Buck. You mean labor is higher in Canada than in the United 
States? 

Mr. Friel. No; but operations are smaller. 

Mr. Buck. What does it cost in Canada? 

Mr. Friel. I would say that would cost between 50 and 60 tients. 

Mr. Buck. Let's give you 50 cents. All right, that is $7.55 so far. 
Any other known costs in there ? 

Mr. Friel. Freight. 

Mr. Buck. What is that on a gallon ? 

Mr. Friel. Ten cents. 

Mr. Buck. That is 65. Do you think of any more ? 

Mr. Friel. No. 

Mr. Buck. All right, $7.65 from $21.20 to the consumer leaves a 
difference of $13.55 between the consumer's cost and known cost to the 
manufacturer to take care of distribution, is that right ? 

Mr. Friel. That is right. That includes, of course, the retailer's 
profit and the wholesalers profit. 

Mr. Buck. That includes the whole distribution system? 

Mr. Friel. That is right. 

Mr. Davis. Mr. Thorp asked you several questions predicated upon 
the theory that there has been a reduction in the price of whisky. We 
all know, of course, that after repeal high prices were exacted and 
obtained for old whiskies which had been manufactured in pre- 
Volstead days, but I want to ask you if your company has made any 
material reduction in the prices of' comparable liquor within the past 
3 or 4 years. 

Mr. Friel. We have not made any material reductions outside of 
one reduction in 1936, at which time we reduced our price, as I recall 
it, oh, probably 15 percent, at the time the tariff was reduced, when 
we added part of our profit on to the tariff-reduction charge. We 
have made several smaller decreases. 

Mr. Davis. Was that on Canadian liquor? 

Mr. Friel. It was on American blended whisky. 



conc;k.\tuati()n of economic rowEii 2625 

Mr. Davis. But blended out of Canadian liquor ? 

Mr. Friel. Partly of Canadian whisky. 

Mr. Davis. That was in 1936, and relating entirely to a reduction 
in tariff. 

Mr. Friel. No ; part of the reduction was part of our profit. 

Mr. Davis. You reduced it from what previous price? In other 
words, was that your 5- and 7-year-old blended, that is, your two 
brands you are talking about? 

Mr. Friel. They were reduced at that time. 

Mr. Davis. Seagram's 

Mr. Friel (interposing) . Five and Seven Crown. 

Mr. Davis. You reduced it from what you had been selUng the 
previous year, you mean. 

Mr. Friel. That is correct. 

Mr. Davis. Well, now, what is the present consumer price on those 
same brands? 

Mr. Friel. The present consumer price 

Mr. Davis (interposing). On Five and Seven Crown. 

Mr. Friel. The present consumer price is $1.20 per pint of whisky 
in New York City. 

Mr. Davis. How much a quart? 

Mr. Friel. Per quart, $1.90. 

Mr. Davis. $1.90. You mean the consumer cost or your price to 
the wholesaler? 

Mr. Friel. Consumer price. 

Mr. Davis. $1.90 a quart for Five Crown. How much for Seven 
Crown ? 

Mr. Friel. $2.80. 

Mr. Davis. That is the same as the price you fixed in 1936, is it ? 

Mr. Friel. No; that is slightly lower. In 1936 I think we were 
getting $1.19, and to that we added the tax increase of last July. 

Mr. Davis. And made it how much ? 

Mr. Friel. The tax increase last July was about 10 cents a pint. 

Mr. Davis. Well, that is no material change, is it? 

Mr. Friel. Actually, today our price is about $1.10 on the same 
old tax basis as against probably $1.42 at that time. 

Mr. Davis. But summing it all up, as a matter of fact, there have 
been no material reductions in the price of the same character and 
same age of whisky, have there, in the United States? 

Mr. Friel. There have been material reductions; there have been 
reductions. 

Mr. Davis, Well, now, will you please furnish for the record your 
prices for each of the years on the exact, same type of whisky, from 
repeal up to your last price. 

Mr. Friel. Here is a copy right here. 

Mr. Buck. This is the same age whisky all the way through ? 

Mr. Friel, Increased formula. 

Mr. Davis. I think that ought to be printed in the record. 

Acting Chairman Reece, That may be included in the record, 

(The tabulation was marked "Exhibit No. 414" and is included in 
the appendix on p. 2696,) 

Mr, O'CoNNELL, I gathered from your testimony that in New 
York, at least, your company, by contract, fixes the resale price of 
its liquors to the consumer. Is that correct ? 



2526 CONCENTRATION OF ECONOMIC POWER 

Mr. Friel. That is correct. 

Mr. O'CoNNELL. Do you do that in other States? 

Mr. Friel. Wherever it is permissible, in the^ majority of States. 

Mr. O'CoNNELL. I take it that is in most States. 

Mr. Friel. I am not sure whether we do it in every State where it 
is permissible or not. 

Mr. O'Connell. You couldn't tell me whether it is the policy of 
your company to take advantage of the fair-trade law where one 
exists so that in all probability if there are fair-trade laws in over 40 
States, as I understand there are, the probabilities are that you take 
advantage of those laws and fix the resale price of your products by 
contract. Is that correct? 

Mr. Friel. We do. 

Mr. O'Connell. What steps do you take to enforce the provisions 
of your contracts Avhich maintain a resale price of your products! 

Mr. Buck. Mr. O'Connell, I have that to be brought out by another 
witness in another phase of the proceedings. It is perfectly all right ; 
I have no objection to the questions. 

Acting Chairman Reece. You may call your next witness. 

Mr. Buck. That is all, Mr. Friel. Thank you very much. 

Just one more question. Is the Seagram exporting aggregation 
members of the Distilled Spirits Institute?* 

Mr. Friel. We are. 

Mr. Buck. What services does that institute perform for your 
organization ? 

Mr. Friel. Oh, I would say the general welfare of the industry in 
the country. 

Mr. Buck. And the country? 

Mr. Friel. In the country. 

Mr. Buck. What, in specific, does it do for you? 

Mr. Friel. Frankly, I would have to think that over to give you 
any kind of intelligent answer, Mr. Buck. 

Mr. Buck. You pay it considerable money, don't you? 

Mr. Friel. Yes; we do. 

Mr. Buck. How much have you paid it in 4 years? 

Mr. Friel. You have the record, I think, right in there. 

Mr. Buck, Our record shows $118,605.43. I imagine that is for 
the 4-year period. And you don't know what services it performs 
for you? 

Mr. Friel. Well, it watches the legislation and the general practice 
of the industry throughout the country. 

Mr. Buck. That is all. 

Mr. Jacobi, please. 

Acting Chairman Reece. Do you solemnlj' swear in the testi- 
mony which you are about to give, to tell the truth, the whole truth, 
and nothing but the truth, so help you God? 

Mr. Jacobi. I do. 

TESTIMONY OF lESTEE E. JACOBI, PEESIDENT, SCHENLEY 
DISTILLERS CORPORATION, NEW YORK CITY 

Mr. Buck. Mr. Chairman, Mr. Jacobi, the present witness, is 
president of the Schenley Distillers Corporation, of New York. Will 
you state your name, Mr. Jacobi ? 



CONCENTRATION OF ECONOMIC POWER 2527 

Mr. Jacobi. Lester E. Jacobi. 

Mr. Buck. Of New York? 

Mr. Jacobi. Of New York City. 

Mr. Buck. I want to say that Mr. Jacobi, while he has been con- 
nected with the corporation for many years — I think perhaps since 
its organization — has been president only a short time. He suc- 
ceeded his brother, who was president, and lately deceased. 

CORPORATE ORGANIZATION OF SCHENLEY DISTILLERS CORPORATION 

Mr. Buck. Mr. Jacobi, can you give the committee a short resume 
of the organization and evolution of the Schenley Corporation ? 

Mr. Jacobi. The present corporation was organized in July 1933, 
having acquired the old Schenley Products Co. The Schenley Prod- 
ucts Co. was a corporation owning two distilleries, one in Pennsyl- 
vania and one in Kentuclr^. . It acquired the stock of the Schenley 
Products Co. by an exchange of its stock, and also at that time sold 
publicly a portion of its stock. 

Mr. Buck. Let's begin at the beginning. When was Schenley Dis- 
tillers Corporation organized? 

Mr. Jacobi. July 1933. 

Mr. Buck. So you have a clean slate beginning with repeal? 

Mr. Jacobi. Beginning with repeal. 

Mr. Buck. That slightly anticipated repeal. You began in July. 

Mr. Jacobl It was in contemplation of repeal. 

Mr. Buck. Wliat did you have at that time to begin with in the 
way of finance, for instance ? 

Mr. Jacobi.- Why I think our company's capitalization at the be- 
ginning was about $8,000,000. 

Mr. Buck. Was that cold money? I mean was it^cash money? 

Mr. Jacobi. No; it was represented by the assets of Schenley 
Products Co. which was taken into the new corporation, and the pro- 
ceeds of sale of 230,000 shares of common stock at $15 a share. 

Mr. Buck. In other words, you started off with money principally 
derived from the sale of stocks. 

Mr. Jacobl The sale of 230,000 common shares. 

Mr. Buck. And $8,000,000. 

Mr. Jacobl I think that was about the figure. 

Mr. Buck. And that was in 1933 ? 

Mr. Jacobl July 1933. 

Mr. Buck. The twenty-first amendment became effective December 
1933. 

Mr. Jacobi. Yes. 

Mr. BuGX. What is the present ccfrporate set-up of Schenley's ? 

Mr. Jacobl Outstanding stock ? 

Mr. Buck. No ; I mean in the number of units. How many corpo- 
rations do you have ? 

Mr. Jacobl Oh, we probably have 40 or 50 subsidiary companies, 
not all operating companies, however. We have about 8 or 10 active 
companies. 

Mr. Buck. Is Schenley Distillers Corporation a holding company 
or operating company ? 

Mr, Jacobi. It is an operating company insofar as the Schenley 
Distillers Corporation is concerned. It is operative as far as distribu- 



2528 CONCENTRATION OF ECONOMIC I'OWEH 

tion and sales are concerned. We manufacture in the subsidiary 
companies. 

Mr. Buck. You have 40 or 50 subsidiaries ? 

Mr. Jacobi. I think there are probably that many in existence but 
not operating, not active. 

Mr. Buck. Are all of your subsidiaries in the United States? 

Mr. Jacobi. Yes. 

Mr. Buck. Do you have any foreign holdings at all in the whisky 
business ? 

Mr. Jacobi. Yes; we own some Canadian whiskies that were pur- 
chased shortly after repeal. 

Mr. Buck. Are they held in Canada or in the warehouse here? 

Mr. Jacobi. Both. We have some stored here and we have some 
stored in Canada. 

Mr. Buck. But you have no corporate interest in any of the cor- 
porations in Canada? 

Mr. Jacobi. None whatever, direct purchase of whisky. 

Mr. Buck. None in Scotland or Ireland ? 

Mr. Jacobi. We own no whiskies in 'other foreign countries. We 
do import some Scotch whiskies and we do import some Irish whiskies 
which we sell under contract. 

BANKING arrangements OF THE SCHENLET CORPORATION 

Mr. Buck. Who are your banking .agents, Mr. Jacobi; for your 
corporations, I mean ? 

Mr. Jacobi. You mean for our active banking accounts? 

Mr. Buck. Yes. 

Mr. Jacobi. We have 3 in New Yoi'k City: Bankers Trust Co., 
Bank of Manhattan, National City Bank, Manufacturers Trust Co. 

Mr. Buck. Bankers Trust? 

Mr. Jacobi. Yes ; I named them, I think. Underwriters Trust Co. 
and the Commercial National Bank & Trust Co. We also do business 
with banks throughout the country. Wherever we have offices we have 
banking connections — Chicago, San Francisco, Los Angeles. 

Mr. Buck. They are usually utilized by the subsidiaries? 

Mr. Jacobi. AVhichever way the account may be handled — I mean, 
usually deposit and checking accounts. 

Mr. Buck. Do you have an open-credit agreement with Bankers 
Trust Co.? 

Mr. Jacobi. We have a banking agreement with 22 banks of which 
the Bankers Trust Co. is one. 

Mr. Buck. What is the ma.ximum under tliat agreement, the majci- 
luum credit? 

Mr. Jacobi. $27,000,000. 

Mr. Buck. $27,000,000? 

Mr. Jacobi. Yes. 

Mr. Buck. Who is the banker's agent under the agreement, or who 
are the agents ? 

Mr. Jacobi. Why, I think the Bankers Trust Co. might be termed 
that. I don't know that they are directly an agent; they being a 
New York bank represent the outside banks, no doubt. 

Mr. Buck. Is Mr. Keidel the banker's agent? 

Mr. Jacobi. No ; I think Mr. IMcGee — Mr. Hugh McGee. 



CONCENTRATION OF ECONOMIC POWER 2529 

Mr. Buck. I have just referred to an agreement with Seagrams. I 
think it is very similar to perhaps the one that your companies have. 
Mr. Jacobi. I am not familiar with Seagrams very much. 
Mr. Buck. Mr. Keidel is a member of your board of directors? 
Mr. Jacobi. Yes. 

Mr, Buck. Is that agreement still in effect? 
Mr. Jacobi. Yes sir. 

schenley's acquisition of whisky stocks 

Mr. Buck. Beginning with 1933, how did Schenley acquire its 
stocks of whisky to meet the demand immediately following the 
repeal ? 

Mr. Jacobi. Why, we started out with about 5,000,000 or 6,000,000 
gallons of whisky. 

Mr. Buck. How did you get that ? 

Mr. Jacobi. Acquired it and accumulated it through the many 
preceding years. The present corporation acquired it from the 
Schenley Products Co. which has been in existence a great many 
years, probably one of the oldest distilling companies in America. 

Mr. Buck. You bought it ; bought the stocks ? 

Mr. Jacobi. Wellj the present principal active officers of Schenley 
Distillers Corporation were the active heads of the old Schenley 
Products Co., and it was a reorganization you might say. 

Mr. Buck. Have yoi5 acquired any stocks from competing com- 
panies since that date? 

Mr. Jacobi. Since 1933? 

Mr. Buck. Yes. 

Mr. Jacobi. Yes; I wouldn't say from competing companies. We 
acquired a stock of whiskies in 1933, just at the time of our reorgani- 
zation. In fact, I think it was really acquired by the old Schenley 
Products Co. It may have been delayed so as to be taken into the 
new corporation, but it was practically at the same time. In July 
of 1933 we acquired the James E. Pepper Co. of Lexington Ky. 

Mr. Buck. What other corporations' stocks have you acquired? 

Mr. Jacobi. We acquired the Bernheim Distilling Co. in 1937. 

Mr. Buck. What were the Bernheim stocks composed of? 

Mr. Jacobi. Both whiskies and property. 

Mr. Buck. Kentucky bourbon whiskies ? 

Mr. Jacobi. Yes. 

Mr. Buck. What about the ages ? 

Mr. Jacobi. All the whiskies practically that they had produced. 
The Bernheim Distilling Co. was not an active selling company. As 
a matter of fact, they sold no whisky in cases. They operated two 
plants, one they had never sold a barrel of whisky from — it was 
known as the Belmont Distilling Co. All of that whislcy was stored 
for aging. The Bernheim Distilling Co. manufactured only for sale 
in bulk. 

Mr. Buck. How many gallons were involved in that transaction, 
approximately ? 

Mr. Jacobi. Oh, I should say offhand — I wouldn't want to give this 
as accurate although it is probably in our questionnaire — probably 
five or six million gallons. 



2530 CONCENTRATION OF ECONOMIC POWER 

Mr. Buck. How were the Bernheim stocks looked upon by the trade 
at that time generally 'i What was the opinion of them ? 

Mr. Jacobi. Probably as being the finest whiskies manufactured in 
America. 

Mr. Buck. And also constituting a backlog of aged whiskies? 

Mr. Jacobi. Yes. 

Mr. Buck. You had plenty of whisky at that time, as a matter of 
fact, didn't you ? 

Mr. Jacobi. No; the real purpose of acquiring the Bernheim plant 
was due to the fact that we had very little aged whisky at the be- 
ginning of repeal. 

Mr. Buck. But you had plenty of young whiskies? 

Mr. Jacobi. No. Very young whiskies, yes ; and then we acquired 
the Pepper plant in July of 1933 and that plant burned down in 
April of 1934 which deprived us of all our aging whiskies, and from 
the time of that fire we had been endeavoring to acquire other 
whiskies to replace it, and the first opportunity we had was to acquire 
the Bernheim plant. 

Mr. Buck. Did the Bernheim plant have a distillery and bottling 
plant? 

Mr. Jacobi. They had no bottling plant; they had a distillery. 

Mr. Buck. Did you acquire it? 

Mr. Jacobi. Oh, yes. 

Mr. Buck. Wliat other stocks have you acquired, if you can re- 
member? Just give them to us chronologically. 

Mr. Jacobi. I don't think we have made any other acquisitions of 
stocks. 

Mr. Buck. Any other acquisitions of competing or potentially 
competing plants? 

Mr. Jacobi. No ; none. We have acquired no plants. 

Mr. Davis. How many brands have you acquired since repeal? 

Mr. Jacobi. I would say we have acquired one of any consequence. 

Mr. Davis. Which was that? 

Mr. Jacobi. The Cascade brand. 

Mr. Davis. You are manufacturing Cascade whisky now? 

Mr. Jacobi. Yes, sir; at Frankfort and Lexington. 

Mr. Davis. You are employing sour-mash process? 

Mr. Jacobi. Yes, sir; we employ both in our various plants, sour 
mash and sweet mash. 

Mr. Davis. You mean you are employing both in the same dis- 
tillery ? 

Mr. Jacobi. Oh, no; in our various plants. 

Mr. Davis. I was asking about Cascade. 

.Mr. Jacobi. Cascade is a sour mash. As a matter of fact, I would 
like to correct that. Judge; Cascade is a blend of straight whiskies 
yf^n bottled. The Cascade whisky as distilled is a sour mash. 

Mr. Davis. You have no aged Cascade whisky? 

Mr. Jacobi. No. 

Mr. Buck. At the time you acquired the brands you didn't ac- 
quire corresponding stock of Cascade whisky? 

Mr. Jacobi. It was not an active company. 

Mr. Buck. There was no stock? 

Mr. Jacobi. None whatever. 



CONCENTRATION OF P]CONOMIC POWER 2531 

Mr. Buck. You immediately put the brand in use? 

Mr. Jacori. No ; we didn't put the brand in use for about 2 years 
after acquiring it. 

Mr. Buck. What age whiskies did you bottle under the brand? 

Mr. Jacobi. Blended straight whiskies, and the youngest whfeky 
in the blend is 3 years old. 

Mr. Buck. Then the whisky that you did put in the bottle and 
brand Cascade was not manufactured particularly upon what might 
be termed a Cascade formula because you didn't have the brand at the 
time the stuff was manufactured; is that it? 

Mr. Jacobi. Well, we did accomplish the same thing; in buying the 
brand we bought the goodwill of the company as it existed, and 
we also acquired the original formula for manufacturing Cascade, 
and we have followed that formula. 

Mr. Buck. Yes; but there hasn't been sufficient time lapsing be- 
tween the time of acquisition of the brand and the time you first put 
the brand on the market to make that w|iisky, even if you had the 
formula. 

Mr. Jacobi. There is no real necessity of manufacturing whisky 
under the name of Cascade. Cascade is a trade name. 

Mr. Buck. Let's stick to the formula. If it is significant, I say 
you didn't have the time to manufacture that whisky. 

Mr. Jacobi. Originally, no; but we do have a process that accom- 
plishes the same purpose. 

Mr. Davis. But what you are selling now as Cascade is a blend of 
straight whiskies. 

Mr. Jacobi. Yes, sir. 

Mr. Davis. None of that is sour-mash whisky? 

Mr. Jacobi. Yes, sir. 

Mr. Davis. What proportion? 

Mr. Jacobi. Oh, I couldn't say that offliand. Judge, I haven't 
the formula in my mind, but I would assume that a great part of it 
is because it is mostly Kentucky whiskies, if not all. 

Mr. Davis. Of course, you understand that Cascade was originally 
a Tennessee whisky. 

Mr. Jacobi. Yes; I know its history quite well and Tam sure that 
you do. 

Mr. Da\ts. How many brands does your company own all told? 

Mr. Jacobi. Oh, I would assume that we own a couple of hundred. 

Mr. Davis. How many are you marketing? I mean under how 
many brands are you marketing whisky now? 

Mr. Jacobi. Roughly, 25 actively. 

Mr. Davis. And that includes bourbon and rj^e. 

Mr. Jacobi. Bourbons and ryes, yes ; and blends and straight 
whiskies. 

Mr. Davis. And you are not manufacturing any Scotch-type 
whisky? 

Mr. Jacobi. No. 

Mr. Davis. Do you import your Scotch? 

Mr. Jacobi. We import Scotch. 

Mr. Davis. That is all. 

Dr. Thorp. May I follow that just for a moment as to what the 
trends have been with regard to the different brands? I suppose 



2532 CONCENTllAllON OF ECONOMIC POWER 

that immediately after repeal your sales were very largely quite 
young whisky. What is the present ratio in terms of the use of 
whisky that is 4 years or more as against whisky that is under 4 
yeajrs ? 

Mr. Jacobi. For our company, our sales of whiskies under 4 years 
old will represent about 70 percent of our sales. 

Dr. Thorp. Is there a steady shift toward the more aged whiskies ? 

Mr. Jacobi. That is our ultimate aim and as a matter of fact we 
have increased ages and qualities as rapidly as possible. 

Dr. Thorp. Would you hope eventually to reach a situation where 
it was not necessary to put on the market any whisky less than 4 
years of age? 

Mr. Jacobi- I don't think that would be practical. 

Dr. Thorp. Why wouldn't it be practical ? 

Mr. Jacobi. I don't think there would be enough money to finance 
the aging of it. 

Dr. Thorp. That is, to carry the stock? 

Mr. Jacobi. To carry all stocks until they became 4 years of age. 

Mr. Berge. How much does that add to the cost per barrel or 
gallon ? 

Mr. Jacobi. It doesn't add materially to the cost, but it adds mate- 
rially to the cost of financing and the ability to finance. 

Dr. Thorp. To what extent has there been a development of financ- 
ing through warehouse certificates? 

Mr. Jacobi. I don't think any of the substantial companies finance 
through warehouse certificates. 

Dr. Thorp. Your feeling would be that you are somewhat near 
now the total volume of stocks that can be financed in this country ? 

Mr. Jacobi. Well, I wouldn't say that that is accurate, but I think 
we have probably reached the peak of warehousing stocks. 

importance or aging whisky 

Dr. Thorp. Was it true that in the earlier era of the alcohol indus- 
tries this youthful whisky was not sold at that time? Wasn't the 
market entirely the aged whiskies? 

Mr. Jacobi. No ; that is not true. As a matter of fact, we started 
selling whiskies which were made by the special processes when they 
were as young as 3 months. 

Dr. Thorp. But I am thinking now of back 20 and 30 years ago. 

Mr. Jacobi. No; I think 20 and 30 years ago there was a great 
quantity of young whisky sold; there always has been in the lower- 
priced brackets, a very large percentage of the business was in young 
wliiskies. 

Dr. Thorp. Do you feel that there is any considerable public in- 
terest in getting older whiskies if possible? 

Mr. Jacobi. I personally don't think the public are much interested 
in the age of whiskies. I think they are very susceptible to the 
quality of whiskies. Age alone does not make good^shisky. 

Dr. Thorp. Doesn't age help any whisky ? 

Mr. Jacobi. Age is essential to all whiskies. However, age alone 
does not make good whisky. A whisky not properly made will not 
improve by age. 



CONCENTKAtlON OF ECONOMIC POWER 2533 

Dr. Thorp. Yes; but without age it can't reach the same quality. 

Mr. Jacobi. I say age is essential to all whiskies. 

Dr. Thorp. So that from the point of view of the consumer it 
would be desirable, if possible, to Jiave more and more of the con- 
sumption take to forms of aged whiskies; there would be a better 
quality then. 

Mr. Jaoobi. Yes; up to a certain point. 

Mr. Davis. Mr. Jacobi, do you understand from your experience 
that whisky improves or undergoes any perceptible change after it 
is bottled? 

Mr. Jacobi. We believe that its character changes practically none 
after in glass. 

Mr. Davis. And that is the reason you have to carry it in the 
original barrels, to age? 

Mr. Jacobi. That is correct, sir. 

Mr. Davis. That is my understanding. 

Mr. Jacobi. Yes, sir. 

Mr. O'CoNNELL. Mr. Jacobi, I understood you to say a few mo- 
ments ago that you doubted the possibility of having most whisky 
4 years old or better because of the cost of carrying it for that length 
of time, of holding it. Our figures are, that we had yesterday, to 
'the effect that there are some 400,000,000 gallons of whisky held in 
stock at the present time. Is most of that, would you know, held in 
wood for aging, or is it bottled ? 

Mr. Jaoobi. That is entirely in wood. All the records comprise 
whiskies in bonded warehouses. 

Mr. O'CoNNELL. If the figures as to consumption, which are to the 
effect that only about 70,000,000 gallons of whisky are consumed in 
a year are correct, it seems to me that almost all or a substantial part 
of that 460,000,0()0 gallons of whisky is going to be 4 years old or 
more before it can possibly be sold. 

Mr. Jacobi. No; I didn't say that the cost of carrying whisky 4 
years would be prohibitive; that is, the caiTying charge, as has 
been testified to here. One of the more important costs of carrying 
whisky is the financing and the ability to finance. I don't think it 
would be possible for any of the companies, even the larger com- 
panies, to finance whisky until all of it became 4 years of age. 

Mr. O'CoNNELL. You don't think that there is any unreasonable 
or undue burden of the financial charge of carrying the present stock ? 

Mr. Jacobi. There is temporarily; but that will be disposed of 
within the next year or two. 

Mr. O'CoNNELL. The whisky will be disposed of? 

Mr. Jacobi. The burden will be disposed of by the reduced produc- 
tion that is now in process. 

Mr. O'CoNNELL. Yes ; but if we have 460,000,000 gallons of whisky 
in stock at the present time, the only way we can reduce the period 
of holding that stock is sell the stock. 

Mr. Jacobi. That is correct. 

Mr. O'CoNNELL. If you sell 70,000,000 gallons, certainly more than 
half of 460,000,000 gallons a year would be more than 4 years old 
before disposed of. So it seems to me along the line of -Dr. Thorp's 
question, there should be a very, very substantial increase in the 
amount of 4-year-old whisky available. 



2534 CONCENTRATION OF ECONOMIC POWER 

Mr. Jacobi. There iincloubtedly will be, and the prices of 4-year- 
old whiskies will be commensurate \\4th the other ages within another 
year or 2 years, in my opinion. 

Mr. O'CoNNELL. There will probably be a substantial decrease in 
the price '^ 

Mr. Jacobi, Yes. 

Mr. Beuge. Do you think that decrease in price will have the effect 
of shifting consumption more and more to the older whiskies? 

Mr. Jacobi. Well, as I said before, I don't think age is a factor. 
I think it is brand value and quality under those labels. 

Mr. Berge. But I am assuming the same brand. You have brands, 
do you not, in whiskies that are sold when 2 or 3 years old, and also 
as 4-year-old whisky? 

Mr. Jacobi. To answer your question better, we have continuously 
increased the age of our various brands. Brands that are currently 
selling today as 3-year-old whisky were originally put on the market 
at 3 months old. 

Mr. Berge. The real thing I want, to get at is this : Will not the 
cheaper price tend to shift the consumption to the bottled-in-bond 
whisky, the 4-year-old whisky, making due allowance for brajids and 
other factors? If the bonded whisky were cheaper, there would be 
more proportionately consumed, would there not? 

Mr. Jacobi. It is our opinion there is no great public demand for 
bottled-in-bond whiskies. 

Mr. Berge. Is that not because the price is relatively high? 

Mr. Jacobi. I think it is a matter of public taste. 

Mr. Berge. You think the public would prefer the younger whisky ? 

Mr. Jacobi. Not necessarily younger whiskies. 

Mr. Berge. If they were able to buy the better -whiskies ? 

Mr. Jacobi. Not necessarily younger whiskies, but lighter whiskies, 
lower in proof, and what is bottled in bond is always 100 in proof. 
As a matter of fact, in preprohibition days bottled in bond did not 
exceed 12 percent of the total business. It was during the prohibition 
era when it was only possible for medicinal whisky to be sold as 
bottled in bond that bottled in bond became a public figure in the 
whisky business. 

Dr. Thorp. Why will tliis come down then if it is not ^oing to 
attract more consumers? 

Mr. Jacobi. A matter of commercial practice. It is certainly our 
desire to give the best quality possible; that has been our aim, and we 
go largely into the low-priced-bracket field. 

Acting Chairman Reece. It is now 12 o'clock, Mr. Buck. Wliat are 
your plans or wishes with respect to the program ? 

Mr. Buck. Mr. Chairman, I had hoped to finish with the four com- 
panies on their corporate finance this morning. I am about one-half 
day behind with that, and I would appreciate it if I could call one 
more witness before the present adjournment, and we could come back 
at 2 o'clock, and I think Ave can catch up on the program. 

Acting Chairman Reece. If that is agreeable to the committee, we 
will continue for a period of time, and I presume the length of time 
that will be necessary to finish with the witness will depend on the 
num.ber of questions which may be propounded. 

Mr. Buck. As you have noticed, I have considerably shortened this 
this morninff over what we e-ave Mr. Porter vesterdav in the wav of 



CONCENTRATION OF ECONOMIC POWER ' ' 2535 

questions, and I have had to do it in order to keep within the allotted 
time. I will ask Mr. Jacobi just two more questions. 

According to the report made in answer to the questionnaires sub- 
mitted to your company, Mr. Jacobi, you have spent approximately 
$15,000,000 over the past 4 years in advertising. Is that approxi- 
mately correct? 

Mr. Jacobi. I would think so. 

Mr, Buck. Your company is also a member of the Distilled. Spirits 
Institute? 

Mr. Jacobi. Yes. 

Mr. Buck. What services does that institute render the company ? 

Mr. Jac-obi. Why, they look after the general welfare of the indus- 
try insofar as regulations and legislation are concerned. 

Mr. Buck. That is all. 

I will put the chart of directors of Schenley on the board right 
quick, so it might be put into the record in regular form according to 
the others. This chart, like the rest, I think, is taken from Poor's 
Manual. 

Mr. Jacobi, I realize your brother Harold is no longer connected 
with the company. With that exception, are there any changes to 
your knowledge? 

Mr. Jacobi. Our last financial statement has the correct list of 
directors. May I take a look at that? That is a correct list. We 
have nine directors. 

Mr. Buck. I will ask that the chart be included in the record. 

Acting Chairman Keece. And printed? 

Mr. Buck. Yes. 

(The chart referred to was marked "Exhibit No. 415" and is in- 
cluded in the appendix on p. 2696.) 

Mr. Jacobi. I'm sorry ; Mr. Becker is not a director. 

Mr. Buck. Mr. Becker and Mr. Harold Jacobi are no longer 
directors. 

All right, Mr. Jacobi. Thank you very much. 

Acting Chairman Reece. Call your next witness. 

Mr. Buck. Mr. Walton, will you step up to the committee table, 
please. 

Acting Chairman Reece. Do you solemnly swear, in the testimony 
you are about to give, to tell the truth, the whole truth, and nothing 
but the truth, so help you God? 

Mr. Walton. I do. 

TESTIMONY OF HOWARD E. WALTON, VICE PRESIDENT AND GEN- 
ERAL MANAGER, HIRAM WALKER & SONS, INC., DETROIT, 
MICH. 

Mr. Buck. Mr. Walton, will you state your name, address, and 
business connection, please, sir? 

Mr. Walton. Howard R. Walton, vice president and general man- 
ager, Hiram Walker & Sons, Inc., Detroit, Mich. 

Mr. Buck. Mr. Chairman, I would like to say here that Mr. H. C. 
Hatch is the president of this corporate group, I believe. I have 
tried to reach him and I find he is in Europe some place, and I 
haven't been able to get in touch with him, so Mr. Walton is here in 
his place. 



2536 CONCKN'l'KATlOX OF 1;(JUN(JM1C I'OVVEK 

CORPOKATE ORGANIZATION OF HIRAM WALKER-GOODERHAM & WORTS, LTD. 

Mr. Buck. Mr. Walton, will you briefly give the committee a 
resume of tlie origin and evolution of the Hiram Walker corpora- 
tions? 

Mr. Walton. Yes, sir. 

The parent firm, Hiram Walker-Gooderham & Worts, Ltd.. was 
incorporated in Canada in 1927 under the laws of Canada. It owns 
in Canada Hiram Walker & Sons, Ltd., located at Walkerville; 
Gooderham & Worts, Ltd., located at Toronto, and James Barclay 
& Co., Limited, which is primarily a Canadian sales company. It 
also owns in the United States Hiram Walker & Sons, Inc., at Peoria, 
which is a manufacturing company. Hiram Walker & Sons, Inc., 
owns the American sales companies of Hiram Walker, Incorporated, 
Gooderham & Worts, Ltd., and James Barclay & Co., Limited. There 
are some other United States subsidiaries, Mr. Buck, which were 
created largely in view of State law ; the Massachusetts Corporation,^ 
which had to be incorporated in order to conduct sales operations in 
the State of Massachusetts. I believe that is the only one. 

Mr. Buck. Mr. Walton, how many subsidiaries are there in the 
United States? 

Mr. Walton. Well, I have enumerated £hose four. If you will let 
me refer to a chart I will be glad to add any more. There may be one 
or two others. There is Hiram Walker & Sons Western, Inc., which 
is a California company and which owns a rectifying plant on the 
Pacific coast, in San Francisco. Then there is the Massachusetts — I 
think I have enumerated all of them. 

Mr. Buck. That takes care of your corporate subsidiaries in the 
United States? 

Mr. Walton. That's right. 

Mr. Buck. How many in Canada ? 

Mr. Walton. In Canada we have the three. I don't recall any 
others. 

Mr. Buck. What other foreign subsidiaries or associate corporations 
do you have ? 

Mr. Walton. The parent company also owns our properties in 
Scotland, which are owned by Hiram Walker & Sons, Scotland, Ltd. 
That company in Scotland owns a lot of subsidiary companies, I 
would say 20 or 25, most of which are merely brand-name companies. 

Mr. Buck. That is in Scotland? 

Mr, Walton. That's right, sir. There are three companies in that 
group which are more than brand -name companies, I would say, 
namely, one company which owns a small malt distillery, a second 
which owns another small malt distillery in Scotland — just those two, 
as a matter of fact, 

Mr. Davis. You mean barley malt? 

Mr. Walton. To make malt whiskies exclusively, Judge, in north- 
ern Scotland. 

Mr. Davis. All of the Scotch whisky made in Scotland is made 
from barley, is it not? 

Mr. Walton. Barley malt. 

Mr. Davis. Either barley itself or barley malt. 

Mr. Walton. That's right, sir. All the Scotch malt whiskies are. 
I assume that is what you refer to. 



coNcKN'i'KAi'iox OF i:('()N()Mi(; r()\vi:u 2537 

Mr. Buck. As I understand it, Hn-ani Walker & Co. is one of the 
old companies in the whisky business. How long has it been in 
operation from the beginning of the thing? 

Mr. Walton. I have heard it said, Mr. Buck, that Hiram Walker 
formed this company, the original Hiram Walker formed the old 
company of Hiram AValker, Ltd., way back in 1858, I think it was. 

Mr, Buck. And one of your principal brands in the United States 
before prohibition was Canadian Club? 

Mr. Walton. Yes, sir. 

Mr. Buck. I bring that out so that the committee might associate 
it with the particular corporation, and it still is a leading brand here? 

Mr. Walton. It still is a very prominent brand with us. 

Mr. Buck. As I understand it, you have recently constructed a 
very modern and very large plant in this country. 

Mr, Walton. Yes; that plant was started late in the fall of 1933 
at Peoria, 111. It was completed in the spring of 1934:' and went into 
production the early part of 1934. 

Mr, Buck, How does it compare with other distilleries in the 
United States? 

Mr. Walton. In point of size, Mr. Buck? 

Mr. Buck. In point of size. 

Mr. Walton, We think it is the largest distillery in the United 
States. 

Mr. Davis. What is the capacity ? 

Mr. Walton, The capacity is about 100,000 gallons a day if 
operated at full capacity. However, we have never operated at full 
capacity. 

Mr. Buck. That is on a 24-hour basis ? 

Mr. Walton. That's right, sir. 

Mr. Buck. So, when repeal came in December 1933, in the United 
States, what did you have here in the way of corporate organization 
and set-up? 

Mr. Walton. We had nothing, to my knowledge. 

Mr. Buck. Nothing? 

Mr, Walton. That's right, sir. 

Mr. Buck. You entered the field anew, so to speak? 

Mr. Walton. That's right. 

Mr. Buck. How did you enter it? "Wliat was the organization, 
the mechanics? 

Mr. Walton. This, of course, will have to be my recollection. I 
was not with the company until after repeal. It is my understand- 
ing, and this is all confirmed in our questionnaire, that the company 
took steps toward the erection of the Peoria distillery prior to repeal 
in anticipation of repeal. 

Mr. Buck. In other words, your people in Canada thought repeal 
was coming? 

Mr. Walton. They thought they saw repeal coming. 

Mr. Buck. So they stepped into this country; and did they organ- 
ize a new corporation? 

Mr. Walton. A new corporation wns formed at that time. 

Mr. Buck. What is that? 

Mr. Walton. That is Hiram Walker & Sons, Inc. 

Mr. Buck. And they in turn built the plant at Peoria? 

Mr. Walton. That's right, sir. 



2538 CONCENTRATION OF ECONOMIC POWER 

Mr. Buck. I see. 

From that date on, what has been the chronological corporate 
evolution in the United States? 

Mr. Walton. When repeal took place, obviously Hiram Walker 
was desirous of entering the United States market. They fonned 
Hiram Walker, Incorporated, which was a selling company and is a 
selling company. Also at that time was formed Gooderham & Worts, 
Ltd., a Delaware company which, too, is a selling company. Along 
about 1935 another selling company was formed, known as James 
Barclay & Co. That is another Delaware company. All of the stock 
of those three companies was owned by Hiram Walker & Sons, Inc., 
which is a Michigan corporation. 

Mr. Buck. And that in turn is owned by the Canadian company? 

Mr. Walton. That in turn is owned by the Canadian companies. 

Mr. Davis. Wliat is the idea of having three sales companies? 

Mr. Walton. The main idea behind that, Judge, was that in 
Canada we had three selling companies. Each one of those com- 
panies sold its own products. The Hiram Walker Sales Co. in 
Canada sold products that were made at the Hiram Walker plant 
in AValkerville. Gooderham & Worts, Ltd., Sales Co. in Canada 
sold products that were made at Toronto, in another distillery ; James 
Barclay & Co., in Canada, sold products that were largely made at 
Niagara Falls, another distillery in Canada. It was, we thought — 
or I should say the management of the company thought, I wasn't 
a part of the management at that time — that it was only logical that 
that same sales structure should be carried out in the United States, 
and that policy was followed. 

Mr. Davis. Was that for the sale of three different types of whisky; 
in other words, rye and Kentucky bourbon 

Mr. Walton (interposing). No, sir; we have just one plant in the 
United States. That is at Peoria. Those companies that I enu- 
merated sell products that are made in that one plant. 

Mr. Davts. Do you make separate types of whisky in that plant? 

Mr. Walton. Oh, yes; we make several types of whisky in that 
one plant. 

Mr. DA\^s. Are these three United States companies sales com- 
panies? 

Mr. Walton. Yes, sir. 

Mr. Davis. Undertaking to sell products comparable in type, re- 
spectively, as those three in Canada? 

Mr. Walton. Well, of course, Hiram Walker, Incorporated, for in- 
stance, sells Canadian Club. Gooderham & Worts, Ltd., specializes 
mainly in the sale of spirit blends. At the start, of course, all three 
of those companies sold largely the products that were sold by their 
comparable companies in Canada. 

Mr. Davis. The pnint I am getting at is, are you manufacturing at 
Peoria, Canadian Club whisky? 

Mr. Walton. No, sir. 

Mr. DA^^s. In other words, your brands that you are manufactur- 
ing and distributing in the United States are different from your 
Canadian brands? 

Mr. Walton. They are, sir. They are all American type whiskies 
that we are making in the United States. In Canada we make Cana- 
dian whiskies. 



CONCENTRATION OF ECONOMIC POWER 2539 

HIRAM walker's FINANCING OPERATIONS 

Mr. Buck. Now, Mr. Walton, that goes to the mecha.iics of the 
thing. Now what about your financing. I assume that when you 
saw repeal approachinj^ here your company was in a fairly good 
finnncial condition in Canada. 

Mr. Walton. That is my imderstanding, Mr. Buck ; yes. 

Mr. Buck. You didn't suffer any from prohibition up there? 

Mr. Walton. I am not familiar with the facts and figures, but I 
know that the company had cash. They had not, I believe, paid any 
dividends in Canada for some little time on the common stock. They 
had accumulated cash. 

Mr. Buck. Did you bring over Canadian capital, or did you get 
capital here? 

Mr. Walton. Both. 

Mr. Buck. Both? 

Mr. Walton. Both. 

Mr. Buck. In the first company you organized here, the Hiram 
Walker & Sons, Inc., of Peoria, was that financed by Canadian 
capital? 

Mr. "Walton. Entirely. 

Mr. Buck. So you began ^^■ith Canadian capital here. 

Mr. Walton. That is right. 

Mr, Buck. Since that time what has been your financinl 

Mr. Walton (interposing). Since tliat time Ave liave sold $8,000,000 
worth of debentures in the United States which are convertible into 
common stock of the parent company. That is all the United States 
financing we have done. In other words, to partially finance our 
Scotch acquisitions in Scotland, we have sold a million and a half 
pounds of debenture stock in Great Britain. 
. Here recently we sold 100,000 shares of our preferred stock in 
Canada. 

Mr. Buck. You have continuously built up your properties here 
from earnings? 

Mr. Walton. Yes, sir. 

Mr, Buck. And now you do have one of the finest distilleries in 
the country? 

Mr. Walton. We think so. 

Mr. Buck. You also own Twenty-One Brands? 

Mr. Walton. No, sir. 

Mr. Buck. What is your connection with Twenty-One Brands? 

Mr. Walton. One of our Scotch com])anies has a contract with 
Twenty-One Brands whereby they are supplied Ballantine Scotch 
whisky, which we make, which one of our Scotch companies makes, 

Mr, Buck. Are you in the gin business? 

Mr. Walton. Yes, sir. 

Mr. Buck. What corporation handles that? 

Mr. Walton. In the United States? 

Mr. Buck. Yes. 

Mr. Walton. Hiram Walker & Sons, Inc., makes the gin in this 
country. 

Mr. Buck. We will have the chart of the board of directors. I 
will ask you while we are getting that chart: Your company is also 
a member of the Distilled Spirits. Institute? 



2540 CONCENTRATION OP^ KCONOMIC I'OWEK 

Mr. Walton. Yes, sir. 

Mr. Buck. What services does the Institute perform for your con- 
tribution ? 

Mr. Walton. They supply us with all sorts of statistical data 
relative to the industry and tax payments and what-not. They 
also promote good will within the industry designed toward improv- 
ing the public relations and putting the industry on as high a plane 
as we can; and then, of course, there are the connections in various 
legislative matters. 

Mr. Buck. What, in the way of promoting good will, do they do ? 
I mean how do they go about that? 

Mr. Walton. I should qualify that possibly by saying it applies 
mainly to trade practices. You are probably familiar with the code 
that Dr. Sturgis has just helped draw up down in the State of Ohio, 
intended primarily to improve practices within the industry? 

Mr. Buck. He works with the State authorities there? 

Mr. Walton. Yes, sir. 

Mr. Bi'Ck. I notice your contributions, according to your report, 
have been $176,442.08 for 4 years. 

Mr. Walton. Yes, sir. 

Mr. Buck. And the Institute contacts the various State legislatures 
and authorities in working out problems m the industry? 

Mr. Walton. They do have men in the field ; yes. 

Mr. Buck. And the Federal Government? 

Mr. Walton. That is true. 

Mr. Buck. I wish you would look at the chart [referring to ex- 
liibit No. 416], Mr. Walton, and tell me if there are any changes. 
The directors themselves are taken, I thmk, from your own report, 
and their corporate connections are taken from Poor's Manual, the 
1938 edition of Poor's Register of Directors of the United States and 
Canada. Do they look approximately correct? 

Mr. Walton. Yes. Of course, I don't know what boards our di- 
rectors are on, but that is a correct list of the board of directors. 

Mr. Buck. I offer the chart for reproduction in the record. 

(The chart referred to was marked "Exhibit No. 416" and is in- 
cluded in the appendix on p. 2697.) 

Mr. Buck. How many brands do you liave in the United States, 
Mr. Walton, do you know ? 

Mr. Walton. All three sales companies, I would say, Mr. Buck, 
probably have a total of 125 different brands. 

That includes whiskies, gins, cordials, bottled cocktails, everything. 

Mr. Buck. I just ask you this for information in the record. Is 
it possible under existing conditions in the trade to buy brands and 
hold them in reserve or take them off the market? 

Mr. Walton. I really would have to get a little legal advice, I 
-am afraid, on that. I don't know myself. 

Mr. Buck. Do you have many brands that are not in active use? 

Mr. Walton. No; we have none. 

Mr. Buck. The reason I ask you, some of the other gentlemen 
]>receding you have testified that they own, for instance, two or 
three hundred brands, and are only using 25 or 30. That would 
indicate that it was possible to acquire a brand. 

Mr. Walton. I couldn't say myself. I know t^hat our bi-aiuls are all 
brands that are being actively used. 



CONCENTRATION OF ECONOMIC POWER 2541 

Mr. Buck. According to your report you spend approximately 
on an aA^erage of one million and a halt a year in advertising. 

Mr. "Walton. That is correct. 

Mr. Buck. That is done principally in the promotion of particular 
brands? 

Mr. Walton. True. 

Mr. Buck. That is all, Mr. Chairman. 

Acting Chairman Reece. If there are no questions, the committee 
will stand adjourned until 2 : 30. 

Mr. Buck. Two o'clock. 

Acting ChaiiTnan Eefce. Since we had run over this far we 
thought that might possibly push some of the committee members 
to get back, but I would consult your convenience. I had consulted 
with the chairman in regard to it before making the announcement, 
but if you feel that is going to limit you too much, Mr. Buck, suppose 
we say 2 : 15. ■ 

(Whereupon, at 12 : 33 p. m., the committee recessed until 2 : 115 
of the same day.) 

AFTERNOON SESSION 

The hearing was resumed at 2 : 30 p. m. upon the expiration of the 
recess. 

Acting Chairman Reece. The committee will come to order, please. 
Are you ready to proceed, Mf. Buck? 

Mr. Buck. Yes, sir. 

Acting Chairman Reece. You may do so. 

INCREASED ASSETS OF FOUR LARGEST DISTRIBUTORS 

Mr. Buck. Mr. Chairman, in the way of closing this inquiry 
into the financial evolution of the four corporations, I would like 
to submit a chart which is a consolidated financial chart for the four 
corporations, from 1934 to 1938, keeping in mind that repeal occurred 
at the end of 1933. 

The chart is taken from the annual reports of the corporations 
themselves and made up and arranged by an accountant of the Fed- 
eral Trade Commission. It shows, of course, total assets beginning 
Avith 117 million in 1934, running up to 287 million in 1938. The net 
sales of the corporations and the progressive increase in those Sfiles 
year after year in the industry in the United States is of som^'iin- 
terest, I think; beginning in 1934, which was a clear year so "far 
as Federal laws are concerned for the sale of whisky, with appiroxi- 
matelv 90 million net sales, running up to $282,884,000, and so on, 
for 1938. 

I should like to ask that the chart be filed in the record as an 
exhibit. 

Acting Chairman Reece. It may be included in the printed record. 

(The chart was marked "Exhibit No. 417" and is included in the 
appendix on p. 2697.) 

Mr. Buck. Of course, the net profits shown, and other statistical 
data, are on the chart, and the committee will take that into consid- 
eration in the use of it. That is all of the chart. 

Now, Mr. Chairman, before getting further into the matter I have 
two witnesses, or I will say one oAiner of a very small distillery, 

124401— 39— pt. 6 9 



2542 CONCENTRATION OF ECONOMIC POWER 

comparatively speaking, whom I would just like to have state the 
cost of producing whisky, to get the data from a small distillery as 
distinguished from the larger distilleries that we have already heard, 
and I would like to ask Mr. A. Smith Bowman, of Virginia, if he 
is present, to come up to the stand. 

Acting Chairman Reece. Do you solemnly swear, in these pro- 
ceedings, to tell the truth, the whole truth, and nothing but the truth, 
so help you God? 

Mr. Bowman. I do. 

TESTIMONY OF A. SMITH BOWMAN, SR., PRESIDENT, A. SMITH 
BOWMAN DISTILLERY, SUNSET HILLS, FAIRFAX COUNTY, VA. 

Mr. Buck. Mr. Bowman, how are you ? Will you state your name 
and address? 

Mr. Bowman. A. Smith Bowman, Sunset Hills, Va. 

Mr. Buck. You have a small distillery in Fairfax County, Va. ? . 

Mr. Bowman. Yes, sir. 

Mr. Buck. How long have you been engaged in the making of 
whisky ? 

Mr. Bowman. Since July 1935. 

Mr. Buck. Since 1935, Now, could you give the committee your 
cost, I would say, of producing a gallon of whisky at the distillery? 

Acting Chairman Reece. Will you ask the witness to sit a little 
closer to the microphone ? 

Mr. Bowman. What was your question ? 

cost to small distiller of producing "quality" whisky 

Mr. Buck. Would you give me your cost of producing whisky at 
your distillery per gallon at the distillery ? 

Mr. Bowman. Well, of course, that depends altogether upon the 
kind of whisky. Now I can take my distillery down there — as you 
know I am just a little distillery, just part and parcel of my) farm, 
and I operate the farm and the distillery together, working the 
labor back and forth each way, and numerous byproducts, I feed 
my cattle, so that I can make it very cheap if I want to, but I don't 
make that kind of whisky. I am making the very highest grade 
whisky that I know how to make. In fact, my instructions to my 
distiller are to obey every law. 

When it comes to the cost Of the whisky, I don't figure on that so 
much as I do the quality. 

Mr. Buck. I will ask you, do you know? 

Mr. Bowman. I couldn't tell you, if you ask that question, I 
couldn't tell you just as to the penny right here, but my oiRce would 
be able to get you that information. But the kind of whisky that 
I am making would run at the present prices — are you figuring it as 
to barrels or from the stills ? 

Mr. Buck. Flat from the distillery, as it comes off the stills. 

Mr. Bowman. That would cost you about 40 cents, 42 cents. 

Mr. Buck. Forty-two cents. What kind of whisky is that? 

Mr. Bowman. That is heavy-bodied bourbon. 

Mr. Buck. Heavy-bodied bourbon. That is made from 51-percent 
corn ? 



CONCENTRATION OF ECONOMIC POWER 2543 

Mr. Bowman. No ; it is more corn. It is about 65-percent com. 

Mr. Buck. That is all I wish to ask Mr. Bowman. 

Mr. Davis! What is the capacity of your distillery ? 

Mr. Bowman. Between twelve and thirteen hundred gallons a day. 

Mr. Davis. Is that 24 hours? 

Mr. Bowman. No; 8 hours. 

Mr. Davis. Eight hours; and you, generally speaking, run 8 hours 
a day? 

Mr. Bowman. Yes. 

Mr. Davis. Do you ever run longer than that, Mr. Bowman? 

Mr. Bowman. No ; never have. 

Mr. Davis. If you ran two or three shifts, would the cost of your 
whisky be reduced? 

Mr. Bowman. Oh, yes; I think it would. In fact, of course, as I 
said in the beginning, the cost of my whisky — if I wanted to make 
that kind of whisky I could reduce the cost of it very materially, but 
I am not trying to make cheap whisky. 

Mr. Davis. You specialize on a high-grade whisky? 

Mr. Bowman. My position is this : That I just have a small plant, 
just make one thing, and if I don't make that the best, why I am lost. 
I have to make it the best, and I am trying to do that ; and if I ever 
find out that I am not making it the best, why I have to change nay 
plans and make it the best or get out of business. 

Mr. Davis. Where did you*'say your distillery is located? 

Mr. Bowman. Right over in Fairfax County, just across the river. 

Mr. Davis, Thank you. Now, this 42 cents average you speak of for 
your highest grade whisky ; is that the price as it comes before it is 
barreled ? 

Mr. Bowman. Well, I think his question was just as it comes from 
the still without the barrels. Of course, if you add the barrels, they 
are a very large, part of the cost. 

Mr. Patterson. I should like to ask the witness this question : If 
you add executive and factory burden to that 42 cents, approximately 
what would be your cost ? 

Mr. Bowman. I didn't understand the question. 

Mr. Patterson. If you add on to your 42 cents executive burden 
and factory burden 

Mr. Bowman (interposing). Oh, well, that would add largely to it. 
Of course, I can make whisky cheaper because it is a family propo- 
sition. I operate it in connection with my farms. One of the rules 
out there is if a man is in the distillery and they need him on the 
farm, he has to go there ; and if I need him in the distillery or need 
him in the dairy, he must ^o. So my distillery is run in connection 
with my farm. My farm is my main business; my distillery is just' 
a side issue, just making a small amount of good whisky. That is 
all I am trying to do. I am not trying to get up into the high ranks. 

Mr. Patterson. More power to you. What is your average number 
of employees, the average daily census of employees ? 

Mr. Bowman. Well, I imagine on all of my various enterprises ont 
there it runs about 100. 

Mr. Patterson. Just on your distillery ? 

Mr. Bowman. Oh, just on the distillery? 

Mr. Patterson. Yes, 



2544 CONCENTRATION OF ECONOMIC POWER 

Mr. Bowman. Well, the distillery — about 20 in the bottling plant 
and about 15 to 18 in the other plant, in the distillery proper. 

Mr. Patterson, That is around 35 or 40 working 51/2 days a week, 
8 hours? 

Mr, Bowman. Well, of course, a great many of those, when I don't 
have any work in the distillery for them, I work them on the farm. 

Mr. Patterson, Are you satisfied with the financial results of your 
work to such an extent that you might shift the major burden over 
to your distillery ? By that I mean, are you ready to forget the farm 
and stick by this distillery if you had to take a choice? 

Mr, Bowman. No; my farm is my principal business. My farm 
has always paid me money except for one drought here in 1931 or 
1932, when I think I lost a little money on it; my farm was a good 
investment to me last year; it is a good investment every year. Of 
course, I built my distillery; I wanted to make money out of it, but 
I built it largely to give employment to labor on the farm. I have a 
farm out there on which the labor is pretty steady ; they don't change 
around; they raise a nice crop of children oiit there every year and 
have got a fine place to put them, and all thi.s happened to work into 
my farm, 

Mr. Patterson. I didn't mean to lead into that, Mr. Chairman, 
but I would like an invitation to go down there sometime. 

Mr. Bowman. I'd be delighted to have you any time and show you 
a good farm, whether I can show you a good distillery or not. 

Acting Chairman Keece. The Secretary of Agriculture has advised 
with you about the successful operation of your farm, hasn't he ? 

Mr. Bowman. No, no. 

(Chairman O'Mahoney assumed the Chair.) 

Mr. Davis. Mr. Bowman, what percentage of the grain that you 
distill into whisky do you grow on your farm ? 

Mr, Bowman. I am increasing that all the time. I suppose I had 
about 6 or 7 hundred acres in last year, and I will probably have 
double that amount in this year and probably twice that next year. 
I am increasing the number of acres I raise in grain; of course, 
keeping as much, livestock as I do, I have to keep a lot of grass and 
things like that. 

Mr. Davis. Still, you buy most of your grain requirements for your 
distillery, do joi\ not? 

Mr. Bowman. Well, yes; most of it I buy from the surrounding 
farmers, a great deal of it ; some some other places. 

Mr. Davis. How many dairy coWs have you? 

Mr. Bowman. We have about 200 head in the dairy. 

Mr. Davis. Of course, you use a good deal of what you raise on the 
farm for your dairy. 

Mr. Bowman. Yes. 

Mr. O'CoxNELL. Mr. Bowman, where do you sell your whisky ? 

Mr. Bowman. What's that ? 

Mr. O'CoNNELL. Where do you sell your whisky! 

Mr. Bowman. Oh, I sell it everywhere. I have quite a trade in 
New ^ York and in Washington, in Maryland, and the State of 
Virginia, for instance, takes a lot of it, West Virginia, Alabama, 
wherever you can, of course. 

Mr. O'CoNNEEL. Do you sell it to retail stores? 



CONCENTRATION OF ECONOMIC TOWER 2545 

Mr. Bowman. No ; we don't sell it to retail stores. We sell it to 
jobbers. 

Mr. Buck. How much do your sales amount to in a year? 

Mr. Bowman. Well, we just began selling, we just put it on the 
market a little over a year ago. I think our sales ran about $160,000 
or $175,000 this last year, and are increasing very rapidly. 

Mr. Buck. One hundred sixty thousand ? 

Mr. Bowman. I think that is about it. 

Mr. Buck. That is all. 

Representative Williams. Do you run your still constantly in 
operation all the time? 

Mr. Bowman. Yes, I have; since I started I have never closed down 
except once, I think, when I didn't get a warehouse completed quite 
in time to get my whisky. 

Representative Williams. What capacity still is it? 

Mr. Bowman. It is about 1,250 to 1,300 gallons in 8 hours, 8-hour 
shifts. 

Representative Williams. What percentage of the capacity do 
you operate ? 

Mr. Bowman. I operate full capacity most of the time. I am 
operating at half capacity and have been for a month or two be- 
cause I have got a warehouse there that I have not quite completed 
and I am afraid if I go on full capacity I may not get the ware- 
house completed in time to finish it. 

Representative Williams. If you operated 24 hours a day your 
capacity would be three times as great as it is now ? 

Mr. Bowman. Yes. 

Representative Williams. You gave the capacity for 8 hours? 

Mr. Bowman. Yes. 

Representative Williams. That would necessarily reduce the cost 
of production, wouldn't it, if that were done? 

Mr. Bowman. Oh, yes; yes, I think it would, although I expect 
if a man just wanted cheap whisky, I expect I could make it cheaper 
than anybody; in fact, when I first started, before I had any brand 
of my own to hurt, some people wanted 300,000 gallons of cheap 
whisky, and in the case of that amount of whisky I was in compe- 
tition with every distiller in the country, I imagine, and I got the 
order because I could make a better whisky at less money. 

Representative Williams. Do you have any bottled in bond? 

Mr. Bowman. No; I don't have. I will have in another year. 

Mr. Davis. How much whisky do you get out of a bushel of grain ? 

Mr. Bowman. That varies, of course. It depends upon the corn 
and the amount of moisture in the corn and all those things. 

Mr. DA^^s. I meant on a yearly average. 

Mr. Bowman. Well, it will run about 4.90 to 4.92; occasionally 
it will run up over that, but I can get a much larger yield than I do. 
But as I say, if I do that, I do it at the expense of my quality, and 
I can't afford to do that. I have just got one thing and that is quality 
whisky and if I don't get the quality there I'm gone. 

Mr. Buck. What goes to make quality? 

Mr. Bowman. Well, a lot of things; the way it is handled, the 
temperature to which it is cooked, m which the mash is cooked; 
there is a g^reat deal in the yeast that it is made from, there is a 



2546 CONCBNTKATION OF ECONOMIC POWEU 

great deal in the formula that you use. It is just like anything else; 
it is just like the difference between a Virginia ham that is 3 years 
old and well cooked and a ham from one of those big companies 
that is mass production — just the difference that I can't tell you, 
but it is there. Sometime I will let you see the difference between 
them, 

Mr. Buck. I want to agree with you as to the ham. 

Mr. Bowman. That is true of whisky, too, and the public are 
becoming more and more quality conscious. Just after repeal of 
prohibition, anything that was legal that had a little alcohol in it, 
you know, would sell and sell fast, and if I could have got my permit 
to do business, I expect I would have been tempted to do the same 
thing, but Virginia didn't repeal until some time after the National 
Government and I got a late start, and I saw by that time that 'there 
was no chance for me unless I made the best that could be made, and 
that is just what I am trying to do. 

Mr. Buck. All right, sir; thank you. 

Mr. Bowman. There is one angle of this. As I said a while ago, 
I am a farmer more than I am a distiller. As I see it, prohibition 
was repealed for the benefit of the farmer. We all talked it. We 
talked, if prohibition could be repealed that the farmer would be 
benefited by it and tha farmer voted for the repeal of prohibition 
just for that purpose. And I have been led to believe — I may be 
wrong — that the farmer hasn't gotten a ju^t break on the repeal of 
prohibition. It's been a little baby handed to the Government here 
6 years ago and it has been surrounded by big interests that I just 
didn't think was good for the farmer. I never saw why a^ town 
up there in Illinois should be able to make 100,000 gallons of whisky 
a day and let the farmers around there have the benefit of that grain 
that other farmers didn't. I may be wrong on that. 

Mr. Berge. How old is your whisky when you sell it? 

Mr. Bowman. I have whisky 3 years old. I sell some at 2 years 
old and 3 years old. 

Mr. Berge. You intend to sell bonded whisky later, I suppose, you 
are holding it. 

Mr. Bowman. I will if the public wants it, but my idea is that 
possibly bonded whisky will not be as popular. As you might imag- 
ine bonded whisky is a little too strong, it is a little too high proof. 
If a man came to me and wanted bonded whisky and my whisky was 
4 years old, I would sell it to him. 

Mr. Berge. Have you any idea what the difference of cost would 
be between selling your whisky at 2 years and selling it at 4 ? 

Mr. Bowman. I couldn't give it here. If I were at my office I 
could tell you. 

Mr. Berge. Do you think it would be very much? 

Mr. Bowman. It is considerable. The loss by evaporation is con- 
siderable, the cost of carrying and all of those things. You have a 
lot of costs toward carrying it. You have to keep a cooper in there 
all the time to see whether there is a leak in the barrels. If there 
is a leak a lot of whisky can go out in a mighty short time, you 
know. 

(The witness, Mr. A. Smith Bowman, was excused.) 

The Chairman. Call the next witness, please. 



CONCENTRATION OF ECONOMIC POWER 2547 

Mr. Buck. Mr. Keidel. 

The Chairman. Do you solemnly swear, in the testimony you are 
about to give, to tell the truth, the whole truth, and nothing but the 
truth, so help you God ? 

Mr. KEroEL. I do. 

TESTIMONY OF LOUIS A. KEIDEL, NEW YORK CITY 

Mr. Buck. State your name, business connection, and address, 
please, sir. 

Mr. Keidel. Louis A. Keidel, in the banking business at 16 Wall 
Street. 

Mr. Buck. What bank are you connected with? 

Mr. Keidel. Bankers Trust Co. 

Mr. Buck. Any other bank? 

Mr. Keidel. No. 

Mr. Buck. Do you act as bankers' agent for any other banks under 
any agreements ? 

Mr. KEroEL. Yes. 

Mr. Buck. What banks? 

Mr. Keidel. Seagrams. 

Mr. Buck. I mean are you agent for other banking groups other 
than Bankers Trust? 

Mr. KJEroEL. Yes. 

BANICEKS LOAN AGREEMENTS WITH SCHENLET AND SEAGRAMS 

Mr. Buck. Of course, I don't want to go into your entire financial 
position, but as to the whisky industry, what groups of bankers do 
you represent, or have you represented in the past 4 years, dealing 
with what distilleries, or distillery corporations? 

Mr. KEroEL. Only those banks that are participants in the loans 
that our bank made to Schenley and to Seagrams. 

Mr. Buck. When were those loans or agreements made, Mr. Keidel ? 

Mr. Keidel. Within the last 4 years, or 5, I don't remember the 
exact dates. 

Mr. Buck. And what was the\ length of time which they ran and 
what was the minimum banking credit allowed by each? 

Mr. Keidel. One ran 5 years and another ran 2. 

Mr. Buck. Five and two. 

Mr. Keidel. Let me correct myself. We also lent money to the 
Glenmore Distillery in Kentucky. 

Mr. Buck. Is that Glenmore ? 

Mr. KJEroEL. Glenmore; yes, 

Mr. Buck. Let's take the two agreements. What was the maxi- 
mum amount of credit under each? 

Mr. Keidel. As I recall it, the Schenley was twenty-seven millions 
and the Seagrams twenty-eight, divided into short-term and long- 
term loans of ten millions each. 

Mr. Buck. And you are also a director in Schenley's Distilling Cor 
poration? 

Mr, KjEroEL. Yes. 

Mr. Buck. Are you a director in Seagram also ? 

Mr. KEroEL; No. 



2548 CONCENTRATION OF ECONOMIC POWER 

Mr. Buck. That is all, thank you sir. 

(The witness, Mr. Louis A. Keidel, was excused.) 

Mr. Buck. At this point, Mr. Chairman, I don't know whether the 

committee is ready to rule upon whether or not the bankers' contracts 

should be admitted to the record. If the committee has reached some 

- conclusion on that, this may be a good place to put it in the record.^ 

If not, of course, it can go in at any time. 

The Chapman. The committee itself has had no opportunity to 
pass upon it. In fact, I have just learned of the offer myself, and 
Congressman Reece advises me that it was just withheld until the 
committee would have the opportunity to examine it. 

Mr. James E. Friel. We will waive the objection to the admission 
of the bank credits in the record. 

Mr. Buck. You have no objection? 

Mr. Friel. No objection. 

The Chairman. This is the witness who expressed objection? 

Mr. Buck. This is Mr. Friel, treasurer of Seagram Corporation, 
who this morning had some hesitancy ,to consenting to this agreement 
being admitted to the record. Mr. Friel now withdraws whatever 
objections he lias to it and agrees it may be printed in the record. 

The Chairman. If there is no objection on the part of the witness, 
and I take it there is none, and if there is no objection on the part 
of any member of the committee, the exhibit may be admitted to the 
record for printing. 

(The exhibit previously marked "Exhibit No. 411" was admitted to 
the record and is included in the appendix on p. 2687.) 

Mr. Guy Mason. Representing a client to be heard, that does not 
apply to any witness except the one just referred? I may object, 
and do object at this time. 

The Chairman. You are objecting to something that hasn't arisen 
yet. 

Mr. Mason. I am trying to find out what the procedure is. 

The Chairman. We will cross that bridge when we come to it. 

Mr. Buck. Is Mr. Gene Tunney here? (Not present.)^ 

Mr. Buck. Mr. Chairman, at this point I might note for the record 
that with the time at our disposal I think this concludes the investi- 
gation into the corporate evolution of the four big corporations. 
'Nqv^ we propose to take up distribution and the price structure of 
the iilclustry, and I had supposed that Mr. Tunney would be here. 
In his absence we migiit call Mr. Wachtel. 

The Chairman. Do you solemnly swear, in the testimony you are 
about to give, to tell the truth, the whole truth, and nothing but the 
truth, so help you God? 

Mr. Wachtel. -I do. 

TESTIMONY OF W. W. WACHTEL, PEESIDENT, CALVERT DISTILLERS 
CORPORATION, NEW YORK CITY 

Mr. BjpcK; .State your name and business connections. 

Mr. Waohtet^. My name is W. W. Wachtel. I am president of 
Calvert Distillers Corporation, a subsidiary of Distillers Corporation, 
Seagrams, Ltd., of Canada. 

• See testimony on p. 2508, supra. 

"Mr. Tunney testified the following day; his testimony befflps. Infra, p 2568. 



CONCENTRATION OF ECONOMIC POWER 2549 

Mr. Buck. It is one of the Seagram group of corporations? 

Mr. Wachtel. Yes. 

Mr. BucK^ Are you active in charge of sales of the whisky for 
Calvert Distillers? 

Mr. Wachtel. Yes, sir. 

Mr. Buck. What is the volume of whisky business in dollars done 
by Calvert per year? 

Mr. Wachtel. Mr. Buck, we have never published that informa- 
tion of a subsidiary. 

Mr. Buck. Well, you know, I am just a country boy. I don't 
know a thing about corporations, so if you will excuse me if I pry 
into something. 

Mr. Wachtel. Well, if it is important I don't thinlc our counsel 
would have any objection, but without his advice, I should rather 
not answer that question. 

Mr. Buck. All right, sir, could you give us an approximation on 
the volume of business in gallons, or cases probably. I think you 
market in cases. 

Mr. Wachtel. I would say approximating 9,000,000 gallons 
(whisky and gin). 

Mr. Buck. Nine million per year? 

Mr. Wachtel. Yes. 

Mr. Buck. That is for Calvert, one subsidiary of Seagram's? 

Mr. Wachtel. Right. 

Mr. Buck. And you are actively engaged in the managing of sales 
and distribution of that subdivision ? 

Mr. Wachtel. Yes. 

Mr. Buck. What are the principal brands involved in that? 

Mr. Wachtel. We have a rather unique position in that our brands 
are rather limited. We have 4 major brands of whisky in 4 buying 
brackets, all of the same type of whisky. We have 2 gins and we 
have one or two "nondescript straight whisky brands in which we have 
no interest whatsoever and which we produce and sell in very small 
quantities, so I would say the answer to your question is probably 5 
brands of importance, a total of 8 brands altogether. 

Mr. Buck. You sell the Calvert brands of Seagrams? 

Mr. Wachtel. No; we sell the Calvert brands of Calvert. We 
are not affiliated with the American company of Seagram. We are 
a direct subsidiary of the Canadian company. 

Mr. Buck. What's the difference, they are all one litter of pups? 

Mr. Wachtel. I don't know whether they are pups; they may be 
a litter. 

Mr. Buck. You will excuse the comparison, but they all belong to 
the same family group. 

Mr. Wachtel. That is right. 

"missionary" type of marketing employed by CALVERT 

Mr. Buck. How is th*' marketing done ? How do you market your 
whisky ? 

Mr. Wachtel. We market our whisky through wholesalers through- 
out the United States, having appointed distributors to handle our 
products in most of the major markets of the country, and we direct 
that distribution through a direct sales force of our own of 300 men. 



2550 ('(jNCKMKAi'iox oi i;<'().\(>.\ii<' i'<»\vi;i; 

Mr, Buck. What do you mean by "directiiifr" the distribution? 

Mr. Wachtel. Well, our salesmen support and assist and aid the 
vN'holesaler in making placements and in securing orders where it is 
legally permitted to do so. In some States it is not, one State in 
particular, and to promote the sale of our products and to educate 
the wholesaler salesmen in a comjdete knowledge of our product and 
how to sell it. 

Mr. Buck. How does he educate them? 

Mr. Wachtel. AVell, he attends meetings in many markets when- 
ever they have meetings of their own salesmen. He will at that time 
expound the virtues of this product, tell oui- sales policy, what our 
philosophy of doing business in the whisky business is, and it hap- 
pens to be just a little diUcrent from most of our competitors, and 
therefore we have to do more of that than the average distiller. 

Mr. Buck. What are those men commonly known as? 

Mr. Wachtel. Missionary men. 

Mr. Buck. They are distinguished from the regular salesmen? 

Mr. W^ACHTEL. The wholesaler has his own staff of salesmen. Prob- 
ably our group has 2,500 men. 

Mr, Buck. Wlio sells to the wholesaler? 

Mr. Wachtel. We do. 

Mr. Buck. Whom do you mean by "we"? 

Mr. Wachtel. Salesmen. Usually a contact man for each whole- 
saler, and usually the district manager in that market takes care of 
the important accounts and does the selling himself. 

Mr. Buck. Let me try anrl get the structure. Your main office is 
in New York ? 

Mr. Wachtel. Yes, sir. 

Mr. Buck. Your plant is at Laurel, Md.? One of your plants? 

Mr. Wachtel. It is now called Baltimore. 

Mr. Buck. It is on the road between here and Baltimore? 

Mr. Wachtel. That is right. 

Mr. Buck. You are distributing whisky throuirhtjut the United 
States? 

Mr. Wachtel. Yes, sir. 

Mr. Buck. A^^ierever it is legally sold? 

Mr. Wachtel. Yes, sir. 

Mr. Buck. Now, you have one man who contacts each wholesaler? 

Mr. Wachtel. No; we have a district manager in a State who will 
contact at various times all of the wholesalers. If his sales force is 
large enough, he may assign one man to each wholesaler or one man 
to two wdiolesalers to more or less carry out the details of watching 
stocks and taking orders and doing all the necessary contacts. 

Mr. Buck. Yes. Now, what do these missionary men do? They 
are not connected with that transaction. 

Mr. Wachtfx. Well, they are direct salesmen of ours who j^romote 
the sale of our product, in some cases suggest window displays, and 
teach the wholesaler's salesmen the virtues of our products and why 
he should sell them in preference to somebody else's. 

Mr. Buck. What I am trying to arrive at is. does your effort cease 
with the wholesaler ? 

Mr. WACHn:L. Oh, definitely. 

Mr. Buck. Does your missionary nian contact the retailer, too? 



CONCENTRATION OF ECONOMIC POWER 2551 

Mr. Wachtel. I should retract that former statement. Oh, yes; 
]ie contacts the retailer, he definitely does. 

Mr. Buck. And what is the object in his contacting the retailer? 

Mr. Wachtet.. To see that he gets the right shelf display and that 
the retailer himself may know something about our product, because 
as I said, we are in the unique position of having a little more dif- 
ficult problem of selling than has the average distiller. 

Mr. Buck. Why do you have the difficulty ? 

Mr. Wachtel. We happen to be exponents and proponents of 
blends, and we don't believe that straight whiskies are good for any 
[)urpose except for blending purposes. We make whiskies only for 
blending purposes and sell straight whiskies only in small quantities. 
We make 150 different kinds of ryes and bourbons and malt whiskies 
and neutral spirits and we believe in and sell only those whiskies to 
make a sum total known as a spirit blend. 

Mr. Buck. That is one finger on the hand. How can you maintain 
that attitude as against your whole corporate structure that is selling 
straight whiskies? 

Mr. Wachtel. There is very little straight whisky sold by our 
entire corporate structure. The percentage would probably be, a 
rough guess, 5 percent, if that much. 

Mr. Buck. You say the missionary man goes beyond the whole- 
saler; they visit the retailer? 

Mr. Wachtel. Particularly the pouring outlets, such as taverns, 
hotels, bars. 

Mr. Buck. And they do whatever is legitimately possible toward 
the promotion of your particular brands as against competitive 
brands. 

Mr. Wachtel. Yes, sir. 

Mr. Buck. They listen to the retailers' problems and try and help 
Ihem solve thern in those ways? 

Mr. Wachtel. Ver}' much, sir. We are proud of that very fact 
that we try to do more than merely sell them. 

Mr. Buck. Many of the States liave Avhat you call fair trade laws. 

Mr. Wachtel. That is right? 

Mr. Buck. I think you are a great advocate of those. 

Mr. Wachtel. I liave been for 25 years. 

Mr. Buck. Now, in the transaction between the distiller and the 
wholesaler what is the agreement and what are the arrangements 
now in existence? Give us a typical example. 

Mr. Wachtel. On what? 

Mi- Buck. On your whiskies. 

Mr. Wachtel. As belween the wholesaler and the distiller? 

Mr. Buck. Yes, sir. 

Mr. Wachtel. We will appoint a wholesaler in the market. In 
many cases he will sign a franchise. 

Mr. Buck. Let's stop right there and say what does that mean. 

Mr. Wachtel. A franchise is a contract of understanding between 
lis, that he will handle our line and that we will sell bim an agency 
contract, subject to cancelation within 10 days, I think, on either side. 

Mr. Buck. Are there any particular terms? Does he have to take 
a certain volume? 

Mr. Wachtel. No; we never specify that. 



2552 CONCENTRATION OF ECONOMIC POWER 

Mr. Buck. Does your missionary man make side agi-eements in 
regard to those thinp;s ? 

Mr. Wachtel. If he does and we catch him, we would fire him. 

Mr. Buck. All ri^ht, sir. Let's go on from there. You have the 
franchise with the wholesaler. 

Mr. Wachtel. That is right. 

Mr. Buck. From there to the retailer? 

Mr. Wachtel. The retailer buys from the wholesaler and we have 
no immediate interest in the transaction other than to guide it and 
see that we get the business instead of the other fellow. 

Mr. Buck. Wliat about the price? 

minimum prices suggested by CALVERT IN "oPEN" STATES 

Mr. Wachtel. On price, we suggest prices in those States where 
it is permissible to do so, and there are some 43 States, deduct 17 
monopoly States, leaving 26 open States in which we have the right 
to suggest — and may I make this word very forcible — "minimum" 
resale prices. We have many instances to show you where, rela- 
tively not many, but many in number, prices are higher than the 
minimum price at the election of the retailer himself. 

Mr. Buck. Isn't it a natural tendency in the market to have the 
minimum become the maximum under those circumstances? 

Mr. Wachtel. That is very unfortunately true. 

Mr. Buck. That is true? 

Mr. Wachtel. It is true. 

Mr. Buck. So it is, therefore 

The Chairman (interposing). You say it is unfortunate. 

Mr. Wachtel. Unfortunately true. 1 say that for a very good 
reason, not every retailer has the same cost of doing business and 
some are entitled to more than others. 

Mr. Buck. Of course, the consumer comes in some places on this, 
I suppose. 

Mr. Wachtel. There is enough free and open competition that if 
he doesn't lilce our prices he has such a variation of prices to select 
from — and may I inject one thought in connection with this; that 
there are being offered four-and-a-half-year-old Kentucky bourbon 
brands in the Boston market for $1.33 a quart for anybody who wants 
to buy it, and not three seventy-nine as shown on the chart. 

If a man is fool enough to pay three seventy-nine, he does so at 
his own election. 

Mr. Buck. You don't dispute the figures shown on the chart ? 

Mr. Wachtel. Not those particular* figures, Mr. Buck. Tliat price 
is a little lower today. 

Mr.^ Buck. Let's get back to this. Let's take the transaction from 
the distiller to the wholesaler under the franchise. You say there 
are not conditions of that franchise that might interfere with that 
wholesaler in handling competitive brands? 

Mr. Wachtel. Definitely not. 

Mr. Buck. Other brands at all? 

Mr. Wachtel. Definitely not. 

Mr. Buck. You have no franchises out which require that whole- 
saler to take a particular amount of whisky from you ? 



CONCENTRATION OP ECONOMIC POWER 2553 

Mr. Wachteu None. Well, let's put it this way: We have prob- 
ably two or three contracts made within recent months where we 
sujTffest a quota, a minimum quota, which would justify his being 
satisfactory to us as a wholesaler, but out of several hundred fran- 
chises I doubt if there are more than three. We are not soing to give 
a franchise to a man who isn't going to do a job. We want it under- 
stood in the first place if he doesn't do a job we have good reason for 
canceling the agreement. 

Mr. Buck. Do you think he could do a job for 10 competitors at 
the same time he is doing a job satisfactorily to you ? 

Mr. Wachtel. My own personal experience would indicate to me 
that the trouble with most wholesalers is that they sell too many 
lines. 

Mr. Buck. Therefore you favor the restriction of the wholesaler 
in lines. 

Mr. Wachtel. Oh, I think if he did, he would make more money ; 
and if he wants to make more money that is the way to do it. 

Mr. Davis. Does this franchise contract between you and the 
wholesaler provide the cost which he is to charge the retailer for the 
different brands? 

Mr. Wachtel. No; but where we have fair-trade contracts the 
contract is established with the retailer. I think in some cases 
through the wholesaler, in some cases direct with us. We give the 
wholesaler a printed published price list showing his cost and his 
mark-up and what he ought to get for it, and then carry it all the 
way through to the consumer bottle price that we suggest the mini- 
mum price should be for the consumer. 

Mr. Buck. Would it be fair to say that in the 43 States that you 
have referred to, so far as your company is concerned, the method 
that you have outlined here is the typical method of distribution? 

Mr. Wachtel. The open States; yes, sir. I mean by that, not the 
monopoly States. 

DISTRIBUTION OF LIQUOR IN "mONQPOLY" STATES 

Mr. Buck. Let's go over to the monopoly States for a moment. 
What is your system of distribution there ? 

Mr. Wachtel. Of course, in the monopoly States most of them 
distribute to the stores for us. We ship to a warehouse, some given 
central point. We have a contact man who calls on the commis- 
sion and maintains frequent contact with that commission. He 
watches his inventories. 

Mr. Buck. You mean the State commissions. 

Mr. Wachtel. The State commissions. He watches his inventories 
and as they go down he watches consumer sales and gives replenish- 
ing stock orders. 

Mr. Buck. Who gives it? 

Mr. Wachtel. The State. The State purchasing agent. 

Mr. Buck. Your man doesn't give them ? 

Mr. Wachtel. No; he gives them to our man. 

Mr. Buck. That is not typical of monopoly States. Aren't there 
States that sell direct to the consumer? 

Mr. Wachiel. Yes ; they run their own State stores. That is 
different. They run their own State stores where consumers buy 



2554 CONCENTRATION OF ECONOMIC TOWEK 

We frequently are not permitted even to go into that store. We 
have to have all our contact with the Commission. 

Mr. Buck. Let's take the State of Virginia, as an illustration. 
How would you market your merchandise there ?^ 

Mr. Wachtel. In the State of Virginia they are probably stricter, 
as strict as any of the States ; as I recall it, I am not certain, we have 
a contact man who would get an order from the State commission 
and that is about all he can do; he is through from that point on. 

Mr. Buck. How does the cost of your sales compare as between a 
sales transaction between your company and the Virginia State com- 
mission and the cost of the sale in open States? 

Mr. Wachtel. That would vary greatly. 

Mr. Buck. Where you sell to a wholesaler. 

Mr. Wachtel. That would vary a great deal. If you mentioned 
a State where our distribution is not good and our costs are high, 
our costs of doing business would be higher. I could name you two 
or three States where we happen to be the leading brand of whisky 
being sold in that market and our costs are much lower. 

Mr. Buck. Now, as I understand it, in the State of Virginia, you 
are not allowed to have a salesman there at all. 

Mr. Wachtel. I think they have a representative who calls on 
the Commission but I don't think he is permitted to go to the State 
stores or do anything in the way of promoting the sales of the 
product. 

Mr. Buck. In other words, every package of goods that you sell 
to the State of Virginia requires just one transaction and that is not 
a solicitation or a selling arrangement; that is simply taking an order. 

Mr. Wachtel. That is right. 

Mr. Buck. As distinguished from going into the open market and 
trying to sell your whisky to a wholesaler. 

Mr. Wachtel. That is true. 

Mr. Buck. With all its attached expense. 

Mr. Wachtel. That is true. 

Mr. Buck. Could you give us some figure on that as to the per- 
centage of cost of the sale allocated to Virginia as against the open 
market sale? 

Mr. Wachtel. That is pretty hard to do, Mr. Buck, because it 
wouldn't be quite fair to take Virginia as an example alone. I would 
take you over to Pennsylvania where the costs are much lower. 

Mr. Buck. Just a minute. We are talking about Virginia ; so as to 
Virginia it is fair, isn't it? 

Mr. Wachtel. No; because we have this open-States proposition. 
Our costs are not the same. They may vary as much as a dollar a 
case between a well -operated States 

Mr. Buck (interposing). I am not asking you whether it is fair 
or not. I am askuig you to ^ive me, if you' can, the difference in 
cost between the State of Virginia and the' open States. 

Mr. Wachtel. Which open State? 

Mr. Buck. Well, say Florida. 

Mr. Wachtel. I couldn't tell you offhand. I would have to have 
my records. 

Mr. Buck. What about Maryland? 

• See .testimony on this subject, jnfra, p. 2574 et si'C(. 



CONCIKNTUATION Ol' KCUxNOMKJ i'UVVlOlt 2555 

Mr. \\'aciitel. I have a notion that the Maryland cost might be 
as low ov lower than Virginia, because we happen to do a very ex- 
cellent business in Maryland. 

Mr. Buck. As a matter of fact, you have no selling obligation in 
the State of Virginia at all, have you? 

Mr. Wachtel. Wc have no selling obligation but by the same 
token we have no selling opportunity. 

Mr. Buck. Therefore, your costs arc less, aren't, they? 

Mr. Wacii'ikl. Not always. If the business is very small, a great 
(leal depends on a gi'eat many factors. I would have to have: my 
figuiT'S in front of me to answer the question hitelligently. 

Mr. Buck. i\s a matte?- of fact,, Avhen the State of Virginia v^mts 
\o place an ordei' they send you an order by mail. 

Mr. Wachtel. That may be right. 

Mr. Buck. That is all there is to the transaction? 

Mr. Wachtel. That is true. 

Mv. Buck. Theie is nothing else you can do about it, you can't 
go there and advertise and promote, and so forth. 

Mv. Wachtel. That is right. I think they permit new^spaper ad- 
vertising of a certain type that shows only the bottle and price, as 
[ recall, 

Mr. J^ucK. AMiich is a very small item. 

Mr. Wachtel. That is right, depending on how big your busi- 
ness is. 

Mr. Buck. But there is a distinct difi'erence in the cost of mer- 
chandising the two customers. 

Mr. Wachtel. I won't say yes to that, Mr. Buck, because it de- 
pends on the States. I have some States where it is less and some 
States whei-e it is more. 

Mr. Buck. Do you maintain any missionary men in Virginia? 

Mr. Wachtel. One. 

Mr. Bi'CK. One man. 

Mr. Wachtel. Yes. 

Mr. Buck. What is his business? 

Mr. Wachtel. He calls on the State. 

Mr. Buck. On wdiom? There isn't but one man to call on. 

Mr. Wachtel. That is right, but he calls on him with some degree 
of freqeuncy to find out complaints, whert' orders are to go. 

Mr. Buck. How often does he call on this one man? 

iNfi-. Wachtel. I don't know the details of how much contact he 
mala'S. I assume he spends a gi-eat deal of time there. 

Mr. Buck. In marking your goods do you take inro considera- 
tion that factor at all, do you give the same price to Virginia that 
you give to Florida? 

Mr. Wachtel. We have one price all over the United States, f. o. b. 
distillery, to which we add the full freight, which wotdd l)e just as 
true of shipping from Maryland to California as it would be to ship 
into Virginia which is nearby. 

Mr. Davis. What is the relative selling price to the consumer of 
your products in the few States which do not have the so-called fair- 
trade laws, compared to the States in which they liav(^ those laws? 

Mr. Wachtel. I think they are aboitt the same, depending on 
the State cost, the tax in the particular State. Taxes vary a great 
deal, as you' know, in liquor taxes of the State. 



2556 CONCENTRATION OF ECONOMIC POWER 

Mr. Davis. Aside from tlie variation in tax there is no variation 
in price? 

Mr. Wachtel. Markets vary in various States. They are not all 
alike. 

Mr. Davis. Well, the average in the five States and the District of 
Columbia, which do not have the fair-trade laws, so-called, and the 
other States in which they have them. 

Mr. Wachtel. I am talking from recollection, now. Let's take 
the District of Columbia versus Maryland. In one case we have fair 
trade, in the other we have not. I think the mark-up is identical. 

Mr. Davis. Although the cost of selling in Maryland is cheaper 
than in the District of Columbia? 

Mr. Wachtel. If that is true it is only because we have a greater 
volume there. There is no reason why it should be true, volume for 
volume, dollar for dollar. 

Mr. I3ERGE. I didn't understand. Is there much difference in the 
price between Maryland and the District of Columbia? 

Mr. Wachtel. I don't think — well, the difference, if any, would be 
the difference in the State tax. 

EFFECT OF FAIR-TRADE LAW^S ON W'HISKY PRICES 

Mr. Berge. Wliat good do the fair-trade laws do the distiller, then ? 

Mr. Wachtel. The fair-trade law was not necessarily made for the 
distiller; it was to keep the retailer from going broke, and if he went 
broke he wouldn't be able to pay the wholesaler and the wholesaler 
wouldn't pay the distiller. 

Mr. Berge. If the price is the same where you have the laws and 
don't, what good is it to anybody? 

Mr. Wachtel. The difference is that prices are probably better 
maintained in Maryland by far than in the District ^ where price cut- 
ting is notably rampant. Most of the retailers of this community 
would do everything in their power to get some kind of protection 
for their profits if tliey could. 

Mr. Berge. The advantage, then, is that the price cutter is barred 
from handling your product • 

Mr. Wachtel (interposing). We don't bar any price cutter from 
handling our product. 

Mr. Berge. I am trying to find out what advantage you get, then, 
from the fair-trade laws. 

Mr. Wachtel. Well, if you have 43 States, or 26 closed States where 
the fair-trade law is functioning, you certainly wouldn't abandon that 
opportunity merely for the 3 States where it doesn't, 

Mr. Berge. I don't see what the opportunity is if there is no dif- 
ference in the price or in the persons who handle the product. I can 
see that if the fair-trade laws effectively banished the price cutter 
from the standpoint of the retailer, there might be some advantage, 
but you say that even where there are fair-trade laws you will do 
business with the price cutters, I suppose that the advantage of the 
fair-trade law is tliat you could contract 

Mr. Wachtel (interposing). I am sorry, I am sorry, we will not 
do business with the price cutter in those States where we have fair- 
trade contracts. 



1 Washington, District of Columbia. 



CONCENTRATION OF ECONOMIC POWER 2557 

Mr, Buck. As a matter of fact, you not only won't do business with 
him, but you will go into the courts 

Mr. Wachtel (interposing). We will take liim down as fast as we 
can and get an injunction. 

Mr. Buck. You do that and have done it. 

Mr. Wachtel. Yes, sir. 

Mr. Buck. And that gives you a legal status in the court. 

Mr. Wachtel. Yes, sir. 

Mr. Buck. To maintain the price fixed by you through your con- 
tract to the retailer. 

Mr. Wachtel. The minimum suggested resale price. Of course, if 
prices went down, went to pot, the advertised brands would obviouslj'' 
have a great big advantage over many of their competitors. 

The Chaibmax. I assume you favor such laws. 

Mr. Wachtel. I certainly do. After 33 years of business expe- 
rience and knowhig the problems of the retailer and the wholesaler 
I can say this to you. Senator: There are 4,000,000 people engaged 
in retail distribution. They distribute $33,000,000,000 of your prod- 
ucts of the farm and the factory and tlie field. If you are inter- 
ested in maintaining the American system, which is the profit system, 
you are going to have to do something to try to make it possible 
for those 4,000,000 people to be happy and content with a margin of 
profit and a fair return on their efforts. They put in longer hours 
and get less return than anybody I know of, including the farmer. 

The Chakman. I assume then that you would feel that this price 
maintenance policy should apply to every line of production. 

Mr. Wachtel. Oh, definitely. My personal views, not my com- 
pany's views. ■ 

The Chaikman. Do you, for example, believe that we should have 
a policy by which we could maintain the level of prices for farm 
products ? 

Mr. Wachtel. I don't think I am enough of an economist to answer 
that. I would like to answer that but I am not enough of an econom- 
ist. During the period of 1932-33 you had the lowest level of prices 
in many j^ears. If low prices are the solution of economic ills, why 
didn't we have a period of prosperity during that period? Prices 
couldn't have gone lower. So low prices are not the answer. America 
has always been prosperous on a high price basis. When the fellow 
in the shipyards was wearing $18 silk shirts with big yellow stripes — 
do you remember, in 1921 — that is when America was prosperous. 

The Chairman. There are a number of people coming in to this 
committee, and coming to Congress, and contending that we should 
adopt a general policy, some suggestion by way of monetary control, 
to raise prices, upon the theory that that will restore prosperity. 
Now in asking these questions of you, I am not undertaking to ex- 
press my point of view, or the point of view of the committee, I am 
]ust trying to develop the advantages that may be obtained from the 
testimony of an apparently very intelligent, very experienced witness. 

Mr. Wachtel. Thank you, sir. 

The Chairman. I say to you, since you believe that in the liquor 
business there ought to be a policy of maintaining the prices, because 
in your opinion that helps to maintain prosperity for all who are 
engaged in this business, do you believe that we should also have 
a policy to maintain prices for every other commodity? 

124491— 39— pt. 6 10 



255(S (ONcii.N'i iJA'iK ».\ OF KroxNctMic i'<>\vi;i; 

Mr. Waciitkl. Let's i)ut. it, this way. The laboior is worthy of 
his hire, and a sale witliout a profit is a sale witlioiit honor, and 
an indictment of the American pcojile. Nobody has' any right to be 
asked to distribute your products oi- to manufacture or (o sell without 
an adequate return unless you don't believe in (he [jrolit system. 

The Chajijman. Just to make it clear, there is pending now before 
the United States Senate Committee on Agriculture a bill designed to 
establish a Government control system which will guarantee to the 
fai-mer the cost of production. That policy is ci'itici/,ed by many 
jH-rsons who coiileiid that it would be very bad for our economy, and 
doubtless you have noticed, as many Membei's of Congress have 
noticed, that thei-e ai'e :i nmnbei- of jiei-sons in industry w'ho believe 
that it is perfectly fair and proper and desirable for industry to con- 
trol production in order to maintain price, but (hat the controlled 
production of agricultural. commodities for the same purpose is an 
outrage. Now, what is your o])inion about that? 

Mr. AVachtel. You are getting me olf the deep end. If you would 
like to spend this evening with me I would be very glad to give you 
in private my views. If you insist on an answer I shall be vei'y glad 
to answer. In my own personal philosophy I can see no harm what- 
soev.er in maintaining ]3ries at a time whi-n we are starving in the 
midst of plenty. And to add to the great surpluses that America 
already has just seems to me futile, infantile, and asinine. 

The CiiAiuMAN. And you think that can be done by the concenti-a- 
tion of control over the distribution of those things which are pro- 
duced in the American, economy? 

Mr. WACirrKL, That is a little different problem. How to do it is 
not as easy to solve. What we shoidd do is perfectly obvious, T 
think, but how to do it with the least disturbance to the economics of 
the country is not the easiest task and we have already in our expe- 
riments found out that that is true. 

The Chaii{man. And you haven't in 3'our own mind reached any 
conclusion? 

Mr. Waciiti:l. If T had I would run for office. [Laughter.] 

I'm sorry, I didn't mean to be facetious. 

The Ciiaihman. Of course, it would de]iend U{)on the conclusion 
which you had reached whether or not you would be successful. 

Mr. Wachtet.. That is correct. 

Mr. Davis. Do you think that it is necessary to maintain price 
fixing from the manufacturer to the consumer in order to maintain 
content among the members in the li(|uor industry? 

Mr. Waciitel. Mininnun r(»sale price suggest ion ;' yes, sir ; definitely. , 

Mr. Davis. Well, isn't the price suggested all the way down the 
line? 

Ml". Waciitei.. That is right. 

Mr. Davis. And you think that is necessary in oi'dei- to maintain 
content among them? 

Mr. WArnTEi>. "VAHiat are you going (o do when you have a group 
of uninlelligent retailers and you have lo do something to protect 
them from themselves? 

Mr. Davis. I asked you a fair (|ues(ion. 

Mr. WAniTET.. I believe tliat. 

Mr. Davis. All of you in (he Tuiuor imlustry are dependent upon 
the consumer, are 3^0 u not ? 



(JUNCr:.\TKATlUA' OK I'^CONOIMK' I'OWEU 2559 

Mr. Waciitel. Yes, sir. 

Mr. Davis. Has it ever ct)iiie to your notice that the American 
consumers are considerably discontented about the price of liquor? 

Mr. Waciitel. I never heard of it. 

Mr. Davis. You haven't? 

Mr, Wachtel. No, sir. 

Mr. Davis. You have a good deal to learn. 

Mr. Wachtel. I have no doubt, sir. 

Mr. Davis. Do I understand you want the committee to understand 
you that competition has no part in American industry or the 
American system? 

Mr, Wachtel. Oh, we have free and o])en competition in our 
industry. 

Mr. Davis. Oh, that is just for business. The only competition 
between you in the liquor industry is for business and not on price. 
Isn't that correct? 

Mr, Wachtel. No ; because the price range is so great on any age 
or proof of whisky that you want, I care not which you pick, I 
will show you a variation in price that is tremendous. Take your 
bottled in bonds, from $1.33 to $3,79. That is a terrible span for the 
same type of whisky. 

Mr. Dams. Of course, you have your widely advertised brands on 
which you spe?id millions of dollars to advertise certain brands, 
whicli induces their sales, but there is no competition in effect between 
conjparable nationally advertised brands. Is that not true — of the 
same age? 

Mr. Wachtel. On the contrary, that is very untrue. Take in our 
own case, we who are projionents for blends, and just have no truck 
with straight whiskies at all; Calvert Special, which happens to be 
the largest selling brand of wliisky in the world (pardon the adver- 
tising), let's say sells in New York City at $1.20, if I am not mis- 
taken — $1.20 a pint. Similar types of blends, some of them, if you 
please, with back labels, that on the face of it the layman doesn't 
understand as yet — the A'alues of whisky and what they mean — sell 
for as low as 90 cents. Some advertised blends, well known, on 
which there are large amounts of money spent, sell at $1. 

Mr. Davis. You mean a dollar a pint? 

Mr. Wachtel. $1 a pint, 20 cents under, 16% percent under, our 
$1.20 i)rice. We have no monopoly on the l)usiness to force a man to 
buy our product as against the other for the same type of whisky. 

Mr. Davis. What age whisky do you sell for $1 a pint? 

Mr. Wachtel. We jusi don't ]>elievp in :iges, and that is what takes 
so hmg to explain. 

Mr, Davis. It is blends? 

Mr. Wachi-el. If you are talking about Calvert Sl)ecial, the aver- 
age age is 5 years. 

Mr. Davis. And the greater |)art of it is spirits. 

Mr. Wachtel. You may call it spirits; we call it Calvert neutral 
spirits, because we make our spirits in a very different way. 

Mr. Davis. Just explain to the committee what spirits'are. 

Mr. Wachtel. I thank you for that opportunity, because the sub- 
ject has been touched upon and quite apparently has not been made 
clear. You make whisky, and if you should d'istill it at al.Miit 189 
proof, under the American law you" must call it neutral grai- .: :rits. 



2560 CONCENTRATION OF ECONOMIC POWER 

Nobody as yet has convinced me that that law is a fair one or a 
sound one, and it does not exist in Scotland or Canada, who made 
whiskies as lono; as we have and some of them logger.- If that whisky 
is distilled at 189 proof, then abracadabra you are permitted to call 
it other whisky, but if it gets to 190, then it immediately becomes 
neutral spirits. Your Scotch wliiskies are made from what is known 
or referred to yesterday as British grain spirits; over there they call 
them patent grain whiskies. To my knowledge, they are all dis- 
tilled at 192.5 proof, and as under the American law, if the Scotch- 
man were compelled to put his labels on the back of his bottle, as he 
does here, he would have to show as much as 60 to 80 percent neutral 
spirits. The diiference between the Scotchman and the Canadian 
and ourselves is that they age neutral spirits in the wood just the 
same as you do whisky. 

We think the time is coming when America will have to do likewise 
if they want to compete with the kind and type of whiskies of for- 
eign countries. 

Mr. Davis. You have told the proof of spirits you manufacture, 
which you use largely in your blend. When these blends get to the 
consumer they are never over 100 proof, are they? 

Mr. Wachtei>. They are never over 90. We don't believe in a 
liigh-proof whisky. 

Mr. Davis. Over even 90? In other words, about half of the proof 
in the spirits and the proof is reduced by water, isn't it? 

Mr. Waciitel. Distilled water; yes, sir. 

Mr. Davis. Distilled water ? 

Mr. Waciitel. One hundred proof bottled-in-bond whisky is 50 
jiercent alcohol and 50 percent water, ostensibly. 

Mr. Daats. I am not arguing with you about whether it is good 
or bad. but I am simply wanting to develop the fact that the proof 
is reduced by watering it about half. 

Mr. Waciitel. No; that isn't true. That is true in the reduction 
of any whisky, whether it is bottled-in-bond or any whisl^. If you 
wanted to make it 90 proof you could reduce 

Mr. Buck (interposing). You can't bottle in bond- 



Mr. Wachtel (interposing). Any reduction of whisky from high 
proof to low proof is done that way. 
Mr. Buck. With the addition of water. 
Mr. Davis, Water doesn't cost as much as liquor, does it? 

WHISKY PRICES DEPENDENT ON QUALITY 

Mr. Wachtel. Well, judge, ma}^ T bring up this point. There has 
been a lot of discussion here as to the consumer price and the prime 
cost of whislrs'. I can submit facts to prove that they are relatively 
not much different than almost any other commodity, many of which 
are staples. In the cracker business, an 8-cent cracker — and I was 
in the cracker business for 27 years and I am not a whisky man, I 
have only been in it 21^ years ^ — might sell to the consumer at 25 
cents a pound, yet the cracker companies have not made an abnormal 
iiet profit on their business. Comparisons were made here on this 

1 Mr. Wachtel was formerly vice president of Loose-Wiles Biscuit Co. 



CONCENTRATION OF ECONOMIC POWER 2561 

$3.79 bonded and the $1.92 2-yecar-old whisky. The law of supply 
and demand is the important thing there. Ten-year-old whisky is 
scarce and you don't take the prime cost as the cost to manufac- 
ture; you take its replacement cost. You couldn't replace that whisky 
at any price. You would have to start now and wait for 10 years 
before you would have it. 

Mr. Buck. This was 4-year-old. 

Mr. Wachtel. I am talking about any whisky 10 years old. 

Mr. Buck. You were talking about the chart. That is a 4-year- 
old whisl^. 

Mr. Wachtel. The other thing that was overlooked in the confer- 
ence yesterday is the fact that when you lay out your cash for State 
and Federal taxes that is a cash outlay of $10 per case that you don't 
get back for 60 daj^s, and there aren't many businessmen willing to 
hazard that kind of investment in cash — not in ingredients — so the 
span betAveen the cost and consumer price is not out of line. The 
best evidence of it is that the profits of the whisky business have not 
been as great as in many other seasoned industries. 

The Chairman. I understood you to testify, in response to Judge 
Davis' question, that there is a very wide variety in the same type 
of whisky. You mentioned especially the 4-year-old bottled in bond 
whisky, running from $1.33 to $3.79. Is that correct? 

Mr. Wachtel. That is, right. 

The Chairman. That is the same type of whisky? 

Mr. Wachtel. It is 4 years old, it is 100 proof. 

The Chairman. What accounts for the difference in price between 
the $1.33 and the $3.79? 

Mr. Wachtel. Ability to make it. It is inconceivable that four 
men can sit down and blend the same type of whisky, even with the 
same inirredients and the same formula. 

The Chairman. When you say of the same type, you don't mean 
of the same type. 

Mr. Wachtel. It is bottled in bond. There might be a justifiable 
span in that price between the $1.33 and the $3.79. 

One other thing ought to be brought out. that while it may seem 
true that the man with the bottled in bond may have a wider margin, 
let's understand that that represents 6 or 7 percent of the total con- 
sumption of the country. That is a specialty. He would'nt be able 
to sell the 2-year-old at the low margin of profit if he didn't make 
the extra margin on the specialty business sold to people who can 
afford to pay and who are not the masses. 

Mr. Davis. Wnat is the price range to the consumer of your Cal- 
vert blend ? 

Mr. Wachtel. Between the wholesale price and the consumer 
price? 

Mr. Davis. No: the price to the consumer in the States where you 
fix the price. 

Mr. Wachtel. It depends on the tax. It is $1.20 a pint in New 
York City. The State tax in New Jersey is the same; it is $120 
there. The State tax in Massachusetts is less; it is about $1.12 there. 
The State tax in Colorado is the highest in the Union ; it is $1.29 
there. We have a $4.80 tax on a case of 3 gallons of whisky, a pretty 
stiff tax. 



2562 (CONCENTRATION OF ECONOMIC POWEIi 

Mr, Davis. Will you furnish for the record your different price 
i-an<^es?^ 

Mr. Wachi-el. Gladly. 

Mr. Davis. Giving; ages and qualities. 

Mr. Wachtel. I can't do it on the difference of age. We improve 
our whiskies fonr or five times a year. There is a constant fiux in a 
blended whisky. It does not remain the same. 

Mr. Davis. Give the prices as of a certain date within the ])as1 
year. 

The Chairman. I take it your whisky is constantly improving. 

Ml". Waciitkl. As ages permit. 

Tlie CirAimrAN. You spoke of three elements that go into the 
differentiation, skill, brand, good will. Is that correct? 

Mr. Waciitkl. Marketing strategy — oh, very important. My com- 
[)etitors have taught me that. 

The Chairman. Probably the most important of all. 

Mr. Wachtel. Without doubt. Of course, you must have some- 
tldng in the bottle. They wouldn't repeat, you know. You can't 
fool them more than once or twice. 

The Chairman. Which of the four has the greatest weight? 

Mr. WAcirjEL. Which of the four has the greatest weight? I 
would say marketing strategy, because that is true in any business. 
T til ink that is fundamentally true of any business. Even a good 
pro(hict will not sell if it is improperly marketed. Some times a 
bad ]jroduct sells, from my experience, when it is well marketed. 

The (^HAiRMAN. kSIciU in salesmanship. 

Mr. Waciitkl. Iiispii-ation, enthusiasm, leadership. 

The Chairman. That is the primarv factor in accounting for this 
range between $1.:',;5 and $3.79? 

Mr. Wachtel. Yes. 

Mr. Patiicrsox. T would like to ask Mr. Wachtel with reference 
(o the volume of whisky business in dollais. I don't ask him to put 
that on the record now because he answered in the beginning, but 
I do ask hiin to consult his colleagues and, if agreeable, submit it for 
the record.^ 

Mr. Wachtel. I shall be very glad to. 

Ml". PA'rrERSON. r understood vou to testify that your capacity 
was 9,()00,()00 gallons a year. 

Mr. Wachtel. No; our sales (approximately). 

Mr. Pa'jter.son. AA'hat is your capacity? 

Ml'. Wacfitei,. Well, that gets into [u-oduction and also another 
problem, and th:i( is. that we try to produce most of our whiskies 
;it one plant, but when iit'ccssary wo may pnxluce at two other plants 
that do uot contiimously make a product. 

Mr. Patticrson. You sell no straight whiskies? 

Afi'. WAcir-rer,. Just in very small quantities, where a Avholesaler 
nsks us to help him out witli a straight bourbon or a straight rye. 
Our nuiin sales ai'e four blends in four price groups. 

Mr. l*A'ri-i;H.s()N. You said the difference between your prime cost 
and the consumer's cost was relative to the differences of other major 
commodities, did vou not? 



M'oiin.scI for Mr. Wnclild, iti ii luttt-r (Uiti'd .Tunc r., JUHi), suppUefl tlio total sale.s 
riLMircK on vfirions bninfls lor tlir fiscal yc.Trs ondinjc .Tulv 31, ]9o7 and .Tuly .'(1, lfi:5K. 
Tlit» (locuniPiit was in.-irUpcl ••Kxliiliii No. OTS" aii.l is iiicUuicfl in Ihc lUipcnrlix un p. 2747. 



(•()M'i;.\ ruAi'io.N (»!•' i;('()\().Mi(; i-owKit 2503 

Mr. AVachtei,. Soiuc; !i <:i;o()(l many 

Mr. Pattkrsox. I just wanied • 

Mr. Wachtkl (interposing). Definitely trnc in the food business, 
certain types of food business in particular. 

Mr. Paiteiison. Tliat is ail. 

Mr. AVachtel. jMay I ciiU attention to one thing, Mr. Buck, which 
may throw some enlightenment? You had a chart that showed 
a declining consumjjtion of whisky based on tax withdrawals. The 
inference there, I think, is erroneous. Actually, in 1937, as near as 
we can find out, consumption increased. In 1938, the first half 
showed a slight decline, and 1 tiiink the second half of 1938 showed 
a slight gain. The reason the figun-s do not rellect the true fact 
is this: There has been a growing tendency toward blends. We figure 
the blend business represents today 40 percent of the total domestic 
whisky business of the country. 

Mr. Buck. That was amply explained yesterday when the charts 
were introduced. 

Mr. AVachtel. 1 thought 1 had some figures you would like to 
add into your record. 

Mr. Buck. What are your figures based on? 

Mr. Waciitee. ISIostly on the reports from the States themselves 
as to the stamps. That is |)rettv accurate. 

In short, the figure shows 99,000.000 gallons— 99,3;'.G,000 gallons— 
instead of 70,000,000, aside from the fact that those tax gallons are 
J 00 proof and 80 percent of your business is 90 proof. 

Mr. Buck. You don't question the accuracy of the chart? 

Mr. WAciri'EE. No; the chart is correct, definitely correct. 

PRICE MAINTENANCE TO SUPPORT RETAILERS 

Mr. Bkroe. May 1 just ask one question? You said a few moments 
ago that your resale price was fl)(> same in different areas, and the 
only ditference to the consumer would be the tax. Y'ou mean by that 
that, on any one of your products, the price you fix for resale is the 
same all over the country? 

Mr. Wachtel. That is not ti'ue: no, sir. 

Mr*. Beroe. Yon vary it according to territory? 

Mr. WACinTJi. Mar!\-u!)s \ary. It would have to. 

Mr. Beiioe. In order to meet coni))etition? 

Mr. Wacjitee. Not (hat alone. Take Los Angeles, for example. 
You have something like <S,000 iciail licensees, probably 4 times more 
than they have any I'ight to have. It is very dilHcult tor a retailer 
there to make a living, ('ompetition for him is too great. In New 
\'ork City we have 1,'2<»0 package stores. Competition is less; there 
is a better op])ortunit.v to make money. 

In Massachusetts {]u\ number of licensee's is much too many; com- 
petition is very keen among retailers. 

Mr. Ber(;e. In other words, you take into account, or try to take 
into account, in fixing the price, what you deem to be t]io, retailer's 
welfare. If you think he can exist on one price, you fix it there, 
and if you thi"l-r that he requires a higher price, yon fix it there. 

Mr. Wachtel. Hiat is right. 

Mr. Beroe. If you think a smallei- margin of profit is sufficient for 
him, you would lower the price? 



2564 CONCENTRATION OF ECONOMIC POWER 

Mr. Wachtel. Yes, sir. 

Mr. Berge. You said a few moments ago that there was competi- 
tion in the liquor industry. You mean price competition, I take it, 
because you mentioned the various prices of different brands. But 
how could there be competition if every company in the business 
followed your resale price-maintenance policy^ I take it that there 
is competition now because many of them don't follow that policy. 
If they all followed the policy I can conceive that there might be com- 
petition as between distillers to fix the price. That is, you might 
desire that all of your retailers should undersell the product of a 
competing distiller ; but how could there be any competition between 
retailers if all of them were operating under retail price maintenance 
contracts? Would that be possible? 

Mr. Wachtel. Yes; because the distiller markets his product at 
different prices. They are not all in the same price category. All 
2-year-old whiskies don't have the same price. 

Mr. Berge. That is a different product ? 

Mr. Wachtel. Oh, no. We look upon the consumer as a belly 
potential, you see. 

Mr. Berge. There are different classifications, of course. What 1 
mean to say is this, that if you have a brand that you have fixed the 
price on at, say, $1.50, and your retailer has to sell it at that, and 
every other retailer has to sell at that, there is no opportunity for 
competition between them on the same product. Of course, they can 
sell a cheaper product at a cheaper price, but there isn't any oppor- 
tunity for them to sacrifice some of their profit for the sake of greater 
sales. 

Mr. Wachtel. We don't want them to. 

Mr. Berge. You don't want them to. But they might want to ? 

The Chairman. Did I correctly understand your testimony in 
response to Mr. Berge that you do not maintain a uniform price 
throughout the country for the same grade of whisky? 

Mr. Wachtel. I didn't quite follow that. How do you mean? The 
consumer bottle price. 

The Chairman. No; your price to your wholesaler. 

Mr. Wachtel. Our price to our wholesaler is definitely an f. o. b. 
distillery price. He is talking about the distiller's price. 

Mr. Berge. I am confused now. I thought you said that for a 
given product you might have a fixed resale price of one figure in 
New York and a lower figure in Los Angeles. 

Mr. Wachtel. That is right; the consumer bottle price. That is 
the span between the wholesaler's cost and the retailer's cost and the 
consumer's cost. In those States where we are permitted to operate 
under fair trade, the mark-up in one market might be 33 percent, 
in another market it might be 38, in another market it might be 40. 

Mr. Berge. You determine what it will be? 

Mr. Wachtel. Definitely, where we have the legal right to do so. 

The Chairman. And who gets it? 

Mr. Wachtel. The retailer gets it. W^e have nothing to do with 
it. We only get a fixed price for every case of whisky we sell at 
the distillery net, and that is the same for every shipment. 

The Chairman. So you make the different mark-ups in the States, 
not for your own benefit but for the benefit of the retailer with whom 
you have no direct dealings. 



CONCENTRATION OF ECONOMIC POWER 2565 

Mr. Wachtel. Thank you, sir, that is exactly right, and I can't 
understand why there is so much misinformation on that subject, 
because a candidate for office in the State of Maryland broadcast 
over the radio last fall 

Mr. Buck (interposing). Let's not go into politics. 

Mr. Wachtel. It isn't politics, it is a question of misunderstanding 
of who benefits from fair trade. The retailer benefits, not the dis- 
tiller. You pull the plug out tomorrow on Calvert and our sales 
would double, but we don't think it would be good over the long 
pull because the retailer would go broke. 

Mr. Berge. But whether the retailer benefits depends upon the 
wisdom of your policy in particular cases. He may or may not 
benefit, depending on whether your judgment is good. The point 
I am trying to establish, and I iDelieve your testimony establishes it, 
is that it is your decision rather than his that determines, and that 
you do exercise the power to discriminate between territories. I 
withdraw the word "discriminate," but I will say to make a differ- 
ence between territories as to what the retailer may charge for the 
same product, and that in doing that you try to weigh these various 
factors affecting his welfare, that the question of what his welfare 
is, is decided by you and not by him. 

Mr. Wachtel. Well, if trial and error proves we are wrong, we 
change. 

Mr. Patterson. Mr. Chairman, was the question of export trade 
mentioned? If not, I would like to ask, Do you have an export 
trade ? 

Mr. Wachtel. Very, very little; almost nothing. 

Mr. Buck. Mr. Patterson, I might say I have tried to divide this 
hearing into parts, and bring them on in consecutive order. This 
particular phase is relating to distribution and its system and symp- 
toms. Tomorrow morning we take up exports and the system of 
distribution of exports. 

Mr. Patterson. But will you, with this witness? 

Mr. Buck. Not this witness, but someone from his company who 
represents the export side of his business. 

Mr. Patterson. I am content. 

Mr. Buck. Mr. Wachtel, I was interested in your statement brought 
out in the questioning of the committee about the investment of 
money in this business by the distiller for taxes. You say that was 
a considerable item and involved great risks that many people 
wouldn't take, or didn't desire to take. As a matter of fact, your 
mark-up is based on taxes. 

Mr. Wachtel. If we didn't do that, we would go broke. 

Mr. Buck. Exactly; so rather than having the tax as a liability, 
the tax is a very great asset in your business, it keeps you from going 
broke. 

Mr. Wachtel. Oh, no; on the contrary. 

Mr. Buck. What do you mean, you would go broke without the 
tax mark-up? 

Mr. Wachtel. You can't simply base your price on the basis of 
paying out $10 in. taxes and getting $10 back and trying to sell 
42 cents worth of whisky for 10 percent mark-up. 

Mr. Buck. When you were in the cracker business you didn't have 
that mark-up. 



2566 CONCENTRATION OF ECONOMIC POWER 

Mr. Wachtel. But sometimes we would put 10 cents worth of 
crackers in a dollar tin, and we had to get the mark-up on the dollar 
tin container or go broke. 

Mr. Buck. Here you have a tax of $2 a quart,*Federal tax. When 
you mark-up your whiskies 10, 15, 20 percent, whatever it naight be, 
you not only get interest on tlie money you have invested in taxes, 
but you take a very considerable profit. 

Mr. Wachtel. We are entitled to do it, as a matter of fact. 

Mr. Buck. I am not talking about what you are entitled to do. 
I say you do as a matter of practice. 

Mr. Wachtel. Definitely. May I point out in raw materials, you 
buy on credit. When you put grain into whisky you don't neces- 
sarily pay in cash in advance as you do in taxes. 

Mr. Buck. And your conclusions are that the industry would go 
broke if it had to mark its goods on cost of production, as other 
industries do. 

Mr. Wachtel. I think the history proves it. 

Mr. Buck. Do y r know of any parallel? 

Mr. Wachtel. I .i^now a great many people in the industry are 
not prosperous and are not able to make expenses and are probably 
going to have to fold up. 

Mr. Buck. As a jnatter of f act^ the largest item upon which you 
take a mark-up in this business is tax, isn't it ? 

Mr. Wachtel. That is true. 

Mr. Buck. Tax exceeds the cost of product. 

Mr. Wachtel. That is right. 

Mr. Buck. And it is your life-blood. You not only get the tax 
and 6-percent interest in return, but you get your tax plus 20 or 30 
or 40 percent, whatever the mark-up is. 

Mr. Wachtel. I think that would be approved by any economist; 
it is good business. 

Mr. Buck. I am not talking about whether it is good or bad busi- 
ness. I am trying to get the functioning of the system. 

Mr. Wachtel. That is true. 

Mr. O'Connell. May I ask a question? In fair-trade States I 
understood you to say sometime ago that in your contracts or in your 
arrangement with retailers you suggest what the resale price will be. 
That isn't exactly the word, is it? 

Mr. Wachtel. In those cases the wholesaler sometimes has the 
contract with the retailer and sometimes we have it ourselves direct ; 
and we inform the wholesaler what the suggested resale price is or 
the fixed resale price. 

Mr. O'Connell. But the effect, insofar as the retailer goes, is that 
he is required to sell according to the resale price fixed by your 
company ? 

Mr. Wachtel. Definitely. 

Mr. O'Connell. And I understood you also to say that the theory 
of that is that where you have, as you put it, an intelligent group 
of retailers, they need the protection which your company, and ap- 
parently oiily your company, is in a position to give them; is that 
right ? 

Mr. Wachtel. I hope no retailer will hold it against me, but it is 
true. 



CONCENTKATION OF ECONOMIC POWER 2567 

Mr. O'CoNNELL. I take it that is the position of your company, 
that in the absence of this paternalistic interest your company takes 
over the retail field, the unintelligent retailers, at least, would go 
broke. 

Mr. Waohtel. And he thanks us for it. 

Mr. O'CoNNELL. The unintelligent thanks you for it? 

Mr. Wachtel. Yes, sir. 

Mr. O'CoNNELL. And the intelligent ones, too ? 

Mr. Wachtel. The intelligent sometimes like to ha,ve the extreme 
privilege of cutting prices without anybody else having the same 
privilege. 

Mr. O'CoNNELL. The intelligent like to cut prices ? 

Mr. Wachtel. Providing nobody else could do it, just that fellow 
himself. 

Mr. O'CoNNELL. That is rather difficult to follow. 

Mr. Wachtel. I am afraid it is. 

Mr. Berge. Do you think that conditions could be frozen so that 
the unintelligent could be kept in business regardless of his efficiency ? 

Mr. Wachtel. He renders a service, he is a fellow neighbor. I 
don't know whether you drink. Let's say I want him as a convenience 
and if he were not in business, it might be inconvenient for me to get 
my whisky conveniently if I wanted it. 

Mr. Berge. I don't see that that answers the question. 

Mr. Wachtel. It keeps a lot of people employed. 

Mr. Berge. He might be a fine fellow and the neignborhood might 
want to keep him in business, but I suppose if enough people felt that 
way about it, they would keep him in business by patronizing him. 
I don't see that your answer was really responsive to the question. 

Mr. Wachtel. They do it as a matter of convenience. It is con- 
venient for them to do so ; they are not very much concerned whether 
he is intelligent or not. He is there when we need him. 

Mr. Berge. I understand your answer to be that that system should 
keep the unintelligent and inefficient in business. 

Mr. Wachtel. It would be an awful holocaust if we did it in all 
business. 

Mr. Berge. The competitive system is on the theory that the most 
efficient man can get the better break in profit, and so forth. How- 
ever, that is neither here nor there. 

Mr. Buck. Mr. Wachtel, in the merchandising of whisky, what 
would you say were the two most important factors ? 

Mr. Wachtel. In the merchandising of whisky? I think prob- 
ably one of the most important factors is the education of your sales 
force and the wholesaler s sales force. 

Mr. Buck. You wouldn't say that brands and advertising were ? 

Mr. Wachtel. Not in our case. 

Mr. Buck. You think you could seU as much whisky without 
advertising ? 

Mr. Wachtel. Oh, no. You asked me the most important. Ad- 
vertising is very important, so are brand names. In our case we 
have made our brand names. 

Mr. Buck. As a. matter of fact, it requires considerable resources 
to develop consumer demand for a particular brand of whisky. 



2568 CONCENTRATION OF ECONOMIC POWER 

Mr. Wachtel. Not always. There are many sectional brands that 
have done very well in their sectional^ markets. 

Mr. Buck. I am talking about national distrihution. 

Mr. Wachtel. National distribution, definitely. 

Mr. Buck. In other words, it is impossible to get into the national 
market on any considerable scale without being able to carry on a 
very expensive advertising program. 

Mr. Wachtel. That is true. 

Mr. Buck. And the technic is first to select a brand that might 
catch, so to speak, in advertising, and then spend a tremendous 
amount of money on the popularizing of that brand name. 

Mr. Wachtel. It could be done in other ways. It could be done 
by taking one State at a time and letting your profits carry you 
along until you were able to cover all States; that is a long-drawn- 
out process. 

Mr. Buck. But in order to get into the national market for dis- 
tribution you must create that consumer demand, and that requires 
great capital. 

Mr. Wachtel. Yes. 

Mr. Buck. That is the way you have developed ? 

Mr. Wachtel. Calvert has been developed sectionally rather thar 
nationally over a period of 4i^ years. 

Mr. Buck. It now has a national distribution ? 

Mr. Wachtel. Yes, sir. 

Mr. Buck. A small company with no capital to spare in that re- 
spect would find it difficult in competing on a national scale, don't 
you think? 

Mr. Wachtel. He would find it difficult to compete on a national 
scale provided he tried to do it all at one time. 

Mr. Buck. That is all. 

Mr. Wachtel. Thank you. Thank you, Senator. 

Mr. Buck. Mr. Tunney. 

TESTIMONY OF GENE TUNNEY, CHAIRMAN OF THE BOARD, AMERI- 
CAN DISTILLING CO., NEW YORK, N. Y. 

The Chairman. Do you solemnly swear, in the testimony you are 
about to give, to tell the truth, the whole truth, and nothing but the 
truth, so help you God ? 

Mr. Tunney. I do. 

Mr. Buck. Mr. Tunney, will you state your name and business 
connection, please, sir? 

Mr. Tunney. Gene Tunney, chairman of the board of the Amer- 
ican Distilling Co. 

Mr. Buck. The American Distilling Co. is engaged in the manu- 
facture and distribution of whisky in the United States? 

Mr. Tunney. Yes, sir. 

Mr. Buck. I believe you have no foreign subsidiaries. 

Mr. Tunney. None. 

Mr. Buck. How long have you been engaged in the business? 

Mr. Tunney. Actually as chairman of the board 15 months. I 
have been a member of the board of the American Distilling Co. and 
American Commercial Alcohol since 1935. 



CONCEiNTRA'riON OF ECONOMIC POWER 2569 

Mr. Buck. As a member of the company you are acquainted with 
the problems in respect to the distribution and sales of the product? 

Mr. TuNNEY. A good many of the problems ; yes, sir. 

Mr. Buck. I would like to ask you this question : Do you find any 
difficulty in obtaining wholesalers to handle your whisky in the 
United States? 

Mr. TuNNEY. Well, yes and no. Some ])laces they have got a 
complete line and other places they are willing to take a new line on. 
On the wliole, I think it is about 50-50, as I have described it. 

CORPORATE ORGANIZATION OF AMERICAN DISTILLING CO. 

The Chairman. Mr. Buck, before you proceed, may I ask Mr. 
Tunney, in what State is your company chartered ? 

Mr. TuNNET. The American Commercial Alcohol owns wholly the 
American Distilling Co. The American Distilling is a Delaware 
company. 

The Chairman. American Commercial Alcohol was chartered by 
what State? 

Mr. TuNNEY. Delaware, I believe — Maryland. 

The Chairman. And the American Distilling Co.? 

Mr. Tunney. The distilling company the same. 

The Chairman. When were they chartered, respectively? 

Mr. Tunney. The American Commercial Alcohol was chartered in 
1928, the American Distilling Co. in 1933. 

The Chairman. Are there any other subsidiaries? 

Mr, Tunney. The American Distilling is a subsidiary of the Amer- 
ican Commercial Alcohol. 

The Chairman. Yes ; but are there any others ? 

Mr. Tunney. Not of the American Distilling. There are others of 
the American Commercial Alcohol. 

The Chairman. What are they? 

Mr. Tunney. Noxon and Kessler Chemical Co. Noxon is a w^ax 
and floor polish that the American Commercial Alcohol makes. 

The Chairman. You don't sell the floor polish except through that 
company ? 

Mr. Tunney. They tell me occasionally they get mixed up. 
[Laughter.] 

Mr. Buck. That may be a hang-over from prohibition. 

Mr. Davis. Mr. Tunney, did your Commercial Alcohol Co. start 
from scratch or did it buy out other alcohol companies? 

Mr. I'uNNEY. It Avas organized in 1928 by a group who bought out 
three companies, three commercial alcohol companies. One vvas the 
S. M. Mayer Co. in Gretna, La. Another was the David Berg, of 
Philadelphia, Pa., owned wholly by Philip Publica. The other was 
the American Distilling Co. in Pekin, 111., and subsequently we took 
on in 1929, I think (it is now the American Distilling Co. of Cali- 
fornia), what was, I think, the Walter Buck Commercial Alcohol Co. 
He is, anyway, the president of it. 

Mr. Davis. They were all engaged in the manufacture of commer- 
cial alcohol? 

Mr. Tunney. Commercial alcohol. 

Mr. Davis. You didn't buy out the interests which Mr. Porter 
described as his company having sold? 



2570 CONOENTRATION OF ECONOMIC POWER 

Mr. TUNNET. No. 

The Chairman. Proceed, Mr, Buck. 

Mr. Buck. Mr. Tunney, do you experience some difficulty in mar-, 
keting your brands generally in respect to wholesalers where they may 
be already handling brands of other companies that are highly adver- 
tised, and so forth, and as a consequence they refuse to take on your 
brands for distribution ? 

Mr. Tunney. Sometimes that would be to the disadvantage of a 
wholesaler. If he has a complete line he might not want to take 
on — in most cases they never do want to take on — another line of 
articles that are not nationally advertised, but this business is terrifi- 
cally competitive, and we find that on the whole we get wholesalers 
in most every State. Of course, we can^t in some cases get the cream 
of the State; the best fellows usually, or sometimes, are already tied 
up with other houses. 

EXTENSION or CREDIT TO WH0LESAI.EKS 

Mr. Buck. What are factors that enter into that situation? Is 
credit sometimes a factor? 

Mr. Tunney. I would say, on the whole — this is merely my opinion, 
now ; I don't say this with any authority — that is about 100 percent, 
in my opinon, the factor. 

Mr. Buck. In other words, if the distiller is large enough to, in 
effect, subsidize the wholesaler as to stocks, and so forth, and carry 
him over a long period of time, that is one status. If you are not 
sufficiently financed to grant these trem6ndous and long credits, that 
is another and different factor that might exist. 

Mr. Tunney. Yes, sir. 

Mr. Buck. That does have an effect on your ability to obtain gen- 
eral and free use of wholesaling facilities? 

Mr. Tunney. Well, that is true ; but, on the other hand, I imagine 
if our company were in a position to extend the credit that is neces- 
sary, we would probably do it, I don't know. I am not certain, but 
I think that is the trouble — rather, it isn't the trouble altogether; 
the condition is prevalent in all industry in America or any part of 
the world. Fellows that are big and can afford to get the best go 
out and do it. The fellows that are not so big and can't afford to 
get the best, they have to do the best they can. And I think it is 
just our hard luck — I mean, our company — that we are not in a posi- 
tion to extend these vast credits. Maybe we'd do it, and maybe we 
wouldn't; but we have — oh, I don't know; we haven't any definite 
opinion one way or the other on that, only that we know that to have 
capital naturally means that you get a good deal many more dis- 
tributors. If you can throw three or four or five hundred thousand 
dollars' worth of merchandise into a fellow's store and he doesn't 
put anything down on it but pays as he can, well, you are going to 
get rid of a good deal more merchandise than if you can only give 
a prospective customer five or ten thousand dollars credit. 

Mv. Buck. That is a point. Then it is a question of bigness and 
ability to finance through and through the distribution system on a 
national scale. 

Mr. Tunney. Well, there are, however, small companies that are 
doing extremely well, well managed, and they don t extend great 



CONCENTRATION OF ECONOMIC POWER 2571 

credits. I am thinking noAv of certain Kentucky distillers that have 
always — well, they have just normal credits and they still do pretty 
well, but on the whole the big companies have an edge naturally. 

Mr. Buck. Yes ; and they use it. 

Mr. TuNNEY. Well, I don't know. That is a matter of opinion. 

Mr. Buck. You find that the experiences that you have related 
you have found to exist in the industry ? 

Mr. TuNNEY. Yes, on the whole; yes. 

Mr. Da\^s. Mr. Tunney, does your company have any nationally 
advertised brands? 

Mr. Tunney. No; not any nationally advertised brands. We did 
do a little national advertising a couple of years ago on Old American 
Rye and Bourbon, but there is no other nationally advertised brand. 

Mr. Davis. Wliere is your whisky distillery? 

Mr. Tunney. In Pekin, 111. We distill gin in Pennsylvania and 
we distill whisky in Sausalito, Calif., and we distill rum down in 
Gretna, La. 

Mr. Davis. Do you do any bottled-in-bond business yet? 

Mr, Tunney. No ; we have a small — we are just getting in the sup- 
plies of 4-year old. You see, we were largely in the bulk-goods 
business for the last, oh, for the jBrst 3 years, and we found that we'd 
have to start to get into the case goods business if we wanted to stay 
in business, so that we started to get our own brands and pushed 
them a little bit. 

Mr. Davis. Do you sell much of your product to rectifiers ? 

Mr. Tunney. Oh, yes; a good deal. 

Mr. Davis. You sell that in the barrel, do you? 

Mr, Tunney. In the barrel ; yes, sir. 

Mr. Berge. Does your company take advantage of State fair-trade 
laws? 

Mr. Tunney. Yes; our company insists wherever there is a fair 
trade law our company insists on the people obeying the law, any of 
our distributors. 

Mr. Berge. The laws are only permissive though, aren't they? 
That is, you don't have to take advantage of them. 

Mr. Tunney. No; you don't have to take advantage, but it ruins 
the reputation of an article if it gets into constant war over price. 

Mr. Davis. Do you have a good deal of pressure brought to bear on 
you to observe the fair-trade laws? 

Mr. Tunney. A good deal of pressure? 

Mr. Da\t:s. Yes ; from the trade. 

Mr. Tunney. No, sir; no pressure whatever. 

Mr. Berge. But you fe^l that where there is a fair-trade law your 
product would suffer if you didn't maintain the price the way the 
other fellows did ? 

Mr. Tunney. It would suffer only in the public consciousness, be- 
cause if in my opinion — I am just speaking now as to how it would 
affect me — if I knew an article like our Meadwood and I liked it and 
I saw that it was selling for $1.79 or $1.89 today, and then I went in 
and bought a bottle, and then tomorrow I passed the same store 
and saw a sign up where I could get it for $1.59, well, I would feel 
that I had been cheated out of 20 cents or 30 cents and would remem- 
ber that, and I don't think it does anybody's product any good to get 
in price wars, in the public mind. 



2572 CONCENTRATION OF ECONOMIC POWER 

Mr. Buck. That is all. 

Acting Chairman Reece. After you have set up agents in the differ- 
ent States, have you observed any tendency on the part of large 
corporations, so to speak, to bring pressure to bear to prevent those 
agents f roni continuing to handle the products of the small company ? 

Mr. TuNNEY. Well, they do. Yes; you heai' all kinds of rumors 
but unfortunately in this industry there ai'e more rumors around than 
we can shake a stic]c at. If you pay attention to rumors, you are 
making a mistake. Only once in my experience has such an occasion 
or such a situation of that Icind been brought to my attention, and 
so I can only speak of — well, two experiences. 

Acting Chairman Reece. It is not prevalent? 

Mr. TuNNEY. No ; not as far as Ave are concerned. 

Acting Cliairman Reece. Are there any other questions? The com- 
mittee have greatly appreciated your coming before them, Mr. 
Tunney. 

Mr. Tunney. Thank you. 

(Mr. Tunney was excused from the stand.) 

Acting Chairman Reece. Mr. Ballinger, what are your plans? Is 
this a good quitting place ? It is something after 4 o'clock. 

Mr. Buck. Mr. Chairman, I have Colonel Bullington here from the 
State of Virginia commission. It will only take about 10 or 15 minutes 
and I promised him lie could get aAvay tonight. If you would sit lUSt 
that much longer I could accommodate the colonel. 

Acting Chairman Reece. It seems to be agreeable to the committee, 
and we will be glad to. 

Do you solemnly SAvear in these proceedings to tell the truth, the 
whole truth, and nothing but the truth, so helj) you God? 

Colonel Bullington. I do. 

TESTIMONY OF COL. R. McC. BULLINGTON, MEMBER, VIRGINIA 
ALCOHOL BEVERAGE CONTROL BOARD, RICHMOND, VA. 

Mr. Buck. Colonel, will you state your name and business, please, 
sir? 

Colonel Bullington. R. McC. Bullington, Richmond, Va., a 
member of the A. B. C. Board. 

i\Ir. Buck. Are you a member and officer of an association of State 
liquor commission officials? 

Colonel Bullington. Yes, sir; I am the president of the National 
Conference of State Liquor Administrators. 

Mr. Buck. That is, the State liquor administrators have an organi- 
zation which they have set up, and you are its president? 

Colonel Bullington. Yes, sir. 

Mr. Buck. What States are members ? 

Colonel Bullington. All monopoly States are members except, at 
the moment, I think, Pennsylvania, the State of Washington, Vermont, 
and North Carolina. North Carolina is not operating strictly a mo- 
nopoly State. They have a monopoly set-up, but the counties operate 
the set-up. 

Mr. Buck. But all other monopoly States are members of your 
association? ' ^ 

Colonel BuLtTNi.TON. Yps, sir; and I think the others are coming in. 



CONCENTRATION OF ECONOMIC POWER 2573 

AIMS AND PUEPOSES OF THE NATIONAL CONTERENCE OF STATE LIQUOR 

ADMINISTRATORS 

Mr. Buck. Colonel, I wanted to ask you about a matter that oc- 
curred some time ago in respect to the price of liquor sold to the " 
State-monopoly States as distinguished from the price of the same 
liquor sold in the open market, I believe your organization took 
some part in that matter, and will you relate it to the committee? 

Colonel BuLLiNGTON. Well, I reckon the best thing, the proper 
thing, to do, probably, would be to give you the aims and objects — 
it takes just a minute — the aims and purposes, of this organization 
of ours, the State liquor administrators. Its aims knd purposes are : 
"The aim-S and purposes of our association" • 

Acting Chairman Reecb (interposing). Will you please state the 
name of your organization ? 

Colonel BuLLiNOTON. The National Conferei^,ce of State Liquor 
Administrators. [Reading :] 

It shall be the purpose of this association, by- thorough cooperation, one 
member State with another, to keep on as high a' plane as possible' all transac- 
tions of the several State liquor-control boards and commissions and to require 
and insist upon frank, open, and ethical practices upon the part of «11 vendors 
of alcoholic beverages and cooperate with all State and Federal agencies 
charged with the control, sale, or taxation on alcoholic beverages. 

This organization was fopmed not only with the idea of seeing 
that we received, as member States, a fair price and as low a price, 
everything being considered, as the open-license States, but to com- 
pare notes on the question of control and the handling of the liquor 
problems in our respective States. This organization was formed in 
January 1938 at Des Moines. We have had several meetings since 
then; we have had several meetings with a committee from the Dis- 
tilled Spirits Institute and other people in the distilling industry, 
bringing to their attention the fact that we knew, or felt positive, 
that in some of the open States, due to competitive conditions — ^foi* it 
has been a highly competitive business — through deals of one kind 
or another that had been given through competitive reasons, and 
probably any one of us might have got into the fight in the same 
way, there were prices being made or considerations being given to 
the wholesalers in those States that were not being given to the 
monopoly States. 

To sell goods in the average monopoly State should cost and does 
cost, in a properly conducted State, less money than it does in an 
average open-license State, volume for volume. Of course some 
monopoly States operate differently from, for instance, Virginia, of 
from, we will say. New Hampshire. They have licenses where whisky 
is sold by licensee. In Virginia the whisky is only sold through our 
90 stores and about 15 or 20 drug stores, or 30 or 40 drug stores who 
sell it on prescription only. 

We held numerous conferences with these gentlemen. 

Mr.' Buck. Whom do you mean by "these gentlemen?" 

Colonel BuLLiNGTON. A committee from the Distilled Spirits In- 
stitute and other people in the distilling industry. 

Mr. Buck. In other words, as I understand it, the Association of 
States appointed a committee. 

124491 — 39— pt. 6 11 



2574 CONCENTRATION OF ECONOMIC POWER 

Colonel Btjllington. Yes, sir. 

Mr. Buck. And the industry appointed a conmiittee. 

Colonel BuLLiNGTON. Appointed a committee. 

Mr. Buck. Composed of representatives of the members of the 
industry who were selling whisky in both States. 

Colonel BuLLiNGTON. In both the open-license States and the mo- 
nopoly States. 

Mr. Buck. These two committees had a meeting? 

PRICE CONCESSIONS TO DISTRIBUTORS IN "oPEN" STATES SOUGHT BY 

"monopoly" states 

Colonel Bullington. We had numerous meetings. 
Mr. Buck. About what. 

Colonel Bullington. About the question of deals being given 
in open-license States which the monopoly States were not benefiting 
by, by certain price concessions that were being given from time to 
time. 

Mr. Buck. As I understand it, frankly it is this, that you found 
in certain instances that they were selling to open States in the com- 
petitive market at a less price than they were selling to the State 
monopolies. 

Colonel Bullington. We felt that that was correct. 
Mr. Buck. Did your investigation confirm your feelings? 
Colonel Bullington. It confirmed that certainly so far as special 
deals and concessions were concerned. 

Mr. Buck. As I understand it, these committees met on several 
occasions and discussed this situation. What was the result, and 
when was it arrived at? 

Colonel Bullington. We met on numerous occasions. I think the 
members of the industry felt that the tactics or the procedure that 
were being used by certain of the men in the industry, or by prob- 
ably most of the people in the industry — by certain of them any- 
how — were not sound. They felt that there was some justice to 
our contention. I didn't like to sit idly by, for instance, in Virginia, 
and feel that I might be paying 50 cent$ a case and not getting the 
advantage of some proposition that was being offered in Maryland. 
I felt that we were paying our bills on the dotted line; we were 
not asking for any terms or concessions, we didn't ask for any better 
price than the other fellow was getting, but we asked for only the 
same price and the same consideration that they were getting in 
open-license States. 

I must say that the committee felt that our contention was a just 
one. Up to that time a numbej* of the States had certain warranties 
that they placed on their orders as to the price to be charged and 
so forth, and there was considerable discussion as to that, and we 
are still in process; I don't know when" we will ever get it exactly as 
on a warranty we feel is fair to the industry and ourselves. 

Mr. Buck. Is this a fair characterization of it: Notwithstanding 
the small cost involved in selling to the State stores, such as yours. 
State-operated systems, you found the industry developing in the 
open market where the costs were higher at a less price than they 
were giving you. 



CONCENTKATION OF ECONOMIC POWER 2575 

Colonel BuLLiNGTON. That wasn't so in every instance. That 
^Yould happen to some brands where there was a fight on brands. 
That was not a general practice by all of the people all of the time. 
It was the practice by certain of them at certain times, when there 
was a brand fight on or a certain particular price range fight. All 
we asked was, "If it is necessary that these price concessions be 
given in open license States, we want that same concession given to 
us," and they have conceded that, I think, in the main. 

Mr. Buck. Not only have they conceded it as to future prices, but 
what happened as to sales that had been consummated up to that 
time? Did they rebate the difference? 

Colonel BuLLiNGTON. This thing started so shortly after, I don't 
know when the thing broke. It broke out just prior to the meeting 
in 1938, and I don't think it was retroactive, because you couldnx 
get at what were the actual facts in the case. 

Mr. Buck. Has the State of Virginia received any adjustment on 
accounts made prior to this agreement? 

Colonel BuLLiNGTON. We have not; but we have received an ad- 
justment on every special deal that I know of that had been made 
by any distillers since. 

Mr. Buck. Since that time? 

Colonel BuLLiNGTON. Yes, sir. 

Mr. Buck. That is all. 

Acting Chairman Reece. IJow do you determine the price, the re- 
tail price of your products? • 

Colonel BuLLiNGTON. We feel that we should buy our goods at the 
lowest price anybody pays for it. We market our goods and price 
our goods as we see fit. We don't allow the distiller to dictate to us 
what our resale price would be. As a rule, in most of the monopoly 
States the retail price is lower than it is in the open States. For in- 
stance, we set our own mark-up ; we make a profit of 331^ percent on 
selling price, which we think is a fair, reasonable price, which is a 
lower price than the goods are sold for as a rule in open license 
States. 

Acting Chairman Reece. And the profit which ypu undertake to 
make is uniform on all of your brands? 

Colonel EuLLiNGTON. We don't deviate a particle. We have a 
breaking point, and if it goes over that one-tenth of 1 cent it goes to 
a higher or lower bracket, we get the same profit on every item, alco- 
holic beverage, except on wine. Our profit on wine is less, because 
we are trying to promote the sale and drinking of wine. 

Acting Chairman Reece. This is probably beside the point, but I 
would be interested myself to know what your observations are of the 
relative sales in the monopoly States and in open States, that is, on 
a per capita basis. 

Colonel BuujNGTON. I couldn't give you that information. I 
probably could get it for you. 

Acting Chairman Reece. No, I wouldn't want you to do thdt. 

Mr. Davis. In connection with ascertaining what you think would 
be a fair price to your State, did you or the association of men repre- 
senting different States make any survey or investigation of the 
prices in the States where they have the price-maintei^ance laws? 



2576 CONCENTRATION OF ECONOMIC POWER 

Colonel BuLuiTGTON. No, sir. I do not think that there is any 
re^lar formula as to profits that the monopoly States charge. I 
think it is a question of merchandising and what a man feels you 
should get out of an operation of that kind. In other words, in our 
State we figure that to do a retail business profitably and handle it 
in a manner in which it should be handled we want a profit of 331/^ 
percent on the selling price, which is a mark-up of 50 percent. Some 
of the States have a high mark-up, some have a low mark-up. This 
association of which I happen to be president doesn't dictate any 
question of terms or prices or anything of that character. 

Mr. Davis. To you. 

Colonel Btjllington. We meet and consult, and that is about all. 
Each one is a sovereign State, each State handles its own business 
aS it sees fit. 

Mr. Davis. You made no investigation whatever of the prices to 
the consumer in any of the other States. 

Colonel BuLLiNGTON. No ; but we ,know that our prices, as a rule, 
are lower. In Virginia, for instance, it is lower than in some of 
the other States, than in the open license States. We don't follow 
any ups and downs in the market. We have no cut prices ; we don't 
have any cut sales. It is a straight price, and they pay that or leave, 
it. There is no effort made to promote sales. 

Mr. Davis. You don't do any advertising? 

Colonel BuLLiNGTON. No, sir. Speaking for my own State, we 
would be very happy if our sales were a million or two million 
dollars less if we knew that business wasn't ^oing into illegitimate 
channels. We are not interested in promotmg or furthermg the 
sale of whiskies ; we are simply interested in supplying an actual de- 
mand that is there. 

Mt. Davis. You don't handle beer? 

Colonel BuixLiNGTON. No; we handle beer in our State but not 
through our commission. We issue the licenses and police it, but 
that goes into the tax department. 

Mr. Buck. Judge Davis, on the point you have asked, we have a 
chart, and I would just as soon set it up now and put it in the record 
so long as you have raised the question. 

This chart represents what we believe to be the consumer's' cost 
on a given-type brand of whisky in a monopoly State as against the 
consumer's cost in what is known as an open State, the same product, 
per quart. The figures are based on a blended whisky, 20 percent, 
114 years old, straight whisky; 5-percent 5-year-old straight whisky; 
75-percent grain neutral spirits, ethyl alcohol; and a quart is 90 
proof. It gives the rectifier's cost and profit. You see, in this case 
you will notice the terms are "Rectifier's cost" and "Profit," whereas 
in the other char':s it was "Distiller's costs" and "Profits." The 
reason for. that is that the maker of blended whisky is known as 
a. rectifier, whereas the other is a straight whisky. 

(The chart referred to was marked "Exhibit No. 418" and is in- 
cluded in the appendix on p. 2698.) 

Mr. Buck. The tax difference is due to the fact that in the open 
State there is a State tax, whereas in the monopoly State that tax 
is charged into the profit, if it is a tax, of course. The total figure 
is $2.05 a quart as distinguished from $i.55 a quart. I just put that 
in because vou raised that Doint. 



CONCENTRATION OF ECONOMIC POWER 2577 



Mr. Davis. Is that based upon the price quotation made the 

Mr. Buck (interposing). That is based on current market; I 
would say, a few days old. 

Acting Chairman Reece. I notice in the license State column, Mr. 
Buck, State and Federal taxes are shown to be 88 cents. 

Mr. Buck. That is right. 

Acting Chairman Reece. In the monopoly State column, the Fed- 
eral tax would be only 63 cents. That means then, that the State 
tax is the difference. 

Mr. Buck. No. 

Acting Chairman Reece. Twenty-five cents? v 

Mr. Buck, Under the monopoly State system, where the State buys 
the liquor and distributes it, of course, there is no tax levied; the 
monopoly is operated to take the place of the tax, and that item is 
charged in. The State derives its profit. 

Acting Chairman Reece. Yes ; I understand that, but in" the license 
State column, as a part of the cost of manufacture and distribution 
there is an item of State tax of 25 cents a quart. That is my 
question. 

Mr. Buck. That is right. That is based on the highest State tax 
that I know of — that is a dollar-a-gallon tax. 

Acting Chairman Reece. So to get on an equal basis, whatever 
the profit which might be charged by the commission in a monopoly 
State, there should be a reduction of 25 cents, which was comparable 
to the average State tax. 

Mr. Buck. That is true as to profit. Of course, that wouldn't affect 
the consumer's price. 

Representative Williams. Do I understand that you deal only in 
blended whiskies? 

Mr. Buck. Oh, no. This chart is only blends. 

Representative Williams. You deal in straight whisky and bottled- 
in-bond ? 

Colonel BuLLiNGTON. We carry everything in the alcohoKc-bever- 
age line. 

Representative Williams. How do you get your prices? 

Colonel BuLLiNGTON. 'Wlien we ask for prices? 

Representative Williams. Yes. 

METHOD OF PURCHASE BY VIRGINIA ALCOHOL BEVERAGE CONTROL BOARD 

Colonel BuLLiNGTON. We have a form that we submit to the dis- 
tiller. We ask for a lot of information as to his financial rating, 
his representative, the number of the distillery, a lot of information of 
that kind. Then we ask for prices. We send in this thing; he fills 
in his prices and gives us his base price, f. o. b. distillery, and then 
he gives us the freight rates in cars and less than cars and then 
carried out to its logical conclusion to the delivered price at Richmond. 

Representative Williams. Do you ask for prices from different 
companies? 

Colonel BuLLiNGTON. We are purchasing probably from 150 com- 
panies, so naturally we have prices from all of them. 

Representative Williams. How has the price varied, say, on 
blended whisky? 



2578 CUNCENTKATIOX OF ECONOMIC POWER 

Colonel BuLLiNGTON. Well, the price has been gradually going 
down right straight along. 

Representative Williams. I mean on different brands. What is 
the range of price of the different brands that you pay? 

Colonel BuLLiNGTON. I can give you my sales price, which will give 
you some idea as to the cost price. 

Representative Williams. That would be your cost price with 331/3 
percent added. 

Colonel BuLLiNGTON. This is our sales price. Our sales price, for 
instance, oh, we will say, runs on rye whiskies, bottled in bond, from 
$2.40 today to $2.75 in quarts. There will be material changes in 
those prices on the issuance of our next list. We issue a list next 
month, and they will be lower by 10, J5, or 20 cents. 

Representative Williams. What is the range on bourbons? 

Colonel BuLLiNGTON. On bourbons they run from $2.60 to $3.10, 
and there would be materially lower prices on those goods probably 
within the next 30 or 60 days. 

Representative Williams. Approximately how many brands would 
that cover ? 

Colonel BuLLiNGTON. In bourbons it would cover two, three, four, 
five brands of bourbons ; one, two, three, four, five brands of bottled- 
in-bond rye. 

Representative Williams. And you get those different brands from 
different companies ? 

Colonel BuLLiNGTON. Yes, sir. 

Mr. Buck. Mr. Bullington, would you file that price list with the 
committee, so that it might be printed in the record ? 

Colonel BuuJNGTON. If you desire it ; yes, sir. 
• Mr. Buck. This is for the State of Virginia. 

Mr. Davis. That is the current price list ? 

Colonel BuLUNGTON. The prices effective February 1, which will be 
in effect until we issue another list, which will probably be May 1. 

(The Retail Price List No. 50 for Commonwealth of Virginia wavS 
marked "Exhibit No. 419" and is included in the appendix on p. 
2698.) 

Acting Chairman Reecb. As I understood, you made your prices 
so as to allow for a 331^-percent profit. 

Colonel Bullington. Profit ; that is, profit on selling. 

Acting Chairman Reece. That is, so to speak, a gross profit. 

Colonel Bullington. Yes, sir. 

Acting Chairman Reece. Out of that should be deducted the cost 
of administrative, rentals, and so forth. 

Colonel Bullington. Yes, sir; that is the gross profit. Am I a 
witness for Virginia or for the conference? I am mixing things up 
here for the organization. I didn't know which was which. As far 
as Virginia is concerned, that is the profit, and out of that go all ex- 
penses ; for instance, we have an inspection and enforcement division 
of over 100 men. We find that with all of the activity, with all the 
stores, with the low prices at which we are selling whisky, bootlegging 
is still going on in our State in a big way. I think last year we closed 
Jip about 1,400 stills. 

Acting Chairman Rkece. Do you have the information or are you 
able to estimate what part of the 331/3 percent profit would be con- 
sMrned by the cost of distribution? 



CONCENTRATION OF ECONOMIC I'OWEK 2579 

Colonel BuLLiNGTON. I think I can tell you what the profit is; yes, 
sir. Our profit last year for the fiscal year ending June 30, 1938, was 
$4,940,000, speaking for Virginia. 

Mr. DAV^s. That was your net profit ? 

Colonel BuLLiNGTON. That was our net profit. 

Acting Chairman Reece. What was the volume of the business? 

Colonel Bui.LiNGTON. The volume of our business was $17,000,000 
in net sales. We made on our operation about 27 cents on the dollar 
sales. 

Mr. Davis. In other words, the cost of distribution averaged 8 
cents on the sales. 

Colonel BuLLiNGTON. No. Our expense of doing business, yes. 

Mr. Davis. No ; it would be 6 cents. In other words, you said there 
was a gross profit of 33 and your net profit was 27. 

Colonel BULLINGTON, Our total administrative and general ex- 
penses; for instance, it cost us $0.26 to operate the stores; it cost us 
less than li/^ percent for general office expenses; it cost us about the 
same money for inspection and enforcement expenses ; for garage ex- 
penses it cost us 3.162; the direct selling expense was 6.217, which 
made a total expense of less than 914 percent on the total volume of 
business. 

Mr. Berge. You said a few minutes ago that you bought from 
about 150 different companies. 

Colonel BuLLiNGTON. I can tell you exactly. 

Mr. Berge. Approximately, I don't care. 

Colonel Bullington. We probably purchased from less than 100 
companies during the fiscal year ending 1938. 

Mr. Berge. You get price quotations from each company? 

Colonel Bullington. Yes, sir. 

Mr. Berge. Is there ever any bargaining over prices or do you 
accept the quotations they send to you the first time? 

Colonel Bullingt(^n. They may quote, but we buy what we think 
will sell on our market, and what we think is salalile and at what 
we think is a"fair and right pri?e. 

Mr. Berge. Do you know whether you are getting quotations that 
are comparable to the same as they quote dealers in States that are 
on the license system? 

Colonel Bullington. We have no way of definitely proving that, 
but we are doing this, we are checking on that very closely and we 
know that the policy of some of the concerns is to quote the same 
base price at distillery — that is the information that comes to us. 

Mr. Berge. You think then that now you are getting whisky at 
the same prices that they are quoting? 

Colonel Bullington. We hope so. 

Mr. Berge. Have you ever had any reason to believe that they 
were charging you more than dealers in States in the license system? 

Colonel Bullington. That is one of the reasons for the formation 
of this organization of States so that we could get that informa- 
tion. We are setting up today an exchange of price information so 
we will have that data, we hope. 

Mr. Berge. Prior to the formation of that association, at any time 
since Virginia has permitted the sale of liquor, have there been any 
differences with the distillers over prices of liquors? 



2580 CONCENTRATION OF ECONOMIC POWER 

Colonel BuLLTNGTON. If we are not satisfied with the price we 
don't pay it; we are in this position, that we don't have to buy a 
brand we don't think there is a demand for. We don't allow any 
promotion work of any kind. 

Mr. Berge. Have there been any major controversies with tne 
distillers? 

Colonel BuLLiNGTON. We have had no major controversj', but 
questions that have come up that have generally been adjusted satis- 
factorily. 

Mr. Beege. Have there ever been any instances of rebating on sales 
that were previously made at a figure which the State thought was 
too high, or thought subsequently was too high ? 

Colonel Bullikgton. I think we have had probably one or two 
cases of that kind, but it has been adjusted and, as a rule, an expla- 
nation has been made and we thought it was satisfactory. If it 
wasn't we would discontinue doing business with that concern. 

Mr. Berge. Those were instances where the State thought it was 
overcharged and insisted on a rebate? ' 

Colonel Bullington. Insisted on an adjustment if we felt we were 
entitled to it. In some instances we were not entitled to it and we 
didn't get it, but in the main our relations with the distillers have 
been, I think, fairly fair and equitable. 

Mr. DAvas. Do you happen to have oji hand a price list of approxi- 
mately a year ago, or say 2 years ago ? 

Colonel Bullington. Yes, sir. 

Mr. Davis. Would you furnish those to the committee, or to Mr. 
Buck to file with the committee? 

Colonel Bullington. I would be very glad to send them to you. 

Mr. Davis. I think when they are received they should go in. In 
other words, the price lists of a year ago and 2 years ago, oi ap- 
proximately that.^ 

Colonel Bullington. Of course, there has been a change in brands 
in that time. I might say there has been a change of course in the 
formula of some of those whiskies, in proof and quality. 

Acting Chairman Reece. How much whisky do you sell, measured 
in gallons in a year ? That is last year, for instance ? 

Colonel Bullington. We sold the year, not the fiscal year but the 
calendar year 1938, a total of 2,614,000 gallons, which was purchased 
in brands which amounted to 272 brands, that is calling a quart as a 
brand and a pint as a brand, as an item. 

Acting Chairman Reece. Are there any other questions? 

Mr. Buck. Colonel, I am still not entirely clear on what happened 
as a result of these conferences with the distillers. You say that you 
found that they were giving one price to the open States and another 
price to your State, for instance. That was the cause of the organi- 
zation of the committee. 

Colonel Bullington. That is one of the causes of the organization 
of our association, the question of prices, and the question of ex- 
cnange of information between the different States on laws and this 
thing and that thing. 

i The committee subsequently received price lists effective as of July 16, 1937, Feb. 1, 
1938, and Oct. 1. 1938. They were submitted at a later hearing, marlted "Exhibit No. 
433" and are included in the appendix on p. 2721. 



CONCENTRATION OF ECONOMIC POWER 2581 

Mr. Buck. Let's stay strictly on prices here for a?i».Ojaent, 

Colonel Burlington All right, sir. 

Mr. Buck. After your respective committees were organized, that 
is, the committee on behalf of the distilleries and the committee on 
behalf of the States, did you reach some agreement as ar- result of those 
committee actions? 

Colonel BuLLiNGTON. Yes, sir. We started out on the premise, first, 
that we were opposed to deals. 

Mr. Buck. Yes ; but what did this agreement provide, in short and 
simple language^ Did it provide that the distillers should rebate to 
the States any amount of the moneys found to be the difference be- 
tween the open State price which they had sold at and the price which 
they had sold to the State at? 

Colonel BuLLiNGTON. I will have to answer that just this way, Mr. 
Buck. It seems that all of a sudden there was an epidemic of deals 
and special prices that broke out among the distillers, and from that 
time, we insisted that, if there were going to be special deals and 
special prices made in open-license States, that we wanted the same 
concession in our States, no more, no less. 

Mr. Buck. I understand that. 

Colonel Bullington. And from that time, from the time- that this 
thing had been in effect, I think the last meeting we really got down 
to cases was at White Sulphur Springs. We had numerous confer- 
ences. I believe those men of the distilling industry were in earnest, 
we were in earnest, we tried to clean up the condition that they didn't 
like. I think things have been working on an even, keel since. 

Mr. Buck. Thank you very much for that, but that still doesn't 
clear up the point I am after. Let's assume that all that happened. 
As a result of those agreements was your State paid by the distillers 
some sum of money or given some discount on future transactions 
^vhich would recoup the State in respect to the transactions that had 
been made before tha agreement was entered into ? 

Colonel Bullington. We did not receive any; I don't think there 
had been many deals going on at that time. If there were we were 
not aware of it nor could we put our fingers on it, but from March 
1938 to date, the State of Virginia has received from several concerns 
who has made special deals, in special territories, in open-license ter- 
ritories, probably some thirteen or fourteen thousand dollars that we 
would not otherwise have gotten. 

Mr. Buck. I see. 

Mr. Davis. Mr. Bullington, when you gave $70,000,000 as the sales 
in dollars 

Colonel Bullington (interposing). I didn't say 70. 

Mr. Davis. What was it? 

Colonel Bullington. In our State? You are talking about Vir- 
ginia ? 

Mr. Davis. Yes. ^ 

Colonel Bullington. Around 17,000,000; 17. 

Mr. Davis. Seventeen. Was that for the calendar year 1938 ? 

Colonel Bullington. That was for the fiscal year running to July 
1, 1938, the ending of our year. 

Mr. Davis. Then you gave the figures in response to a question by 
Congressman Reece of your sales for the calendar year of 1938. Could 



2582 CONGENTIIATION OF ECONOMIC POWER 

you eliher give the dollar sales on the calendar-year basis or the 
gallon sales on a fiscal-year basis ? 

Colonel BuLLiNGTON. Before I left Richmond I thought the ques- 
tion might be asked as to the amount of gallons sold in the State of 
Virginia for the year ending 1938, and I have that information, but 
I do not know what it amounts to in dollars and cents. 

Mr. Berge. This thirteen or fourteen thousand dollars which was 
paid to the State, you say was during 1938 ? 

Colonel Btjllington. From March, I should say, 1938, to date. 

Mr. Behge. Was that in regard to current business or was it retro- 
active? 

Colonel Btjllington. I will put it this way. If, for instance, tlie 
National or Schenley or Seagram's or any one of them would, for a 
period of, say, a week or 10 days or 2 weeks, in the open license terri- 
tory, make a special concession of 50 cents or a dollar a case on a 
certain item during that period, we were offered the same opportunity 
to take advantage of that if we desired to do it. In no instance do 
we anticipate our requirements ; we buy as we sell, and where we could 
take advantage of that we did so and where we couldn't we didn't. 
We were placed on the same basis as the open license territory, which 
was all we wanted. 

Mr. B£R(^. Are these concessions granted retroactively? That is, 
if they have made them in other territory and concurrently have 
charged you a higher price, would they later refund ? 

Colonel Btjllington. I am not in position to say |hey charged us 
a higher price prior to going into this organization. 

Mr. Berge. Were any concessions paid relating to the time prior 
to the establishment of this? 

Colonel BtJUJNGTON. No, sir; not in my State, and I am not in 
position to say that they were definitely made. I have the feeling 
that they were, but I don't know. 

Acting Chairman Reece. Thank you very much. 

(The witness was excused.) 

Acting Chairman Reece. The committee will stand adjourned until 
10 a. m. 'tomorrow morning. 

(Whereupon, at 4 : 50 p. m., a recess was taken until Friday, March 
17, 1939, at 10 a. m.) 



INVESTIGATION OF CONCENTRATION OF ECONOMIC POWER 



FRIDAY, MARCH 17, 1939 

United States Senate 
Temporary National Economic Committee, 

Washington^ D. C. 

The committee met at 10:10 a. m., pursuant to adjournment on 
Thursday, March 16, 1939, in the Caucus Room, Senate Office Build- 
ing, Representative Carroll B. Reece, presiding. 

Present: Representatives Sumners (vice chairman), Reece, and Wil- 
liams; Messrs. Henderson; Ferguson; Davis; O'Connell; Berge; 
Lubin; Ernest Tupper, representing Department of Commerce; 
Thomas D. Lynch, representing Securities and Exchange Commission; 
Willard Thorp and Robert R. Nathan, representing Department of 
Commerce. 

Also present : Federal Trade Commissioners William A. Ayres and 
Charles H. March ; Willis J. Ballinger, Director of Studies and Eco- 
nomic Advisor to Federal Trade Commission ; William T. Kelley, chief 
counsel, Federal Trade Commission; Phillip Buck, chief counsel; and 
John P. Brown, attorney. Federal Alcohol Administration. 

Acting Chairman Reece. The committee will nlease come to order. 
Mr. Ballinger, are you ready to proceed ? 

Mr. Ballingep. Yes ; Mr. Buck will continue the examination. 

Acting Chairman Reece. Call your first witness, Mr. Buck. 

Mr. Buck. Mr. Chairman, I should like to say that in view of the 
time we have in which to complete the hearing, we will necessarily 
liave to restrict the examination of some of the witnesses to particular 
points that my inviBstigation has convinced me to be probably the most 
important of many points that they could testifiy to. 

I should like to call two other witnesses to close out this particiilai 
phase of the hearing, that is, on distribution and prices, and the first 
witness I should like to call is Mr. Balfe, of National Distillers. , 

Acting Chairman Reece. Mr. Buck, is it your wish this morning that 
you complete the examination of the witnesses before the members of 
the committee ask questions of the witness ? 

Mr. Buck. I think that would facilitate the hearing considerable 
in view of the time allowed. 

Acting Chairman Reece. If it is agreeable to the committee, we will 
try to follow that policy. Of course, if at any time a committee 
member thinks it is desirable to ask a question, he can do so 

Mr. Buck. I might say I have six Avitnesses to put through this 
morning and, as I say, I won't be able to develop their entire testmiony. 

Acting Chairman Reece. As I understand, it is the wish of the 

2683 



2584 CONCENTRATION OF ECONOMIC POWER 

chairman that we complete this phase of the hearing today so that 
we mipht have a recess. 

Mr. Buck. Mr. Balfe. (No response.) 

If Mr. Balfe isn't here, I will call Mr. Greenlee, of Schenley Dis- 
tillers. (No response.) 

Is .Mr. Archibald Kelley here? (No response.) 

Mr. Marks. 

Acting Chairman Reece. Do you solemnly swear, in these proceed- 
ings, to tell the truth, the whole truth, and nothing but the truth, so 
help you God ? 

Mr. Marks. I do. 

TESTIMONY OF LIONEL MARKS, PRESIDENT, WILLIAM JAMESON & 
CO., INC., NEW YORK, N. Y. 

Mr. Buck. Mr. Marks, will you state your name and business con- 
nection, please, sir? 

Mr. Marks. Lionel Marks, managing' director, William Jameson & 
Co., London, and president of William Jameson & Co., Inc., New 
York. , 

Mr. Buck. I notice you have a shamrock this morning. It is an, 
Irish company, isn't it? 

Mr. Marks. It is an Irish company. I think I should share it 
with you, Mr. Buck. 

Mr. Buck. Does your company hold whisky in stocks in Ireland? 

Mr. Marks. Yes. 

Mr. Buck. Mr. Marks, I believe you had occasion over the past 
few years to become fairly well acouainted with the situation in 
Great Britain so far as the manufacture and production and control 
of whiskv is concerned in that country. 

Mr. Marks. Yes, sir. 

PRODUCnON AND CONTROL OF WHISKY IN BRITISH ISLES 

Mr. Buck. Will you give to th^ committee, for the committee's 
benefit here, a short resume of how whisky is produced there, how it 
is controlled — that is, Scotch and Irish and English whiskys? 

Mr. Marks. Well, Scotch whisky is divided into two classes. There 
is the malt whisky and the grain spirits, or grain whisky, as it is 
called. The malt whisky is comparable to the straight whisky in 
this country an^i gives the character and flavor to the blends of 
Scotch whisky. The grain spirits are comparable m a manner to the 
grain spirits in this country, and are used for diluting the heavier 
straight whiskys. 

Mr. Buck. And the resultant product is known as Scotch whisky. 

Mr. Marks. Both ihe straight pot-still whisky and the resultant 
blends are known as Scotch whisk f in England. Iti this country 
the blend is known as blended Scotck whisky, b^ause of your regu- 
lations. 

Mr. Buck. Now, give us a short resume of the situation in Ireland. 

Mr. Marks. In the south of Irelavod the^ manufacture of whisky is 
being practically confine(J to manufacturing or distilling straight 
whiskies. 



CONCENTRATION OF ECONOMIC POWER 2585 

Mr. Buck. Straight Irish pot-still whisky? 

Mr. Marks. Straight pot-still whisky. 

Mr. Buck. What is the situation with respect to stocks on hand and 
ages? 

Mr. Marks. In the south of Ireland I think the present stock on 
hand are about 8,000,000 British proof gallons, and the average age 
would be in excess of 8 years, as far as I remember. The bulk of 
the stock in the south of Ireland is pot-still whisky; there is very 
little spirits in bond. 

Mr. Buck. Tell the committee what you mean by pot-still whisky. 

Mr. Marks. Pot still was the original form of manufacture. It is 
made in a still which is comparable to a glass retort, I mean the old- 
fashioned manner of distillation, in which there is not a continuous 
distilling process. 

Mr. Buck. You mean by that that the whisky must be distilled 
over again? 

Mr. Marks. Whisky in Ireland is frequently and mostly distilled 
three times. 

Mr. Buck. Whereas in a continuous still such as is used by large 
Commercial plants here, there is one continuous process. 

Mr. Marks. There is one continuous process. The real difference 
is the fact that pot-still whisky is taken out at 145° British proof, 
that is approximately 160 American proof, whereas in the continuous- 
distilling process it is taken out at approximately 190 proof American. 

Mr. Buck. The British use what is known as a Sykes. 

Mr. Marks. They use a Sykes hydrometer for ascertaining the 
proof. 

Mr. Buck. Now, with respect to the commercial ownership of those 
stocks, how is that arranged in Britain ? 

Mr. Marks. The custom of trade in production of whisky has 
changed greatly in the last 20 ycjars in the United Kingdom, par- 
ticularly in Scotland. The malt distilleries are mainly small-capacity 
distilleries, of which there are approximately, I think, around 140, 
and there are a number of them that are held, owned by one con- 
cern, others are held individually. In the grain-whisky production 
there are eight' j)roducing distilleries today, a number of them are 
shut down, but eight of them are producing, of which five are held 
in one group and one is held as a subsidiary of a Canadian company 
and is a subsidiary of a London company, and the other is inde- 
pendent. 

Mr. Buck. Out of the total distillery capacity there is one inde- 
pendent ? 

Mr. Marks. One independent of any selling organization. 

Mr. Buck. What is the corporation or trust that controls a large 
share of the production ? 

Mr. Marks. The Distillers Co., Ltd. 

Mr, Buck. And what part of the total Scotch whisky would you 
say is controlled directly or indirectly by the D. C. L. ? 

Mr. IVIarks. You mean production, stocks, or sales? 

Mr. Buck. Ownership of whisky in reserve or in warehouses. 

Mr. Marks. Well, I think that figure was given under oath at a 
recent investigation in Scotland only about 4 or 5 weeks ago — Decem- 
ber, as a matter of fact — and a witness who was from the statistical 



2586 CONCENTRATION OF ECONOMIC POWER 

department of the Distillers Co. gave their stocks as eighty-eight and 
one-quarter million gallons. 

Mr. Buck. And what percent of the total do you think that 
would be ? 

Mr. Maeks. I don't know what the total stocks are that were at 
that time in England. I should say they were somewhere around 
130,000,000 gallons total, but I can let you have that figure accurately 
if you wish it. 

Mr. Buck. Will you put it in the record ? 

Mr. Marks. Yes, sir. 

Mr. Buck. And of the approximate 130,000,000, D. C. L. controls 
80,000,000? 

Mr. Marks. They own eighty-eight and a quarter million ; yes. 

Mr. Davis. Is that Scotch alone j'ou are talking about, or all of 
the Great Britain liquors? 

Mr. Marks. It was all, as far as I understand the evidence that was 
given in Scotland, their stocks of Scotch, pot still, and grain whisky . 
On the total stocks, the stocks of the United Kingdom of all whis- 
kies; is that what you mean? Does the Judge mean that? 

Mr. Davis. I just wanted to definitely identify what you were 
designating. 

Mr. Marks. The figures given by the United Kingdom authorities 
are given for the whole of the United. Kingdom; they don't separate 
them, as a rule. That includes Northern Ireland, Scotland, and Eng- 
land, and most of the stocks are held in Scotland ; there is a very small 
proportion held in Northern Ireland today. 

Mr. Buck. Let's step it up now to getting the whisky info this 
country. How does D. C. L. ordinarily market its whisky in the 
United States? 

Mr. Marks. I am not very familiar with the methods of D. C. L. in 
the United States. I understand that they ship their whisky, as do 
other Scotch producers, to agents or purchasers here and it is dis- 
tributed through those purchasers. 

Mr. Buck. Let me ask you this question: Do you know what 
brands are controlled by D. C. L., Scotch whisky brands marketed in 
the United States ? 

Mr. Marks. I know a number of them; I don't know whether I 
could remember all of them, but I could remember the most prominent. 

Mr. Buck. Will you give the committee the benefit of your approxi- 
mation of that ? 

Mr. Marks. Well, Johnny Walker, Dewars, Buchanans, Haig, 
Whit€> Horse, Vat 69 — I suppose they are the six leaders. And then 
there are the subsidiary brands such as King George and Huntley. 
I am not sure about King William ; I think there are numerous others. 

Mr. Buck. Old Angus? 

Mr. Marks. Old Angus is not owned by the D. C. L. 

Mr. Buck. Would you say that by far the vast majority of the 
popular brands of the Scotch whisky sold in the United States is 
owned or controlled by D. C. L. ? 

Mr. Marks. Of the popular brands ; yes. 

Mr. Buck. Definitely? 

Mr. Marks. Yes. 

Mr. Buck. That is all. 

(The witness, Mr. Marks, was excused.) 



CJONCENTllATION OF ECONOMIC POWER 2587 

Acting Chairman Rebce. Will you call vour next witness ? 

(Mr. Buck called Mr. T. W. Balfe, Mr^! Archibald Kelly, who did 
not appear.) 

Mr. Buck. Mr. Wile, of Schenley Distilleries. 

Acting Chairman Reece. Do you solemnly swear, in these proceed- 
ings, to tell the truth, the whole truth, and nothing but the truth, so 
help you God? 

Mr. Wim;. I do. 

TESTIMONY OF OSCAR J. WILE, VICE PRESIDENT, SCHENLEY 
IMPORT CORPORATION, NEW YORK, N. Y. 

Mr. Buck. Will you state your name and business association, 
please, sir? 

Mr. WiLiB. Oscar J, Wile, vice president of Schenley Import Cor- 
poration. 

ALLQCATION OF BRANDS TO IMPORTTJfS IN UNITED STATES THROUGH 
EXCLUSIVE AGENCY CONTRACTS 

Mr. Buck. Are you acquainted with the arrangements made be- 
tween Schenley Import Corporation and D. C. L. for the distribution 
of brands of Scotch whisky? 

Mr. Wile. We have arrangements with Dewars, but not with 
D. C. L. 

Mr. Buck. With Dewars. What is the customary practice that 
you have? ^Vhat is the customary practice in respect to allocations 
of brands ? How are they allocated in this country to importers ? 

Mr. Wile. Well, they are not allocated at all. Importers make 
their application toi foreign shippers of all kinds for the sole conces- 
sion, the sole right to sell their goods in this country. There is no 
allocation by anybody abroad. 

Mr. Buck. Do you import your Scotch brands under exclusive and 
sole-agency contracts? 

Mr. Wile. We do. 

Mr. Buck. And when those contracts are consummated between the 
foreign shipper and the American importer, does the American im- 
porter become the sole and only person in the United States who can 
buy their brand of whisky ? 

Mr. Wile. That is the case in the contract between Schenley and 
Dewars. I don't know what the conditions are with other people's 
contracts. 

Mr. Buck. That is the case in respect to your own contracts on 
Dewars ? 

Mr. Wile. Yes. 

Mr. Buck. Do you handle any other Scotch brands? 

Mr. Wile. We do. 

Mr. Buck. What are they ? 

Mr. Wile. We handle the Scotch known as Bobby Burns. 

Mr. Buck. Is it the case there, too, as in all of your contracts ? 

Mr. Wile. In all of our contracts we are the sole distributors in 
the United States. 

Mr. Buck. In other words, Schenley under your contract with 
foreign shippers is the only company that can buy those particular 
brands for distribution in the United States? 



2588 CONCENTRATION OF ECONOMIC POWER 

Mr. Wile. That is correct. 

Mr. Buck. Now, what is the policy in respect to the distribution 
of those brands once they arrive here? What is your policy in 
marketing them in the United States in respect to allocation to dealers 
and so on ? 

Mr. Wile. We make a practice of selling to every wholesaler. We 
don't allocate to any particular dealer. 

Mr. Buck. You mean you don't give exclusive wholesale rights in 
specified territory? 

Mr. Wile. With two exceptions in the United States we give no 
exclusive, rights. Those are in the case of small States where we 
consider it wise to confine ourselves to one person, one firm. 

Mr. Buck. Wh^t States are they ? 

Mr. Wile. Florida and Khode Island. 

Mr. Buck. In Florida and Ehode Island you do allocate those 
States to particular wholesalers? 

Mr. Wile. That is correct. 

Mr. Buck. And they are the only wholesalers v/ho can get this 
brand of whisky for distribution in those States? 

Mr. Wile. No; any other wholesaler -i^an buy them through the 
distributor that we appoint as our distributor. 

Mr. Buck. Yes; but he has to buy it through this man that you 
set up there. 

Mr. Wile. That is correct. 

Mr. Buck. Now, what is your policy in respect to resale price 
maintenance on these brands? 

Mr. Wile. Well, xn certain States where there are fair-trade laws, 
where we consider it wise to put a resale price on Scotch whisky, we 
enter into fair-trade contracts. 

Mr. Buck. What percent of your business is covered by such con- 
tracts? 

Mr. Wile. I would say less than 50. 

Mr. Buck. Less than 50 percent? 

Mr. Wile. Yes. 

Mr. Buck. Do you maintain that contract relation m New York 
State? 

Mr. WniE. Yes, sir. 

Mr. Buck. New Jersey? 

Mr. Wile. Yes. 

Mr. Buck. Pennsylvania? 

Mr. Wile. No. 

Mr. Buck. Why? 

Mr. Wile. Because the State of Pennsylvania controls the price 
itself. 

Mr. Buck. Therefore you couldn't do it there, 

Mr. Wile. You could not. 

Mr. Buck. And the reason you don't do it in several States is 
because of the State distribution system set-up where it can't be 
done, is that so? 

Mr. Wile. Well, in some States there are no fair-trade laws; in 
other States the State buys and fixes its own prices. 

Mr. Buck. But with those >wo exceptions, either where you can't 
do it — let's put it all in that : tegory— -where you can't do it because 
of State laws, vou do ? 



CONCENTRATION OF ECONOMIC POWER 2589 

Mr. Wile. No; there are a good many States that have fair-trade 
laws that we don't put our goods under fair trade. 

Mr. Buck. What States? 

Mr. Wile. Well, Arkansas, for instance.^ 

Mr. Buck. Wliat others? 

Mr. Wile. I can't tell, off-hand, I" am not sales manager of my 
company. 

Mr. Buck. Why don't you do it in Arkansas ? 

Mr. Wile. Because we consider it the better part of business not to 
put the whisky under fair-trade control. 

Mr. Buck. Why would it be good business not to do it in Arkansas 
and to do it in Maryland or New Jersey ? 

Mr. Wile. Well, because there don't seem to be the desire to cut 
prices down there that there is in other territories. 

Mr. Buck. You mean the dealers take care of that matter them- 
selves ? 

Mr. Wile. That is right. The dealers take care of it themselves. 

Mr. Buck. Then they have some organization for that purpose ? 

Mr. Wile. I presume the dealers have. 

Mr. Buck. For maintaining the price ? 

Mr. Wile. I presume so. 

Mr. Buck. Under your contracts with foreign shippers on these 
brands, does the shipper contribute to the advertisement of the brand 
in the United States? 

Mr. Wile. He does. 

Mr. Buck. And that is for the purpose of creating consumer de- 
mand for the particular brand here ? 

Mr. Wile. That is correct. 

Mr. Buck. And he also contributes to other forms of salps pro- 
motion in this country? 

Mr. Wile. No ; not our Scotch whisky shippers. 

Mr. Buck. Just the advertising? 

Mr. Wile. Just the advertising. 

Mr. Buck. What do you list under advertising at that point? 

Mr. Wile. We list under advertismg only published advertisements 
in newspapers, magazines, or trade magazines. 

Mr. Buck. Mr. Wile, I. had intended to ask another witness this 
question, but you have been with Schenley for some time. You 'mow 
the business pretty well, generally. 

Mr. Wile. I have been in it 40 years. 

Mr. Buck. What is the situation in respect to the New York 
market now — Schenley marketing whiskies generally, not imports- 
alone ? 

Mr. Wile. I am executive in charge of the import company and I 
know nothing about the domestic division at all. 

Mr, Buck. Don't you sit in on general policy questions ? 

Mr. Wile. Our two companies are run entirely separate. 

Mr, Buck. I didn't ask you that. Don't you sit in on general 
policy questions of the corporation and hear them discussed, and 
so forth? 

Mr. Wile. I do not. 



' Mr. Wile, ia hU original' testimony stetefl Louisi.uia". ijut for the sake »^f aeroracv 
iater corrected it to "Arkatisas" n^hlch ia what he had in inlnd. 

124491— 3&— pi. 8— 12 



2590 CONCENTRATION OF ECONOMIC POWER 

Mr. Buck. You do not? 

Mr. Wile. I do not. 

Mr. Buck. Do j^ou mean to say, now, that you^know nothing about 
the situation in respect to Schenley's in the New York market? 

Mr. Wile. That is correct; I know nothing about their domestic 
situation. 

Mr. Buck. What about their imports? What is the condition of 
the New York market in respect to your imports, Schenle3''s im- 
ports ? 

Mr. Wile. Schenley's import company sells to every wholesaler 
that wants to buy from him in New York. 

Mr. Buck. How many want to buy? Do you have any difficulty 
in marketing in New York City? 

Mr. Wile. None at all. 

Mr. Buck, None at all. Have you had to resort to the establish- 
ment of exclusive wholesale agencies? 

Mr. Wile. Never have. 

Mr. Buck. Do you mean to say that Schenley doesn't have exclusiv^e 
wholesale agencies in New York? 

Mr. Wile. I believe Schenley domestic does. Schenley import 
does not. 

Mr. Buck. Don't you distribute through the same distribution 
channels ? * 

Mr. Wile. We do not. 

Mr. Buck. You do not ? When you take one of these brands under 
an exclusive contract for distribution in the United States, what 
assurances do j^ou have that the brand will be retained by your 
company? 

Mr. Wile. Well, the contract usually has a termination date be- 
yond which we have no assurance. 

Mr. Buck. Wliat is the usual term of the contract? 

Mr. Wile. Some contracts run for 1 year, some for 10 years. 

Mr. Buck. You would say they nm from 1 to 10 years? 

Mr. Wile. That is correct. 

Mr. Buck. And they are sold on exclusive agency contracts ? 

Mr. Wile. That is correct. 

Mr. Buck. For popular brands. 

Let's have the chart on imports. That is all of Mr, Wile, Mr, 
Chairman, if the committee has no questions. 

Acting Chairman Reece. Are there any questions by members of 
the committee? [None.] 

(The witness, Mr, Wile, was excused.) 

Acting Chairman Reece, You may proceed. 

COMPARISON of CONSUMER tOSTS OF SCOTCH WHISKY IN LONDON AND 

NEW TORK 

Mr. Buck. This chart, Standard Consumer Cost of Scotch Wliisky, 
at this point is introduced for the purpose of comparing the consumer 
cost on Scotch whisky as between London and New York, The figures 
are based on market situation as it existed last week, I believe. It is 
a standard Scotch whisky 8 years old, four-fifths of a quart, you will 
observe. ' That is not a full quart of whisky, even. That is four- 



CONCENTRATION OF ECONOMIC POWER 2591 

fifths, 86.8 proof, and the conversion into money is based upon the 
pound sterling at $4.89, which we figure to be the average rate of 
conversion for 1938. 

The chart is interesting, I feel to the committee, for many reasons. 
It compares the consumer price in London at $3.31 for a fifth to the 
price in New York at $3.39, a difference of only 8 cents a bottle. 

It is noticeable there that the Goverimient in Britain levies upon 
that four-fifths of a quart of whisky apparently $2,24 in taxes, 
whereas the Federal and. State taxes, including the tariff on the 
whisky when imported to the United States, figure only $1.15. It 
pays no tax of any consequence that I know of to the British Govern- 
ment when exporting. 

Notwithstanding me great difference between the amount of taxes 
levied by the respective Governments upon that bottle of whisky, we 
find that the consumer in the United States is paying about the same 
price as the consumer in London. Another interesting point in the 
chart is the allowance to the retailer in Great Britain, that is, the 
total mark-up from distiller to consumer in Great Britain, we figure, 
is 28 cents on that bottle as against $1.37^/^ in the United States. 

The distiller's cost and profit vary to a short and small degree, but 
the interesting comparison — and it, of course, by implication involves 
the whole distribution system and the costs thereof — -is that, notwith- 
standing the fact that Great Britain levies nearly twice the tax that 
the United States does, still the consumer pays the same price in the 
United States as he does in London. 

Acting Chairman Reeoe. What is the system of distribution in 
England? Is it by private distribution or is it done by the Govern- 
ment? 

Mr. Buck. Privately distributed. 

I will ask that the chart be numbered for the record, Mr. Chairman, 
as the others have been. 

(The chart referred to was marked "Exhibit No. 420" and is included 
in the appendix on p. 2703.) 

(Representative Sumners, the vice chairman, took the chair.) 

The Vice Chairman. Pardon me, do you know exactly what tax 
liquor pays to the British Government ? 

Mr. Buck. Congressman Sumners, yes ; that is the tax he pays to the 
British Government when sold in Great Britain. 

^ The Vice Chairman. That liquor that is exported from Great Brit- 
ain to this country — prior to exportation, what tax does it pay ? 

Mr. Buck. It is a very nominal sum ; I believe it amounts to about 
6 or 7 cents a gallon ; I wouldn't be quite sure. It is just a shade of 
some excise charge there. 

The Vice Chairman. It doesn't really figure into the American 
price. 

Mr. Buck. No ; it does not, 

Mr, Chairman, I am advised that Mr. Balfe, of National Distillers, 
is here, and I would like to revert back to the point we had up yes- 
terday afternoon for just a moment. 

The Vice Chairman. Do you solemnly swear, in the testimony you 
are about to give,- to tell the truth, the whole truth, and nothing but 
the truth, so help you God ? 

Mr. Balfe. I do. 



2592 CONCENTRATION OF ECONOMIC POWER 

TESTIMONY OF T. W. BALPE, VICE PRESIDENT AND GENERAL 
SALES MANAGER, NATIONAL DISTILLERS PRODUCTS CORPORA- 
TION, NEW YORK CITY 

Mr. Buck. Mr. Balfe, state your name and business connection, 
please, sir. 

Mr. Balfe. Tom W. Balfe, vice president and general sales manager 
of National Distillers Products Corporation. 

Mr. Buck. You have charge of the sales and distribution of products 
for National Distillers in this country? 

Mr. Balfe. Yes, sir; except that the monopoly State sales are in 
charge of Mr. MacNamara; the open-State sales are in my charge. 

Mr. Buck. You have all open-State sales in the country? 

Mr. Balfe. Yes, sir. 

EXTENSION OF CREDIT TO WHOLESALERS^ 

Mr. Buck. What is the approximate amount of credit extended 
by National to wholesalers in open States at the present time on its 
distribution ? 

Mr. Balfe. I can only answer that by saying that it would vary, 
of course, in the community you are doing business in, and also with 
the individual distributor. 

Mr. Buck. In round figures, is it $10,000,000 or $8,000,000, or what? 
How much credit do you carry? 

Mr. Balfe. I truthfully haven't those figures, but in round figures 
I would say it could be seven or eight million. . 

Mr. Buck. That is a normal, you feel, and a minimum, between 
seven and eight million ? 

Mr. Balfe. N'o ; I will take that back. I would think 5,000,000 
was nearer it. I think you have that report on your questionnaire. 

Mr. Buck. It is in your annual report, I suppose, but it is mixed 
up with other things and I couldn't very well tell. It is between 
five and eight million. 

Mr. Balfe. I would think so. 

Mr. Buck. And how many States does that apply to? 

Mr. Balfe. It applies to tlie whole country. 

Mr. Buck. You have to except the monopoly States. 

Mr. Balfe. It includes them. 

Mr. Buck. Some of the monopoly States pay cash, do they? 

Mr. Balfe. I don't think any of them pay cash. I think some 
of them pay their bills within 10 days, some of them 30 days. 

Mr. Buck. Now will you give the committee an illustration or 
some imderstanding about ^the length of credit? How long does 
credit run ? What is ycur longest credit account, I will ask you that, 
of any consequence? 

Mr. Balfe. I truthfully couldn't answer that. Our terms are 
cash less discount of 1 percent in 10 days, one-half of 1 percent in 
30 days, and 60 days net. 

Mr. Buck. I know those are your printed terms, but I am talking 
about what is the practice. 

* This subject Is resumed from p. 25tO et seq. 



CONCENTRATION OF ECONOMIC POWER 2593 

Mr. Balfe. I would say very definitely that our practice is to keep 
our accounts paid up. 

Mr. Buck. Well, for instance. I have heard that there are who"! 
salers that are being practically financed by distillers; that is tne 
point I am getting at. Now, to what extent do you do that? 

Mr. BAiji'E. I would say not to any extent whatsoever. 

Mr. Buck. On what basis do you extend the credit? Do you rate 
the purchaser on his worth, his assets? 

Mr. Balfe. I would say very decidedly yes. 

Mr. Buck. How would you account for a wholesaler who had only 
$.50,000 in assets who might owe $300,000 for whisky? Would that 
be a rating on assets, in your opinion? 

Mr. Balfe. No; I would say not. 

Mr. Buck. It would not be? 

Mr. Balfe. Yes, sir. 

Mr. Buck. Would you have such cases on your books? 

Mr. Balfe. I would say no. 

Mr. Buck. You are not certain about that? 

Mr. Balfe. I am not certain about it. We have a credit depart- 
ment. The credit department is entirely separate and distinct from 
my department. I would feel very certain, though, that they would 
not extend any such credit. 

Mr. Buck. Have you accounts, wholesalers, that you do practically 
finnnce in order to keep them going and to take your lines? 

Mr. Balfe. No, sir. 

]\rr. Buck. You think not? 

Mr. Balfe. T know not. 

Mr. Buck. I might say just in line with Mr. Balfe's testimony, 
Mr. Chairman, that the annual report of the company for 1938 showg 
notes and accounts receivable, less reserve for doubtful accounts, of 
$19n48,r)44.52. 

The Vice Chairman. Is that out of proportion to the bills receiv- 
able of ordinary commercial concerns, when you compare the volume 
of sales and credit? 

Mr. Buck I wouldn't know, Mr. Chairman. I don't know. The 
point here, Mr. Chairman, is this, as I understand it. There is 
some talk — truthful or not, I don't know — to the point that the large 
companies can afford to extend wholesalers unusual and more than 
ordinary commercial terms in order to get the wholesaler to represent 
them, and the smaller companies with less capital haven't that amount 
of money to carry these wholesalers in such amounts. 

The Vice Chairman. Is there any evidence, or do you purpose to 
develop any evidence, that the distillers require that wholesalers 
carry their goods exclusively? 

Mr. Buck. We touched upon that yesterday. That seems to be a 
controverted question, too. There are all sorts of individual prac- 
tices, apparently, in the industry, and none that can be taken on that 
point as beinj? general, I should say. 

The Vice Chairman. I am riot familiar with the direction of this 
particular examination, and certainly not the objectives of the exam- 
ination, so I suspect I had better not interfere. I would suggest, 
however, that we cut through some of these details as fast as possible 
and get right down to the point. 



2594 CONCENTRATION OF ECONOMIC POWER " ': 

Mr. Buck. That about concludes my examinatioYi of this witness. 

Representative Reece. Yesterday some reference was made to the 
credit agreements by some of the larger companies with the banks.. 
Is it your purpose to develop the question as to whether there is any 
disposition on the part of the banks to restrict credit out of propor- 
tion to the smaller companies? . 

Mr. Buck. Congressman, I am putting the facts in the record. I 
don't know what the proper conclusions ought to be from those facts. 
I put into the record yesterday the banking agreement of the large 
companies, whereby it is conclusively shown, of course, that they do 
have at least ample financial assistance under those agreements. Now, 
I haven't been able to find anything comparable to that in the aver- 
age concern. As to what conclusions the committee might draw from 
that, I don't know. 

Representative Reece. My thought was going to the point as to 
whethli- you expected to develop the other phase of the credit situa- 
tion so as to show any situation which might exist with reference to 
the so to speak smaller concern ; that is all. 

Mr. Buck. Mr. Tunney testified yesterday, you Avill recall, that of 
course the big companies could do this, but the smaller companies 
could not. That was one point there. 

Vice Chairman Summers. Have you developed what credit is ordi- 
narily required by a retailer in order to carry on the liquor business ? 

Mr. Buck. No ; I have not, Congressman Sumners. I don't know 
that you could. 

The Vice Chairman. May I ask one or two questions; and if J 
cover territory you have alreaCdy covered, be good enough to indicate 
to me so we won't duplicate it in the record. 

What is the average credit in your sales — length of time? 

Mr. Balte. I am sorry, sir; I couldn't answer that. Our accounts 
range from small distributors; you see, we do not sell to the retailer 
at all. 

The Vice Chairman. If you can't answer it, all right. 

Mr. Balte. I couldn't answer it. 

Mr. Nathan. What was the volume of sales during the period 
when the notes "accounts receivable" were $19,000,000? 

Mr. Balfe. I think Mr. Porter testified — I think that is a matter of 
record— $6,000,000? 

Mr. Nathan. Were those notes receivable primarily from whole- 
salers, notes receivable on credit granted to wholesalers ? 

Mr. Balfe. Yes, sir; I would say so. 

Mr. Nathan. That would seem to indicate an average credit dura- 
tion for that period of somewhere between 3 and 4 months, if you 
have $19,000,000 outstanding in notes accounts receivable, about $68,- 
-000,000 sales. That would seem to indicate that there was a turnover 
of three to four times a year, or somewhere between 3 to 4 months' 
average duration of the credit ^range. 

Mr. Balfe. I am certain that is not correct as you Jmve put it, but 
truthfully it is a financial matter that I am not competent to answer. 

The Vice Chairman. Have you someone with your organization 
that can testify on these points? 

Mr. BaWe I would be very glad to get any information that you 
want with reference to the $19,000,000 f\nd the break-down of it, if 
you would like it. 



CONCENTUATIOX OF KCOiSOMlC rOWEll 2595 

Mr. Buck. Mr. Chairmarij I would suggert we ask the witness to 
put it in the record and furnish it to me.^ 

The Vice Chairman. Also indicate, if it isn't an improper thing 
fo do, what small liquor people you have declined to sell because 
they were not able either to pay cash or give you assurance of pay- 
ment in a reasonable time. 

Mr. Balfe. I could say those instances must be few and far 
between. 

The Vice Chairman. Personally I would like to know whether or 
not you have in your business record a declined sale on your part to a 
small liquor man because his ability to pay in a reasonably short 
length of time was not good. 

Mr. Davis. Do you require the wholesalers to execute notes, promis- 
sory notes, covering their accounts unless they have extended beyond 
the 60-day period, which is net? 

Mr. Bali'e. I didn't understand the last part of that — beyond the 
60-day i)eriod. Do you mean do we take from our customers notes 
if they run beyond the 60-day period? 

Mr. Davis. Yes. You explained in response to questions of Mr. 
Buck what your regular rates were. 

Mr. Balfe. Yes, sir. 

Mr. Davis. Sixty days net. Now unless a wholesaler fails to pay 
his account by the expiration of 60 days, you do not require him to 
execute notes receivable, do you? 

Mr. Balfe. I would say not. We are very strict on our credit terms 
of 60-day periods. 

Mr. Davis. In other words, the figure given of $19,000,000 notes 
receivable only covered the indebtedness to you in the form of notes 
which had extended beyond the 60-day period. 

Mr. Balfe. I would say a very large part of that is represented 
by notes covering beyond that period. 

Mr. Davis. How was that designation given, Mr. Buck? 

Mr. Buck. You mean what was the amount. Judge? 

Mr. Davis. No ; what was the designation of that item ? 

Mr. Buck. Notes and accounts receivable. 

Mr. Davis. Notes and accounts? What percentage of that would 
you say was represented by notes as distinguished from open accounts ? 

Mr. Balfe. I truthfully do not think- 1 could answer that author- 
itatively. If I were to make a guess I would say possibly one-third 
or one-fourth. 

Mr. Davis. One-third open accounts? 

Mr. Balfe. Oh, no; I would say the reverse. 

Mr. Davis. The reverse? 

Mr. Balfe. Yes. I would much rather furnish that information 
to you.^ 

Mr. Davis. I thought you first stated that your outstanding ac- 
counts were only about 5 or 8 million dollars. 

Mr, Balfe. I (qualified that by saying it was my guess and it was 
a very rough estimate based on our sales as to what they might be, 
but I can see they would run more than that, we giving 60-day terms, 
so from that I estimated just as an estimate two-thirds and one-third. 

Mr. Buck. Mr. Balfe, do you have wholesalers — let's take the four 
corporations, Schenley, Seagram, Walker, and National. Do any of 
your wholesalers handle your lines and none of the other three? 



2596 CONCENTRATION OF ECONOMIC POWER 

Mr. Balfe. I think we have one distributor only, Mr. Buck, and 
that is of a very recent date, who handles not any of the other three 
lines. 

Mr. Buck. Where is that distributor? 

Mr. Balfe. Baltimore. 

Mr. Buck. What about the Chicago market? 

Mr. Balfe. In the Chicago market every distributor we have 
handles Hiram Walker, Calvert, or Seagram. 

Mr. Buck. The same comparable price bracket? 

Mr. Balfe. Hiram Walker line is in most cases comparable to our 
line in the price brackets, yes. 

Mr. Buck. Would that be generally true, you say ? 

Mr. Balfe. Yes, sir. 

Mr. Buck. That is all. 

Mr. Balfe. Thank you. 

(Mr. Balfe was excused.) 

Mr. Buck. Is Mr. Archibald Kelly here ? 

The Vice Chairman. Do you solemnly swear, in these proceedings, 
to tell the truth, the whole truth, and nothing but the truth, so help 
you God? 

Mr. Kelly. I do. 

TESTIMONY OF ARCHIBALD KELLY, PRESIDENT, DISTILLERS UU., 
LTD., OF DELAWARE, NEW YORK CITY 

Mr. Buck. Mr. Kelly, will you state your name and business con- 
nections, please, sir, and address ? 

Mr. Kelly. Archibald Kelly; address, 35 Helena Ave., Larch- 
mont, N. Y. ; occupation, president of the Distilleries Co., Ltd., of 
Delaware, and also correspondent of the D. C. L., Great Britain. 

The Vice Chairman. What do you mean by correspondent ? Any- 
body can write. 

Mr. Kelly. To keep my company in touch with any matters of 
interest, in the United States, to them. 

The Vice Chairman. You write them on any matters that develop 
in the United States that are of interest to them ? 

Mr. Kelly. In connection with taxes, duties, labeling, regulations; 
also to advise and reconmiend in connection with the appointment of 
distributors. 

The Vice Chairman. You have some sort of relationship with that 
company in connection with selling their liquors in America ? 

Mr. Kelly. No ; not with selling their liquors in America. 

The Vice Chairman. What doing, then ? 

Mr. Kelly. The duties I have already outlined, plus putting them 
• in touch and advising and recommending regarding the appointment 
of distributors to sell their liquors in America. 

The Vice Chairman. You are in advisory capacity ? 

Mr. Kelly. Advisory. 

The Vice Chairman. Are you on salary with them or do you have 
an interchange of service? 

Mr. ICelly. Salary. 

The Vice Chairman, Thank you. 



CONCENTRATION OF ECONOMIC POWER 2597 

Mr. Buck. Mr. Kolly, I believe you have a Distillers Co., Ltd., in 
the United States as well as in Great Britain. 

Mr. Kelly. Yes; the Delaware company. 

Mr. Buck. That is a Delaware corporation? 

(Mr. Kelly nodded in the affirmative.) 

Mr. Buck. And you are president or manager of it? 

Mr. Kelly. President of the Delaware corporation. 

Mr. Buck. How long have you been with D. C. L., of Great 
Britain ? 

Mr. Kelly. Since 1930 between Canada and the United States. 

Mr. Buck. 1930. 

Mr. Kelly. I might say, in Canada I was with the Distillers Co. 
of Canada, Ltd., which is the Canadian subsidiary of the D. C. L., 
and since I came to the States after repeal, then I have been the presi- 
dent, of the Delaware Co. of the D. C. L., Great Britain. 

Mr. Buck. And as you term it, a corresponding factor, so to speak. 

Mr. Kelly. For the Scotch whisky end of it. 

Mr. Buck. For the Scotch whisky lines of the whisky trust? 

Mr. I^LLY. For the D. C. L. of Great Britain. 

OPERATIONS or D. C. L. AND ITS SUBSIDIARIES IN MARKETING SCOTCH 

WHISKY 

The Vice Chairman. Does the D. C. L. own this Delaware cor- 
poration ? 

Mr. Kelly. D. C. L. owns 250,000 shares out of 850,000 shares of 
the Delaware corporation, and the balance is owned by the various 
gin companies which are subsidiaries of the Distillers Co. of Great 
Britain. 

The Vice Chairman. Let's get that clear. This Delaware corpora- 
tion is owned either by the parent concern or by the subsidiaries of 
that parent concern mentioned by you. 

Mr. Kelly. Between the parent concern and the British gin dis- 
tilleries they own 100 percent of the Delaware Co. 

The Vice Chairman. ^Vhat is the relationship between what you 
designate as the parent concern and the gin distilleries? 

Mr. Kelly. By the parent concern I mean the Distillers Co. and 
their British gin subsidiaries over there. 

The Vice Chairman. Wliat is wrong with my question insofar as 
its comprehensiveness that the parent concern and its subsidiaries 
own the Delaware corporation, Who else owns it? Anybody else? 

Mr. Kelly. Nobody. 

The Vice Chairman. That is- all. Thank you. 

Mr. Buck. Mr. Kelly, would you state for the committee the 
brands of Scotch whisky sold in the United States that are owned or 
controlled by the D. C. L. of Great Britain ? 

Mr. Kelly. Well, as far as I can remember, there is the Johnnie 
Walker whiskies, Haig & Haig, Dewar's, White Horse, Black and 
White, Vat 69, Green Stripe, Sandy MacDonald, Bulloch Lade, Peter 
Dawson, Watson No. 10, King William, King George. And I think 
that is about ail I. can remember just now. There are many of them 
but I will be able to give you a list of them. 



2598 CONCENTRATION OF ECONOMIC POWER 

Mr. Buck. If you find what you have stated is not all, will you 
give me a list? 

Mr. Keixt. I would be pleased to.^ 

Mr. Buck. Are all of those brands distributed in the United States 
through sole agency contracts? 

Mr. Kelly. Through sole distributorship contracts. 

Mr. Buck. Yes; I appreciate the distinction betw^een agency and 
distributors. I notice you carry it in your contract. In other words, 
your distributors are not allowed to bind the parent company in any 
way. That is the point, isn't it? 

Mr. Kelly. None whatever. 

Mr. Buck. But they are the only people in the United States who 
can get this whisky, these particular brands ? 

Mr. Kelly. These particular brands. Each American distributor 
has a brand. 

Mr. Buck. No one else can buy from corporations? 

Mr. Kelly. No. 

Mr. Buck. As I understand it, the D. C. L. allows a certain per- 
cent of the total purchases for advertising in the United States, 
creating consumer demand. 

Mr. Kelly. No. 

Mr. Buck. What is the advertising arrangement? 

Mr. Kelly. In the case of what we call the bigger brands they 
make a lump sum appropriation irrespective of the sales, which the 
distributor spends to the best of his ability for that brand in the 
United States. 

Mr. Buck. What would you call the higher brands ? 

Mr. Kelly. Dewar's, Haig & Haig, Johnnie Walker, Vat 69, Black 
& White, and Wliite Horse. 

Mr. Buck. And who are the agent's sole distributors of those in- 
the United States? 

Mr. Kelly. Haig & Haig is Somerset Importers, Ltd.; White 
Horse, Browne . Vintners Co., Inc. ; Johnnie Walker, Canada Dry 
Ginger Ale Co.; Vat 69, Park & Tilford; Black & Wliite, Fleisch- 
mann Distilling Co. ; and Dewar's, the Schenley Import Corporation, 

The Vice Chairman. May I ask, are these distributors that you 
mention selected as a result of your recommendation under your 
responsibility as correspondent? 

Mr. Kelly. No ; the most of the original arrangements were made 
in the latter part of 1933, just before repeal, when the directors of 
the Distillers Co., Ltd., of Great Britain came over here and selected 
their distributors. 

The Vice Chairman. Is there more than one distributor for a given 
brand in the United States? 

Mr. Kelly. No ; we have one sole distributor for each brand. 

The Vice Chairman Are the businesses of these distributors owned 
to any degree by either the parent concern or any subsidiary of the 
4)arent concern, referring now to the British organization ? 

Mr. Kelly, Do I understand you to say, does — - 



1 Mr. Kelly supplied the committee with a list of the principal brands owned or con- 
trolled by Distillers Co., Ltd. (Edinburgh), now being imported by American distributors, 
in a letter dated March 21, 1939. It was marked "Exhibit No. 432", and is included in 
.the appendix on p. 2720. 



CONCKNTllATION OF ECONOMIC I'OWEU 2599 

The Vice Chairman (interposing). I was asking the question 
whether or not the business of the distributors is owned to any degree 
either by the chief British concern or any of its subsidiaries. 

Mr. Kelly. None; no interest whatever.^ 

The Vice Chairman. That is all. 

Mr. Buck. How long do the "contracts run ? 

Mr. Kelly. Well, they vary from 10 years down to 1 year. 

Mr. Buck. What about the main brands that you have mentioned ? 

Mr. Kjilly. Mostly 10 years. 

Mr. Buck. Ten years exclusive sole distributor contracts? 

Mr. Kelly. Yes. 

Mr. Buck. How^ many sole distributors do you have outside of New 
York City? 

Mr. Kelly. None. 

Mr. Buck. All in New York? 

Mr. Kelly. Oh, no; there is S. S. Pierce & Co., of Boston, who have 
the Glengarry Brand, which is a brand that I omitted to mention. 

Mr. Buck. That is a secondary brand, is it ? 

Mr. Kelly. That is one of our smaller brands. 

Mr. Buck. With that exception, they are all held in New York City ? 

Mr. Kelly. All held in New York City. 

The Vice Chairman. Will you undertake to develop whether or not 
there is any relationship in ownership, direct or indirect, among these 
distributors ? 

Mr. Buck. I am working on a report to be filed, Mr. Congressman. 

The Vice Chairman. Then I withdraw the suggestion. It would 
be very interesting, I think, to know about it. " 

Mr. Buck. Of course, some of these sole agencies are subsidiaries of 
our own large domestic distillers. 

The Vice Chairman. That has been developed and put in the 
record ? 

Mr. Buck. That is an acknowledged fact. 

Mr. Buck (to Mr. Kelly). Now, suppose a sole distributor should 
permit Haig & Haig to be sold at what the Distillers Co., Ltd., consid- 
ered to be less than a reasonable price to be charged to the consumer. 
What would happen to that contract ? 

Mr. Kelly. The Distillers Co. have no control over the price or 
policy of their American distributors. 

Mr. Buck. Yes; they have no control, but what in practice would 
take place there? If I should have an exclusive agency for Haig & 
Haig in the United States, and say it is now selling at $3 a bottle, and 
I should permit it to be sold at $1.50 a bottle — suppose the price of 
Haig & Haig dropped to $1.50 a bottle, what would happen to that 
contract ? 

Mr. Kelly. Nothing. 

Mr. Buck. You think not? 

Mr. Kelly. Nothing. 

Mr. Buck. Would you recommend its renewal? 

Mr. Kelly. In the 10-year contract many of them have very many 
years to go, so it is a question of what I might do 10 years from now. 

^In this connection, Mr. Kelly advised the Committee, in a letter dated Mav 16, in,S9. 
"that in 1936 the British company acquired in the open market approximately "4% of the 
capital stock of Schenley Distillers Corporation, a subsidiary of which is a distributor of 
the brands of one of the British companies." 



2600 CONCENTRATION OF ECONOMIC POWER 

Mr. Buck. You also have some 1-year contracts? 

Mr. Kelly. One-year contracts? Certainly I would recommend 
the renewal. » 

Mr. Buck. Even though they were selling Haig & Haig at $1 a 
bottle. 

Mr. Kelly. Yes; because we have no concern or interest in the 
resale price in the United States. 

Mr. Buck. As a matter of fact, you wouldn't know whether, in 
turn, these- brands of whisky are sold under resale price-maintenance 
contracts in this country? 

Mr. I^LLY. I have no record whatever of any resale prices of any 
of our brands, either to wholesalers or distributors. 

Mr. Buck. You make no effort to have the geographical distribu- 
tion of these agencies' contracts? That is obvious from your state- 
ment before. 

Mr. Kelly. None whatever. 

Mr. Buck. What does Distillers Co., Ltd., in the United States 
manufacture ? 

Mr. Kelly. The various brands of gins that they acquired from 
the British companies when we formed the Distillers Co. of Dela- 
ware. The brands are the Gordon's, Burnett's, Boord's, Hill's & 
Underwood's, and some other ones. 

The Vice Chairman. Do those goods indicate where they are man- 
ufactured ? 

JSIr. Kelly. They are all manufactured in Linden, N. J. 

The Vice Chairman. And that is indicated on the bottle ? 

Mr. Kelly. On the bottle and on the label. 

Mr. Buck. Our law, Mr. Congressman, requires that that be done. 
However, most of them are brands that were manufactured in Eng- 
land at one time, I suppose, and established a reputation as English 
brands and then were brought to this country and manufactured 
here. 

Mr. Kelly. Yes. 

Mr. Buck. Do you happen to know the capital, the value, the assets 
of D. C. L.? 

Mr, Kelly. No. I know it consists of 10,000,000 common shares,^ 

Mr. Buck. Would £20,000,000 be an approximation, do you think? 

Mr. Kelly. Approximating the market value of their shares at 
$20, that would be about £40,000,000. 

Mr. Buck. Mr. Kelly, would you know the specific amounts al- 
lowed on certain brands for advertising in a year in the United 
States? 

Mr. Kelly. Yes; I know the appropriation amongst the main 
brands. 

Mr. Buck. Take Haig & Haig as an illustration. Would $241,997 
be an approximation? 

^ In the letter of May 16, 1939, cited in footnote 1 on the preceding page, Mr. Kelly 
lavised that he has 'since asceitained that according to the last published balance siieet 
of Ihe Distillers Company Limited, as at May 15, 1938, the capital was s.tated as 
follows : 

Ordinary Stock • __ _ £10 690 962 

6% Cumulative Preferred Stock """_" 2,20(1,000 

12, 890, 962 
^34 270 9^66/28/*4d *^^ '^*^^ ^^^^*^ °^ '^^^ Distillers Company Limited were carried at 



CONCENTRATION OF ECONOMIC POWER 2601 

Mr. Kelly. No; far too high. 

Mr. Buck. For 1938? 

Mr. I^LLY, 1938. 

Mr. Buck. What would be the proper amount? 

Mr. Kelly. £35,000. That would be, roughly, $175,000 at $5. 

Mr. Buck. That is all. 

Mr. Ballinger. I would like to ask you a question, Mr. Kelly. 
You are acquainted with how the D. C. L. operates in Great Britain. 
Do they sell to wholesaler, and wholesaler sell to retailers? 

Mr. Kelly. I am not very well acquainted with their principle of 
doing business in the United Kingdom. All my business experience 
with the D. C. L. has been between the United States and Canada. 

Mr. Ballinger. Very well. Then I won't ask these questions of 

you. . 

Dr. LuBiN. Mr. Chairman, may I ask the witness a question? 

The Vice Chairman. Yes, sir. 

•>r. LuBiN. These distributors are purchasers of the products of 
-^le D. C. L. They make an outright purchase and distribute the 
products after they make the purchase. 

Mr. Kjelly. They make the purchase in England and pay for the 
goods in England, and the goods then belong to them ? 

Dr. LuBiN. Is there anything in any of the contracts or any prac- 
tices in existence which have anything to do with determining the 
amount that they must sell or purchase in a given year ? 

Mr. Kelly. Yes. I believe the minimum is 100,000 cases per 
annum. 

Dr. LuBiN. Is there any maximum limitation of the amount they 
may purchase? 

Mr. Kelly. No maximum. 

The Vice Chairman. Any other questions, gentlemen? (None.) 

Mr. Buck. That is all. 

(The witness, Mr. Kelly, was excused.) 

Mr. Buck. Mr. Newman, please. 

The Vice Chairman. Do you solemnly swear, in the testimony 
you are about to give, to tell the truth, the whole truth, and nothing 
but the truth, so help you God ? 

Mr. Newman. I do. 

TESTIMONY OF JOSEPH H. NEWMAN, PRESIDENT, BKOWNE- 
VINTNERS CO., INC., NEW YOKK CITY 

Mr. Buck. State your name and business. 

Mr. Newman. Joseph Newman, president of Browne- Vintners Co., 
Inc. 

Mr. Buck. Mr. Newman, does Browne-Vintners Co. hold the sole 
agency or sole distributors contract on White Horse Scotch whisky ? 

Mr. Newman. They do. 

Mr. Buck. How do you market- that wliisky in the United States? 
What is your marketing policy? 

Mr. Newman. Selling it to the different wholesalers through the 
country. 

Mr. Buck. Do you market ^^nder resale price maintenance agree- 
ments? 



2602 CONCENTRATION OF ECONOiMlC POWER 

Mr. Newman. In some of the States. 
Mr. Buck. In most States? 

Mr. Newman. "Well, probably half a dozen, where they have fair- 
trade contracts. 

TYPICAL SOLE AGENCY CONTRACT 

Mr. Buck. I hand you an agreement and ask you if that is one of 
the typical agreements or is the typical form of the agreement used 
by your company ? 

Mr. Newman. That is correct. 

Mr. Buck. May I file that for the record ? 

Mr. Newman. Yes, sir. 

Mr. Buck. I ask that it be received. 

The Vice Chairman. It will be admitted. 

(The agreement referred to was marked "Exhibit No. 421" and is 
included in the appendix on p. 2703.) 

Mr. Buck. Mr. Chairman, I would like also to submit a copy of 
an agreement, one of the contracts under which these sole distributor 
agencies are created. Some of these contracts, however — I think all 
of them — set forth the price at which the distributor buys the whisky, 
and I understand that that might cause some uneasiness in the trade, 
and at least it is a matter that they wouldn't want put in. 

Mr. Newman. Yes. 

Mr. Buck. So I submit it to the committee whether they think the 
price schedules under those circumstances should be omitted from the 
agreement or not. 

The Vice Chairman. As 1 understand it, you propose to submit 
the document with the suggestion that there is objection on the part 
of the trade to having their price schedules incorporated. 

Mr. Buck. Yes, sir. 

The Vice Chairman. Do they want to make any further showing 
of protest than to indicate that protest and let the committee have 
it? 

Mr. Newman. No. 

Mr. Buck. I think not; I think that would be the general attitude. 

Mr. Newman. That is all right. 

The Vice Chairman. You be certain, so in the completion of the 
record it won't be overlooked. 

Mr. Buck. I will. 

The Vice Chairman. I assume that these gentlemen who are at- 
tending the hearings will see to it.^ 

Mr. Buck. Mr. Newman withdraws his objection to this particular 
contract ; and I will say to the trade, those that are present, that unless 
they object, the committee might consider this as a typical contract 
to a sole agency or distributor, if that is satisfactory to the committee. 

The Vice Chairman. That is satisfactory to the committee; but I 
think it should appear at this point and be very clear that if it is con- 
tended by any of the gentlemen here who represent other concerns that 
this contract is not typical, at this i)oint in the record would be the 
proper place to indicate tlieir lack of agreement. 

Mr. Guy Mason (Washington, D. C. counsel. Park & Tilford). I 
make that reservation for Park & Tilford. 



' Referring to counsel for various witnesses. 



CONCENTRATION OF ECONOMIC POWER 2603 

The Vice Chairman. You make the reservation that it is not typi- 
cal? 

Mr. Mason. For the time bein^, for Park & Tilford. 

The Vice Chairman. The committee clerk has noted that. 

Mr. George K. Benemax (Washington, D. C, counsel, Schenley 
Import Corporation). On behalf of Schenley Import Corporation, we, 
of course, have never seen that contract. 

The Vice Chairman. Are you making; this to save the point or be- 
cause your examination of the document indicates that it is not typi- 
cal? 

Mr. Beneman. I am making the point. Mr. Chairman, because I 
have never ■^een that document.^ 

The Vice Chairman. You reserve the point because you have never 
seen it? 

^Ir. Mason. That is the basis of my reservation. 

The Vice Chairman. It is saving your point. 

Mr. Buck. Are there others ? 

The Vice Chairman. I think it would be, unless you gentlemen are 
very attentive on this inquiry at the moment, a good time to examine 
that record and then see whether or not you have more objection than 
that which would be purely technical. 

Mr. Buck. Mr. Chairman, on that point, those who feel this is not 
a typical representation of the contract, I would suggest file their in- 
dividual contracts for the record. 

The Vice Chairi\ian. That is a good suggestion, and let them all 
come in at this point, if it can be arranged. I mean physically at this 
point. 

Mr. Mason. Speaking for Park & Tilford, we have no objection to 
the contract going in. We do wish to exclude, if possible, short of 
going to jail for contempt, our price list. 

Mr. Buck. Mr. Mason, will you file a copy of Park & Tilford's 
contract and take out your price list ? 

Mr. ISIason. We will be glad to do so, and we will furnish the price 
list confidentially to the committee or to the Federal Trade Com- 
mission.- 

Mr. Buck. Will all you gentlemen who declare this not to be a typi- 
cal contract do the same thing? 

The Vice Chairman. Now, we understand clearly that this is to go 
in, and their own trade contracts are to go into the record. In addi- 
tion to that, their respective price lists are to be furnished for the 
information of the committee or the Trade Commission. 

Mr. Buck. That is right. 

(The Browne-Vintners agency contract was marked ''Exhibit No. 
422" and is included in the appendix on p. 2705.) 

Mr. Buck. Do you have, on behalf of Browne-Vintners Corpora- 
tion, any other sole-agency contracts for any brands of Scotch whisky? 

Mr. Newman. We have not. 

Mr. Buck. You have the White Horse brand. 

Mr, Newman. That is correct. 



^Counsel for Schenley Distillers Corpoiatiou, after reading the agreement, subse- 
quently returned it to the committee clerk with the statement that it is suhstan,tially 
typical of the Schenley Import agreement. 

2 Later submitted by Mr." Mason. See p. 2612, infra, and appendix, pp. 2700 and 2711. 



2604 CONCENTRATION OF ECONOMIC POWER 

Mr. Buck. I may say that I have consular invoices on these goods, 
on most of the contracts already furnished on subpena duces tecum, 
but I would prefer that they put them in voluntarily. . I think that. 
would be more agreeable to the industry. 

The Vice Chairman. Whoever has charge of this record will see 
if they do come in that they come in right at this point, so they will 
not be distributed. 

Mr. Buck. That is right. 

Mr. Newman, do you have the same arrangement in respect to ad- 
vertising of your brand of Scotch in this country ? Does the foreign 
factory contribute to the sales promotion in the United States? 

Mr. Newman. They do. 

Mr. Buck. Would you care to say to what extent they contribute 
to the sales promotion of White Horse ? 

Mr. Newman. £35,000. 

Mr. Buck. £35,000 a year? 

Mr. Newman. Yes. 

Mr. Buck. Are you obligated under the contract to contribute a 
like sum or some proportionate amount ? 

Mr. Newman. We are. 

Mr. Buck. What is that? 

Mr. Newman. A dollar a case. 

Mr. Buck. Each case that you import? 

Mr. Newman. Yes. 

Mr. Buck. That dollar a case, of course, is charged in your price 
made to wholesalers and consumers on the goods? 

Mr. Newman. Quite right." 

Mr. Buck. And you are obligated under the contract to make that 
distribution. 

Mr. Newman. That is right. 

Mr. Buck. Otherwise the contract is subject to cancelation. 

Mr. Newman. Well, I suppose so. 

Mr. 5ucK. Are you obligated under the contract to take and dis- 
pose of a specific amount of "whisky each year ? 

Mr. Newman. One hundred thousand cases. 

Mr. Buck. You must take and dispose of 100,000 cases ? 

Mr. Newman. Right. 

The Vice Chairman. May I ask one point before we get further 
away: Do you have any contracts or agreements that supplement 
this written contract that you turned in? 

Mr. Newman. No, sir. 

The Vice Chairman. It covers — well, your answer is comprehen- 
sive ; there is no other. 

Mr. Buck. That is all. 

Mr. Davis. Mr. Chairman, I don't recall that he has stated, but I 
wish to ask the witness whether his company is affiliated with anj^^ 
other company engaged in the liquor business. 

Mr. Newman. We have a subsidiary company, th& Wilson Distill- 
ing Co. 

^Ir. Davis. Is your company owned or controlled by any company 
or corporation engaged in the liquor business? 

Mr. Newman. No, sir. 



CONCENTRATION OF ECONOMIC POWER 2605 

Mr. Davis. You have the one subsidiary, only? 

Mr. Nev7Man. That is correct. 

Mr. O'CoNNELX.. Mr. Newman, I understand from your testimony 
^hat you, by virtue of the contract, are the British D. C. L. exclusive 
igency? 

Mr. Newman. We have our contract with the White Horse dis- 
tilleries. 

Mr, O'CoNNELL. Which is a subsidiary of the D. C. L. ? 

Mr. Newman. Correct. 

Mr. O'CoNNEiiL. And is there any provision in your contract with 
WTiite Horse Distilleries relative to the resale price of the liquor 
you buy? 

Mr. Newman. None whatever. 

Mr. O'CoNNELL. I also understood you to say that some States, by 
contract between your company and the distributors or retailers - 

Mr. Newman (interposing). Retailers. 

RETAIL WHISKY PRICES FIXED 

Mr. O'CoNNELL. By contract with the retailers, you fix the resale 
price at which your whiskies may be sold to the public^; is that 
correct ? 

Mr. Newman. Correct. 

Mr, O'CoNNELL. I understood you to say in only about six States, 
s that true? 

Mr. Newman. Approximately right. 

Mr; O'CoNNELL. There are resale price maintenance laws in many 
nore States than that. 

Mr. Newman. There may be. 

Mr. O'CoNNELL. What is the policy of your company with regard 
;o taking advantage of resale price maintenance laws in States where 
;hey exist? 

Mr. Newman. We follow our own ideas about it. If we think it 
s good policy to put it on fair trade we do. 

Mr. O'CoNNELL. You wouldn't be able to tell me even generally 
ivhat standards you would apply in determining whether or not a 
Darticular State needed that particular type of treatment. 

Mr. Newman. No ; I couldn't. 

Mr. O'CoNNELL. In States where you have decided that you should 
ake advantage of a resale price maintance law, you, I take it, de- 
;ermine on some basis or other what the resale price will be. Could 
,^ou tell me even in a general way how you would arrive at the price 
hat you fixed? 

Mr. Newman. Well, it is according to the mark-up of the retailers? 
n different States. 

Mr. O'CoNNELL. That is a little bit vague. Could you be more 
ipecific ? 

Mr. !N EWMAN. That is as near as I could give it to you. 

Mr. O'CoNNELL. Do you sell to all distributors at the same price? 

Mr. Newman. Yes, sir. 

Mr. O'CoNNELL. And the amount of the mark-up that you would 
permit in a State where there was a resale price maintenance law 
vould depend upon the amount of mark-up that you thought v/as 

124491— 39— pt. 9 13 



2606 CONCENTRATION OF ECONOMIC POWER 

proper in the State, or the amount that was being charged, or an 
amount that was being charged by some distributors or retailers. 
What it would be, I don't quite understand. 

Mr. Newman. We would figure the mark-up on what the retailer 
would ask, if we thought it was fair. 

Mr. O'CoNNELL. What retailer? I take it if there were no such 
provision, there would be a variety of prices, a variety of mark-ups. 

Mr. Newman. No ; those things are pretty much controlled by the 
retailers, the price. 

Mr. O'CoNNELL. You mean even in the absence of fair-trade laws? 

Mr. Newman. The price mark-up. 

Mr. O'CoNNELL. How ? I don't understand. 

Mr. Newman. They figure that they are entitled to, say, 25 or 30 
percent mark-up. If we think that is a fair amount, we 

Mr. O'CoNNELL (interposing). In the cases where you do take ad- 
vantage of the laws, you figure you are entitled to a particular 
mark-up but I don't quite understand the mechanics by which you 
arrive at the mark-up in a particular State. 

Mr. Newman. As I explained to you before, it is considered upon 
the mark-up the retailer asks for. 

The Vice Chairman. What do you mean by mark-up, profit? 

Mr. Newman. The profits of the retailer. 

Mr. O'CoNNELL. Is it a sort of cooperative activity between your 
companv and the distributors or retailers? 

Mr. Newman. Not with the distributor, with the retailer. 

Mr. O'CoNNELL. Is it a cooperative activity with regards you people 
and the retailer ? 

Mr. Newman. No, sir; we figure their mark-up and if we think it 
is fair 

Mr. O'CoNNELL (interposing). Whose mark-up? 

Mr. Newman. The retailer's. 

Mr. O'CoNNELL. But the retailers in a particular State are a large 
group of people who in the absence of fair trade laws would have a 
variety of selling prices. I take it that the purpose of having a re- 
sale price maintenance agreement is to prevent that situation. When 
you speak of retailers who in the absence of the situation you create 
would have a variety of selling prices, I don't quite understand who 
-you mean when you speak of the retailers. You figure the mark-up 
of the retailers. Whom are you talking about? 

Mr. Newman. The retailer is the man who sells to the consumer. 

Mr. O'CoNNELL. Of course,' that is right, that is a class. In the 
absence of the law, in the absence of your contract, the mark-up 
would be a variety of different prices. 

Mr. Newman. It would be in different States, sure. 

Mr. O'CoNNELL. In the free States. 

Mr. Newman. Suie. 

Mr. O'CoNNELL. I am still trying to find out what criterion you 
use or how it is you arrive at the particular mark-up. 

Mr. Newman. I can't go any further. 

The Vice Chairman. He wants to know how much profit you are 
willing to have the retailer make, or how little. 
Mr. Newman. Thirty percent. 

The Vice Chairman. Why don't you. let him have 35? 
Mr. Newman. We don't think he is entitled to it, that is all. 



CONCENTRATION OF ECONOMIC POWER 2607 

The Vice Chairman. You are trying to keep him from selling too 
high or too low ? 

Mr. Newman. We don't like to see him selling too high and we 
don't like to see him selling too low. 

Mr. O'CoNNELL. The price you fix is a minimum price ? 

Mr. Newman. Now you have it. 

The Vici; Chairman. The cheaper he sells it, the more liquor be 
should sell. 

Mr. Newman. That doesn't interest us at all. 

The Vice Chairman. You mean how much liquor you sell doesni 
interest you? 

Mr. Newman. It doesn't interest us. 

The Vice" Chairman. You are doing business as a matter of — 
what do they say- — philanthropy ? 

Mr. Newman. We don't do it for that either. 

The Vice Chairman. I thought people who made a thing for sale 
were interested in selling it. 

Mr. Newman. No; not particularly. You like to see a lot of it 
sold. 

The Vice Chairman. You just keep it around the house. 

Mr, Newman.- We don't want them to do that either. 

Mr. Buck. Judge, you might not know just how important brands 
are. They know a certain amount is going to sell, apparently. 

The Vice Chairman. Ther^ may be something to that. 

Mr. Buck. There is a lot to that. That is why these agency con- 
tracts are so valuable and are so valuable in the distribution set-up. 

The Vice Chairman. They don't want the liquor too cheap. 

Mr. Buck. It cuts the profit. 

The Vice Chairman. Because people think they are not getting 
good liquor if they get it at a reasonable price, maybe. 

Mr. Davis. You said that you fixed the resale price to the con- 
sumer in six States, I believe. 

Mr. Newman. May^be more, I couldn't tell you offhand. 

Mr. Davis. Do you fix the same price in each of those States? 

Mr. Newman. No, sir. 

Mr. Davis. You don't fix a 30-percent mark-up everywhere, do 
you ? 

Mr. Newman. No ; we do not. 

Mr. Davis. How is the profit to the retailer fixed ? 

Mr. Newman, They ask quite a big mark-up in different States. 
Some may be a little bit more and some ma}' be a little bit less. 

Mr. Davis. Just teU us, you know the highest mark-up that you fix, 
don't you ? 

Mr. Newman, I would say about 35 percent. 

Mr. Davis, No more than that? 

Mr. Newman. No. 

Mr. Davis. And what is the lowest you have fixed, where you 
have fixed the retail price? 

Mr. Newman. I would say about 30 percent. 

Mr, Davis, So the range has been from 30 to 35 percent? 

Mr. Newman. That is correct. 

Mr. Davis. And with further reference to the questions asked by 
Mr. O'Connell, as to who requests this, you say the retailers. Do 
you refer to the retailers' association ? 



2608 CONCENTRATION OF ECONOMIC POWER 

Mr. Newman. The different retailers, which are probably brought 
in through the association. 

Mr. Davis. Suppose some of the retailers said they wanted one 
price fixed, and others another price, and others another price, and 
so forth, how would you determine the price ? 

Mr. Newman. We would consider it and give them what we 
thought was a fair mark-up. 

Mr. Davis. In other words, you would determine what you thought 
was best for the retailers ? 

Mr. Newman. That is correct. 

Mr. Davis. Does the question of the right of the consumer ever 
enter into consideration ? 

Mr. Newman. I didn't get that. 

Mr. Davis. Does the right of the consumer ever enter into the 
picture ? 

Mr. Newman. It certainly does. 

Mr. Davis. You hadn't mentioned him up to date. I just wondered. 

Mr. Newman. I wasn't asked. 

Mr. Davis. Do you know the selling price of your product from 
the standpoint of mark-up in the States where you haven't fixed it? 

Mr. Newman. On what particular brands? Scotch is $3.39 in 
New York. 

Mr. Davis. Three thirty-nine a fifth ? 

Mr. Newman. Yes. 

Mr. Davis. Does your White Horse Scotch whisky sell for approxi- 
mately $3.39 m all the States? 

Mr. Newman. I wouldn't say in all of them, no, it is according to 
the State taxes. 

Mr. Davis. What is the least you know of it selling for in a State? 

Mr. Newman. I would say about $2,99. 

Mr. Davis. What States have dropped to that? 

Mr. Newman. Just offhand I couldn't rememher. 

Mr. Buck. Most lil<:ely State stores ? 

Mr. Newman. It would be, yes. 

Mr. Buck. A case where the retailer doesn't exist as such. 

Mr. Newman. Very likely. 

Mr. Beege. Suppose that a retailer or a group of retailers in a 
community wanted to sell at 20 percent profit. 

Mr. Newman. At what? 

Mr. Berge. At a 20 percent profit — they thought they could sell 
more of it at 20 percent profit, they thought they could make enough 
money to justify them in selling it, staying in business, that they 
would do nicely on that. You wouldn't feel that they could be per- 
mitted to sell at 20 percent? 

Mr. Newman. There aren't any such retailers. 

Mr. Berge. You mentioned a moment ago that White Horse was 
sold at, the lowest figure you thought was $2.99, but there undoubt- 
edly are retailers in the States and in the District of Columbia where 
the resale price policy doesn't obtain, who would sell it for $2.50, 
or $2.49. ' 

Mr. Newman. Very likely. 

Mr. Berge. They apparently feel they are justified in doing that, 
and I just wondered on what theory you felt that the wholesaler 



CONCENTRATION OF ECONOMIC POWER 2609 

could better determine what was good for the retailers than the 
retailers themselves. 

Mr. Newman. As I explained before, that policy is fixed by the 
retailer. 

Mr. Berge. I don't think that answers the question, because I am 
supposing that there are a group of retailers who differ with what 
you say is the prevailing sentiment. I take it that the retailers aren't 
agreed on that policy, that some would prefer the 30 percent profit, 
some would prefer a larger volume of business a-fc the lower percent- 
age, as is certainly demonstrated by the fact that where you don't 
have those laws there is a variety of prices. 

I was wondering in the State of New York whether you would feel 
a large concern like Macy's were unable to protect themselves, and 
their judgment was necessarily bad as to what they could profitably 
sell your product to the public for. 

The thing that I am questioning is your promise, your assumption, 
that these questions of price could be better determined by the whole- 
saler of the manufacturer than by the person who directly deals 
with the public, and I have been interested in that all through the 
hearings and I haven't found anyone that has what seems to be a 
very satisfactory answer. 

Mr. Newman. As I explained before, the mark-up is usually fixed 
by the percentage of profit that the retailer asks for. 

Mr. Berge. Of course, if a particular retailer wants to sell at the 
30 percent profit, I don't see why he has to ask you for it. I Should 
suppose that in a free market those retailers who deem 30 percent 
profit or 35 percent profit to be proper, could ask it, and the others 
might prefer to take less and sell more of their product, 

Mr. Newman. You will find that the majority of them would prefer 
to sell less and get the mark-up. 

Dr. LuBiN. Mr. Newman, apropos of that same point, when did 
you put in your fixed price in the State of New York? 

Mr. Newman. I couldn't tell you just exactly. 

Dr. LuBiN. But it was some time after repeal, was it not ? 

Mr. Newman. It must have been. 

Dr. LuBiN. Do you know what was charged for your product iii 
the State of New York before you fixed the price ? 

Mr. Newman. It wasn't very much less than what they charge 
today. I couldn't exactly tell you. 

Dr. LuBiN. Was it uniform? 

Mr. Newman. Fairly. 

Dr. LuBiN. Were there any retailers that you know of that had a 
smaller mark-up than you fixed under the law ? 

Mr. Newman. Yes. 

Dr. LuBiN. In other words, there are retailers who apparently 
do feel that they would be satisfied with the smaller mark-up than 
you fix, 

Mr, Newman. That is correct. 

Dr. LuBiN. In other words, the retailers then do not determine 
what the mark-up shall be. 

Mr. Newman. They do in many instances and if they don't follow 
it, that is all there is to it. 



2610 CONCENTRATION OF ECONOMIC POWER - 

Dr. Ltibin. You say that the mark-up that you fix is determined 
by the retailers and then in the other sentence you say that the re- 
tailers were charged different prices. 

Mr. Newman. Well, they don't always follow the mark-up. In 
many instances they cut below it. 

Mr. Berge. Doesn't it come down to this? Some of them want it 
and some of them don't but your policy requires them all to take it. 

Mr. Newman. That is the idea. 

Mr. Berge. In fixing your prices on particular products, do you 
tsike into account the price that your competitors have fixed on 
products of similar quality ; in other words, if a standard brand 
of Scotch of approximately the same quality is fixed by §i competitor 
at three thirty, T?*^ould you not take, that into account in fixing your 
price? 

Mr. Newman. We may and we may not. 

Mr. BERdE. Wouldn't there be a strong tendency to do that? 

Ml. Newman. There may be; yes. 

Mr. Beege. Well^ isn't there in practice? Why would you sell, 
if you belieTe in these uniform policies, a standard brand at three 
ten if your competitor with a similar brand is getting three thirty ? 

Mr. Newman. Well, you will find in some of the States that our 
brand is a" little bit higher than the others and some a little bit lower. 

Mr. Berge. Well, I want to get in mind what factors you take into 
account. 

Mr.. Newman. We would consider that. 

Mr. Buck. You t^ke it that is .your province to determine. 

Mr. Newman. Yes ; surely, I do. 

Mr, Berge. Wouldn't it work both ways, where you would like to 
fix your price at three thirty, you might fix it at either three forty or 
three twenty-five according to what your competitor fijsed his price? 

Mr. Newman. In some instances we would consider it and in others 
we wouldn't. 

The Vice Chairman. That is the point right there. When would 
you consider it and when would you not? 

Mr. Newman. Well, that is the question. 

The Vice Chairman. You are the businessmen. You do it and why 
do you do it? Why do you do it some times and why at other 
times do you not do it? Why do you take into consideration one 
time what your competitor is selling for and the next time ignore it? 

Mr. Newman. It is all according to circumstances. 

The Vice Chairman. We want it. We want to kiiow what those 
circumstances are, and you know and we don't. Some times you 
take into consideration your competitor's prices, you say, and some 
times you do not, and we want to know why you do it at one time 
a;nd not at another. 

Mr. Newman. We figure it isn't neecssary to do it at all times. 

The Vice Chairman. What makes it unnecessary ? 

Mr. Newman. Well, we feel we can in some instances — :— 

The Vice Chairman (interposing). You are not answering my ques- 
tion. 

Mr. Newman. That is the only way I can answer it. 

The Vice Chairman. You are a businessman and you go into a 
State and -you find there prices of liquor, certain prices, and you 



CONCENTRATION OF ECONOMIC POWER 2611 

may consider them and you may not. Now, why do you consider 
them or why do you not ? 

Mr. Newman. Well, I would say this: That, as I said before, in 
some instances I think it is necessary and in others I don't. 

The Vice Chaikman. Why do you think it is necessary ever to con- 
sider your competitors price ? 

Mr. Newman. With the master prices? 

The Vice Chairman. Yes. 

Mr. Newman. Well, in that instance I would say where the market 
is on an average and the price would be equal all through. 

The Vice Chaieman. You used some remarks you may understand 
but I don't. You say you go in and find the prices about equal, and 
then some other things. Let me see if I can help you. You are now 
at the point where we are interested. 

Mr. Newman. I understand that. 

The Vice Chairman. This is something you know and we don't. 
In one State you are influenced by competitive prices and in another 
State you are not. Do you mean that in some States you go in and 
you find the competitive price about what you would sell for anyhow? 

Mr. Newman. Yes. 

The Vice Chairman. I am helping you out, am I /not? 

Mr. Newman. A little bit. 

The Vice Chairman. The next place you find them not what you 
think they ought to be, and there you fix the price. 

Mr. Newman. That is the idea. 

Mr. Ballinger. Mr. Newman, you think the producej»3 of liquor 
should compete on price in the manufacture of liquor. 

Mr. Newman. What do you mean ? 

Mr. Ballinger. There must be price competition between manu- 
facturers of liquor. 

Mr. Newman. Absolutely. 

Mr. Ballinger. Then why don't you think there should be price 
competition between the distributors? Why should you sort" of stop 
price competition on that front, and tolerate it on the other? What 
is the special advantage of that? 

Mr. Newman. You are talking now to the consumer? 

Mr. Ballinger. I mean you are perfectly willing that the manu- 
facturers of liquor should compete on price, but if you believe in 
resale price maintenance you don't want your distributors to com- 
pete on price. I want to know what is the special advantage of 
that. If competition is good here, why isn't it good there? 

Mr. Newman. Well, I would say that in selling to the consumer 
that the retailer requires a certain mark-up in order to make his 
profit. 

Mr. Ballinger. Then why wouldn't you say it would be a good 
thing if the manufacturers would get together and agree on what 
their profit should be? 

Mr. Newman. It couldn't be done. 

Mr. Ballinger. It could be done much more easily than the other 
way. You would have only four people to get together. 

Mr. Newman. It couldn't be done. On account of the extreme 
competition that would be impossible. 

Mr. Ballinger. I am asking you if it could be done. 



2612 CONCENTRATION OF ECONOMIC POWER 

Mr. Newman. I don't see how it could. 

Mr. Balunger. If it could be done, do you think it would be a 
good thing for the manufactures to fix prices ? 

Mr. Newman. I don't think so. 

Mr. Balunger. But you think it is a good tljing for the manufac- 
turer to prevent the distributor from competing, saying "You can't 
compete on price any longer." 

Mr. Newman. Yes. 

Mr. Ballinger. There is some inconsistency, then, in what you are 

^y^^s- ... 

Mr. Buck. What you know about it is that this system gives you a 
good, profit and insures the payment of your accounts properly, and 
so forth. That is what your interest is. After all, your interest is in 
good, solid profit straight through. 

Mr. Newman. Yes. 

Mr. Davis. I understood you to say your selling: price on White 
Horse is uniform to all wholesalers. 

Mr. Newman. Yes. 

Mr. Davis. What'is that current price, the present price ? 

Mr. Newman. To the wholesaler? 

Mr. Davis. Yes, sir. 

Mr. Newman. $21.50. 

Mr. Davis. $21.50 a case of 12 fifths?- 

Mr. Newman. That is correct. 

Mr. Buck. What is your resale price fixed on that in New York? 

Mr. Newman. What do you mean ? 

Mr. Buck. What is the retailer's price to the consumer on thai same 
whisky in New York? 

Mr. Newman. $3.39. 

Mr. Buck. A bottle? . 

Mr. Newman. Yes. That is exclusive of the State tax. Of course, 
that is to the wholesaler. 

Mr. Buck. That gives the retailer a profit of $1.59 on a fifth of 
whisky ? 

Mr. Newman. Don't forget he has $1 a gallon tax. 

Mr. Buck. That gives him $1.34 profit on one bottle of whisky. 

That is all. 

The Vice Chairman. The Chair is advised that counsel for Park & 
Tilford have tendered their contracts for the record, to be admitted. 

(The Park & Tilford agency contracts were marked "Exhibits Nos. 
423 and 424" and are included in the appendix on pp. 2709 and 2711.) 

Mr. Buck. Are there any other contracts to come m at this time? 

Mr. Newman. I want to correct that. That is $26.10. 

Mr. Buck. Mr. Newman, did the price change since you left here? 

Mr. Newman. No; that was the price. 

Mr. Buck. Is Mr. Williams here, of Canada Dry ? 

The Vice Chairman. Do you solemnly swear to tell the truth, the 
whole truth, and nothing but the truth, in the testimony you are 
about to give, so h:\lp you God? 

Mr. Williams.. J^ do. 



CONCENTRATION OF ECONOMIC POWER 2613 

TESTIMONY OF WILLIAM J. WILLIAMS, SECRETARY AND GENERAL 
COUNSEL, CANADA DRY GINGER ALE, INC., NEW YORK, N. Y. 

Mr. Buck. Will you state your name and business connections ? 

Mr. WiLLDVMS. William J. Williams, secretary and general counsel, 
Canada Dry Ginger Ale. 

Mr. Buck. I didn't know you were a lawyer or I wouldn't have 
summoned you. [Laughter.] 

Do you know about the contractual arrangernents between Canada 
Dry and Johnnie Walker ? 

Mr. Williams. Yes, sir. 

Mr. Buck. Johnnie Walker is a Scotch whisky ? 

Mr. Williams. Johnnie Walker is a blended Scotch whisky. 

Mr. Buck. It is all blended, isn't it? 

Mr. Williams. That is what you tell us. 

Mr. Buck. Wlio owns the Johnnie Walker company abroad? 

Mr. Williams. On information, I believe the D. C. L. own the 
Jolinnie Walker Company. 

Mr. Buck. The same aggregation we have been discussing here ? 

Mr. Williams. I think so. 

Mr. Buck. You have seen the contract that we offered, for the 
record? ^ 

Mr. Williams. I didn't examine it but I would like to, and I think 
in all probability it is about the same. I would like to have an oppor- 
tunity to glance through it after the examination. 

Mr. Buck. Is Johnnie Walker a popular Scotch brand in the 
United States? 

Mr. Williams. I think so. 

Mr. Buck. What are its gross sales? 

Mr. Williams. In dollars? 

Mr. Buck. In dollars. 

Mr. Williams; I don't know exactly, but I wiU guess between four 
and five million dollars a year. 

Mr. Buck. Not as large as Haig & Haig ? 

Mr. Williams. I don't know what the Haig & Haig sales are. 
Johnnie Walker gross sales may approximate $6,000,000. 

SOLE AGENCY CONTRACT FOR JOHNNIE WALKER AND HAIG & HAIG WHISKIES 

Mr. Buck. And Canada Dry Ginger Ale Corporation holds the 
sole distributor's contract for that brand in the United States? 

Mr. Williams. That is right. 

Mr. Buck. It can't be purchased from anyone else ? 

Mr. Williams. That is substantially correct. Under certain con- 
ditions Johnnie Walker can be purchased direct from the parent 
company, but those conditions are not very important. 

Mr. Buck. In the event I should place an order with Johnnie 
Walker abroad for a case and they were kind enough to send it to 
me, would you get a profit on it under your contract? 

Mr. Williams. We would get an agent's profit. 

1 Referring to "Exhibit No. 421." appendix, p. 2703. 



2614 CONCENTRATION OF ECONOMIC POWER 

Mr. Buck. Whether you sold it to me or not? 

Mr. Williams. That is right. 

Mr. Buck. Does D. C. L. contribute to the advertising of the 
brand in this country ? 

Mr. Williams. No ; John Walker & Sons, Ltd., do. 

Mr. Buck. My mind doesn't break down to fine parts. It is all 
D. C. L. with me. 

Mr. Williams. We don't have any relationship with the D. C. L. 
company whatsoever. 

Mr. Buck. All right, I will take your view of it. Johnnie Walker 
contributes ? 

Mr. Williams. Yes. 

Mr. Buck. How much do they contribute each year? 

Mr. Williams. I think it fluctuates from year to year, but the 
current appropriation is around thirty or thirty-five thousand pounds. 

Mr. Buck. Thirty or thirty-five thousand pounds. Are you re- 
quired to make a contribution to that under your agreement? 

Mr. Williams. Not specifically in our existing agreement. 

Mr. Buck. Do you, as a matter of fact? 

Mr. Williams. Yes. 

Mr. Buck. How much do you contribute toward it ? 

Mr. Williams. On information from our accounting department, 
I believe it is around $1 a case. 

Mr. Buck. The same as Mr. Newman testified to ? 

Mr. Williams. I believe so. 

Mr. Buck. For every case you sell you must spend that dollar? 

Mr. Williams. That is right. 

Mr. Buck. That is passed on to the consumer, of course ? 

Mr. Williams. I suppose it is a component part of the pr^ce. 

Mr. Buck. In turn, you distribute, throughout the United States, 
Johnnie Walker whisky ? 

Mr. Williams. That is correct. 

Mr. Buck, And you distribute it under resale price-maintenance 
agreements ? 

Mr. Williams. In some States. 

Mr. Buck. In most open States ? 

Mr. Williams. No. I am guessing now. There are, I should say, 
about six States in which we have fair-trade contracts. 

The Vice Chairman. Can you name those States? 

Mr. Williams. California; Arizona; New York State, of course; 
New Jersey and Illinois ; and' either Wisconsin or Minnesota, I don't 
know which. I think it is Wisconsin. 

The Vice Chairman. I wish you would ask Mr. Newman to remain. 
I want to ask him a question when you get through with the witness. 
Mr. Buck. Mr. Newman, will you remain in the room after we finish 
with this witness, please, sir ? 

Mr. Buck. I hand you a contract, • together with a letter that 
accompanies it, referring to a court decision in the State of New York, 
and ask you if that is typical of your resale price maintenance con- 
tracts on that brand of whisky ? 
Mr. Williams. Yes. 

Mr. Buck. And you send this letter along with it? 
Mr. Williams. That is correct. 



CONCENTRATION OF ECONOMIC POWER 2615 

. Mr. Buck. What is the purpose in sending the letter ? 

Mr. Williams. Well, in the present contract there is a provision 
which was validated by a subsequent decision of the New York Court 
of Appeals, and as a consequence we amended the original contract to 
conform with the decision. 

Mr. Buck. You feel that it had a little coercive value ? 

Mr. Williams. No ; I don't think so. 

Mr. Buck. To send the court decision along with the contract. 

Mr. Williams. I didn't send the court decision. I just referred to 
it in a memorandum. 

]VIr. Buck. I will ask that the contract and other attached papers be 
filed. 

The Vice Chairman. They will be filed. 

(The documents referred to were marked "Exhibit No. 425" and are 
included in the appendix on p. 2714.) 

question of enforcing price maintenance by large retailer 

Mr. Buck. Mr. Williams, just as a matter of developing this sub- 
ject, do you sell to Macy & Co. in New York? 

Mr. Williams. Yes ; I believe so, 

Mr. Buck. Do you require Macy to charge a price more than they 
wish to el large on your whisky? 

Mr. Williams. We request that they maintain our suggested resale 
price. 

Mr. Buck. Notwithstanding the fact that they wish to sell your 
whisky at a less price. 

Mr. Williams. They have been pretty good; they have followed 
our suggestion quite well. At times they have cut a little. 

Mr. Berge. You call it a suggestion. Isn't it a definite obligation? 

Mr. Williams. Of course, if you want to construe it strictly. 
Macy has not signed a fair-trade contract. Consequently it isn't a 
contract price ; it is a suggested price. 

Mr. Davis. If they didn't observe your fixed resale price you would 
quit selling to them, wouldn't you ? 

Mr. Williams. We would do that or we might bring an action to 
enjoin them from cutting the price. 

Mr. Davis. Wliat is your price on Johnnie Walker to the whole- 
salers in New York at the present time ? 

Mr. Williams. We have various prices on various sizes under 
various conditions. We have "in bond," "out of bond," all sizes. 
Take the fifth. Is that satisf actorj' ? 

Mr. Buck. Take the fifth, "out of bond," for distribution. 

Mr. Williams. About $25.34 a case. 

Mr. Davis. What is your fixed resale price of that in New York? 

Mr. Williams. Three dollars and thirty-nine cents. 

Mr. Buck. A fifth? 

Mr. Williams. A fifth ; we are talking about fifths. 

Mr. Davis. Do you charge a little more than the Wliite Horse 
wholesale ? 

Mr. Williams. I don't know what White Horse charges except 
from what I heard Mr. Newman say. 

Mr. Davis. But the resale price to the consumer is the same? 



2616 CONCENTRATION OF ECONOMIC POWER 

Mr. Williams. Our price is three thirty-nine. 

Mr. Davis. Is the price that you have designated uniform to whole- 
salers throughout the United States? 

Mr. Williams. Except for the dijfference which is occasioned by 
freight or costs it is practically uniform. 

Mr. Davis. You sell f . o. b. New York, don't you ? 

Mr. Williams. That is right, f. o. b. our warehouse in New York. 
We also sell f. o. b. warehouse in Chicago, and f. o. b. warehouse in 
San Francisco. 

Mr. Davis. And the only difference you make is what the trans- 
portation and warehouse charges are in- 

Mr. Williams. I think that is correct. 

Mr. Berge, You said a moment a^o that in- your dealing with 
Macy's you did not have a definite binding contract, but that they 
followed suggested prices. Is that generally your policy in New 
York State ? I thought that you entered into definite contract agree- 
ments with most of your 

Mr. Williams (interposing). We do. We have in existence fair- 
tra,'(Je contracts, but not everybody, for varying reasons, will sign 
the contracts. 

Mr. Ber«^e. Are there many people that you let off as lightly as. 
you do Macy's? 

Mr. WnjUAMS. As a matter of fact there are many dealers in New 
Your State who have not signed contracts. If you were to sign up 
the retail dealers throughout the entire State of New York, you would 
have to tie up thousands of retail dealers and that is practically im- 
possible. That is probably one of the current weaknesses of the 
fair-trade acts. 

Mr. Berqe. In other words, you tie some of them up and you don't 
tie all of them up. 

Mr. Williams. We sent contracts to everybody. I have forgotten 
how many thousand we sent out, but we didn't discriminate between 
one dealer and another. We sent them to Macy's and to everybody. 

Mr. Berge. If the little fellow didn't want to sign the contract, 
would you do business with him? 

Mr. Williams. If he maintained price, I believe we would. 

Mr. Berge. Then those who don't sign the contracts are cautioned 
to observe the suggested price. If they don't observe the suggested 
price, you stop domg business with them. 

Mr. Williams. Not necessarily. As you know, these fair-trade 
acts have a provision in them that nonsigning retailers who are 
notified of a price maintenance program are bound as well as those 
people who do sign. 

Mr. Berge. I am aware, generally, of what the laws provide, but 
I was wondering how you enforced your rights under the laws, 
\-7hether you enforced them equally with respect to all retailers or 
whether you would wink at violations in certain cases and insist 
on strict observance in others. 

Mr. Williams. No ; we do not discriminate. As a matter of fact, 
that, as I indicated before, is one of the difficulties with the fair-trade 
acts in their present status, and you have many court decisions 
which have indicated that fact both here and in 



CONCENTRATION OF ECONOMIC POWER 2617 

Mr. Berge (interposing). Would you want to state, then, that 
it is your uniform policy to cease business relations with price cut- 
ters in States where you have taken advantage of fair-trade laws? 

Mr. Williams. No ; I stated that that was not our uniform practice, 
or wasn't 

Mr. Berge (interposing). Then you don't treat all retail dealers 
alike? 

Mr. Williams. The conclusion is not a fair one to draw. You are ■ 
trying to prove that there is a discrimination which we don't 

Mr. Berge (interposing). I am not trying to prove; I am trying 
to 

Mr. Williams (interposing). It is a matter of business judgment. 
There are some people who cut prices who are notorious for it. 

Mr. Bejige. Macy is notorious for it. 

Mr. Williams. That is not right. I don't think Macy's is. 

Mr. Berge, According to fair trade laws, they were generally 
known as a large outfit who cut prices pretty generally. I suppose, 
though, it could be a rathei^ serious loss of business if any of the 
national brands refused to do business with them, but what would 
be your policy with respect to a smaller dealer who for one reason 
or another didn't observe your suggested price? Would you uni- 
formly cut them or would you make exceptions? If you would 
make exceptions to permit violations in some cases, wh'at would 
determine in which cases you would make exceptions and permit 
price cutting? 

Mr. Williams. As a matter of actual practice, it isn't as uniform, 
at least as classifiable, as you would like to make it. Price wars 
break out sporadically. The customary procedure is to approach the 
dealer and request him to maintain the resale price. Usually, if he 
does everybody else does, and in most cases that is the way it works 
out. Some of them may not, and on the basis of sound judgmiant 
you pick out half a dozen people and sue them. 

The Vice Chairman. You would do a whole lot if you would pick 
out a big profit like Macy's and go right' after them. That would be 
some warning. How big do they have to get to permit you to sort of 
let them drift along? 

Mr. Williams. We don't bring suits against these retailers on the 
basis of size. 

The Vice Chairman. Taking a big concern like Macy's, if it breaks 
over doesn't that put the little competitor at a very great disad- 
vantage ? 

Mr. Williams. Well, I don't know, frankly. I think probably in 
the immediate vicinity, yes; but take New York City with five bor-. 
oughs, I don't know whether people from Brooklyn would go over 
to Macy's to buy Scotch whisky for 5 cents a bottle less. The car- 
fare would be in excess of that. I don't know. As a matter of fact, 
if I may digress a minute, it seems to me that you are trying to ask 
me a question with respect to fair trade acts which is not answerable. 
It is one which is the subject of study by Harvard University. There 
have been several books written on the subject. Weigel has written 
a book on fair trade acts. 



2618 CONCENTRATION OF ECONOMIC POWER 

The Vice Chairman. Yes ; I know ; a great many books are being 
written that nobody ought to read, 1 expect. But the point is, look- 
ing at it from the standpoint of monopolizing business, if you forced 
the little fellow to observe these resale prices and then you let a big 
concern like Macy ignore those prices that you compelled the smaller 
man to observe, how can he stay in competition ? 

Mr. Williams. I think that is a misstatement. 

The Vice Chairman. Will you correctly state it? 

Mr. Williams. I don't think Macy is the only large dealer in 
whisky." I think there are other large dealers in whisky and con- 
sequently it is not a choice between Macy and Mr. Jones. There are 
other competitors in New York that probably sell as much whisky as 
Macy & Co. We" do not sue on the basis of size. 

The Vice Chairman. Do they observe your sales price? 

Mr. Williams. In a good many cases they do ; yes. 

The Vice Chairman. In other cases they don't? 

Mr. Williams. We go after them, regardless of their size. We 
don't choose a little retailer; as a matter of fact, I don't think that 
would be effective. The value to us would be less if we picked a 
man who was small and was not known. 

The Vice Chairman. Well, do your small retailers to a considerable 
degree refuse to be governed by your resale schedule ? 

Mr. Williams. No ; as a matter of fact, I think the desire for price 
maintenance emanates from the small retailer, and as a consequence 
it is to his own advantage to maintain the margin of profit. 

The Vice Chairman. With the hope, I suppose, that the pepple he 
is buying from will insist that the big man do it, too. 

Mr. Williams. We try to. 

The Vice Chairman. Couldn't you be rather effective if you just 
didn't sell to R H. Macy & Co., if they didn't observe it? I don't 
suggest it is good policy; I am just trying to get at it. 

Mr. Williams. Again I state that R H. Macy & Co. are not the 
only large 

The Vice Chairman (interposing). They are the only ones we are 
asking about right now. 

Mr. Williams. They are one of them. 

The Vice Chairman. Which others violate? 

Mr. Williams. I am not in the distribution end of the business, but 
I know that there are a number of large department stores in New 
York and there are a number of large retail stores who do a large 
whisky business. 

The Vice Chairman. And they do not observe the resale price? 

Mr. Williams. They do in most cases. 

The Vice Chairman. How do they get into this picture we are 
talking about? 

Mr. Williams. Macy's do observe it. If you went to Macy's now 
and ordered a bottle of Johnnie Walker Red Label you would pay 
$3.39 plus 3 percent retail sales tax. 

The Vice Chairman. They are observing it? 

Mr. Williams. Yes, sir. 

Mr. Buck. The point is, if they don't observe it you won't let them 
have the whisky ? 

Mr. Williams. Well, we adopt these other methods first. We have 
found Macy's rather cooperative, to be frank. 



CONCENTRATION OF ECONOMIC POWER 2619 

Mr. Buck. The point is, if you undertake to sell your whisky on a 
resale price maintenance basis in New York you do it clear through? 

Mr. Williams. Yes. 

Mr. Buck. Therefore, if one does not observe the price, whether he 
be under contract or otherwise, you stop letting him have the whisky ? 

Mr. Williams. Eventually, if he doesn't adjust his price. 

Mr. Buck. Yes; of course. 

Mr. Williams. Of course, there are a lot of these intermediate steps 
that we go through. 

Mr. Buck. So long as we are talking about theory — and I am not 
one who indulges in very much of that — is it your opinion that the 
resale price maintenance insures stability of the retailer? 

Mr. Williams. It is a step forward, I believe. I think it is some- 
thing which the retailers have wanted for many years, and now they 
have it. I don't know how successful it is going to be. It is in 
process of development. 

Mr. Buck. In other words, you think except for the resale price 
maintenance some retailers who are now in business may be out of 
business ? 

Mr. Williams. That is quite likely. 

Mr. Buck. Do you think it is fair and equitable to the consumer 
that he support more retailers than might be necessary in a trade ? 

Mr. Williams. I think it depends upon your economic viewpoint. 
On one occasion we had the N. R. A., which was for the continuation 
of everybody in business, and price maintenance. That is one eco- 
nomic philosphy. On the other hand, you have the true competitive 
system, which is another. 

Mr. Buck. I want to correct you on the N. R. A. I don't believe 
that was the purpose. 

Mr. Williams. I mean my experiences with it, which were rather 
limited, lead me to believe that price maintenance programs were 
encouraged. 

Mr. Buck. That is all that. I have. 

Mr. Berge. I just want to pursue one point just a little further. I 
am still not quite clear as to the uniformity of your policy with 
respect to violators. I take it that you don't enforce the agreements 
as to all of them, but I am not clear as to whether you don't simply 
because it is impossible to do so, because there are so man}' of them, 
or because you think there are some instances where it is not neces- 
sary to enforce, or good practice would permit you to frown on viola- 
tions. 

Mr. Williams. Let me preface my remarks by stating that the 
courts in New York and the courts in Illinois have both stated, on 
occasion, that the condition of price maintenance in some cases was 
chaotic: that it would be impossible for a producer or an owner to 
sue everybody that cut price, particularly at a time when it had 
become promiscuous. 

As to our particular procedure, we approach it very practically. 
We get complaints from retailers who state that John Jones is cutting 
price; they feel it because he is in their immediate section; they 
say, "Well, why don't you have him maintain price?" 

We go over to him and say, "John Jones, why don't you maintain 
the suggested price as you have agreed to in your contract?" 



2620 CONCENTRATION OF ECONOMIC POWER 

John Jones says, "All right," or he may say, "No." If he says 
"no," the probability is that we bring an injunction suit and make 
him raise his price. 

Mr. Berge. Do you always bring injunction suits? 

Mr. WiLUAMS. No ; again it is a matter of 

Mr. Berge (interposing). Would you ever quit doing business with 
him because of that? 

Mr. Williams. We haven't had that situation to date, so I can't 
answer it. 

Mr. Berge. I don't care to press it further but just to make this 
comment and see what your reaction to it is. Other witnesses have 
testified that the. whole purpose of this was to protect the retailer, 
that the philosophy had been adopted that it was in the retailer's in- 
terest to have the distributor or the manufacturer look after him. 

Accepting that for the moment, I don't see how it can work to 
the retailer's advantage unless you maintain a vigorous policy with 
respect to all violations. I suppose that we either have to consistently 
pursue one philosophy or the other, and if this is good for the 
retailer, if you are going to do your duty to the retailer, you have to 
pretty vigorously enforce it as against Macy's and the big retailers 
and also the little ones, and if there is any discrimination in enforce- 
ment it seems to me that it fails in what you yourselves state to be 
the purpose of it. 

Mr. Williams. I would like to make this preliminary statement : I 
think that you have not fully stated the purpose. Most of these acts 
have a declared purpose of protecting the trade-mark. At least, that 
.is the basis of the acts, to protect the marks, and that is the basis on 
■which the Supreme Court passed on the two cases that it heard. That 
4s the fundamental purpose of the act ; it is not exclusively the pro- 
tection of the profit margin of the retailer. 

Secondly, I don't think that we discriminate. You imply in your 
statement that we discriminate between one dealer and another, which 
we do not. 

Thirdly, as I stated originally, the fair-trade acts, in my opinion are 
in the evolutionary stage and there are various forms. In Wisconsin, 
I believe, an administrative board regulates the extent to which you 
can fix prices ; in New Jersey you have a situatiop where you file your 
price with the liquor-control commission, which enforces that price; 
in Rhode Island and Arizona, under the Liquor Act, or by regulation 
of the commissioners, they have definitely fixed* the mark-up to the 
retailer. I think it is, respectively, 40 and 50 percent in Rhode Island 
and Arizona. So you see that the exact purpose and the philosophy 
behind the fair-trade acts is not too clear. They are in the state of 
development, in my opinion. 

METHOD OF DETERMINING RETAIL LIQUOR PRICES 

Mr. Buck. At this time I would like to offer for the record a price 
list of this company for the New York area as of November 1, 1938, 
and ask that it be submitted for the record. 

(The price list referred to was marked "Exhibit No. 426" and is 
included in the appendix on p. 2716.) 

Mr. O'CoNNELL. A little while ago I understood you to say that 
your price to distributors was about $25.34 a case. 



CONCENTRATION OF ECONOMIC POWER 2621 

Mr. Williams. I think that is correct. 

Mr. O'CoNNELL. F. o. b. your factory, or does that include freight? 

Mr. Williams. That is f . o. b. our warehouse in New York. 

Mr. O'CoNNELL. Would that be the price that you would sell f . o. b. 
New York to all distributors generally at any given moment? 

Mr. Williams. I believe that is correct. 

Mr. O'CoNNELL. It might vary generally, but at any given moment 
it would be the same price to all distributors. 

Mr. Williams. At the date which this was prepared, which was 
the other day, they were the prices. 

Mr. O'CoNNELL. And the resale price, you maintain, in New York is 
$3.39 a quart? 

Mr. Williams. That is correct ; a fifth. 

Mr. O'CoNNELL. Could you shed any light on the way your company 
arrives at that $3.39 resale price ? That is the same line of questions 
we were pursuing with Mr. Newman. I thought possibly you could 
explain a little more clearly how you arrived at such a price. 

Mr. Williams. There are so many factors that enter into a price, it 
seems to me. The retailer figures that he must have a certain return 
on his capital invested. In New York State there are rather substan- 
tial license fees. The wholesaler pays $4,000. 

Mr. O'CoNNELL. That wouldn't be something that you would con- 
sider in determining the resale price. You wouldn't consider that 
$4,000. I should assume that if you would give any consideration to 
costs it would be retailers' costs. I am talking about the retailer's 
price, 

Mr. Williams.. The retailer pays a tax of $800 or $1,200. 

Mr. O'Connell. The $4,000 is not an item. 

Mr. Williams. No ; but either eight or twelve hundred dollars, de- 
pending upon his class is. I think he is also influenced by the profit 
margin on other goods. 

Mr. O'Connell. I am more concerned with what you are influ- 
enced by, because as I understand, it is your company that makes 
the resale price of three thirty-nine. 

Mr. Williams. We don't take an arbitrary position on it. 

Mr. O'Connell. Obviously, it is an arbitrary position, in the sense 
that you fix the price at three thirty-nine. I am only interested in 
how you arrive at the three thirty-nine. 

Mr. Williams. We figure what a fair margin of profit is for the 
average retail dealer. 

Mr, O'Connell. Do you make a study of retailer's costs and dis- 
tribution ? 

Mr. Williams. That usually comes out in the course of discussion 
with the retailers. 

Mr. O'Connell. Is the price fixed with a view to keeping all qi 
the retailers in the field ? 

Mr. Williams. I don't think we approach it from that point of 
view. 

Mr. O'Connell. I would like to find out, if I could, from what 
point of view you do approach it. You must have some point of 
view of determining the three thirty-nine. 

Mr. Williams. We have competitive conditions to contend with ; we 
know what our competitive products are sold for; consequently, we 
know that if we are out of line with those we are out of business. 



2622 CONCENTRATION OF ECONOMIC POWER 

Mr. O'CoNNELL. The resale price of White Horse is also three 
thirty-nine ? 

Mr. Williams. I understand it is, 

Mr. O'CoNNELL. Is that also the resale price, so far as you know, 
of some of the other standard makes of Scotch whisky? 

Mr. Williams. I only purchase Johnnie Walker, but I think that is 
correct. 

Mr. O'CoNNELL. I mean the resale price of other Scotches is the 
same. 

Mr. Williams. Generally speaking, I think they are about the same. 

Mr. O'CoNNELL. Aren't they all three thirty-nine? 

Mr. Williams. I don't know of my own knowledge. 

Mr. O'CoNNELL. I understood you to say you did consider the 
other prices in determining the resale price so you probably know 
the price. 

Mr. Williams. I am not speaking for the sales manager, but in 
the course of preparing these contracts I know we discussed all these 
items. 

Mr. O'CoNNELL. I am still a little vague in my mind. 

Mr. Williams. What you are trying to find is a formula which I 
don't think exists. 

Mr. O'CoNNELL. Not necessarily a formula, but I would assume 
that there must be some standards, whether they be arbitrary or not, 
by which you arrive at the differential between your $25 a case and 
a resale price of $3.39 a quart. 

Mr. Buck. As I understand Mr. O'Connell, in the absence of some 
formula or some standard, then it must necessarily be an arbitrary 
price. 

Mr. Williams. I think probably we figure a fair margin of profit 
at 25 or 30 percent, maybe 35 percent on the retailer's price. 

Mr. O'CoNNELL. For what retailer, for all retailers? We are 
speaking about a margain of profit for a retailer. 

Mr. Williams. That is right. 

Mr. O'CoNNELL. I take it retailers' costs probably differ. 

Mr. Williams. That is true. 

Mr. O'CoNNEix. And you would draw a fair margin of profit of 
25 or 30 or 35 percent for what retailer, all retailers, the least efficient 
or the most efficient? 

Mr. Williams. I don't think we can take into consideration the 
efficiency of the particular retailer. We are in business to fix a price 
which is available to all. If we took into consideration the particular 
retailer to whom the stuff was sold we would spend most of our time 
gathering statistics. 

Mr. O'Connell. I understood you to say you did take into consid- 
eration retail costs. 

Mr. Williams. In a general way, yes. There as so many factors 
in the situation that you can't generalize. 

Mr. O'Connell. I think we can generalize all right, but apparently 
we can't be very specific. 

Mr. Williams. For instance, the retailer likes stability of price. 
If your product is thrown around the market, you don't have a stable 
price and many retailers are not inclined to buy it. 

Mr. O'Connell. I wasn't so much concerned with the stability in 
price as I was how you arrived at the particular price. 



CONCENTRATION OF ECONOMIC POWER 2623 

Mr. WiixiAMS. I know, I know. 

Mr. O'CoNNELL. How you arrive at the margin. 

Mr. Williams. That is right. 

Mr. O'CoNNELL. We can't quite get together on that. 

Mr. Williams. I don't think there" is an exact formula. 

Mr. Davis. You made several references to court decisions in rela- 
tion to the fair-trade laws. Is it not a fact that in the Dearborn case 
the Supreme Court proceeded on the theory that the fair-trade laws 
were designed primarily for the protection of the manufacturers, so 
as to protect the goodwill in price setting, and they were not designed 
so much for the protection of the retailers. 

Mr. Williams. I think I indicated that fact when the other gentle- 
man asked that. I think that is correct. 

Dr. LuBiN. Mr. Williams, I understood you to say that your whole- 
sale price is $24.35. 

Mr. Williams. Thirty-four cents. 

Dr. LuBiN. Wliich is approximately $2.03 a iSfth roughly. 

Mr. Williams. What was that ? 

Dr. LuBiN. Roughly about $2. Your retail mark-up price is $3.39 
which mean there is a mark-up of '$1.36. It might be 2 or 3 cents off. 
I was very much interested in what you said about the necessity of 
stability of price, particularly in not wanting the retailer to have the 
price go up and down. 

Mr. Welliams. I said that is one factor. 

Dr. LuBiN. Do you believe, in view of your experience in the 
industry that if you fix the price, let's say, of $3, which meant that 
the mark-up became a dollar, and the retail price was set at that, 
that you would sell more or less of your brand ? 

Mr. Williams. I frankly don't know; I don't know what effect 
price has on Scotch. I am not in the sales department, but I imagine 
that the lower the price the larger the sales. It is a general assump- 
tion. 

CANADA dry's RETAIL LIQUOR PRICE MAINTENANCE POLICY 

Dr. LuBiN. In view of the fact that you get your wholesale price 
anyway, what advantage is there to you in seeing to it that the re- 
tailer gets $3.39, especially after j^our assumption that if it sold for 
less you probably would sell more and your wholesale price remains 
unchanged ? 

Mr. WnjJAMS. I think there are many factors. A retailer doesn't 
like to have a product which is, so-called, kicked around. I think 
price maintenance existed even before the fair-trade acts. He gets 
a price which yields him a certain profit. If everybody is going to 
kick the price around he has no reasonable knowledge as to what 
his profit is going to be at any time. Again I refer to the declared 
purpose of the Act. The producer-owner also has a definite interest in 
maintaining the standard of his mark. 

Dr. LuBiN. I am not interested in the purpose of the act because 
there is nothing in the act which compels you to take advantage of 
it. You deliberately set about to take advantage of the act, and I 
am trying to find out what gains you can get, particularly after your 
admission if the resale price was lower and your wholesale price 
remains unchanged you would sell more product. 



2624 CONCENTRATION OF ECONOMIC POWER 

Mr. WnxiAMS. If we gave it away we would increase our volume 
too, but on the other hand there is a point where we have got to make 
a profit and the retailer has to make a profit and the wholesaler has 
to make a profit, so we can't arbitrarily charge $3 or $2.50. We are 
limited to business practices. We have just got to make money to stay 
in business. 

Dr. LuBiN. I agree with that. After all, the resale-price law has 
nothing to do with the wholesale price that you get for your product. 

Mr. Williams. That is true. 

Dr. LuBiN. You admit that you continue to sell that, and if the 
retail price were lower you could still sell more and still get the same 
wholesale price. I am trying to find out what advantage you get 
out of it. 

Mr. Williams. As I indicated to the other gentleman who sat 
to your left, because of practical reasons the retailer must have a fair 
profit. As I told you before, we don't have any formula to deter- 
mine a fair profit, but we figure 25, 30, 35 percent as a fair profit. 
Why, I don't know. 

Dr. LuBiN. Why do you feel it is your duty to see he gets a fair 
profit? After all, you have got your wholesale price which takevS 
care of your own profit. Why are you interested in seeing that he 
gets a certain specific return? 

Mr. Williams. Because it is to our advantage. The retailer will 
buy a price-maintained product when he probably wouldn't otherwise. 

Dr. LuBiN. That is what I am trying to find out, what the advan- 
tage is. You think you can sell more liquor under a fixed-price 
arrangement. 

Mr. Williams. I thilnk so, and it would rebound to our ultimate 
benefit. 

Mr. Berge. This is such a good policy, why do you only follow it 
in six States, although you are permitted to in many more? 

Mr. Williams. Because the conditions requiring the fixing of prices 
is not existent in many of those States.' That is the only answer I 
can give you, and also there may have been no particular demand on 
the part of retailers for a program of that type. Again I say we ap- 
proach it in a very practical manner. You can realize. the size of 
the legal staff that we would have to maintain if we put a fair-trade 
act into 41 States. 

Mr. Davis. Who absorbs the difference between your price and 
the price of Haig & Haig on a comparable product, or White Horse, 
the wholesaler or the retailer? 

Mr. Williams. I don't quite understand your question. 

Mr. Davis. Well, as Dr. Lubin has pointed out and as has been 
stated on the stand here, the price you receive from the wholesaler 
for Johnnie Walker is more than the price received for White Horse, 
and yet the selling price fixed at least in New York is the same, 
$3.39' a fifth. Who absorbs that difference? 

Mr. Williams. I believe the wholesaler. It is a matter of a few 
cents, isn't it? 

Mr. Lynch. It is a matter of 7 cents a bottle. 

Mr. Williams. These figures were given to me and I believe they 
are accurate. These prices are tax paid*, I assume that Mr. New- 
man's figures were also tax paid, but I don't know. 



CONCENTRATIfN OF ECONOMIC POWER 2625 

Mr. Lynch. That would still leave the same difference of 7 cents 
a bottle, tax paid or not. 

Mr. Williams. I don't know what he includes in his price. 

Mr. Davis. He said that was the price he received from the whole- 
saler. 

Mr. Williams. If there is 7 cents a bottle, that is probably our 
profit. I don't think there is that difference. I don't Imow. 

(Mr. Ferguson assumed the Chair.) 

Mr. Lynch. I believe in relating the purpose or philosophy of 
these fair-trade acts you said that one basic purpose was to protect 
the mark of the owner. The owner of the mark is D. C. L. You 
are not the owner of the markj yet your company fixes the prices. 
How do you reconcile the practice with the philosophy that you ex- 
pressed ? 

Mr. Williams. A damaging effect on the Johnnie Walker mark 
in this country would certainly affect us. Under these acts, as I 
understand them, the authorized agent, or the authorized distribu- 
tor — put it that way — has a right to take advantage of the provisions. 

Mr. Lynch. That is true as to the law, but do I understand that 
D. C. L. as the owner of the mark has expressed its interest as owner 
and as proprietor of the mark in having resale price maintenance 
in the United States? 

Mr. Williams. No, sir. 

Mr. Lynch. It is a situation, then, where the owner of the mark 
may not wish it, as the owner of the mark, the one for whose ad- 
vantage the act was passed, yet at the same time resale price mainte- 
nance is placed in force. 

Mr. Williams. I don't believe the act is for the sole protection of 
the owner of the mark, because the act empowers any distributor, 
as I understand it, or any retail dealer, to take advantage of the 
provisions of the act. 

Mr. Lynch. Wliat is the policy of D. C. L. with reference to price 
maintenance in the United States market? 

Mr. Williams. It has never been discussed with them to my 
knowledge. 

Mr. Lynch. You mean as the owner of the mark they have never 
expressed any interest one way or another? 

Mr. Williams. No. 

Mr. O'Connell. That is rather interesting to me. Your contract 
with D. C. L. by which you obtain the exclusive sales agency for this 
particular type of whisky makes no reference to, nor are you required 
to maintain, the resale price at all? 

Mr. Williams. No, sir. 

Mr. O'Connell. So they apparently feel that they have no interest 
as the owner of the brand, of the mark, in maintaining the resale 
price. 

Mr. Williams. We have never discussed resale price with them. 

Mr. O'Connell. So to the extent that the act may be for the pur- 
pose of protecting the owner and the brand your company is a 
volunteer ? 

Mr. Williams. Yes. 

Mr. O'Connell. The owner of the brand isn't interested. 

Mr. Williams. I can't answer that. 



^626 CONCENTRATION OF ECONOMIC POWER 

Mr. O'CoNNELL. I can see that you are very much interested but 
apparently the owner of the brand is not interested. 

Mr. Williams. No, sir; they have never been consulted, and I think 
I have issued all the contracts and I have never even discussed it 
with anybody in the Johnnie Walker Company. 

Mr. Nathan. Do you know whether the six States in which you 
take advantage of fair-trade practice laws are the same six States 
in which, let us say, Mr. Newsman and most of the other distributors 
do? 

Mr. Williams. I don't know, frankly. 

Mr. Nathan. Obviously it would not be to your advantage to do 
so in a State where I presume the other distributors of standard 
brands would not. 

Mr. Williams. Frankly, I don't know; I think probably in New 
York State is the only State I know where there are any other 
Scotch fair-trade contracts in existence. 

Mr. 0'CoN^•ELL. Mr. Newman testified that there were six or seven 
States in which his company also maintained resale prices. 

Mr. Williams. They probably are not 'identical, I don't know. 

Mr. O'CoNXELL. You don't think that the policy of another com- 
pany would have any influence on your policy with regard to a par- 
ticular State? 

Mr. Williams. No. You see, we are in the ginger-ale business, too, 
and we have 14 plants in this country, and we have somewhat the 
same situation on ginger ale. 

Mr. O'Connell. Do you maintain the resale price of ginger ale? 

Mr. Williams. In a few States. 

Mr. O'Connell. Six? 

Mr. Williams. No ; probably in about four or five. 

Mr. O'Connell. Four of the six, or different States? 

]Mr. Williams. I believe they are the same. 

Mr. O'Connell. Your company apparently hasn't any very well 
defined policy as to whether it takes advantage of laws. 

Mr, Williams. Again I say it is a practical question. 

Mr. O'Connell. Yes; I guess it is. We don't seem to have any 
practical answer for the practical question. 

Mr. Williams. We have a very practical answer. 

Mr. O'Connell. I haven't heard it. 

Mr. Williams. We don't do it unless we find conditions warrant it. 

Mr. Lynch. Conditions as to retailers or conditions to the interest 
of the retailer or conditions governing the distribution of your prod- 
uct and which you would take into consideration relating to your 
own business ? 

Mr. Williams. As I said before, the factors are numerous; there 
is particular interest in protecting our mark; we don't like to have 
our mark thrown around. 

Mr. Lynch. The primary interest is the interest of your company, 
you agree to that ? 

Mr. Wiluams. Yes ; I think so. 

Mr. Lynch. I believe you said you didn't take any consideration 
of relative efficiency of the retailers. 

Mr. Williams. I don't think we could, very practically. 



CONCENTRATION OF ECONOMIC POWER 2627 

Mr. Lynch. So that you don't take into consideration the disparity 
in cost of distribution as between one retailer and another. 

Mr. Williams. I am afraid I would have to have the Brookings 
Institute make a survey before I could answer it ; we could undertake 
that. 

Mr. Lynch. It is obvious without the assistance of Brookings In- 
stitution that there exist varying degrees of distribution costs on the 
part of various distributors and retailers. 

Mr. Williams. I think that is a fair assumption that exists in all 
industries. 

Mr. Lynch. What is your policy, if you have any, in working in 
that expensive play of distribution costs or efficiency of different 
distributors? 

Mr. Williams. We have taken very little interest in that. We 
can't do it. 

Mr. Lynch. Perhaps this is a trifle dialectic, but if you say the 
purpose of the fair-trade act and your purpose is to benefit the 
retailer and yet at the same time jou. don't take into consideration 
any factors of disparity between costs of retailing, I am left some- 
what puzzled. 

Mr. Williams. I just say that as a practical matter we couldn't 
do it. 

Mr. Lynch. It comes b^ck again to being the interest of your 
company that predominates. 

Mr. WiiiLiAMs. Of course; we are in the business to make money 
and that is our primary interest, like all other business. 

Mr. Lynch. And regardless of whether that be the stated purpose 
of the fair-trade act, that is the net effect of the act in your practice ? 

Mr. Williams. That is one effect. 

Mr. Lynch. In furthering the interest of the wholesaler in your 
case? 

Mr. Williams. The sole distributor. 

Mr. Lynch. Yes. 

Mr. Berge. Mr Chairman, a few moments ago in discussion with 
Mr. Williams I think I referred to Macys as notorious price cutters. 
I want to make it perfectly clear that I didn't use that language in 
any critical or derogatory sense. 

Mr. Williams. That is perfectly all right. 

Mr. Buck. No further questions. 

advertising expenditures of four largest DISl'RIBUTORS 

Mr. Buck. At this point I would like to offer for the record a state- 
ment with respect to the advertising of distilled spirits by the four 
large domestic distillers: that is, National, Schenley, Seagram, and 
Hiram Walker. The figures are set forth and they are the best avail- 
able figures on the subject that we can find. They do not include, 
however, the total advertising expenditures of the companies in- 
volved, because outdoor advertising or point of sale and specialty 
advertising is not included. It seems hard to get those. We are ad- 
vised that $4,000,000 is the approximate figure for outdoor adver- 
tising, and $1,000,000 for local outdoor advertising. 



2628 CONCENTRATION OF ECONOMIC POWER 

I have also, in connection with the statistics, the total figures, forty- 
two million eight hundred and twenty-nine thousand two-hundred- 
some-odd dollars. 

In addition to those figures I have illustrated copies of advertis- 
ing that the committee might desire to look over just as a matter 
of interest. I don't believe they could be reproduced in the record. 
I will offer the statistics for the record, and this illustration of the 
type of advertising for the committee's own interest. 

(The tabulation entitled "Advertising of Distilled Spirits" was 
marked "Exhibit No. 427" and is included in the appendix on p. 
2717. The illustrations of the advertising referred to were marked 
"Exhibit No. 428" and are on file with the committee.) 

Mr. Buck. This afternoon we will take up examination of the 
Distilled Spirits Institute. 

Acting Chairman Ferguson. The committee will recess until 2 : 15. 

(Whereupon, at 12 : 45 p. m., a recess was taken until 2:15 p. m. 
of the same day.) 

AFTERNOON SESSION 

The hearing was resumed at 2 : 30 p. m. upon the expiration of the 
recess. 

Acting Chairman Ferguson. The committee will come to order. 
Mr. Buck, are you ready to proceed ? 

Mr. Buck. Yes, Mr. Chairman. 

Dr. Doran. 

Acting Chairman Ferguson. Do you solemnly swear, in the testi- 
mony you are about to give, ,to tell the truth, the whole truth, and 
nothing but the truth, so help you God ? 

Dr. DoRAN. I do. 

TESTIMONY OP DR. JAMES M. DORAN, TECHNICAL ADVISER TO THE 
DISTILLED SPIRITS INSTITUTE, WASHINGTON, D. C. 

Mr. Buck. How are you feeling. Doctor ? 

Dr. DoRAN. Never better. 

Mr. Buck. State your name and position, please. 

Dr. DoRAN. James M. Doran ; at present I am technical adviser to 
the Distilled Spirits Institute and other members of the industry. 

Mr. Buck. Doctor, will you state your position in respect to the 
whisky industry during the past 4 years ? 

Dr. DoRAN. Starting in with repeal of the twenty-first amend- 
ment, in December 1933, I was appointed director of the Distilled 
S]Dirits Institute and also supervisor of the code authority which ad- 
ministered under the supervision of the Federal Alcohol Administra- 
tion the code relating to the distilled-spirits industry. 

Mr. Buck. That was under the National Industrial Recovery Act 2 

Dr. DoRAN. That is coirect. 

Mr. Buck. And that situation washed out in May 1935 with the 
Schechter decision ? 

Dr. Doran. That terminated. The code authority terminated with 
the Schechter decision, and thereafter the industry operated as a trade 
association under the title of tlie Distilled Spirits Institute. 

(Representative Williams assumed the Chair.) 



CONCENTRATION OF ECONOMIC POWER 2629 

Mr. Buck. Previous to that time you had been connected with the 
Treasury Department for a number of years ? 

Dr. DoRAN. I had been in the Treasury Department since 1907. 

Mr. Buck. Then in order to get the chronological order of this, 
you were in the Treasury Department from 1907 to 1933? 

Dr. DoRAN. That is correct. 

Mr. Buck. In 1933 you became code authority director under the 
distillers' code which was set up under the National Industrial Re- 
covery Act, is that it? 

Dr. DoKAN. That is right. 

INCEPTION AND OPERATIONS OF DISTILLED SPIRITS INSTITUTE 

Mr. Buck. Then in May 1935, following the Schechter decision, 
the dissolution of the codes and the Recovery Act, you say the dis- 
tillers organized an independent association of their own? 

Dr. DoRAN. No; at the time of repeal the distillers organized a 
trade association, called the Distilled Spirits Institute, which op- 
erated along with, for lack of a better term, the code authority. 

Mr. Buck. They did what? I didn't hear you. 

Dr. DoiRAN. They operated supplemental to the operation of the 
code authority. 

Mr. Buck. I see, that was in existence during the code-authority 
period ? 

Dr. DoRAN.-.That is correct. 

Mr. Buck. Who was head of the Institute then? 

Dr. DoRAN. I was. 

Mr. Buck. : Then you weren't' head of the code authority ? 

Dr. DoRAN. I was ; I was head of both of them. 

Mr. Buck. You were head of both of them? 

Dr. DoRAN. That is right. 

Mr. Buck. One organization represented the independent organ- 
ization of distillers, the other represented this quasi governmental 
status. 

Dr. DoRAN. The Distilled Spirits Institute was a voluntary trade 
association. All members of the industry did not choose to join the 
Distilled Spirits Institute. All members of the industry, however, 
were by virtue of holding permits to distill liquor, within the juris- 
diction of the code authority. 

Mr. Buck. Well, I am trying to clearly establish in the record the 
status of these two organizations you speak of that existed simul- 
taneously ; that is, the code authority and the organization known as 
the Distilled Spirits Institute. Those two did exist simultaneously 
and together ? 

Dr. DoRAN. That is correct. 

Mr. Buck. You were president or director of both ? 

Dr. DoRAN. I was the executive officer in both of them. Might I 
explain why the Distilled Spirits Institute was organized coinci- 
dentally with the coming into operation of the code authority ? Many 
States were enacting very intricate and diverse laws in connection with 
the legal manufacture, sale, and taxation of distilled spirits. The code 
authority was set up to deal with operations under the National Indus- 
trial Recovery Act. It was necessary to have some means whereby 



2630 CONCENTRATION OF ECONOMIC POWER 

the industry could keep itself in line with the various State enactments' 
and reg^ilations made thereunder. 

Mr. Buck. One was, as I have stated, a quasigoverfimental organi- 
zation ; the other was the voluntary association of distillers. 

Dr. DoRAN. That is correct. 

Mr. Buck. You say the function of the voluntary^association was to 
look after State legislation and State matters pertaming to wliislry ? 

Dr. DoRAN. Primarily; but the National Industrial Recoveiy Act 
did not encompass the relationship of the industry to the taxing au- 
thorities of the Government, and that was under the direct jurisdiction 
of the Treasury Department through the Alcohol Tax Unit. The 
industry had many common problems before the taxing authorities 
which could be handled more adequately and with much greater satis- 
faction through a trade association operating for all members. 

Mr. Buck. What do you mean by more adequately handled ? 

Dr. DoRAN. When repeal came there was, of course, great confusion 
and a great lack of information. Many small distillers were 
greatly in need of advice as to the regulations of the Treasury Depart- 
ment, which were then in their formative period. The Institute served 
as a clearing house for information, dissemination of information, for 
all of those units who could not take the time from their business to 
come to Washington and find out personalFy just what the require- 
ments were. There was nothing in print at that time. 

Mr. Buck. Do you mean to imply that the large distillers adopted a 
"big-brother" attitude toward the small ones? 

Dr. DoRAN. No; I don't mean to imply anything of that sort, Mr. 
Buck, but by the very nature of the case the smaller distiller who is 
busy with his own affairs, trying to get his business established, can- 
not come down to Washington and spend half his time tiding to find 
out what liis primary duties are under the law. 

Mr. Buck. He has access to the laws, of course. 

Dr. DoRAN. Oh, yes; everybody knows the law, or is presumed to. 

Mr. Buck. When the N. R. A. organization collapsed under the 
Schechter decision in 1935, nearly 4 years ago, that left in existence 
this distillers' organization. Is that right? 

Dr. DoRAN. That is correct. 

Mr. Buck. And you remained as director of that organization ? 

Dr. DoRAN. Yes, sir. 

Mr. Buck. And wound up the affairs of the code authority ? 

Dr. DoRAN. Yes, sir. 

Mr. Buck. And adjusted those and took over the distillers' organi- 
zation proper? 

Dr. DoRAN. That is right. 

Mr. Buck. And how long did you remain director of that organiza- 
tion? 

Dr. DoRAN. I remained director until the spring of '37. 

Mr. Buck. The spring of '37? 

Dr. DoRAN. Yes. 

Mr. Buck. Did you incorporate it or is it incorporated ? 

Dr. DoRAN. It is incorporated, a nonprofit corporation incorporated 
under the laws of the State of New York. 

Mr. BycK. When was it incorporated ? 

Dr. DoRAN. I suppose about the first week in December of 1933, just 
about coincident with repeal. 



CONCENTRATION -OF B€ON0MIC POWER 2631 

Mr. Buck. How many members in the distilling industry, let us 
say in 1936, were members of the Institute? 

Dr. DoRAN. Oh, probably 85 or 90 percent of the entire production. 
Those figures are available, but I can't recall the exact number, but it 
was about that. 

Mr. Buck. That is based on production. 

Dr. DoRAN. Yes. 

Mr. Buck. I am speaking of units. 

Dr. DoRAN. Units, probably a less number. There were a great 
many small plants that were automatically in the code authority, 
that is by law and regulation, who did not retain their membership 
in the Distilled Spirits Institute. For example, many of the brandy 
plants on the west coast that operate only 2 or 3 weeks of the year 
and produce brandies solely for the purpose of rectifying wines 
were* obviously not interested in a trade association dealing with the 
distilled spirits industi-y generally. Those men almost without ex- 
ception dropped out of the Institute. 

Mr. Buck. Let's confine this to whisky distillers. Did some of 
those drop out? 

Dr. DoRAN. Some of the smaller members did not continue their 
membership in the Institute, for reasons I can't tell. I would be very 
glad to state if I knew— jDossibly because they didn't find the business 
profitable, trying to liquidate. When repeal came, of course, many 
people endeavored to engage in the distilling of whisky, many with- 
out experience, many without capital. At that time people were 
searching around for something profitable to engage m and this 
seemed an attractive new field. Many of them were not able to 
make the commercial grade and dropped out. 

Mr. Buck. You don't know why they dropped out. You were in 
charge of the Institute at the time. Did they make any explanation 
to you? 

Dr. DoRAN. Very seldom. 

Mr. Buck. Did they ever? 

Dr. DoRAN. Why, I think some of them did. I think they said, 
"We quit distilling; we are going out of business. Our business is 
so small that we don't feel that there is any particular advantage 
to us in retaining membership in a national trade association." 

Mr. Buck. What were the dues for membership ? What were the 
charges made against members? 

Dr. DoRAN. The dues in the early few years, and I am just quot- 
ing from memoir and it may not be exact, were one-tenth of a 
cent per each gallon produced. It was a dues based on production. 
Of course, by reason of that schedule the larger distiller, that is the 
larger producer, would pay more into the Institute, but in the organi- 
zation of the Institute every operating company had but one vote. 

Mr. Buck. How often did you vote? 

Dr. DoRAN. We had a meeting of the board of directors on the 
average of once a month and sometimes more frequently. The 
largest operating company in the United States, with a number of 
subsidiaries, had the same vote that the smallest whisky distiller in 
Massachusetts or Kentucky had. 

Mr. Buck. Were all members on the board of directors? 

Dr. DoRAN". No, sir. The bylaws of the Institute provided that 
each group making a particular category of spirits would them- 



2632 CONCENTRATION OF ECONOMIC POWER 

selves meet and elect their representatives on the board. The by- 
laws provided for the number of members that might be elected from 
each ^roup. For example, the whisky people ^elected their repre- 
sentatives, the rum people elected their representatives, the brandy 
people elected their representatives, and the gin people likewise 
elected their representatives. 

Mr. Buck. So when you say you held monthly meetings of the 
board of directors and that each member was entitled to vote, you 
don't mean that each member could vote in the board of directors 
meeting ? 

Dr. DoRAN. Oh, no ; I was speaking of the board of directors meet- 
ings. We had general institute meetings from time to time, at which 
time each member had one vote. On the board of directors which 
also met from time to time, but at no stated interval, each director 
had one vote, regardless of whether he happened to be an officer of 
a large or small distilling company. 

Mr. Buck. If he was on the board, he could vote. 

Dr. DoRAN. He could vote, and only on,ce. 

Mr. Buck. How many directors did you have ? 

Dr. DoRAN. There was 18 directors in the early days, as I recall. 
That was later enlarged to 20. 

Mr. Buck. You were charging the membership one-tenth of 1 
percent on the amount of spirits produced ? 

Dr. DoRAN. One-tenth of 1 cent per gallon on spirits produced. 

Mr. Buck. Considerable spirits were being produced during the 
years '34, '35, '36, and '37, 1 believe. 

Dr. DoRAN. That is right. 

Mr. Buck. Do you recall the total receipts of the Institute? 

Dr. DoRAN. No. The books will show that. I haven't that data ot 
hand. The receipts from production, of course, were much higher in 
the early years than they were in the last year and a half when pro- 
duction curtailed I think in a normal fashion. On this production 
situation, you must recall, Mr. Buck, that "it was inevitable that there 
would be an over-capacity employed in the first 3 or 4 years to build 
up this backlog of storage which did not exist when repeal took 
effect. Therefore, at the end of 4 years you would inevitably have 
both an excess of productive capacity and a normal curtailment of 
production which was largely a replacement quantity, and the busi- 
ness became stabilized. 

Mr. Buck. And when that situation took place in respect to pro- 
duction, you changed your theory of assessment of your members, 
didn't you ? 

Dr. DoRAN. That was changed last year. I am not entirely familiar 
with that as I have not been in any executive capacity with the Insti- 
tute for some time. 

ACTFVITIES OF THE INSTITUTE 

Mr. Buck. Now, beginning with the organization of the institute 
entirely aside from the code authority activities, what have been 
the activities of the Institute? What services has it rendered to its 
members? What have been its activities in respect to legislation in 
various States and the Federal Government, and to the formulation 
of rules and regulations in the States and Federal Government? 



CONCENTRATION OF ECONOMIC POWER 2633 

Dr. DoRAN. I will be very glad to explain that as best I can. In 
the first place, this is the most highly regulated industry in the world. . 
Every State operated as a laboratory, on a trial and error method. 
No two States' laws were alike. The Federal regulations were in 
their formative period. It was absolutely essential for the conduct of 
this industry, in order to keep them in line and in conformity with 
not only the Federal regulations, but State, city, and county *"hat 
they be fully informed oi all acts passed, the nature of the regulatory 
bodies set-up, the new rules of these regulatory bodies — and they 
change frequently. I think one of the most important functions of 
the Institute in the early days was to try to inform the industry as to 
what was required of them in order that they be strictly within 
the law in every State where it was legal to ship and sell whisky. 

As to activities in legislative bodies, the Institute never engaged 
in lobbying activities. It was necessary from time to time, how- 
ever, and I think perfectly proper, to appear before legislative com- 
mittees, either the officers of the Institute or through attorneys, to 
point out the need of more uniform regulation, more practical regu- 
lation, and generally to urge that such legislation be passed only as 
would be strictly in the public interest. 

This industry has always known that it was an industry that must 
of necessity be very closely supervised and they never opposed regu- 
lation. Their whole interest in legislative matters was to advise wise 
legislation. 

Mr. Buck. That is from your standpoint. 

Dr. DoRAN. Well, that is what you asked me. 

Mr. Buck. That is right. You did have price filing in the Insti- 
tute; is that so? 

Dr. DoRAN. We did. That is correct. On January 20, 1934, the 
Federal Alcohol Control Administration, of which Mr. Choate was 
the director — it was an administration composed of a number of 
people; Mr. Choate was the head — issued a regulation requiring all 
members of the distilled-spirits industry to file with the code author- 
ity and by the code authority to be transmitted to the Federal Alco- 
hol Admmistration a complete schedule of prices and to notify the 
code authority and the Federal Alcohol Administration through the 
code authority any change of prices. No change could be made until 
a lapse of 3 days. 

This regulation required a filing of complete schedule of prices, 
of barrel goods, of case goods, f. o. b. distillery and any collateral 
charges connected with the price. It also required the filing of a 
suggested^ wholesale price and a suggested retail price. That regu- 
lation was in effect until the Schechter decision when we, by our own 
voluntary action, abolished all open price filing. 

Mr. Buck. Was there any function of the Institute with respect 
to prices at all after that date ? 

Dr. DoRAN. None whatever. Prices were never discussed in the 
Institute. 

Mr. Buck. What did you discuss at these directors' meetings? 

Dr. DoRAN. The institute was primarily engaged in informing its 
members of what was going on in the various regulatory bodies; it 
maintained a statistical service ; it adopted a code of business conduct 
and a set of rules that not only fully met the requirements of the 



2634 CONCENTRATION OF ECONOMIC POWER 

Federal Alcohol Act, but went beyond that and set up a system of 
self -regulation, and I would say that the great part of the time of the 
meetings of the institute and the directors was devoted to developing, 
these activities within the industry. 

Mr. Buck. Were you given authority under the organization of 
the Institute to enforce any of those things? 

Dr. DoRAN. I had nothing but the power of moral suasion. 

Mr. Buck. Not having the authority to enforce or promulgate any 
self -discipline or self-regulation for the industry, what was the pur- 
pose of the activities in that regard ? 

Dr. DoRAN. Most people want to do what is right, and when, by 
common counsel, they determine on a wise course of action, a general 
meeting of the minds will as a rule carry that principle forward. I 
would say it is a very fine example of a voluntary restraint placed 
by an industry upon itself. 

Mr. Buck. Could this board of directors adopt self-disciplinary 
measures for the entire industry? 

Dr. DoRAN. The board of directors would from time to time adopt 
resolutions expressing it as their sense that certain rules of conduct 
be followed for the guidance of the industry. 

Mr. Buck. It would be their sense that it should be done, and that 
rested the subject ? 

Dr. DoRAN. No ; they went a little further in some respects. Take 
for example the matter of participating in these liquor shows, where 
they had displays of bottles. The board of directors adopted a reso- 
lution to this effect, and it was unanimously agreed to by the mem- 
bership, that no member of 'the industry would exhibit in any of 
these so-called liquor shows unless and until the matter had been 
placed before the board of directors of the Institute and by them 
agreed to. The consequence was that we stopped all of that. 

Mr. Ferguson. May I ask Dr. Doran a question ? 

Acting Chairman Williams. Certainly. 

Mr. Ferguson. You said, Dr. Doran, when these directors and 
businessmen get together they want to do what is right. Well, isn't 
it a fact that very often what they think is right may be in contra- 
vention of the antitrust laws? In other words, they don't agree with 
the policy of the antitrust laws. 

Dr. Doran. Well, I have never heard anybody in our industry give 
voice to any such expression, Commissioner Ferguson. Whether they 
think so I don't know, but I can say this very truthfully, that this 
industry is used to being regulated. It is probably the most sensi- 
tive industry in the United States, if not the world, and any govern- 
ment body has only to suggest a course of conduct and it will be fol- 
lowed. I have never met or had to do with a group of men who, as 
businessmen, felt under such necessity of following not only the letter 
but the general view of the law of any governing body. 

Mr. Buck. What other specific things did the Institute do between 
1935 and the time that you left it? 

Dr. Doran. Well, as I told you, Mr. Buck, it was engaged largely 
in informational statistical activities and an endeavor to aid our 
membership in keeping continually in line with Government and 
State regulatory matters. The detail of the activity was so volumi- 
nous; you must recall that every '2 years in this country about 44 



CONCENTRATION OF ECONOMIC POWER 2635 

legislatures meet in session and they hold frequent special sessions. 
The State laws are continuously changing; personnel of State boards 
of control, State commissioners of control are continually changing; 
new rules are coming up from time to time. Just the keeping up with 
these continuous changes — I am talking about State, not Federal — 
was of itself a monumental task, but vital to this industry. That 
alone was a tremendous activit5^ 

Mr. Buck. Well, Doctor, name some specific thing that the indus- 
try did in that period. You say you dispersed general statistical 
information. 

Dr. DoRAN. I don't suppose there was a day, Mr. Buck, that the 
Institute didn't send out anywhere from one to five pages of advice 
as to what had happened either in Albany or the A. B. C. Board in 
New York or Massachusetts, South Carolina, New Mexico, or what 
was going on in Minnesota. About 2 years ago we were confronted 
by what seemed to be a very serious situation with respect to what 
were then known as antidiscriminatory laws, laws which set up bar- 
riers as between the States, which were very hampering and restrict- 
ing. They were retaliatory laws directed against one State or a 
series of States, a number of States, whom they thought were dis- 
criminating against them. 

We did our best, and expended considerable energy, in endeavor- 
ing to convince various legislatures that they shouldn't enact those 
laws, which we felt were against the public interest, to say nothing 
of being against the interests of our industry. 

Mr. Buck. You were then acting for the good of the State, I as- 
sume. 

Dr. DoRAN. No ; I wouldn't say that. I think our people are good 
citizens and as citizens and businessmen we didn't see that this tend- 
ency to set up State barriers against trade, even the liquor trade, was 
a wise public policy. We endeavored to combat it, notwithstanding 
the fact that the Supreme Court in the Youngs Market case says that 
any State might do that, 

Mr. Buck. So, notwithstanding the fact that the Supreme Court 
declared such laws to be constitutional and the prerogative of the 
State, you felt it your duty, or the industry felt it its duty, to go into 
the State legislatures and advise them against such action for their 
own good, or for the good of the industry. 

Dr. DoRAN. We felt we were well warranted, as I say now we are 
well warranted, in endeavoring to convince any State legislature by 
any proper means that such enactments are against good public 
policy. 

Mr. Buck. Did the Institute adopt that policy in respect to any 
State law that might affect its members' welfare? 

Dr. DoRAN. No; unless it was something that was obviously un^ 
reasonable and would contribute to lawlessness. The Institute has 
always taken the position that the manner of control of liquor was 
strictly a business of the State and locality with which the distillers 
have no concern. They did feel it their duty, however, to point out 
any proposal that they thought might be unwise from practical ex- 
perience. We know very well that unreasonable restrictions, both as 
to tax and regulatory matters, do nothing but contribute to boot- 
legging and add to consumers' costs. 



2636 CONCBNa?RATION OF ECONOMIC POWER 

Mr. Buck. What other specific laws did you find it necessary to 
discuss with State legislatures? 

Dr. DoRAN. I don't recall any other specific laws at this time, Mr.. 
Buck. That was a series of laws, a kind of epidemic. 

Mr. Buck. General throughout the Nation? 

Dr. DoRAN. General throughout the Nation, and I believe it has 
been discussed from time to time since in thisi field and in other 
fields. 

JVIr. Buck. In other words, when the States realized they had the 
constitutional right to legislate upon this question, they naturally 
began to exercise that right, and you felt it the duty, or the industry 
felt it the duty of the Institute to guide the States in that. 

Dr. DoRAN. That is hardly the correct point of view so far as the 
Institute is concerned, Mr. Buck. Most of these so-called antidis- 
criminatory laws germinate selfishly with people who desire to secure 
a fully protected market in their own little locality and lose entire 
sight of the fact that trade within the 48 States ought to proceed 
reasonably free, and I may say that when this matter was presented 
practically every legislature turned this legislation down after being 
mformed as to what the implications were. 

Mr. Buck. What about tax legislation in the States? Does the 
Institute concern itself with that? 

Dr. DoRAN. Only to this extent if an unreasonable tax bill is pre- 
sented ; the Institute has never, to my knowledge, done anything but 
present statistical information which is as plain as a book that when 
taxes are increased past the optimum point there is loss of revenue 
and an increase of bootlegging. We have never gone beyond that 
point. The industry realizes that it is a medium for the collection of 
a very substantial tax. We think it is to the interest of the State and 
Federal Governments to place that point in the light of experience 
at the optimum point where the maximum revenue will be secured 
and the minimum of lawlessness generated. 

Mr. Buck. Is this a fair characterization of the State activities of 
the -Institute ? In all legislation that the Institute or industry con- 
sidered might affect its general welfare, that it concerned itself with 
that? 

Dr. DoRAN. No ; that is not correct. 

Mr. Buck. How would you characterize it? 

Dr. DoRAN. Many hundreds of bills have been introduced and 
passed but while they may not have been agreeable to all members of 
the industry, we took the position that it was wholly the prerogative 
of the State ; it was not unreasonable and it was none of our affair. 

Mr. Buck. What other specific laws did the Institute concern itself 
with ? 

Dr. DoRAN. Well, the Institute was able to cooperate with the Treas- 
ury Department, the Alcohol Tax Unit, when a general revision of 
the statutes governing the taxation of liquor and the regulation of 
distilleries was undertaken, some 2 or 3 years ago. Bear in mind that 
many of the existing statutes up to that timei had been enacted prior 
to 1879, and they dealt with practices as of those dates. We were 
of some considerable assistance, I think, to the Treasury Depart- 
ment and the Alcohol Tax Unit and to the committees in Congress in 
trying to bring about a modernized code dealing with Government 



CONCENTRATION OF ECONOMIC POWER 2637 

supervision of this industry ; in other words, to try to bring the thing 
down to date to conform with modern industrial practice. 

Mr. Buck. You didn't advocate any legislation that was against 
the best interests of the liquor industry, did you? 

Dr. DoRAN. Well, I will say this: I have taken the position, and 
been backed by the Institute every time, where one or two members 
might have felt there would be some immediate commercial advan- 
tage, we have always taken the position that this industry must be 
strictly regulated, and the bill might not be capable of good admin- 
istration, and therefore would be unwise. I have done that frequently. 

Mr. Buck. Do you care to state any other specific activities of the 
Institute during your term of office that might be of interest to the 
committee ? 

Dr. DoRAN. They were so numerous over that period of time that I 
am afraid I can't pick out any special thing at this time, other than 
what we have discussed. I have no doubt, had I opportunity to review 
the minutes of the action of the Institute, many more things would 
occur to me. I have endeavored to give you my best recollection of the 
main activities of the Institute. 

I might say this: The Institute has been a clearing house for infor- 
mation for all branches of the industry — wholesale, retail, rectifying, 
and what not — which information was always very gladly furnished. 

Mr. Buck. Where is the Institute located? 

Dr. DoRAN. National Press Building. 

Mr. Buck. Washington? 

Dr. DoRAN. Washington, D. C. 

Mr. Buck. Is this the center of the whisky industry? For any 
geographical purpose is it located here ? 

Dr. DoRAN. Well, we have a very substantial industry right close at 
our door in Maryland. I will say this : It is much closer geographi- 
cally to the industry than is New York, Chicago, or San Francisco, 
and has many other points of convenience, principally, I say, because I 
live here. 

Mr. Buck. In other words, where you went the Institute went? 

Dr. Doran. No, indeed. The Institute at one time set up an office 
in New York, but finally con.cluded that it could operate to better ad- 
vantage by discontinuing the New York office, and centering its 
activities in Washington. 

Mr. Buck. And you found that to be the case? 

Dr. DoRAN. That is correct. We are supervised by many govern- 
mental departments here, as you know. The F. A. A., the Alcohol Tax 
Unit, we occasionally have a little matter Avith the Federal Trade 
Commission and the Food and Drug Administration, and a little with 
the Interstate Connne.rce Commission and the Department of Com- 
merce, and it seemed very logical to me that the headquarters of the 
Institute should be right here in Washington. 

OFFICE AXD PFRSiONNEf, OF THE INSTITUTE 

Mr. Buck What staff do you maintain, or did you maintain from 
1935 on, up until you left the Institute in '37? 

Dr. DoRAN. We had the usual clericrJ staif, the group that attended 
to the mechanical work, statisticians, attorneys. 

124491— 39— pt. 6 15 



2638 CONCENTRATION OF ECONOMIC POWER 

Mr. Buck. What were the executive positions of the Institute? 

Dr. DoRAN. My title changed several times and I can't tell you. 
I think I started "in as executive director and then was made director, 
and then a technical director. 

Mr. Buck. What other executive officers did the Institute have? 

Dr. DoRAN. We had a secretary, a treasurer, and a counsel. 

Mr. Buck. A secretary, a treasurer, and a counsel ? 

Dr. DoRAN. That is right. 

Mr. Buck. When did you adopt a public relations man? 

Dr. DoRAN. From the very start the secretary worked on public- 
relations matters. It so happened that he was an old and experienced 
newspaperman, and performed a very good function. However, as 
some of the social problems increased, it seemed wise to the directors 
to somewhat change, you might say, the emphasis from the regulatory 
set-up of the business, which was pretty well in hand, and proceed 
to the work of fleveloping the social problems, with a view to securing 
such better results as might be secured from the public point of view. 
We are just as anxious to rub out abuses in this industry as anyone 
possibly could be. The life of the industry depends on its good 
conduct and its approval by the public. 

Mr. Buck. But you have no power to do that under your organiza- 
tion set-up, except as you say by moral persuasion or suasion. 

Dr. DoRAN. Well, the more people know about what they ought to 
do, the better off they are. 

Mr. Buck. Wlio were the officers of the Institute, the executive 
officers, from 1935, aside from yourself? 

Dr. DoRAN. I was executive head until sometime in the early spring 
of 1937, I believe, when Mr. Forbes Morgan was appointed adminis- 
trator, and I was appointed as a technical director. Dr. Morgan very 
unfortunately lived only a very few weeks after his appointment. 
From that time on I remiained as acting head of the Institute until 
last summer, when I resigned and accepted the position of technical 
consultant or adviser, and the board of directors then proceeded to 
elect Dr. Wesley A. Sturges as executive director of the Institute. 

Mr. Buck. Yes; but my question related to those other than the 
directors. 

Dr. DoRAN. There were no other changes 

Mr. Buck (interposing). You haven't told me in the first place 
who were the originals. 

Dr. DoRAN. I was there as the original. Mr. Howard Jones, the 
counsel, was there originally; Mr. Emmet Dougherty was then the 
secretary. There are practically no changes in the executive staff 
or the clerical staff. 

Mr. Buck. That constituted the executive staff? 

Dr. DoRAN. That is correct. 

Mr. Buck. How large an office did you maintain? 

Dr. DoRAN. Wliat do you mean, how inuch furniture, space? 

Mr. Buck. Well, let's take space and employees. 
Dr. DoRAN. I think there were 13 employees and possibly six or seven 
rfk)ms in the Press Building; there might have been eight. I think 
we had a storeroom in addition. 
Mr. Buck. Do you recall the total salaries of the Institute? 



CONCENTRATION OF ECONOMIC POWER 2639 

Dr. DoRAN. No; I couldn't say. The books would show all tha<. 
I can't recall. 

Mr. Buck. Aside from yours, what were the «&.laries? 

Dr. DoRAN. Do you mean the total salaries? 

Mr. Buck. Yes. 

Dr. DoRAN. I can't tell that without consulting the records. 

Mr. Buck. You haven't seen those lately, have you ? 

Dr. DoRAN. As a matter of fact, I never did pay much attention to 
them. I didn't keep the books. 

Mr, Buck. You never suffered from lack of funds? 

Dr. DoRAN. No, sir ; although I will say this : I believe it is a pity 
that the Institute didn't have more money to spend in dissemination of 
information and a more elaborate coverage on statistical reporting 
service. 

Mr. Buck. Now, Doctor, as a matter of fact, there were only 100 
active distilleries, weren't there ? 

Dr. Dor AN. That is about right, I think. 

Mr. Buck. Is that an enormous mailing list, do you think? 

Dr. DoRAN. Well, let me state this. It is our custom to include in 
the mailing list State oiScials and the executive officers at each one 
of the operating units. For example, one company, I believe it was 
testified to here 2 days ago by Mr. Porter, has nine operating units. 
Every one of the superintendents, executives in charge of those operat- 
ing units, received all the information, 

Mr. Buck. There is only dhe superintendent in each unit. 

Dr. DoRAN. Well, you say 100 distillers. There is 1 distiller that 
had nine on the mailing list. 

Mr. Buck. No ; I say 100 plants. So there would only be 100 super- 
intendents. 

Dr. DoRAN. No ; I think you are 

Mr. Buck (interposing). Our statistics show 97. I say that is not 
a very large clientele to keep advised. 

Dr. DoRAN. We didn't confine merely to what you call clientele 
at all. The information that we thought was of some interest we 
mailed regularly, and, as far as I know, they still do, to State offi- 
cials, to company attorneys, to trade journals, in th6 same manner 
that any information service operates, be it Government or private. 

Mr. Buck. What was the purpose of gratuitously furnishing States 
with such matters? 

Dr. DoRAN. It is our experience that the officials of various States 
are very glad to be advised of current Federal regulation as well as 
rulings and activities of their sister States. They have appreciated 
that service very much. We were very glad to furnish it to them. 
Most of them had no other facility for obtaining it. 

Mr. Buck. Then you take it upon yourself to act as sort of a guide 
for the State liquor officials. 
Dr. DoRAN. Not at all. You entirely misunderstand me. 
Mr. Buck. What is the object? What is the purpose? 
Dr. DoRAN. Well, I believe there is such a thing as people doing 
things occasionally because they believe they are good- things to do, 
whether they get paid for it or not. 



2640 CONCENTRATION OF ECONOMIC POWER 

Mr. Buck. You think that is" one of the functions of the Institute, 
to do good, charitable deeds whether they get paid for it or not? 

Dr. DoRAN. No. I don't wish to be misunderstood 

Mr. Buck (interposing). I don't mean to be facetious at all. 

Dr. DoKAN. I don't wish to be misunderstood in that respect. It 
has been our view — it still is, so far as I know — that to post informa- 
tion to all officials and people concerned was in everybody's interest. 
We didn't have to do this, of course. I still maintain that it was an 
excellent thing to do and to continue to do it. 

Mr. Buck. That is all. 

Mr. O'CoNNELL. May I ask a question or two ? You prefaced your 
remarks about the activities of the Institute in connection with State 
legislatures or legislation in general by saying that the Institute had 
never indulged in what you referred to as lobbying activities. 

Dr. DoRAN. That is correct. 

Mr. O'CoNNELL. Would you mind explaining for my benefit the 
difference between what the Institute has done in connection with 
legislation in States and lobbying as you understand the word? 

Dr. DoRAN. Well, I don't know wfiether I am qualified to define 
lobbying; but if a legislature, through its committee, is holding a 
public hearing or a committee of Congress is holding a public hear- 
ing, it has always seemed to me very proper for anybody having any 
matter of interest to appear before that committee and furnish it with 
such information as they were possessed of. That I do not call lobby- 
ing. I thinly: that is a right of every citizen. 

Mr. O'CoNNELL. You used the term "lobbying": I didn't; and pos- 
sibly you can tell me what it is. 

Dr. DoRAN. Pardon ; I may have used it wrongly, but I wish you to 
understand what was the nature of the Institute activities. If it is a 
case of buttonholing members of the legislature privately, and enter- 
tainment, and all that, the Institute never engaged in any such 
activity. 

Mr. O'CoNNELL. I take it that would go more or less to the form of 
effort that would be made to influence legislation, but I understood 
from what you explained about the activities of the industry that it 
was the Institute's view that they were justified, not only justified but 
practically duty bound, to attempt to influence State and Federal 
legislation with a view to possibly the well-being of the industry. 

Dr. DoRAN. Well, I don't agree with you in the use of the term 
"influence." I think the conveying of information is perfectly proper, 
and I don't understand that the conveying of information operates as 
an influence on any legislative or congressional committee that is 
sitting in judgment as to what is the wisest course to pursue. 

Mr. O'CoNNELL. You possibly misunderstood me. I wasn't attempt- 
ing to characterize what you people were doing, but it certainly 
seemed clear to me that whatever information you give to any legis- 
lative body, be it statistical information or whatever it is, is for the 
purpose of influencing legislation. Isn't that true ? 

Dr. DoRAN. That is a partial answer. It may not be a direct answer. 
We have been invited on numerous occasions to furnish groups with 
such iiiformation as we Dossess. 

Mr. O'CoNNELL. That is interesting, but that isn't the -answer to 
the question. 



CONCENTRATION OF ECONOMKJ POWER 2641 

Dr. DoRAN. Well, then, I am sorry ; I apologize. I may have to ask 
you to repeat that question. I want to answer it fully. 

Mr. O'CoNNELL. It was my understanding that, regardless of the 
type of information that your organization would furnish to a legis- 
lative body, the purpose of furnishing the information, or whatever 
other activity your institution engages in, is to influence the passage 
of legislation. I mean that is not intended to indicate that there is 
anything wrong in that. I am merely trying to understand what the 
purposes of your activities are. 

Dr. DoRAN. Well, information, I suppose, is always furnished for 
the purpose of influencing them, anything of this sort, but I think 
there is a great distinction between what you have just defined and 
what might be improperly influencing them. 

Mr. O'CoNNEu:.. I hadn't used the word "improper." 

Dr. DoRAN. I used it myself. 

Mr. O'CoNNELii. I see. 

One more question. You mentioned the various Government 
agencies that you or the Institute, I take it, has to deal with; you 
mentioned the Department of Commerce, the Alcohol Administration, 
and all that. Do you mean that those are agencies with which 
members of the industry have to deal or that the Institute as an 
organization has to deal with ? 

Dr. DoRAN. Well, take the members of the industry, they may 
have to deal individually with regulator}^ matters arising under the 
Food and Drugs Act, the Alcohol Tax Administration or the Fed- 
eral Alcohol Administration. Many individual members who are 
unable, as I said before, to take care of little and rather minor things 
to us but rather major to them — the Institute acts as a clearing house 
and endeavors to place their matters before the departments in the 
best way they could. 

Now, as to the Department of Commerce, that is not regulatory 
at all, but the industry through the Institute has always had contact 
with the Department of Commerce because one of our slow, up-hill 
fights has been to try to develop a legitimate export business in these 
products made from agricultural products, and in that activity the 
Department of Commerce has been most helpful, and that is always 
best done through a general organization rather than individuals 
pursuing the matter with the officers of the departments. That is 
not regulatory, however; it is entirelj'^ helpful. 

Mr. O'CoNNELL. What I was interested in, is there any Govern- 
ment agency that has any regulatory supervision or direction over 
the Institute with which you are connected? 

Dr. DoRAN. As such, no, sir. 

Mr. O'CoNNELL. There is no Government agency in existence which 
exercises any regulation over the affairs of your organization? 

Dr, DoRAN. No, sir; no more than any other trade association so 
far as I know. 

Mr. O'CoNNELL. That is right, but I wanted to correct an impres- 
sion that might have been created Iw what you said before about 
the number of Government agencies with which you have to deal. 

Dr. DoRAN. Which I said supervised us, and I am sorry for using 
that term. When I say us, I mean all the distillers. 



2642 CONCENTRATION OF ECONOMIC POWER 

Mr. O'CoNNELL. Would you also tell me for my information how 
many members there are in the Institute at the present time? 

Dr. DoRAN. I cannot tell you right now. The present officers can. 

Mr. O'CoNNELL. All right ; I will withdraw. 

Mr. Lynch. May I ask a question? In the industry, or at least 
as to the members of your Institute, is there existent a policy as to 
representation of the viewpoint of the industry before State legis- 
latures. Let me be more specific. Is there an agreement, an under- 
standing, or is it part of the by-laws that the industry viewpoint 
shall be put forth exclusively by the Institute ? 

Dr. DoKAN. No, sir. 

Mr. Lynch. The situation then is possible that whatever point of 
view the Institute might put forward, individual members might put 
forth differing viewpoints? 

Dr. DoRAN. It is always possible, but I think I can clear you up in 
that point. It had never been the policy of the Institute and I do not 
think it now is to act as an institute on any important pending matter 
without first calling a meeting and having the entire matter can- 
vassed, and have the membership give such instructions to the officers 
of the Institute as they saw fit. The Institute never independently 
assumed to do anything in that. 

Mr. Lynch. You would say that has been the practice with refer- 
ence to the appearance of the Institute or any representative of the 
institute before a Government body in reference to any specific 
proposal ? 

Dr. DoRAN. That is entirely correct, so far as I know, and naturally 
the Institute would act as an institute through its officers only for the 
membership of the Institute and at no time could it speak for any- 
body not a member of the Institute. 

Mr. Lynch. Has the Institute put forth any point of view or en- 
gaged in any activities or in any way appeared as spokesman with 
reierence to fair-trade-practice acts? 

Dr. DoRAN. None whatever, within my knowledge. 

Mr. Lynch. I refer to State legislation. 

Dr. DoRAN. No, sir; the Institute has never been engaged in any 
activities with respect to the passage of fair-trade acts. 

Mr. Lynch. Or with respect to acts concerning resale price mainte- 
nance ? 

Dr. DoRAN. Correct ; none whatever, up to the time that I resigned 
as an executive officer. ^ 

Mr. Lynch. Has the Institute adopted any policy in that respect? 

Dr. DoRAN. No, sir, 

Mr. Lynch, Or any expression of policy? 

Dr. DoRAN. No, sir ; the Institute never concerned itself with mat- 
ters of prices. 

Mr. Lynch. No matters affecting prices. Is that correct? 

Dr. DoRAN. Correct. 

INTEREST* in LIQUOR TAX LEGISLATION 

Mr. Lynch. What residue did that leave of interest so far as legis- 
lation is concerned ? Taxation ? 

Dr. DoRAN. Taxation and innumerable regulation activities. I sup- 
pose it is quite natural for anybody to think that the particular field 



CONCENTRATION OF ECONOMIC POWER 2643 

in which he works is more involved than any other field, but I think 
I am quite safe in saying to this committee that there is no activity, 
no industrial activity, upon which so many Government actions are 
directed or to which so many Government actions are directed as this 
industry. Just to repeat, it is the most highly regulated industry 
in the world. 

Mr. Lynch. The reason I inquired, at least my inquiry was 
prompted in part by what you said with reference to taxation, that 
the industry necessarily is represented in reference to taxation be- 
cause you feel that if the price as a consequence reaches a certain 
limit it may be an encouragement to bootlegging. I take it that that 
same consequence might result from undue advantage of resale price 
maintenance laws. 

Dr. DoRAN. I cannot quite follow you ; I cannot see the connection 
there. I would call your attention to the testimony of Colonel Bul- 
lington of Richmond, who is a very able State official, who testified 
before this committee yesterday, stating that bootlegging was still 
quite prevalent. I won't attempt to quote his words ; I think he said 
rampant; but it certainly is quite prevalent in the State of Vir- 
ginia. Should the Legislature of Virginia have before it a bill to 
increase the margin of the State monopoly or impose a direct State 
tax, I think the industry as a whole in the interest of both itself and 
tlie citizens of Virginia would be well warranted in calling attention 
to experience in other localities, and in the Federal Government run- 
ning back from the Civil War to this time. 

Mr. Lynch. I think perhaps you misunderstood my question. My 
question is simply this: Does the interest of the Institute in retail 
price of liquor, which, of course, would be affected by taxes, does 
that same interest carry over as to other circumstances affecting price, 
particularly fair-trade practice ? 

Dr. DoRAN. The Institute has no interest whatever in prices or fair- 
trade-practice acts. 

Mr. Buck. The point. Doctor, I think is this : So far as increasing 
bootlegging, as you say, is concerned, if 25 cents additional tax or 
50 cents additional tax per gallon would increase bootlegging, 
wouldn't the same 50 cents per gallon added as a result of fixed 
prices in the industrv have the same effect? 

Dr. DoRAN. Well,"l think that 

Mr. Buck (interposing). What difference does it make? 

Dr. DoRAN. The question almost answers itself, Mr. Buck. If the 
price to the consumer gets up to a point that the bootlegger has 
enough margin to operate on profitably you will have bootlegging. 

Mr. Buck. Does the Institute fight against consumer price in- 
crease fixed by the commercial transaction to the same extent that 
it fights against consumer price increase caused by tax? 

Dr. DoRAN. As I said, the Institute has never been concerned with 
retail price. 

Mr. Buck. So the Institute is not concerned with prices so long as 
they are held up or fixed by distributors. 

Dr. DoRAN, It is very difficult to answer a question like that. The 
Institute is concerned with a condition that would promote bootleg- 
ging. However, these fair-pricing laws are matters of operation 
within the States, enforceable within the States, and we feel that it 



2644 CONCENTRATION OF ECONOMIC POWER 

is a field entirely separate and apart from the general public policy 
of high taxation. 

Mr. Buck. Has the Institute ever taken any action toward the 
reduction of prices to the consumer? 

Dr. DoRAN. Very much. The Institute and all its membership for 
the first 2 years after repeal were doing everything possible to bring 
down the prices of liquor, realizing that there was some considerable 
public reaction to the then inevitable high prices of liquor. The pity 
of it was that repeal caught the United States with such a very short 
supply of liquor. 

Mr. Buck. What did you do in that respect? What were your 
specific actions? , 

Dr. DoRAN. We took no specific actions. It was a matter of indus- 
try discussion. I never talked to a man who at that time wasn't 
extremely anxious to bring his prices down just as rapidly as he could. 

Mr. Buck. Well, as a matter of fact, the industry had all the whisky 
there was, didn't it ? 

Dr. DoRAN. Yes ; but it wasn't enough. 

Mr. Buck. But, regardless of the amount, they had what whisky 
there was in the country, and if they had wanted to reduce the prices, 
or even were concerned over it, couldn't they have reduced it volun- 
tarily ? Couldn't they, as a matter of fact? 

Dr. DoRAN. They could have ; and with this disastrous result : The 
whisky that the industry had on hand on repeal was very largely old 
whisky. If that had been put on sale at bargain prices, there would 
have been absolutely no base stock left for blending and the country 
would have been thrown on a whisky that, in my judgment, wasn't fit 
to drink. It was absolutely necessary to maintain that stock and use it 
so far as possible for blending purposes until such time as stock there- 
after manufactured could be matured. Should that whisky have been 
sold for preprohibition prices, this country would have faced an era 
of bootlegging the like of which it never saw before. 

Mr. Buck. We produce 280,000,000 gallons in a year, and the con- 
sumption is only TO. 

Dr. DoRAN. But you must recall that repeal caught the country 
very ill prepared, both as to plant construction, and, of course, as to 
stock on hand. You cannot build a distillery overnight. 

Mr. Buck. Then it is your theory that the price of whisky was held 
up in order to protect the public ? 

Dr. DoRAN. No ; it wasn't held up — well, indire'ctly, yes ; and it did 
have that effect, and a very fortunate effect, but as soon as the stocks 
were adequate, prices reached their normal level. The stock on hand 
now is ample. 

^ Mr. Davis. Doctor, still those who had the price could pay that very 
high price for the old liquor then in existence, couldn't they ? 

Dr. DoRAN. In a very limited way. I may say. Judge Davis, that 
many of the companies did not place on the market, at any price, a 
large portion of their aged whisky stocks. It was not for sale. 

Mr. Davis. If it was so essential to retain that old liquor for future 
blending purposes, why didn't they keep all of it and use it for blend- 
ing instead of selling it to those who were willing to pay the price? 

Dr. DoRAN. That is a commercial policy that I couldn't answer. 
Some of them sold some of it. Some refused to sell any of it. 



CONCENTRATION OV ECONOMIC POWER 2645 

Mr. Davis. Doctor, you stated, as I understood you, that the mem- 
bers of the Distillers Institute paid as dues to the Institute one-tenth 
of 1 cent per gallon produced by them. 

Dr. DoRAN. That is correct, in the early days. 

Mr. Davis. What were the annual receipts and disbursements for 
the past 2 or 3 years of the Distillers Institute ? 

Dr. DoRAN. I have not that information. I don't doubt it is avail- 
able very readily for the committee. I just don't happen to have that, 
Judge. It is available. 

Mr. Davis. Doctor, since the twenty-first amendment, as we are all 
aware, contests have gone on in practically all of the States involv- 
ing the enactment of proposed bills permitting the sale or manufac- 
ture, or both, of hard liquor. That is a fact, isn't it ? 

Dr. Doran. Yes ; that is a fact. 

Mr. Davis. And by now most of the States have passed such laws, 
have they not ? . 

Dr. DoRAN. All but three. 

Mr. Davis. Did the Distillers Institute take any part in any of those 
contests ? 

Dr. DoRAN. Not as an Institute; no sir. 

Mr. Davis. Did any of the employees of the Institute visit any of 
these States in connection with those legislative contests ? 

Dr. DoRAN. No, sir; not so far as I know, to engage in any local 
activity. There might have been some conferences with committees, 
or something like that, but at'no time, so far as I know, did any officer*' 
of the Institute engage in any campaign activity, if that is what you 
mean. 

Mr. Davis. I didn't ask that. I asked whether they visited the scenes 
of action in the various States. 

Dr. DoRAN. I think they did, in order to ascertain what the situa- 
tion was. I think it a very natural thing to do. 

Mr. Davis. They visited these States generally when those contests 
were pending simply as observers ? 

Dr. DoRAN. That is correct. You must remember, Judge, that when 
a State suddenly changes its mind on this matter — whei^ there is a 
possibility or a probability of change, the matter of making com- 
mercial arrangements for moving of stocks into the State, so the 
State can bring about a le^al set-up, whether it is a monopoly sys- 
tem or license system, is quite important, because if a State legalizes 
the sale of liquor and legal liquor is not available, everybody sells 
"legal" liquor. 

Mr. Davis. You don't think you could learn of the passage of an 
act of that kind without having a man visit the State ? 

Dr. Doran. You can read the papers^ and, as a rule, you will bt 
correctly informed ; but it is not a bad idea, though, if you want to 
know something, to ask people who really know. 

Mr. Davis. Don't you generally write to the State officials and get a 
certified cojjy of such an act as soon as it passes ? 

Dr. DoRAN. Yes ; of course. 

Mr. Davis. You rely more on that than on newspaper publicity, 
don't you ? 

Dr. Doran. Of course, that is the law. But as you know. Judge, 
occasionally there are some people that are a little more acute ob- 



2646 CONCENTRATION OF ECONOMIC POWER 

servers of those conditions than others, and their judgment is, as a 
rule, worth quite a bit. 

Dr. LuBiN. Mr. Chairman, may I ask a question? Dr. Doran, as 
director of the Institute for a certain period of time, just what, 
specifically, were your duties? 

Dr. DoRAN. I was a general executive officer. It is pretty hard to 
define the detail of the activities of an executive officer, whether it is 
time consumed in dictating letters or indicating what activity ought 
to be performed, or answering long-distance telephone calls, or con- 
ferring with department officials on what is required, seeing that the 
office runs smoothly. I can assure you that my time was fully taken 
up. I never worked as hard at any job in my life. 

Dr. LuBiN. Of course, every executive has to be responsible for 
seeing that letters are answered, but I wonder if you would mind 
telling us just what the specific duties were; I am not inquiring as 
tc what you wrote in your letters, but what were you responsible for ? 

Dr. Doran. Weil, matters would come up from time to tune where 
I would have to form a judgment as to whether it was any business 
of the Institute to become active. It would be up to me to form 
rather prompt judgments on the proper scope of activity. Of course, 
matters could be referred to the board by telephone, if necessary, but 
the judging of the daily gxist as it came in as to whether it was 
proper Institute activity occupied a great deal of my time. 

Dr. LuBiN. Were you responsible, among your duties, for present- 
ing to the board a budget for the activities of the Institute? 

Dr. Doran. Yes. 

Dr. Ltjbin. Do you recall off-hand what the budget was in the first 
year of your service? 

Dr. Doran. No; as I indicated to Judge Davis, those records are 
available. I do not have them with me, and I wouldn't attempt to 
recall them. 

Dr. LuBiN. Would you mind telling us for the record what your 
salary was as director? 

Dr. Doran. $30,000 per annum. 

Dr. Ltjbin. I was very much interested in what you stated relative 
to the feeling on the part of the Institute that it was its duty to see 
to it that no unreasonable tax bills were passed which might so affect 
the price of liquor as to stimulate bootlegging. 

Apropos of the question asked you by Mr. Buck, at any time, in 
your opinion, did you feel that it was the function of the Institute 
to see it it that other types of legislation which might so increase 
prices should be opposed? 

Dr. Doran. Only with respect to what we knew as the anti-discrim- 
inatory legislation. That did not relate to tax. That related wholly 
to a public-policy question. 

Dr. LuBiN. Now, the question of price-fixing being legalized by fair 
trade practices is, of course, a matter of public policy. Did the insti- 
tute at any time feel that it might be well to oppose such legislation 
because such legislation might so increase prices as to increase boot- 
legging? 

Dr. Doran. No; the Institute did not concern itself with that type 
of legislation in the State legislatures, pro or con. 



CONCENTRATION OF ECONOMIC POWER 2647 

Dr. LuBiN. In other words, you were interested in prices only inso- 
far as they might be fixed by tax policies and discriminatory policies. 
Dr. DoRAN. We were interested in tax legislation for the reason 
that the Federal Government and State governments had accumu- 
lated a very vast experience since the Civil War on the effect of rates 
of taxation. We knew nothing about the effect on the price structure, 
even if we should have cared to concern ourselves with it, which we 
did not, of these fair-trade acts, and personally, I don't know any- 
thing now. 

Dr. LuBiN. Dr. Doran, in the course of your testimony you stated 
that you felt the Institute played an important part in revamping 
the rules and regulations relative to the control of the industry. I 
think the words you used were that you felt that the regulation of 
the industry should be adapted to modern industrial practices. Can 
you give those of us who know nothing about the regulations that 
are imposed some idea as to just what sort of changes the Institute 
felt were necessary ? 

Dr. Doran. The Alcohol Tax Unit of the Treasury Department 
indicated that they proposed to propose to Congress a revision of 
some of the statutes governing liquor which they felt were inefficient, 
added to their administrative costs, and had no particular relation 
to the proper supervision of a modern industrial alcohol- plant or 
distillery. We indicated that we would be very glad to give them 
the benefit of our best view as to how certain statutes, which as I 
say were drawn back in the*' seventies, could be revised in line with 
modern practice, for their benefit even more than ours. 

Mr. O'CoNNELL. Dr. Doran, referring again to the question of 
taxes, I take it that it is clear that from the point of view of the 
industry and the Institute, that any tax legislation. Federal or State, 
which would be in the nature of an increase of existing taxes, would 
be a law which would tend to encourage bootlegging and at least 
incidentally reduce or increase the price of whisky, and in that re- 
spect be contrary to the best interests of the Institute and the indus- 
try. Is that a fair statement? 

Dr. Doran. Not entirely. We have always felt — at least I did — 
that there was an optimum point at which the States and the Federal 
Government could collect the maximum of revenue with a minimum 
of trouble. It just so happens that most of the States have enacted a 
tax of $1 per gallon which, added to the Federal tax of $2.25 per 
gallon, makes $3.25. We have felt that any system of taxation where 
a radical increase beyond that is proposed would cause difficulty. 
The Federal statistics on changes of rates of tax for the lat 75 years 
are very eloquent on that point. We also felt that if the States levied 
as nearly as possible a uniform rate it would prevent a great deal of 
cross-border trouble which would aggravate the States themselves. 
In other words, a rate of 80 cents here and $1.20 there means that 
the border will have difficulty, even though $1 might be perfectly 
all right, or 80 cents. Our position has always been that the optimum 
rate is a proper rate and as nearly a uniform rate as possible is in 
the interest of all. 

Mr. O'CoNNELL. Would it be fair to say from wha£ you have said 
that you feel that an optimum rate would be the present Federal tax 
plus $1 tax by each State ? 



2648 CONCENTRATION OF ECONOMIC POWER 

Dr. DoRAN. Well, I believe experience of the last 5 years has shown 
that that is working out in a quite satisfactory manner. 

Mr. O'CoNNELL. Then would it also be fair to say 

Dr. DoRAN (interposing). Some people think it ought to be higher, 
some people think it ought to be lower, but it is my experience, my 
judgment, that the State officials and the Federal officials are operat- 
ing very satisfactorily on that approximate rate. 

Mr. O'CoNNELL. Would it be fair to say that were the States, any 
State, or the Federal Government to propose legislation substantially 
increasing the present rates of tax on liquor, it would be the feeling 
of the industry that it would be their duty to oppose such legislation? 

Dr. DoRAN. It would be the duty of the industry not to oppose it, 
but to inform the proper authorities as to what effect increases have 
practically had on the Federal revenues for the last 75 years, a matter 
merely of statistics. 

Mr. O'CoNNELL. I think if I reframed my question we would 
probably find that we are not very far apart in the effect of any 
such proposal. 

Mr. Buck. Doctor, did you mean to say that a great majority of 
States now have $1 tax a gallon ? 

Dr. DoRAN. Yes. That seems to be quite the prevalent rate. There 
is a little variation. There are one or two States out of line. 

Mr. Buck. Which States? 

Dr. DoRAN. New York, for example, has a dollar. 

Mr. Buck. What other States? 

Dr. DoRAN. Ohio has the equivalent of a dollar; Wisconsin has a 
dollar ; Minnesota has a dollar ; Kentucky has a dollar and four cents. 

Mr. Buck. That is only five or six. 

Dr. DoRAN. Well, if I had the list I could read them off to you, 
Mr. Buck. I am not a statistician. 

" Mr. Buck. The other point I observed in your statement is that the 
statistics speak eloquently to the point that the optimum of tax has 
been reached. Did you have that opinion at the time of the last 
Congress when they added 25 cents ? 

Dr. DoRAN. I wouldn't want you to think that I answered it exactly 
in that fashion. The statistics show that each time since the Civil War 
that the Federal Government has made an increase of tax, has pro- 
vided for an increase of tax, the revenues have dropped off ; conversely, 
each time the tax has been lowered the revenues have increased. It is 
a matter of statistics. 

Mr. Buck. Let's take that up for a moment. I mean that is news to 
me and I would like to have a reference to those statistics. 

Dr. DoRAN. I'll be glad to give them to you because they are culled 
from the reports of the Treasury Department. 

Mr. Buck. How many times has the tax on liquor been changed 
smce the Civil War? 

Dr. DoRAN. Perhaps 30— at least 15 times. 

Mr. Buck. What was the tax in 1917? 

Dr. DoRA^. In 1917? It seems to me it was $2.20, and then I believe 
they put on a wartime prohibition tax of $6.40, but of course that 
was not what they would call a going normal tax; it was a very 
unusual condition. 

Mr. Buck. Let's take the basic tax of 1914 

Dr. DoRAN. That was $1.10. 



CONCENTRATION OF ECONOMIC POWER 2649 

Mr. Buck. $1.10 a gallon? 

Dr. DoRAN. That is right. 

Mr. Buck. What other fundamental changes have been made in the 
rates of Federal tax on whisky? 

Dr. DoRAN. The tax was $2 in the Civil War, dropped to 50 cents, 
went up to 70 cents. 

Mr. Buck. Never mind ; begin with 1916 or 1914. 

Dr. DoRAN. 1914, $1.10. 

Mr. Buck. All right; now^ it is w^hat? 

Dr. DoRAN. Now it is $2.25. 

Mr. Buck. Do you mean to tell me that we got more revenue in 1914 
from tax on liquor than we are getting now ? 

Dr. DoRAN. 1914? That I can't say, Mr. Buck. I do not think we 
did in 1914. 

Mr. Buck. Wouldn't that contradict your opinion ? 

Dr. DoRAN. Not at all. If this tax wasn't as high as it was, we 
would get more revenue right now, because consumption per capita is 
very substantially less than 1914. 

Mr. Buck. Wait a minute. There have been two fundamental 
changes in Federal taxes since '14, we will say. In '14 the tax was 
$1.10 a gallon. Is that right? 

Dr. DoRAN. That is right. 

Mr. Buck. All right. Then it was stepped up to $2 when? 

Dr. DoRAN. I think it went up to $2.20 about the time we got in the 
war. I don't want to quote exact dates. 

Mr. Buck. That was on during prohibition period ? 

Dr. DoRAN. No; 1917. The Food Control Act was operating and 
distilling ceased, and the Congress enacted the War Revenue Act and 
raised the tax, it seems to me, to $3.20 or $6.40, some very high rate, 
but a war tax. 

Mr. Buck. Let's take out the war-tax period and take normal- 
period taxes. It was $1.10 in 1914; it was raised to $2.20. . 

Dr. DoRAN. That was, you might say, a measure taken-^we were 
not actually in the war, as I recall it, but the tariff had dropped off 
alarmingly, naturally, due to loss of trade, and the Congress raised 
the internal rate on spirits. But I consider that period wholly ab- 
normal and not to be taken as indicating what the experience would 
be over a considerable period of time, under reasonably normal con- 
ditions. 

Mr. Buck. All right ; I am trying to understand because I am inter- 
escted in that. In 1914 the tax was $1.10. The Federal tax now is 
$2.25, is it? 

Dr. DoRAN. That is right. 

Mr. Buck. As a matter of fact, don't we receive more revenue now 
than we did in 1910? 

Dr. DoRAN, I think we do, and I think we ought to receive 30 per- 
cent more than we do. I think you will find out, Mr. Buck, if you 
will consult the records of the Alcohol Tax Unit, that the revenue 
agents right today are seizing a far greater number of distilleries, 
illicit distilleries, than they did in 1914, all of which revenues should 
have gone to the Federal Government. 

Mr. Buck. I just want to say to you personally, I think that is a 
popular or catchy argument. 

Dr. DoRAN. It. isn't; it is a fact, and the figures show it. 



2650 CONCENTRATION OF ECONOMIC POWER 

Mr. Buck. That it appeals to the public, but has no merit to sta- 
tistics. 

Dr. DoRAN. I wouldn't say what the merit is; I will say that the 
statistics show it. 

Mr. O'CoNNELL. Dr. Doran 

Mr. Buck. Wait one minute, if you please, sir. The tax in 1914 
was $1.10 a gallon. The tax today is $2.25 per gallon. Now, you 
will admit that we are consuming as much whisky now as we were in 
1914. 

Dr. DoRAN. Not legal whisky, per capita, no, sir. We are not con- 
suming per capita the amount of whisky legally, tax-paid, we were 
in 1914. 
. Mr. Buck. Let's keep the per capita out. 

Dr. Doran. Well, how else can you figure this? The country has 
grown from 100,000,000 to 130,000,000. 

Mr. Buck. Keep the per capita out for the moment. In 1914 we 
were consuming approximately sixty-odd million gallons a year. 

Dr. DoRAN. No, no ; about 135,000,000. There might have been that 
much of straight whisky withdrawn for tax payment, but there was a 
great deal of blended whisky sold, and the total consumption in 1914 
approximated 135,000,000 gallons. Last year, as I recall the figure, 
it hardly reached 110,000,000 gallons; so when I say that the country 
is not consuming as much per capita as it did in 1914, the figures are 
very, very plain. 

Mr. Buck. I might say there, too, that the price of whisky to the 
consumer in 1914 was about $3 a gallon, wasn't it? 

Dr. DoRAN. No; it was more man that. Many other things were 
cheaper in 1914. Whisky wasn't the only one. 

Mr. Buck. We are talking about consumer consumption and costs, 
though. Do. you think the consumer would use more whisky now 
if the price to him was down to where it was in 1914? 

Dr. DoRAN. No; I don't think it would make any difference; but 
what I was trying to point out, Mr. Buck, is this : When the Treasury 
Department seizes a very ^substantially greater number of illicit dis- 
tilleries in 1938 than they did in 1914, I don't say it argues that we 
are drinking actually less per capita, but I do say it is very conclu- 
sive on the point that we are drinking less legally tax-paid liquor 
per capita. 

Mr. Buck. Well, you don't measure consumption by the number of 
stiUs confiscated, do you? You measure that by withdrawals from 
the warehouse. 

Dr. DoRAN. The fact that 12,000 illicit distilleries were seized last 
year indicates that at least some liquor was manufactured and sold 
from those stills. 

Mr. Buck. That might go to the point that we now have a much 
more efficient Treasury service that catches distilleries, but I don't 
see that that has anything to do with the amount of whisky consumed. 

Dr. DoRAN. I think it has everything to do with it; and further- 
more, the Treasury has always been efficient. 

Mr. Ferguson. Don't you think that the high price of wbisky has 
a lot to do with bootlegging? ^ 

Dr. Doran. Yes; I think that is quite true, Commissioner. 

Mr. Buck. That is all. 



CONCENTRATION OF ECONOMIC POWER 2651 

Dr. DoRAN. Thank you. 

Acting Chairman Williams. Call your next witness. 

Mr. Buck. Dr. Wesley Sturges. 

Acting Chairman Williams. Do you solemnly swear, in the testi- 
mony you are about to give, to tell the truth, the whole truth, and 
nothing but the truth, so help you God ? 

Dr. kSTURGES. I do. 

TESTIMONY OP DE. WESLEY A. STURGES, EXECUTIVE DIRECTOR, 
DISTILLED SPIRITS INSTITUTE, INC., WASHINGTON, D. C. 

Mr. Buck. Doctor, state your name and business, please, sir. 

Dr. Sturges. My name is Wesley Sturges, executive director of the 
Distilled Spirits Institute. 

Mr. Buck. How long have you been executive director of the Insti- 
tute? 

Dr. Sturges. Since October 22, 1938. 

Mr. Buck. What was your business before becoming connected 
with the Institute? 

Dr. Sturges. Professor of law. School of Law, Yale University. 

Mr. Buck. Yale University ? 

Dr. Sturges. Yes, sir. 1 am still, 

receipts and disbursements of distilled spirits intttute 

Mr. Buck. Doctor, one point the committee asked Dr. Doran, and 
he wasn't able to give them the information. Will you give the com- 
mittee the total receipts of the institute for each year from 1934 to 
1938? 

Dr. Sturges. I will : 1934, $206,153.46 ; 1935, $142,556.15 ; 1936, $225,- 
137.87 ; 1937, $349,330.85 ; 1938, $323,440.27. 

Mr. Brow^n.^ What was 1934 again? 

Dr. Sturges. $206,153.46. 

Mr. Buck. Do you have the total. Doctor? 

Mr. Sturges. The total I have here is $1,246,618.60. 

Mr. Buck. What have been its expenditures during that period? 
Give it by years ; it will be all right if you have it set up that way. 

Dr. Sturges. Statement of disbursements: Total, 1934, $111,832.24; 
1935, $211,357.15; 1936, $209,557.50; 1937, $395,124.59; 1938, 
$308,319.84. 

Mr. Buck. That constitutes the official expenditures of the Institute 
in their entirety in those periods ? 

Mr. Sturges. I cannot state of my own knowledge except for 1939, 
but I have reason to believe this record is correct. 

Mr. Brown. Have you the total expenditures there ? 

Dr. Sturges. Mr. Brown, I do not have a total of them. 
■ Mr. Buck. How large a staff does the Institute now maintain ? 

Dr. Sturges. The personnel now consists of 21 persons. 

Mr. Buck. What is the cost of the personnel per year ? 

Dr. Sturges. As I have it set up here, do you wish it for each year ? 

Mr. Buck. Yes ; if you have it. 

^ Mr. J. P. Brown, attorney, Federal Alcohol Administration. 



2652 CONCENTRATION OF ECONOMIC POWER 

Dr. Sturges. Under the designation of "Salary and expense allow- 
ance of tKe Pr4sident," Mr. William Forbes Morgan, in 1937 only, 
$18,055.56. For all 5 years, "Salaries of executives," 1934, $51,263.37. 

Mr. Buck. How many executives ? 

Dr. Sturges. t do not know of my own personal knowledge in 1934 ; 

1935, $50,000; 1936, $50,000; 1937, $67,044.98; 1938, $73,269.20. 

The next desi^ation is "Salaries of clerical and other employees" : 
1934, $13,463.50; 1935, $35,918.33; 1936, $37,321.43; 1937, $72,279.42; 
and in 1938, $49,862.14. 

Mr. Buck. Would that take care of all the salary expenses, those 
figures that you have read ? 

Dr. Sturges. I, believe it does, 

Mr. Buck. What other expenses would the Institute have in oper- 
ating^ 

Dr. Sturges. I shall be very glad to read them. Do you wish them 
for each year? 

Mr. Buck. Yes ; if you can give them. 

Dr. Sturges. "Office expenses": The first designation is "Rent": 

1934, $4,160; 1935, $6,000; 1936, $6,396^ 1937, $15,025.24; 1938, $8,658. 
Under the second designation, "Office alterations," there is an entry 

for only the year 1937, $3,065.44. 

Under the next designation, "Office equipment purchased": 1934, 
$4,099.40; 1935, $1,082.25 ; 1936, $747.10 ; 1937, $9,555.59 ; 1938, $264.76. 

Under the next designation, "Telephone and telegraph": 1934, 
$5,185.34; 1935, 5;59,428.69; 1936, $6,098.67; 1937, $9,160.78; 1938, $3,- 
330.38. 

The next designation m "Postage": 1934, $1,759.50; 1935, $3,997.58; 

1936, $2,949.56 ; 1937, $5,217.13 ; 1938, $5,592.30. 

The next designation, "Printing, stationery, and supplies": 1934, 
$2,431.86; 1935, $3,605.47; 1936, $2,192.04; 1937, $6,663.56; 1938, $10,- 
332.16. 

The next designation, "Moving expenses. New York to Washing- 
ton" : An entry only for the year 1937, and the amount, $2,146.66. 

The next designation, "Miscellaneous" : For the year 1934, $1,166.44 ; 

1935, $1,338.30; 1936, $2,348.60; 1937, $3,652.66; 1938, $2,933.39. 
The next designation, "Traveling expenses" ; a subdivision of that, 

"Directors' and committee members" : There is no sum entered for the 
year 1934; 19.35, $1,807.28; 1936, $3,399.81; 1937, $6,237.71; 1938, 
$3,495.50. "Other traveling expenses"; 1934, $6,694.81; 1935, $12,- 
221.71; 1936, $10,494.03; 1937, $23,736.15; 1938, $19,881. 

Under the designation "General expenses," first subdivision, "Insur- 
ance": 1934, $43; no entry for 1935; 1936, $96.29; 1937, $195.10; 1938, 
$454.85. ' ' 

The next designation, "Taxes": 1934, $43.40; 1935, $186.77; 1936, 
$859.08; 1937, $3,174.14. 

Mr. Buck. What is that item. Doctor — ^"insurance" ? 

Dr. Sturges. "Taxes": 1938, $4,654.52. 

Mr. Buck. Does the Institute pay Federal taxes? What kind of 
taxes would that be? 

Dr. Sturges. I have had no personal experience. 

Mr. Howard Jones (counsel, Distilled Spirits Institute). Social 
security, principally. 

Dr. Sturges. The next entry, "Surety bond premiums": The first 
year is 1936, the amount, $250; 1937, $326.54. 



CONCENTRATION OF ECONOMIC POWER 2653 

The next designation, "Expenses of meetings" : 1934, $343.75 ; 1935, 
$888.87; 1936, $683.48; 1937, $1,686.93; 1938, $1,243.87. 

The next designation is "Accounting and organization survey fees" : 
The first entrance is for the year 1935, the amount, $775 ; 1936, $1,750 ; 

1937, $1,889.05; 1938, $1,650. 

The next designation, "Legislative" 

Mr. DAyis (interposing). Before you leave that, what did that 
S3rvice cover? 

Dr. Sturges. Of my own knowledge I know of only one thing, 
Judge, and that is of the auditing charge of our books at the close of 
the fiscal year. That came to my attention, and I cannot break that 
down to tell you what the exact amount of "it was or if we have paid 
the bill yet. 

The next designation is "Legislative reporting service": For the 
year 1934, $1,435; 1935, $19,239.31; 1936, $6,430.01; 1937, $6,411.06; 

1938, $3,344.75. 

The next general designation is "Other expenses," and the first 
subdivision under that is "Special investigations": 1934, $13,378.98; 
1935, $12,948.20; 1936, $8,333.67. That is the last year for any entry 
under that designation. 

The next designation, "Institute advertising": Entry for the first 
time in the year 1935, $30,840.56. There is no amount for 1936 ; for 
1937, $2,819.26; for 1938, $625. 

The next designation, "Advertising and exhibitions": One entry 
for the year 1936, $33,751.22. 

Mr. Buck. I didn't get that. 

Dr. Stukges. It is under the designation, Mr. Buck, of "Advertising 
and exhibitions." 

Mr. Buck. "What is the sum? 

Dr. Sturges. $33,751.22 for the year 1936, only for that year. 

"Legal fees and expenses," the next designation : For the year 1934 
$5,188.89; 1935, $6,042.80; 1936, $12,544.30; 1937, $71,379.78; 1938, 
$24,691.07. 

"Legislative committee expenses" is the next designation: For 1 
year only, 1936 $6,835.20. 

The next designation, "Clipping service" : The first entry is for the 
year 1936, the amount, $6,679; 1937, $6,198.84; 1938, $283.20. 

"Organization expenses" is the next entry : For the year 1935 only 
and the amount, $15,000. 

The next designation, "Education and publicity" : First entry for 
the year 1936 $18,239.76 ; 1937, $57,045.01 ; 1938, $56,151.71. 

"Membership and dues," the next designation: An entry for the 
year 1934 only, $1,175. 

"Books and publications" is the next entry, and the first entry is 
for the year 1936, the amount $1,236.46; 1937, $2,158.02; 1938, 
$1,221.80. ' 

The next designation, "Lease of New York office space less receipts 
from sublease" : The entry appears for the year 193^ only the amount 
$7,421.87. 

The next designation, "Expenses of miniature distillery exhibit," 
the entry for the year 1938 only, and the amount $3,108.38. 

The next designation, "Technical consultant services," the first en- 
try for the year 1938, the amount $5,000. 

124491— S?— PC. 6 16 



2654 CONCENTRATION OF ECONOMIC POWER 

The next entry is a gift to Mrs. Sarah Morgan and the entry is for 
the year 1938, the amount is $20,000. 

The next and final entry is "Settlement of»a salary claim 1938 
only," and the amount, $850. 

Mr. Buck. Does that statement you have read balance with the 
receipts ? 

Dr. Stueges. Approximately, Mr. Buck. That is, the expendi- 
tures for 1938 were- $308,319 in round figures, and the reported in- 
come for 1938 was $323,000, in round numbers. 

Mr. Buck. I wonder if you could leave that to be filed in the 
record. 

Dr. Sturges. May I have permission to file another copy? I am 
not sure I have an extra one. 

Mr. Buck. It would save anyone from having to read all this, if 
they could have that set up as you have it. 

Dr. Sturges. I shall be very pleased to supply you with a copy. 

Mr. Buck, i will ask the committee if it may be submitted as an 
exhibit to be printed. 

Acting Chairman Williams. It may be received. 

(The tabulation referred to was marked "Exhibit No. 429" and is 
included in the appendix on p. 2718.) 

Mr. Buck. Doctor, you are new in the whisky business, so to 
speak ? 

Dr. Sturges. Exceedingly so. 

Mr. Buck. You had no particular connection with the business 
until you got into the Institute and were appointed director in 1938 ? 

Dr. Sturges. That is correct. 

Mr. Buck. So you wouldn't know of your own knowledge a great 
deal about what happened in the Institute before that time ? 

Dr. Sturges. That is true. 

Mr. Buck. These figures that you have presented here have been 
made up from the books and records of the Institute as you found 
them ? 

Dr. Sturges. That is true. 

Mr. Buck. And you furnish them on that basis? 

Dr. Sturges. That is correct. 

Mr. Buck. Now, what employees do you presently have in the In- 
stitute? Wliat are their positions, their duties; how do they 
function ? 

Dr. Sturges. We have what is entitled a public relations director, 
secretary and general counsel, a director of research, statistician, four 
field men, an organizer, attorney. 

Mr. Buck. How many does that make? 

Dr. Sturges. Twenty-one. 

Mr. Buck. Twenty-one all told? 

Dr. Sturges. That is correct. 

Mr. Buck. How many members do you have* 

Dr. Sturges. Of the Institute? 

Mr. Buck. Yes, sir. 

Dr. Sturges. The members of the Institute are divided into two 
classes, the so-called distiller group and the associate group, 

Mr. Buck. How many distillers? 

Dr. Sturges. The distillers are 35. 

Mr. Buck. Thirty -five distiller members? 

Dr Stttrot5S. That is correct,. 



CONCENTRATION OF ECONOMIC POWER , 2655 

Mr. Buck. Wliat is the present method of assessing dues ? 

Dr. Stdkges. Just at the moment the basis of figuring the dues is 
on the stripped sales, sales of the several members, stripped of any 
taxes, and the rate per thousand dollars of such sales is $2. 

Mr. Buck. You get $2 per thousand for all sales by distilleries ? 

Dr. Sturges. That is the temporary present set-up. 

Mr. Buck. And was that in effect last year when your revenue 
was $223,440? 

Dr. Sturges. I believe that the system changed during the last 
year, if you mean 1938, from an assessment of some rate which I do 
not know on a production basis, to the sales basis. I think the system 
of assessment was changed during the year 1938 from a production 
basis to the strip-sales basis. 

MEMBERSHIP AND THEIR CONTRIBUTIONS TO THE INSTITUTE 

Mr. Buck. Is the number of members that you have mentioned, 
32, based upon corporate units or distilleries ? 

Dr. Sturges. Those are individual units, either corporate or other- 
wise. 

. Mr. Buck. The point I am getting at is this. Take for illustration 
the Seagram Co., that is one unit ? 

Dr. Sturges. Seagram is counted but once. 

Mr. Buck. One time? 

Dr. Sturges. That is correct. 

Mr. Buck. And the same is true of National ? 

Dr. Sturges. That is right. 

Mr. Buck; And so on ? 

Dr. Sturges. Yes. 

Mr. Buck. Now, Doctor, will you explain to the committee your 
duties as director of the Institute under its present policies? 

Mr. Davis. Mr. Buck, before you leave that, Dr. Sturges referred 
to associate members. How many associate members are there and 
who are they with respect to the industry ? 

Dr. Sturges. There are 15 in number, and most of those are ware- 
housing people. 

Mr. Buck. Would you file for the record a list of all your members ? 

Dr. Sturges. I would be very happy to.^ 

Mr. Buck. You might read the list of distilleries for the benefit 
of the committee here. 

Dr. Sturges. You want just the names of the organizations, not 
the executive officers? 

Mr. Buck. Yes. 

Dr. Stuges. The Baltimore Pure Rye Distilling Co., Brown-For- 
man Distillery Co., A. & G. Caldwell, Inc., California Mission 
Vintage Co., B. Cribari & Sons, Inc., Cucamonga Valley Wine Co., 
Felton & Sons, Inc., The Fleischman Distilling Corp., Frankfort Dis- 
tilleries, Inc., Glenmore Distilleries Co., The Golden-Rossell Co., 
Hood River Distillers, Inc., Hunter Baltimore Rye Distillery, Inc., 
Laird & Co., The Siegfried Loewenthal Co., Lord Stirling Dis- 
tilleries, Inc., L. M. Martini Grape Products, Merchants Distilling 

/^^- .^^^I^^ submitted a list, dated July 1, 1939. of the active and associate members 
of Distilled Spirits Institute, Inc. It was marked "Exhibit No. 1172" and is included in 
the appendix on p. 2748. 



2656 CONCENTRATION OF ECONOMIC POWER 

Corp., H. McKenna, Inc., National Distillers Products Corp., Old 
Meclford Rum Distillery, Inc., Old Mountaineer Distilling Co., Padre 
Vineyard Co., Pennsylvania Distilling Co., Ina, Sa'n Gabriel Vine- 
yard Co., Schenley Products Co., Seagram Distillers Corp., Speas 
Manufacturing Co., Virginia Distillery Corp., Hiram Walker-Good- 
erham & Worts, Ltd., The Frank L. Wight Distilling Co., Wilson Dis- 
tilling Co., Inc. 

Mr. Buck. How many of those are whisky distilleries ? 

Dr. Sturges. Seventeen, as I count them. 

Mr. Buck. You have 17 members who are whisky distillers out 
of the total of 32? 

Dr. Sturges. Yes. 

Mr. Buck. Now as Dr. Doran testified, the Institute is divided in 
sections, that is whisky section, brandy section, and so forth. Is 
that the present organization? 

Dr. Stueges. That is true today, for purposes of the board of di- 
rectors. 

Mr. Buck. You have 17 distilleries out of a total, according to our 
figures, of 97 in operation. Wlio are the members of your board of 
directors, and what whisky distillery companies do they represent ? 

Dr. Sturges. Whisky distilleries, only? 

Mr. Buck. Yes, sir. 

Dr. Sturges. Do you wish me to read them? 

Mr. Buck. Yes; the individual members and the whisky distillers 
they represent. 

Dr. Sturges. The president is Mr. Dwsley Brown, president of 
the Brown-Foreman Distillery Co. 

Mr. Davis. It would be sufficient to just print those in the record. 

Mr. Buck. It is satisfactory if you have the whisky separated 
from the general. I am afraid that isn't the set-up. I notice from 
his papers he has all distilleries and we are concerned only with 
whiskies. It won't take a moment, I guess. 

Dr. Sturges. Mr. James F. Brownlee, president of Frankfort Dis- 
tilleries, Inc. ; Mr. Lester E. Jacobi, president of the Schenley Distil- 
lers Corporation; Mr. M. J. MacNamara, vice president, National 
Distillers Products Corporation. I don't know whether. Merchants 
Distilling is whisky or not. 

Mr. Buck. Yes; it is. 

Dr. Sturges. Frank Mayr, Jr., Merchants Distilling Corporation; 
Mr. F. R. Schwengel, vice president, Seagram Distillers Corporation ; 
Mr. I. Strouse, vice president, the Baltimore Pure Rye Distilling 
Co. ; myself 

Mr. Buck (interposing). You are not a distiller. 

Dr. Sturges. I am a member of the board of directors. 

Mr. Buck. 1 mean just those who are distillers. 

Dr. Sturges. Mr. F. B. Thompson, president, Glenmore Distilleries 
Co. ; Mr. Howard R. Walton, vice president, Hiram Walker-Gooder- 
ham & Worts, Ltd.; M. R. Weiner, president, Pennsylvania Dis- 
tilling Co. ; Mr. Frank L. Wight, vice president, the Frank L. Wight 
Distilling Co. 

Mr. BuctK. Is that ar subsidiary of one of the Big Four? 

Dr. Sturges. No. 



CONCENTRATION OF ECONOMIC POWER 2657 

Mr. Buck. What percent, or what part, of the last year's income, 
$323,440, was paid by Schenley, National, Walker, and Seagram's? 

Dr. SnjRGES. I caii't say of my own personal knowledge, but my 
estimate is between two-thirds and three-quarters of the total income. 

Mr. Buck. Then the four corporations which I have mentioned, 
whisky-distilling corporations, paid between two-thirds and three- 
fourths of the total income of the institute. 

DUTIES OF DIRECTOR AND OTHER OFFICERS 

Mr. Buck. What are your specific duties as director. Doctor, under 
the policy of the organization? 

Dr. Stutjgds. My duties are determined by the articles of incor- 
poration of the Institute and by my contract with the Distilled Spirits 
Institute, and elaborating upon that, it will be the policy of the 
Institute to carry on its business services that it has performed here- 
tofore, and it will also undertake to carry out regulation of the 
industry according to the provisions of the articles of incorpora- 
tion, namely, to induce law enforcement, both Federal and State, 
with respect to itself iind with respect to the industry generally so 
far as seems feasible. 

Mr. Buck. Well, is that as specific as you can make it to the com- 
mittee ? 

Dr. Sturges. No ; it is not. 

Mr. Buck. Would you care to make it more specific ? I take it the 
committee was interested in that. 

Dr. Sturges. So far as what has gone on before is concerned, I 
can only speak from information. One line of activity is the rendi- 
tion of services to the members of the Institute and on occasion, 
like services are rendered to non-members. Those services are rather 
varied. In one particular it is the supplying of information with 
respect to legislation that is pending, with respect to business condi- 
tions in the industry, in which there may be a general interest. So 
far as public relations are concerned, we publish what is kiiown as a 
Distillers Bulletin. That publication is very largely comparable to a 
literary digest of expressions of views of editors of things that are 
deemed to be, by the public relations director, of current interest to 
our members. So far as our counsel is concerned, he is engaged in 
interpretation of the laws for us, for the Institute, in order that the 
Institute may advise or help out one or more of our members. 

In that connection possibly I may give you an illustration. A 
small distiller on the Pacific coast wished to change the practice that 
has heretofore existed with respect to bottling — and I do not under- 
stand the technicalities of bottling — which under the existing regula- 
tions was not permissible. We had two or three similar requests. We 
took that request to the head of the department of the Government 
who has charge. _ I believe in this instance it was Mr. Berkshire of the 
Alcohol Tax Unit. The matter was laid before him for his consider- 
ation as to wtiether an amendment of the regulations would be per- 
mitted. It was taken under advisement by the deputy. After about 
3 or 4 weeks, as I recall, the matter was passed upon. The request for 
the change was granted and the regulations were amended and sent 
out. 



2658 CONCENTRATION OF ECONOMIC POWER 

A very, technical field of regulations covered in the Ganger's Man- 
ual — which I have not yet had opportunity to read — relates to the 
conduct by the distiller of his business in his physical plant. These 
regulations and the amendments that would seem to be desirable to 
the existing manual have been a matter of conference between mem- 
bers of the Alcohol Tax Unit and other proper authorities; and I 
understand that such a manual in its amended form is soon to be 
published, if it has not already been published. I instance those as 
two illustrations of the type of service that is offered of a more or 
less helpful nature to particular individuals, possibly to groups of 
individuals who are our members. 

So far as the conception which I have of what the function of 
the Institute shall be under my contract with the Institute and carry- 
ing out the articles of incorporation of the Institute, I am very much 
concerned with two considerations: The first is the matter of the 
competitive practices within the distilling industry itself. I share 
the conviction of some of the witnesses who have already appeared 
here that the industry is exceedingly competitive and that it is going 
to continue to be exceedingly competitive; that it is going to continue 
to be exceedingly competitive notwithstanding the fact of the exist- 
ence of the four companies that have been recurringly referred to. 
The competition is so excessive in my opinion that at times it leads 
to unfortunate business practices, and I measure the unfortunate 
aspect of those practices by the impact upon the human beings that 
are involved, particularly the salesmen in the field. In carrying 
out that policy the Institute has already closed what I presume to 
call, for lack of a better name, a code, with the administrative 
authority, the Liquor Control Authority of the State of Ohio. That 
code manifests the conclusions of what the administrator in the 
State of Ohio thought should be done to insure compliance with the 
local laws of the State of Ohio, regulating the sale of alcoholic 
beverages, and what should be done as a matter of sound business 
practice also in Ohio. 

That code, after conference with the administrator, has been pre- 
sented to the board of directors and has been in effect now nearly 
a month. 

Mr. Buck. Do you assist the State of Ohio in the promulgation 
of it in the formation of it, and so forth? 

Dr. Sturges. Yes. 

Mr. Buck. You do that on behalf of 17 distilleries of the United 
States? 

Dr. Stubges. No. I do it on behalf of the members of the Distilled 
Spirits Institute for whom only am I authorized to act. 

Mr. Buck. They are 17. 

Dr. Sturges. That is true, and any other distillers and their repre- 
'sentatives, not members, are of course entitled to share in the program. 

Mr. Buck. Suppose they disagree with your philosophy in^these 
situations ? 

Dr. Sturges. It isn't a matter of philosophy, Mr. Buck. It is a 
matter of practice which the local authority says for his particular 
State ought to be in effect, and the practical situation is this, as I 
see It with my experience limited as it is : That these details of com- 



CONCENTRATION OF ECONOMIC POWER 2659 

petitive practice run out into human activity so remotely and in such 
lineness that if the political state undertakes to enforce compliance, 
the enforcement program will be largely a sampling program, and 
largely a matter of enforcement of particular instances from time to 
time; whereas if the industry which is being regulated, the indi- 
viduals who are being regulated, are also assuming a correlative 
responsibility, I think the discipline within the industry is very 
helpful to the administrator. And these terms of the code, if I may 
call it that again, are such as are laid down by the administrator of 
Ohio. 

Mr. Buck. My point is simply this : Here you are in Ohio, we will 
say, consulting with the State authorities there in respect to the formu- 
lation of a certain philosophy in the law in the distribution, and so 
forth, of whisky. With all your resources and whatever they may be, 
you represent only 17 out of a total of 97 distilleries. Who represents 
the other 80? 

Dr. Stttrges. The administrator. 

Mr. Buck. The administrator of the State of Ohio ? 

Dr. Sturges. That is true. 

Mr. Buck. He is representing the State and the consumer ? 

Dr. Sturges. With respect to these other nonmembers, as well as 
the members, he is concerned in getting as full and faithful com- 
pliance with the prescriptions that are set forth in the code as is 
possible. 

Mr. Buck. Yes; but you are assisting him, as I understand it, in 
writing a certain philosophy in your code. 

Dr. Stcbges. I don't know what you mean by a certain philosophy. 
I know what the provisions of the code are. 

Mr. Buck. Well, whatever they be, you are there participating in 
the crystalization of these principles into a form of law on behalf of 
7 distilleries, and the other 80 distilleries are not represented in the 
proceedings except, as you say, through the administrator of the State 
of Ohio. Is that the situation ? 

Dr. Sturges. So far as the Institute's activities are concerned with 
this code, it is to try to cooperate with the public authorities of the 
State of Ohio in improving, according to the yardstick prescribed by 
the administrator of the State of Ohio, the practices of the distillers, 
those who are members of the Institute quite as impartially as those 
who are not members. 

Mr. Davis. Has that been approved by the State of Ohio authorities ? 

Dr. Sturges. By the administrator ; yes, sir. 

Mr. Davis. Will you file a copy of it for the record ? 

Dr. Sturges. Yes, sir. 

(The code referred to was received in evidence and marked ''Exhibit 
No. 430" and is included in the appendix on p. 2719.) 

Mr. Buck. Does this proposed code become law under the laws of 
the Constitution in the State? 

Dr. Sturges. That is the huv so far as the administrator and the 
administration of the Liquor Control Act of the State of Ohio is 
concerned. 

Mr. Buck. Is it enforceable in the courts ? 

Dr. Sturges. I suspect that it is. 



2660 CONCENTRATION OF ECONOMIC POWER 

Mr. BuoK. All right ; we started off on this trying to have the work 
of each of the executive oflficers stated. What, for instance, are the 
duties of your public relations men ? 

Dr. Sturges. Do you wish me to complete my own conceptions of 
my own duties? 

Mr. Buck. I don't know that we are so much interested — personally, 
I am not ; I don't know about the committee — in the philosophy of the 
thing. I simply want the mechanics of it. What does he do ? What 
is he charged with doing? 

Dr. Stdeges. The public-relations director has charge of the pub- 
lication of the Distillers' Bulletin ; he also has charge of the handling 
of news releases which emanate from the Distilled Spirits Institute. 
He has charge very frequently of assisting me in trying to write an 
article or speech, particularly a speech ; he is also concerned with our 
research in directmg the scope and direction of the research, whether 
it may be in the field of revenues or whether it may be in the field 
of laws, or what. 

Mr. Buck. What is his salary ? 

Dr. Sturges. Mr. Chairman, I believe that I should like to be 
excused from giving the salaries of any of the staff in public. I 
would be very pleased to submit them to the committee in confidence. 
The reason is necessarily protective. My salary was published in the 
newspapers at the time I was appointed. It only means more and 
more salesmen and that sort of thing. I am not reluctant to make 
available for the confidential use of the committee the salary of any 
member of the staff of the Institute. I wish to be excused from 
submitting it publicly. 

Acting Chairman Williams. That will be a matter for the commit- 
tee to consider. I can't pass on that myself. 

Does the committee desire to consider that now at this time? 

Mr. O'CoNNELL. Mr. Chairman, of course, I can't speak for the 
other people here, but it seems to me that the request of Dr. Sturges 
is entirely reasonable. It is information that I think the committee 
might like to have. I am not sure to what use it should be put, I 
have no feeling. I don't know about the other men here, but I have 
no feeling if it becomes an essential part of the record. 

Acting Chairman Williams. I can see no use of it at all, unless 
it is part of the record itself. I personally don't care anything 
about it. 

Dr. Sturges. I am very glad to submit it to each of you, mail you 
a statement, or to submit it to you as a o:roup in confidence. 

Acting Chairman Wiiliams. We wii"" withhold that matter for 
the present, and it will not be admitted at this time. 

Dr. Sturges. It will be available to the committee at your pleasure 
at my office. 

Mr. Nathan. What are the duties of the organizer? 

Dr. Sturges. The organizer is associated with the other line of 
activity in the field of law enforcement, in v/hich I am particularly 
interested. The impression I have had, and the complaints I have 
had about the industry, seem to center not inconsiderably around 
what the public sees by way of the behavior of the retail outlets, in 
particular the "on premise," the tavern keeper. I have complaints 
coming to me all the time of children's cocktail parties in hotels and 
in taprooms and so forth, and that there are sales to drunks contrary 



CONCENTRATION OF ECONOMIC POWER 



2661 



to law; that ther^ are sales after hours, and that the whole thing 
brings an unfavorable reputation to the industry and its composite 
set-up. And, that isn't a criticism merely of the retailer as an 
offender, but of the entire industry- 

I feel that the industry, as a mattfer of decency, or if. others wish 
to say so, as a matter of self -protection, assurance of its security 
against the prohibition movement, should take mear,ures to try to 
remedy that situation. 

Mr. Buck. What authority does the Institute have to regulate such 
things as hours and so on, as you have mentioned? 

Dr. Sturges. Of the retailer? 

Mr. Buck. Yes. 

Dr. Stueges. None whatsoever, Mr. Buck, and I would like to 
continue my explanation. 

What is a fit, reasonable method of proceeding to accomplish that 
end of working in the retail field, comparable to what possibly we 
are doing in the distiller field ? After no little deliberation I decided 
upon a plan, whereby I would try to approach people who were con- 
cerned that repeal should work and that we shouldn't get back to 
the deplorable conditions that are supposed to have existed prior to 
prohibition for their cooperation, and that plan has been developed to 
this point, that in Connecticut I assisted in the organization of what 
is called the Connecticut Citizens Conimittee. 

That committee has articles of membership which provide three 
general lines of interest on the part of the committee. The one is 
to concern itself with the types of persons who apply for the- grant- 
ing of a permit, . apply to the liquor-control commission. In Con- 
necticut an applicant wishing to become a permittee to sell alcoholic 
beverages must file his application and that application is published 
for 3 weeks before it comes on for public hearing. This committee 
is concerning itself now with who is trying to get into the business ; 
who, as measured by the prescriptions of the liquor control act as to 
the qualifications of permittees. 

The second general activity of that committee, as set forth in its 
articles of membership, is to concern itself with stimulating the public 
authorities, the liquor-control commission, police authorities, the 
health authorities, even the fire 

Mr. Buck (interposing). Doctor, may I interrupt you there? You 
say the Institute is concerning itself with who may get into the indus- 
try under the Liquor Control Act. What do you mean by that ? 

Dr. Sturges. It isn't the Institute ; these are terms in the articles of 
membership in the committee. 

Mr. Buck. What do you mean by the Liquor Control Act ? 

Dr. Sturges. Of the State of Connecticut. 

Mr. Buck. You are talking about something that happened in Con- 
necticut before you became a member or afterward ? 

Dr. Sturges. No ; I am talking about the second part of my program 
of law enforcement relating to the behavior of retail outlets and the 
suggestion of the organization of the Connecticut Citizens Committee, 
and what the articles of membership of that committee, the Connecti- 
cut Citizens Committee, provide. 

Mr. Buck. When did that happen ? Did you do that since you have 
been director of the Institute? 

Dr. Sturges. That is correct. 



2662 CONCENTRATION OF ECONOMIC POWER 

Mr. Buck. When was it consummated ? 

Dr. Sturges. The committee perfected its organization early in 
January — I sliould say about the 10th of January. 

Mr. Buck. And what is the purpose of the committee? How does 
it arise? 

Dr. Sturges. By tlie articles of membership that I have just been 
referring to, the first point of interest to the committee under its arti- 
cles is to concern itself with the persons who make application to be 
granted a permit. 

Mr. Buck. Under the State laws of Connecticut? 

Dr. Sturges. Under the State laws of Connecticut. 

Mr. Buck. And you are interested in that? 

Dr. Sturges. And I will tell you in just a moment how. 

The other interest, the second interest of tlie committee, as set forth 
ill its articles of membership, is the matter of stimulating enforcement 
officers of the State; and the third general interest of the committee is 
to give study to the Alcohol Control Act of the State, and in the light 
of their experiences on the other two. points that I have mentioned, 
determine whatever they think are desirable amendments. 

Now, in order to facilitate that committee's operations, the Distilled 
Spirits Institute will make a contribution, just the same as it would 
make a contribution to the Community Chest. The Connecticut 
Citizens Committee, which I am infonned has about 1,000 members 
throughout the State, ran for its president the president of an insur- 
ance brokerage concern that does business throughout the State, and 
members who are clubwomen, and businessmen who became inter- 
ested in it. They have carried on the activities along three general 
points I have mentioned. I may say that they found that the activi- 
ties of the police in the city of New Haven seemed to be so limited 
that by their own hired man, a sleuth for the particular occasion, 
they effected the revocation of 10 licenses in tha first week they began 
their real operations. I am not particularly concerned with what the 
committee does in law enforcement generally, but I find that there is 
a very real interest in many, many people to have the liquor business, 
the retail field, carried on differently from what it seems to have been 
in some States. 

Mr. Buck. Doctor, may I ask you a few questions in a clesire tc 
straighten this out in my own mind ? 

We began with your duties, trying to find out specifically what your 
duties as director were. Then I asked you what the duties of the 
public-relations man were. You said to publish a digest, and certain 
other times ; I forgot just what. What sort of digest is this ? How 
is it published ? 

Dr. Sturges. The Distillers Bulletin, I believe I said. 

Mr. Buck. How often? 

Dr. Sturges. It comes out weekly. 

Mr. Buck. What does it contain ? 

Dr. Sturges. I used by way of an analogy the Literary Digest. 

It is an abstract of editorials that we think will be of interest 

Mr. Buck (interposing). You don't prophesy election results, do 
you. That was the Literary Digest. You have 17 whisky distilling 
members. You are publishing a digest for those 17. 

Dr. Sturges. You mean the Distillers Bulletin, that goes to the 
trade press ; it goes to the newspapers ; it goes to our membership. 



CONCENTRATION OF ECONOMIC POWER 2663 

We have a mailing list of people that are either interested or curious 
about us, and I don't know whether it goes to the F. A. A.^ or not. 
I expect it does, doesn't it? 

Mr. Buck. I don't know. That is why I asked you. I don't know 
about it. 

What other activities. Do you visit State legislatures? Do you 
visit State control agencies? You gave us an illustration of what 
you did in Ohio, for instance, and you gave us an illustration of what 
you proposed to do in the State of Connecticut. Is that the extent of 
the Institute's activities ? What else ? Did you appear, for instance, 
in the State of New York ? 

Dr. Sturges. I appeared before the committee on taxation, a joint 
session of the committee on taxation and something else, some other 
committee, I have forgotten the name, with reference to the proposal 
to increase the excise tax of the State of New York from $1 to $1.50. 

Mr. Buck. That is one of the functions, too ? 

Dr. Sturges. That proved to be in that case. 

Mr. Buck. What other specific functions does the Institute have in 
relation to State legislatures, State control boards, and so on ? What 
else, specifically, does it do ? 

Dr. Sturges. Well, Colonel Bullington gave you yesterday a 
sample, namely, the conferences, and there have been many of them — 
I have been in on the last two or three — relating to the conduct of the 
distilling business in the monopoly States, and questions that come 
up there, and those questions that involve the matter of the warranty 
to which he referred. 

Mr. Buck. Let me ask you this question, too. Do these other 80 
distilleries that are not members of your Institute have any associa- 
tion that does similar things? 

Dr. Sturges. There are associations of some of the distilleries down 
in Kentucky and the group over in Maryland also have an organiza- 
tion, the Maryland Distillers. 

Mr. Buck. Do you tie in with those organizations? 

Dr. Sturges. Not in any way, if I understand your term; no. 

Mr. Buck. They consult you and you consult them. 

Dr. Sturges. Yes. 

Mr. Buck. That is the way it operates. 

Dr. Sturges. Of course, my hope is they will all come into the 
Distillers Institute. We are in that connection revising our schedule 
of dues so that they may, bringmg the dues down to $240 a year 
minuimum, and arranging our dues on a surtax basis. 

Mr. Buck. Do you make any activity in the industry toward reduc- 
ing the price of whisky to the consumer, for instance? 

Dr. Sturges. No. 

Mr. Buck. What is your view of that question ? Do you think that 
might be desirable? 

Dr. Sturges. That is a very hard question for me to answer, but 
it is one about which I have thought. This liquor business appears 
t(J me to be considerably peculiar to itself, peculiar to itself with re- 
spect to its social implications, and one of the social implications 
the matter of increased consumption in my opinion is undesirable — 
not to increase the consumption above what I believe now exists. 

'Federal Alcohol Administration. 



2664 CONCENTRATION OF ECONOMIC POWER 

The matter of the total consumption of the individual is a matter 
which I think is of very great social -concern. 

To reduce the price out of consideration for the consumer in order 
to increase consumption I think is a problem of serious consideration. 
I do, however, have the genuine feeling that the illicit liquor pro- 
duced by bootleggers and the refills and dilutions that go on with 
on-premise permittees, gives the legal business an opportunity to 
expand its sales as soon as law enforcement is perhaps more sub- 
stantial. 

Mr. O'CoNNELL. Dr. Sturges, when Dr. Doran was on the stand we 
had quite a bit of discussion about the price of whisky and the func- 
tion of the Institute as regards price, and it was his position that so 
long as he was connected with the Institute, the Institute was not 
concerned in any way with price, insofar as price to the ultimate con- 
sumer is concerned. Hei I think to some extent varied that later in 
discussing the position the Institute would take as regards tax matters 
which might tend to increase the price. Could you clarify the posi- 
tion or the function of the Institute as. regards the price of liquor to 
the consumer, whether it has an affirnlative interest in that problem, 
and to what extent it uses its interest if it has one? 

Dr. Sturges. So far as the merchandising practice is concerned, and 
so far as promotion from the Institute through my members or 
through my members and other distillers, as to what they should do 
with their prices, I should not concern myself. In other words, I 
don't feel that I am competent, nor anj I competent by deriving a 
fixed conviction from those who are in the business, to say whether 
price shall be down or not as a matter of sales. 

I would like to suggest this, Mr. O'Connell, that I get it from the 
trade as a matter of information which I deem reliable, and I there- 
fore state it to be my belief, that somewhere around 75 percent of 
our sales now of alcoholic beverages, distilled spirits beverages, sell 
at a price of $1 a pint or under. In other words, there is the cheap 
liquor, 10 drinks for perhaps 89 cents or up to $1. 

Mr. O'Connell. I wasn't intending to direct the question so much 
as to whether the present price of whisky was high or low; I don't 
believe it is possible for us to determine here whether the price of $1 
a pint is a high price or a low price. I was directing my question as 
to what you conceive to be the function of the Institute as regards the 
price, whatever price it may be, that the consumer pays, and I under- 
stood Dr. Doran to say the Institute was not concerned with that. 

Dr. Sturges. No; I am sure I wouldn't pass judgment on whether 
the price of liquor is too high or not. 

Mr. O'Connell, Does the Institute do anything in the nature of 
collecting and disseminating prices to its members ? 

Dr. Sturges. Not a thing. 

Mr. O'Connell. Earlier in your testimony you stated that the 
liquor industry was a highly competitive industry and that it was 
one that would continue to be highly competitive. 

Dr. Sturges, I believe so. 

Mr, O'Connell, And as the result of the terrific competition, some 
pernicious practices tended to arise. Do you conceive that the Insti- 
tute has a function as regards regularizing competition, or reducing 
the amount of competition, or possibly eliminating competition? I 
am just curious to know what your function is. 



CONCENTRATION OF ECONOMIC POWER 2665 

Dr. Sturges. I do not have any such program, and the Institute 
does not; but there seem to be certain byproducts of what I would call 
excessive competition which the public authorities recurringly bring 
to our attention, which they, the State administrators, complain of. 
They are proscribed in a general way within the Federal Alcohol Ad- 
ministration Act, and as competition becomes intense, with a tendency 
to indulge in rebates, kick-backs, throwing $5 to the bartender to 
induce the pouring of his drink, things that affect human beings 
that are engaged in, that practice, and I think most people agree are 
not savory or honest, the Institute is concerned to discover what 
possible implementations can be accomplished to eliminate them. 

Mr. O'CoNNELL. Do you believe that competition in the industry, if 
not carried to such extremes, is a desirable thing for the industry ? 

Dr. Sturges. Very. 

Mr. O'CoNNELL. Would you care to take a position or express a 
conviction as to whether or not price competition is also a desirable 
thing in the retail sale of liquor ? 

Dr. Sturges. I have listened to the attitudes expressed here, and 
on price fixing personally I obviously have no final judgment. Sec- 
ondly, I think that so far as my principals are concerned, they regard 
the present fair trade acts differently. There are some positive ex- 
pressions of conviction that they are desirable, some that are not so 
positive, and I think the general attitude of the members of the 
Institute is one of regarding the present situation as experimental, 
and the laws that have existed, that they are trying now, perhaps 
are more or less satisfactory. 

My own feeling is becoming terribly involved. To allow the price 
of whisky to go down too cheaply might result in an unfortunate 
amount of consumption. 

Mr. O'CoNNELL. That rather interests me, because that gives the 
liquor industry or possibly the Institute a rather sort of social func- 
tion. In other words, do you feel that they have a duty to protect 
the consumers from themselves by keeping the price up so that the 
per capita consumption won't get too high ? 

Dr. Sturges. I am expressing a personal opinion, and on the other 
hand I think it purveys the attitude of my principals as I articulate 
it more or less for them, that there is the social function, and that 
there is the social delimitation so far as the. amount of consumption 
that people ought to consume. 

Mr. O'CoNNELL. That is rather interesting to me, because frankly I 
was under the impression generally when we started this discussion 
that the businessmen in the liquor industry, as in most industries, 
were almost entirely concerned with selling as much of their product 
at the highest possible price, the largest possible profit, rather than 
with the broader view of protecting the consumers from using too 
much of the product. 

Dr. Sturges. I think the members of the Distilling Spirits Insti- 
tute ought to have a little more credit than possibly you are willing 
to give tiiem. I sa^' that with the greatest of sincerity. 

Mr. O'CoNNELL. I could see that it also would be to their self- 
interest if by virtue of the operation of the industry, the industry 
should fall, as you put it earlier, into disrepute by virtue of the 
undue sales, or something of that '^'""' 



2666 CONCENTRATION OF ECONOMIC POWER 

Dr. Sturges. We couldn't come out, I don't believe, in advertise- 
ments, for example, and advocate on Saturday that there ought- to be 
three drinks for the price of one on Monday. 

Mr. O'CoNNELL. It may be very good business. 

Dr. Sttjrges. It might be technically good business for the time 
being, but I think that my principals' and certainly my own feelings 
are that that would be quite unfortunate. 

Mr. DA\^s. You want us to understand that the purpose of your 
principals in undertaking to maintain prices to the consumer of 
alcoholic liquors is altruistic and from the standpoint of the morals 
and health of the consumer? 

Dr. Sturges. I would like to say this to you, Judge, and it is as 
direct an answer to your question as I can make, granting the 
implications of your statement: That I am very confident that the 
members of the Distilled Spirits Institute are very sensitive to the 
fact that there is and should be a limitation on consumption of 
distilled spirits by the consuming public, that the attitude is quite 
distinct from that of the manufacturer of cornflakes or the producer 
of milk. 

Mr. Davts. Do you know of any members of the industry who 
have refused to sell at fair prices for that reason? 

Dr. Sturges. No, I do not ; no. 

BOOTLEGGING PROBLEM INVOLVED IN INCRI:ASED TAXATION 

Mr. Nathan. In line with that matter of prices, would you mind 
telling us ver}^ brieflv the position you took before the tax commit- 
tee of New York State? 

Dr. Sturges. I took the position before the New York Tax Com- 
mittee that I felt that if the tax were raised from $1 to $1.50 jier 
gallon, the excise tax, that it would be very unfortunate, that it 
would be unfortunate in the matter of probably inviting increased 
distribution of un-tax-paid distilled spirits. 

Mr. Nathan. In other words, you believe that the bootlegging 
would be increased substantially by higher taxes? 

Dr. Sturges. That is my fear; yes. What the precise point is, 
of course, I do not know and I couldn't state it, but I think the jump 
from $1 to $1.50 in New York goes over the limit. 

Mr. Nathan. In other words, you believe there is a certain point 
at which when prices get too high the bootlegging interests come in 
and too low you may get overconsumption relative to certain moral 
standards. 

Dr. Sturges. I have that feeling; yes, sir. 

Mr. O'CoNNELi.. Doctor, as a representative of the Institute and 

of the industry, your primary concern in all probability was that 

*to the extent that the amount of illegal liquor consumed would be 

increased that the amount of liquor sold by the industry would be 

decreased. Isn't that a fair statement? 

Dr. Sturges. I don't think I quite follow you. 

Mr. O'Connell. I say that in taking the position that you took 
before the tax committee in New York, your primary concern, as I 
view it, was that the result of an increase in the duty and as a result 



CONCENTRATION OF ECONOMIC POWER 2667 

of that an increase in the amount of illegal liquor consumed, the 
amount of liquor sold by members of the industry would be decreased. 
Dr. Sturges. Certainly. 

Mr. O'CoNNELL. Your primary interest is a business one and not 
the morals of the situation. 

Dr. Sturges. That is true. I would rather have the legalized tax- 
paying industry have the business than to have what we call the 
bootlegging, non-tax-paying industry have it. 

Mr. b'CoNNELL. And to that extent, the Institute is really inter- 
ested in price, is it not? 

Dr. Sturges. You may say that, when you point out the inconsist- 
ency of a position with respect to resale price maintenance. I can 
only say I haven't any final conviction on the use of the Fair Trade 
Act. It is experimental. I would like to learn more about it. 

Mr. O'CoA^NELL. Generally speaking, would it be fair to say that 
it is the position of tlie Institute to oppose attempts on the part of 
State legislatures or the Federal Government to increase the tax on 
liquor? 

Dr. Sturges. No. I would like to state very definitely what I feel 
is our position and will continue to be our position ; that what is done 
by the several States and what is their rate of taxation is none of the 
distillers' business unless it comes to a particular situation which 
seems to involve some soci^^l implications; and the tax case I so 
conceived, and that I should appear before the committee to present 
my point of view in behalf of the industry. 

Mr. O'CoNNELL. In New York the tax rate was $1 a gallon. 
Dr. Sturges. That is true. 

Mr. O'CoNNELL. And the industry would feel that any attem]:)t on 
the part of a State legislature, I take it, to increase the tax on liquor 
above $1 a gallon would by virtue of the social implications be some- 
thing that the Institute should oppose. 

Dr. Sturges. That is correct. I think they have gone practically 
high enough. We have some suggestion in Wisconsin, I believe, that 
the tax be raised from $1 to $2. On the other hand, the State of 
Connecticut proposes to increase its tax from 60 cents, my last infor- 
mation is, to 80. We will not go to Connecticut. 

Mr. O'CoNNELL. Did the Institute oppose the increase of the Fed- 
eral tax from $2 to $2.25? 

Dr. Sturges. I think that they had some difficulties in their points 
of view as a matter of membership and took no Institute position at 
that time. 

Mr. O'CoNNELL. It is pretty difficult to lay down a hard and fast 
rule for the Institute. 
Dr. Sturges. It is. 

Mr. O'CoNNELL. But it is a matter of the social implications of an 
increase in the tax rather than the effect upon the sales of the mem- 
bers of the Institute. 

Dr. Sturges. It is two ways of saying the same thing. I shall have 
to have it imputed to me that I am selfishly looking out for my prin- 
cipals. On the other hand, there is the other attitude which if es- 
poused by a professor, for example, would be looked upon as a social 
job. 



2668 CONCENTRATION OF ECONOMIC POWER 

Mr. O'CoNNELL. But any other component part of the price struc- 
ture that ^oes to make up the retail price is subject to the same social 
implication as the tax. 

Dr. Sturges. Well, to impose the increase of a tax from $1 to $1.50 
on the present resale price maintenance program in New York is at 
least a fortiori a case of opposing the tax increase. Maybe there are 
counteracting and other considerations relating to* resale price main- 
tenance which would not be controlling with respect to the question of 
tax increase — offsetting justifications. Possibly if there were 100 per- 
cent law enforcement and the illicit liquor was kept out and that as- 
surance obtained, there would be no occasion to object to the increase 
in the tax on a social basis. Whether the most effective way of get- 
ting more and more revenues is to increase the rate or to decrease the 
rate, that is another consideration. I relied on expert authority, I 
thought, the public authorities of the control board who indicate that 
it is desirable to decrease the rate of tax. 

Mr." Buck. Doctor, I was interested in the statement that you 
would like to appear to present the, views of the industry. Do you 
mean that your membership of 17 distillers as against 80 who are not 
members should be taken as representing the industry, or do you mean 
that you just appear for your principals? 

Dr. Sturges. There were many — I will say some — I have for- 
gotten how many — who also requested us to appear in their behalf, 
distillers and also groups of retailers. It was, in other words, a con- 
sensus of trade opinion, as near as I could describe it, that the pro- 
posed tax increase in New York was undesirable. 

Mr. Buck. As I understand it, you oppose tax increase because 
it would increase bootlegging, yet you don't feel that any activity 
is required in order to reduce the price of liquor at all. 

Dr. Sturges. I have no basis for a judgment. 

Mr. Buck. But aren't you dealing with prices, concerned with 
prices, when you oppose a tax on that principle? 

Dr. Sturges. I grant that is true. There may be inconsistencies 
in one's behavior, without one being required to justify them at the 
moment. 

SALARIES OF THE DIRECTOR AND PUBLIC RELATIONS COUNSEL 

Mr. Buck. To get back to the question I asked you relative to 
your public relations man,^ the committee would like to know, I am 
told, what you base your objections upon. On what ground do you 
object to disclosing the information that I have asked for? 

Dr. Sturges. You mean the salaries? I have tried to make it as 
clear as I could, Mr. Buck. I am sure I have. 

Mr. Buck. Do you hold this committee hasn't the authority? 

Dr. Sturges. Not at all. This is salaries, now, of my staff? 

Mr. Buck. That's right. 

Dr. Sturges. I have tried to indicate to the committee that I am 
very happy to have them have it, receive it in confidence. I tried 
to state why I did not wish to submit it here, and that reason is a 
matter of personal protection, protection for them, and protection 
for me in my own office. 



' Seo j^-.?660, supra. 



CONCENTRATION OF ECONOMIC POWER 2669 

Mr. Buck. Protection from whom? 

Dr. Sturges. Salesmen who find out what the salaries are. I ma\ 
say my salary was once published in a newspaper; it was inaccurate, 
and why should I be pestered with people; I don't want to buy 
many things that many people would like to sell. I am perfectly 
willing that the salaries should be disclosed to you as a committee 
and see that you get it, personally — each one of you, or otherwise. 
If the committee insists that it is important, controlling, I will yield. 

Mr. Buck. I have no interest in it. I. just assumed, so long as 
the committee asked the question of Dr. Doran when he was on the 
stand, that the committee was interested in that phase of the inves- 
tigation, and I ventured the question. I personally don't give a rap. 

Dr. Sturges. I am perfectly willing to tell you. 

Mr. Buck. What yours is or what his is. 

Dr. Sturges. You may have them. I will tell you outside. I am 
merely trying to keep it out of the public record. 

Mr. Buck. The committee was interested and asked Dr. Doran, 
and I assume they were interested in this (Question. 

You put it on the ground that you don't want to be disturbed by 
somebody who wants to sell an automobile or something. 

Dr. Sturges. Well, it is automobiles, it is dry cleaners, it is books, 
and it is children's clothes for the summer, and a thousand and one 
other things. 

Mr. Buck. Well, so far a§ I am concerned I leave it as it is, in 
the hands of the committee, and I take it, of course, you will abide 
by their ruling. 

Mr. Nathan. May I ask, your organizer is primarily responsible 
for the organization of the committee in Connecticut? 

Dr. Sturges. Yes. That is ; he stayed there until the structure was 
organized and now he has moved into another State. 

Mr. Nathan. Would you mind admitting for the record the amount 
of the appropriation to that committee? 

Dr. Sturges. I am very happy to state it. There has been paid 
$2,200, and the appropriation is $3,500. 

Dr. LuBiN. Mr. Sturges, I understood the previous witness to state 
that the Institute has never taken any activity in the passage of laws 
relating to fair-trade practices or price fixing. If, as a result of ac- 
tivity on the part of the distiller, it came to your attention that there 
was a movement on foot whereby the price of liquor was raised, 
say, 25 cents or 50 cents a quart under the fixed price laws — in other 
words, the trend was in that direction, which according to the testi- 
mony 

Dr. Sturges (interposing). I am sorry; I lost it. 

Dr. LuBiN. I am citing a hypothetical case where you would learn. 
that, because of one reason or another, there was a general tendency 
in a given State or series of States where fair-trade laws prevail to 
increase the price of liquor, say, 50 cents a quart. Now, on tlie 
basis of the statements you have made, that should lead to an incre ise 
in the sale of bootleg liquor. Would you feel it came within the 
provinces of the Institute or that it would be your duty to undertalce 
to prevail upon the members of the industry which were increasing 
their prices, to persuade them not to do it ? 

124491— 39— pt. 6 17 



2670 CONCENTRATION OF ECONOMIC POWER 

Dr. Sturoes. You have stated a similar social implication. Tliere 
is no question. 

Dr. LuBiN. In that sense the Institute would feel it its duty to see 
that prices didn't get too high? 

Dr. Stukges. Yes. 

Dr. LuBiN. That assumes, then, that the present price is not too 
high. 

Dr. Sturges. That is a hard question to answer. I don't know how 
you make the assumption. The price of whisky is not too high for 
you if you buy it. What little I buy, I buy what I can pay for and 
I think I buy quality. 

Dr. LuBiN. Wouldn't we both do the same if the price were 50 cents 
higher? 

Dr. Sturges. No; I wouldn't. My supply, my consumption, would 
be curtailed. 

Dr. LuBiN. There is a further question I would like to ask you. 
I don't know whether you can answer it, and if you can't, feel per- 
fectly free to say so. In view of your recent association with the 
organization it may be you don't knotv the facts, but I was very much 
interested in the various figures on expenditures showing a very 
marked jump in expenditures in the year 1937. Do you know of any- 
thiufT peculiar to that year which resulted in this large increase in 
certain types of expenditures? 

Dr. Sturges. Mr. Lubin, I can't answer that of my own personal 
knowledge. I don't know. 

Acting Chairman Williams. Now, Doctor, as I understand you, 
with reference to this question that was asked you concerning the 
salaries, you don't question the right or the authority of the committee 
to require you to produce those? 

Dr. Sturges. No; I do not question the power of this committee 
to subpena them. 

Acting Chairman Williams. It is a question of personal conven- 
ience and to avoid some people trying to sell you sometliing? 

Dr. Sturges. If those figures were put into the record 

Mr. Buck (interposing). Not to him but to someone else. This 
salary doesn't relate to the doctor but to an employee of the Institute. 

Dr. Sturges. I understood you to ask for mine. 

Mr. Buck. I didn't ask for yours. 

Acting Chairman Williams. Will you ask your question again, 
Mr. Buck, in order that we may have it in the record? 

Mr. Buck. I want to put the matter in this position : I pro- 
pounded the question in the original instance because a member of 
the commi*^tee itself had asked the question of a previous witness. 
Picking til 'it up as being a possible matter of interest to the com- 
mittee, I usked the doctor to give the committee the salary of Mr. 
Norman Baxter, the public-relations man. Now, personally, I didn't 
begin the quest ion at all. I have no use for it except that I consid- 
ered it a ii nttor of interest to this committee, and I was trying to 
aid the committee. So long as the matter has arisen, I hate to see 
it go oveH" unanswered. I think it is a good matter. Why make 
fish of one and fowl of another? We asked Dr. Doran the question. 
He answered it, and I asked the doctor if he will put in the record 



CONCENTRATION OF ECONOMIC POWER 2671 

of this proceedings a list of all salaries of all members of his 
Institute. 

Dr. Stukges. Mr. Chairman, will it be out of order to make one 
statement i So far as Mr. Doran is concerned, that is ancient history. 
The statement of his salary was while he was director. He is not now 
director. In our case, salaries are known to be our present salaries. 

Acting Chairman Williams. You have already stated your grounds 
for your desire not to produce it. 

Dr. Sturges. I am not putting it on any technical pounds what 
soever, nor reserving the question as to your jurisdiction. I feel 
it is just a matter of concession to the 21 employees of the Distilled 
Spirits Institute. I am perfectly willing to supply the data. I can 
supply the data for you to the committee or otherwise. 

Acting Chairman Williams. I will ask you to remain, if you will. 
Can you remain for a few minutes until we have an executive session 
to determine the matter? 

Dr. Sturges. I shall be very pleased to. 

Acting Chairman Williams. Mr. Buck, I think we will conclude 
this hearing with that understanding, that the committee will go 
into executive session to determine the matter and the doctor, if it 
so determines, shall return and produce those figures. 

Mr. Buck. I would like to reserve this arrangement with the com- 
mittee, that in the event the committee should conclude that the 
doctor ought not to state or answer the question, that the committee 
reconvejie and permit me to call Norman Baxter, who is on the list of 
witnesses for the hearing, just as a matter of inquiry. 

Acting Chairman Williams. Very well. However, we will go 
into executive session at the present time. 

(Whereupon the committee went into a brief executive session.) 

Acting Chairman Williams. The committee will be in order. 

Mr. Buck. Dr. Sturges, I will ask you to state to the committee 
the annual salaries paid by the Distilled Spirits Institute to the 
director, public-relations counsel, the secretary and treasurer, and 
the organizer. 

Dr. Sturges. The secretary and general counsel and the organizer? 

Acting Chairman Williams. The committee has decided that that 
is germane and that the answer should be given. 

Dr. Sturges. I am very pleased to give it. The director of public 
relations, $22,500; the secretary and general counsel, $12,000; the 
organizer, $6,000. 

Mr. Buck. And the director. 

Dr. Sturges. Did you ask my own? $30,000. 

Mr. Davis. Those are the salaries at the present time? 

Dr. Sturges. At this moment ; yes, sir. 

Acting Chairman Williams. I think that is all. 

Mr. Buck. That is all I have. 

(Dr. Sturges was excused from the stand.) 

Mr. Buck. Mr. Chairman, that concludes the hearing, I think, be- 
cause it is nearly 6 o'clock. I want to make this statement. First, 
I want to express my thanks to the members of the* industry who 
have come here and testified; and, secondly, I want to thank the 
committee for its indulgence, the many kindnesses to me in particular. 



2672 CONCENTRATION OJP ECONOMIC POWER 

I want to say that this hearing is not as complete as I would like 
to see it. Necessarily we have had to pass over very many important 
facts because of the lack of time. In fact, we have been unable to 
use many very important witnesses because of the time at the disposal 
of the committee for the hearing. 

I would suggest, therefore, that the committee allow or request 
the Federal Trade Commission to supplement the hearing by the 
filing of the report, based upon available statistics, and the answers 
to questionnaires that have heretofore been circulated to the industry, 
and that that report be considered as part of this hearing in the 
record. 

Acting Chairman Williams. Is that a request that this report you 
speak of be part of the printed record ? 

Mr. Buck. Yes, sir; when filed. I feel that that is material in 
order to fill in many of the gaps we have been required to leave be- 
cause of the lack of time. 

Acting Chairman Williams. If there is no objection to that, that 
Tvill be done. 

Dr. LuBiN. Mr. Chairman, may I just interrupt ? Under the rules 
and regulations adopted by the committee in its first session, definite 
arrangement was made relative to the receipt of certain types of 
information to go into the record, and, with your permission, sir, may 
I suggest tliat the decision be held in abeyance, pending a decision 
by the full committee ? 

Acting Chairman Williams. Yes ; that may be done. 
Mr. Buck. I simply wanted to leave the thought with the com- 
mittee that such a report would make the hearing more complete 
and more valuable. 

Dr. LuBiN. I don't feel there would be any objection to such a 
procedure, but I am thinking only in terms of those absent members 
of the committee. 

Acting Chairman Williams. Do you mean by that that the sug- 
gested report which you have should be submitted to the committee 
for consideration, as to whether they will admit it to the record or 
not? 

Mr. Buck. As I understand Dr. Lubin, he knows that there is 
some rule of the committee made at its first session, and it would 
require the consideration of the full committee to pass upon this 
question. 

Dr. Lubin. No; it would not require such action, but I was sug- 
gesting we delay it pending a: meeting of the full committee. 
Mr. Buck. I want to leave the thought with the committee. 
Dr. Sturges. May I ask one question, whether or not the industry, 
the Distilled Spirits Institute acting, would be privileged to submit 
a brief before this committee? 

Acting Chairman Williams. I rather think not under the ruling 
here in addition to what you have already stated in the record. 
Mr. Davis. That would have to be detennined by the committee. 
Acting Chairman Williams. Of course, I suppose the committee 
could permit that. 

Dr. Sturges. I should like to request the opportunity of submit- 
ting a memorandum. 



COXOEXTRATIOX OF ECONOMIC POWER 2673 

Acting Chairman Williams. That may be done. You may sub- 
mit the memorandum to the committee to determine whether or not 
it should be incorporated m the record. 

Dr. Sturges. At Avhat time limit? 

Acting Chairman Williams. This committee is to stand in recess, 
at the call of the chairman, just when I don't know. It perhaps will 
be in recess here for a week or 10 days. 

Dr. Sturges. May I contact the connnittee after the recess? 

Acting Chairman Williams. Yes; you may contact the chairman. 
Senator O'Mahoney, at any time as to when the next meeting wiU be. 

With that, the committee will now stand in recess at the call of 
the chairman. 

(Whereupon, at 5:45 p! m.. an adjournment was taken subject to 
the call of the chairman.) 



APPENDIX 




2675 



2670 



CONCENTRATION OF ECONOMIC POWER 
Exhibit No. 395 



MILUONS 

or GALLONS 

«SO 



Teldlral Alcohol Administration 
Production of Whiskey inThe: Unitcd States 

IN TAX GALLONS 

1932-1938 

245470000 




1932 
FISCAL YEAR 
rOR 1932 



1935 



1934 



1935 



1936 



1937 



1938 



•approximatc 



HIGHEST PRE.-PR0HIBITION PRODUCTION, 1911 - 100,647,000 
AVCRAGC PRC-PROHIBITION PRODUCTIOH(I90I-I9I9)-7I,543,555 



MILLIONS 

or GALLONS 

SOO 



Exhibit No. 396 

Fldelral Alcohol Administration 
Stocks of Whiskly in Bonded Warehouses 

IN TAX GALLONS 

1935-1938 

452.398.000 



374,467.000 



25100,000 




1933 



1934- 



1935 



193ft 



1937 



1938 



HIGHEST PRE-PROHIBITION STOCKS IN BONDED WAREHOUSES. 1911—278,108,056 
AVERAGE STOCKS IN BONDED WAREHOUSES PRE-PROHIBITION PERIOD (1901-1919)— 209,737,595 



CONCENTRATION OF ECONOMIC POWER 

Exhibit No. 397 

WHISKEY WITHDRAWN TAXPAID 

IN TAX GALLONS 

1933-1938 
(Cafendar Years) 

72,473,000 



2677 




VALUE *^^«» 

1933 



^76>M«kOOO 

1934 



*(23,746k00<» ^I44,94%000 *M<Jt664,000 

1935 J936 1937 



Mf^55l,000 

1938 



Movf McvM Mimnisfn/iion -2-I-39 



ff/Gff£ST Ptf£-PffOHIB/T/OM W/THDMWAL, 1917- eiSS/OOO 
J>V£/fAOC P/tE-PMH/BIT/Of^ WITHDKAWAL. ,'90/ -1313 - 6l,6SZ,000 



Exhibit No. 398 



WHISKEY DISTILLERIES IN OPERATION 
ANNUAL CAPACITY AND PRODUCTION 

TAX GALLONS 



FISCAL YEIARS 

DISTILLERIES 
OPERATED 



ANNUAL 
CAPACITY • 

(IN THOUSANDS) 

ANNUAL 
PRODUCTION 

(IN THOUSANDS) 



1933 

7 


. 1934 

44 


1935 
79 


1936 
112 


1937 
126 


1938 
108 


18,780 


234,750 


303,660 


382.631 


435,814 


434,986 


4,910 62,352 


149,112 


223,659 


223,457 


102395 



•based on 24 HOURS. 313 DAYS 



DISTILLERIES OPERATED 



1914 
352 



WHISKEY PRODUCED 88.698 

(IN THOUSANDS) " 



AVERAGE PER UNIT 

(IN THOUSANDS) 



252 



1937 
126 



223.457 



1,773 



2678 CONCENTRATION OF ECONOMIC POWER 



Exhibit No. 399 

WHISKEY DISTILLERIES OPERATED AND 
WHISKEY PRODUCED 

FOUR COMPANIES COMPARED WITH ENTIRE INDUSTRY 
1934-1938 
(Ca/e/7dor Years) 



DISTILLERIES: 



1934 1935 1936 1937 1938 



ENTIRE INDUSTRY 74 100 118 129 97 

FOUR COMPANIES 16 13 18 20 20 

PRODUCTION: 

(Tcijc Ga//o/?s) 

ENTIRE INDUSTRY 108,000.000 184,860,000 245,470,000 155,670,000 94,950,000 

FOUR COMPANIES 65.00a000 84,70a000 111,900.000 



AVERAGE PER DISTILLERY: 

{laj( Ga//o/7s) 

ENTIRE INDUSTRY 1,459,000 1,848,000 2,080,000 1.206.000 979,000 
FOUR COMPANIES 4.062,000 6.515.000 6^16,000 3,650,000 3,020.000 



—FOm COMPANKS— 

SCHENLfY D/ST/LL£^S CO/fP. 
NAT/O/VAL D/3r/lL£/?S P/?OOUC73CO/?f> 
J03£PH £. SEAGRAM <t SOIV.S. WC 
H/RAM WAIHOIK SO/^3. WC 
/idfro//l/ci^//lt/m/msfro/m}-SrAmr/CS f P£ffAf/r D/y/S/O/VS ~ 2-/-33 



CONCENTRATION OF ECONOMIC POWER 



2679 



Exhibit No. 400 



PRODUCTION OF WHISKEY IN THE 
UNITED STATES BY FOUR COMPANIES 
COMPARED WITH TOTAL PRODUCTION 

TAX GALLONS 



3CHENLEY DISTILLERS CORP. ) 

NATIONAL DISTILLERS PR0DUCT3C0RP.( 
JOSEPH E. SEAGRAM 8 SONS, INC. ( 
WRAM WALKER a StfNS, INC. )' 



245.470.000 




1934 



1935 1936 

CALENDAR YEARS 



1937 



1938 



FEDERAL AljCOHOL ADMINISTRATION 
STATISTICS DIVISION 



2680 



CONCENTRATION OF ECONOMIC POWER 



Exhibit No. 401 



STOCKS OF WHISKEY m BONDED WAREHOUSES 

HELD BY FOUR COMPANIES 

COMPARED TO TOTAL STOCKS 



TAX GALLONS 



SCHENLEY DISTILLERS CORP 
NATIONAL DISTILLERS PR00UCT5CORP 
JOSEPH E SEAGRAM ft SONS. INC 
HIRAM WALKER a SONS. INC 



25.100.000 




1933 



1934 



1935 1936 

CALENDAR YEARS 



1937 



1938 



FEDERAL AUSOHOL ADMINISTRATION 
STATISTICS DIVISION 



CONCENTRATION OF ECONOMIC POWER 

Exhibit No. 402 



2681 



TOTAL STOCKS OF WHISKEY FOUR YEARS OLD 

AND OVER REMAINING IN BONDED WAREHOUSES 

AS COMPARED WITH 

SUCH STOCKS HELD BY FOUR COMPANIES 



TAX GALLONS 



14,358.277 



SCHENLEY DISTILLERS CORP 
NATIONAL DISTILLERS PRODUCTS CORP 
JOSEPH E SEAGRAM 8 SONS. INC 
HIRAM WALKER 8 SONS. INC. 

SCHENLEY DISTILLERS CORP j 

NATIONAL DISTILLERS PRODUCTS CORP ) 



2,196,396 





1934 



1935 1936 

CALENDAR YEARS 



1937 



1938 



FEDERAL ALCOHOL ADMINISTRATION 
STATISTICS DIVISION 



Exhibit No. 403 
United States Bottling in Bond Act 

An Act to allow the bottling of distilled spirits in bond (Act of March 3, 1897, Ch. 379, 29 Stat., 626, as 
amended by Act of March 2, 1929, Ch. 510, 45 Stat., 1496; Act of June 26, 1936, Ch. 830, 49 Stat. 1944; and 
by Act of July 9, 1937, Ch. 472, 50 Stat. 487 (26 U. S. C. A., 1276 through 1282)) 

Be it enacted by the Senate and House of Representatives of the United States of 
America in Congress assembled, That whenever any distilled spirits deposited in 
the Internal Revenue Bonded Warehouse have been duly entered for withdrawal 
before or after tax payment, or for export in bond, and have been duly gauged 
and the required marks, brands, and tax-paid stamps (if required) or export 
stamps, as the case may be, have been affixed to the package or packages con- 
taining the same, the distiller or owner of said distilled spirits, if he has declared 



2682 CONCENTRATION OF ECONOMIC POWER 

his purpose so to do in the entry for withdrawal, which entry for bottling pur- 
poses may be made by the owner as well as the distiller, may remove such spirits 
to a separate portion of said warehouse which shall be set apart and used exclu- 
sively for that purpose, and there, under the supervision of a United States store- 
keeper-gauger in charge of such warehouse, may immediately draw off such 
spirits, bottle, pack, and case the same. For convenience in such process any 
number of packages of spirits 6f the same kind, differing only in proof, but pro- 
duced at the same distillery by the same distiller, may be mingled together in a 
cistern provided for that purpose, but nothing herein shall authorise or permit 
any mingling of different products, or of the same products of different distilling 
seasons, or the addition or subtraction of any substance or material or the appli- 
cation of any method or process to alter or change in any way the original con- 
dition or character of the product except as herein authorized; nor shall there be 
at the same time in the bottling room of any Internal Revenue Bonded Ware- 
house any spirits entered for withdrawal upon payment of the tax and any spirits 
entered for export. 

Every bottle when filled shall have affixed thereto and passing over the mouth 
of the same a stamp denoting the quantity of distilled spirits contained therein 
and evidencing the bottling in bond of such spirits under the provisions of this 
section, and of regulations prescribed under paragraph (3) of this section. 

The Commissioner of Internal Revenue, with the approval of the Secretaiy of 
the Treasury, shall prescribe (a) regulations with respect to the time and manner 
of applying for, issuing, affixing, and destroying stamps required by this section, 
the form and denominations of such stamps, ^applications for purchase of the 
stamps, proof that applicants are entitled to such stamps, and the method of 
accounting for receipts from the sale of such stamps, and (b) such other regula- 
tions as the Commissioner shall deem necessary for the enforcement of this section. 

Such stamps shall be issued by the Commissioner of Internal Revenue to each 
collector of internal revenue, upon his requisition in such numbers as may be 
necessary in his district, and, upon compliance with the provisions of this section 
and regulations issued under paragraph (3) of this section shall be sold by collec- 
tors to persons entitled thereto, at a price of 1 cent for each stamp, except that 
in the case of stamps for containers of less than one-half pint, the price shall be 
one-quarter of 1 cent for each stamp. 

And there shall be plainly burned, embossed, or printed on the side of each 
case, to be known as tbe Government side, such marks, brands, and stamps to 
denote the bottling in bond of the whisky packed therein as the Commissioner 
may by regulations prescribe. 

And no trade-marks shall be put upon any bottle unless the real name of the 
actual bona fide distiller, or the name of the individual, firm, partnership, cor- 
poration, or association in whose name the spirits were produced and warehoused, 
shall also be placed conspicuously on said bottle. 

Sec. 2. That the Commissioner of Internal Revenue, with the approval of the 
Secretary of the Treasury, may, by regulations, prescribe the mode of separating 
and securing the additional warehouses, or portion of the^warehouse hereinbefore 
required to be set apart, the manner in which the business of bottling spirits in 
bond shall be carried on, the notices, bonds, and returns to be given, and accounts 
and records to be kept by the persons conducting such business, the mode and 
time of inspection of such spirits, the accounts and records to be kept and returns 
made by the Government officer, and all such other matters and things as in his 
discretion, he may deem requisite for a secure and orderly supervision of said 
business; and he may also, with the approval of the Secretary of the Treasury 
prescribe and issue the stamps required. 

The distiller may, in the presence of the storekeeper-gauger, remove by strain- 
ing through cloth, felt, or other like material any charcoal, sediment, or other 
like substance found therein, and may whenever necessary reduce such spirits as 
are withdrawn for bottling purposes by the addition of pure water only to 100 
per centum proof for spirits for domestic use, or to not less than 80 per centum 
proof for spirits for export purposes, under such rules and regulations as may be 

Prescribed by tbe Commissioner of Internal Revenue with the approval of the 
ecretary of the Treasury; but no spirits (except gin, for export) shall be bottled 
in bond until they have remained in bond in wooden containers for at least four 
years from the date of original gauge as to fruit brandv, or original entrv as to all 
other spirits: Provided, That nothing in this Act shall authorize the label ng of 
spirits in bottles contrary to the provisions of regulations issued pursuant to the 
Federal Alcohol Administration Act or any amendment thereof. 



CONCENTRATION OF ECONOMIC POWER 2683 

Sec. 3. That all distilled spirits intended for export under the provisions of 
this Act shall be inspected, bottled, cased, weighed, marked, labeled, stamped, 
or sealed in such manner and at such time as the Commissioner of Internal 
Revenue may prescribe; and the said Commissioner, with the approval of the 
Secretary of the Treasury, may provide such regulations for the transportation, 
entry, reinspection, and lading of such spirits for export as may from time to time 
be deemed necessary; and all provisions of existing law relating to the exporta- 
tion of distilled spirits in bond, so far as applicable, and aU penalties therein 
imposed, are hereby extended and made applicable to distilled spirits bottled for 
export under the provisions of this Act, but no draw-back shall be allowed or paid 
upon any spirits bottled under this Act. 

Sec. 4. That where, upon inspection at the bonded warehouse in which the 
spirits are bottled as aforesaid, the quantity so bottled and cased for export is 
less than the quantity actually contained in the distiller's original casks or pack- 
ages at the sime of withdrawal for that purpose the tax on the loss or deficiency' so 
ascertained shall be paid before^the removal of the spirits from such warehouse, 
and the tax so paid shaH be receipted and accounted for by the collector in such 
mapner as the Commissioner of Internal Revenue may prescribe. 

t3Er. 5. That where, upon reinspection at the port of entry, any case containing 
or purporting to contain distilled spirits for export is found to have been opened 
or tampered with, or where any mark, brand, stamp, label, or seal placed thereon 
or upon any bottle contained therein has been removed, changed, or willfully 
defaced, or where upon such reinspection any loss or discrepancy is found to exist 
as to the contents of any case so entered for export, the tax on the spirits con- 
tained in each such case at the time of its removal from warehouse shall be col- 
lected and paid. 

Sec. 6. That any person who shall reuse any stamp provided under this Act, 
after the same shall have been once affixed to a bottle as provided herein, or who 
shall reuse a bottle for the purpose of containing distilled spirits which has once 
been filled and stamped under the provisions of this Act without removing and 
destroying the stamp so previously affixed to such bottle, or who shall, contrary to 
the provisions of this Act or of the regulations issued thereunder, remove or 
cause to be removed from any bonded warehouse any distilled spirits inspected 
or bottled under the provisions of this Act or who shall bottle or case any such 
spirits in violation of this Act or of any regulation issued thereunder, or who shall, 
during the transportation and before the exportation of any such spirits, open or 
cause to be opened any case or bottle containing such spirits, or who shall will- 
fully remove, change, or deface any stamp, brand, label, or seal affixed to any 
such case or to any bottle contained therein, shall for each such offense be fined 
not less than one hundred nor more than one thousand dollars, and be imprisoned 
not more than two years, in the discretion of the court, and such spirits shall be 
forfeited to the United States. 

Sec. 7. That every person who, with intent to defraud, falsely makes, forges, 
alters, or counterfeits any stamp made or used under any provision of this Act, 
or who uses, sells, or has in his possession any such forged, altered, or counter- 
feited stamp, or any plate or die used or which may be used in the manufacture 
thereof, or who shall make, use, sell, or have in his possession any paper in 
imitation of the paper used in the manufacture of any stamp required by this 
Act, shall on conviction be punished by a fine not exceeding one thousand 
dollars and by imprisonment at hard labor not exceeding five yea'rs. 

Sec. 8. That nothing in this Act shll be construed to exempt spirits bottled 
under the provisions of this Act from the operation of Chapter seven hundred ^ 
and twentv -eight of the Public Laws of the Fifty-first Congress, approved 
August eighth, eighteen hundred and ninety. 



Section 626 of the Revenue Act of 1918 (Act of February 24, 1919, Ch. 18, 
40 Stat. 1115) provides: 

"Sec. 626. That distilled spirits known commercially as gin of not less than 
80 per centum proof may at any time within eight years after entry in bond at 
any distillery be bottled in bond at such distillery for export without the pay- 
ment of tax, under such rules and regulations as the Commissioner, with the 
approval of the Secretary, may prescribe." 

Section 307 of the Liquor Tax Administration Act (Act of June 26, 1936, 
Ch. 830, 49 Stat. 1945) reads as follows: 

"Sec. 307 (a). All distilled spirits heretofore entered for deposit in a dis- 
tillery, general, or special bonded warehouse, or hereafter entered for deposit 



2684 



CONCENTRATION OF ECONOMIC POWER 



in an Internal Revenue Bonded Warehouse, shall be withdrawn therefrom within 
eight years from the date of original entry therein, except as provided in sub- 
section (c) of this section." 

Subsection (c) referred to above permits distilled spirits which were on July 
26, 1936, eight years of age or older and in bonded warehouse to remain therein 
after such date, but prohibits the allowance for loss by leakage or evaporation 
to be made for such spirits for any period after that date. 



Exhibit No. 404 



rCDCRAL ALCOHOL ADMINISTRATION 



Total Whiskly Importld into Unitld States 



IN PROOF GALLONS 

1934-1938 

(CALENDAR YELARS) 



CANADIAN 
UNITED KINGDOM 
OTHER WHISKEY ^ 




4..348,320 



13,375.339 




1934 1935 

CANADIAN WMISKLY- 



1936 



1937 



1938 



CONSISTS PRINCIPALLY OF BULK WHI5KLY 
USED IN DOMELSTIC BLLNDS. 
UNITED KINGDOM WHISKEY- CONSISTS PRINCIPALLY OF SCOTCH WHISKCY 
OTNtR WHISKEY- CONSISTS PRINCIPALLY OF IRISH WHISKEY 



'Exhibit No. 405", introduced on^. 2450, is on file tvitb the committee. 



"Exhibit No. 406", introduced on p. 2450, is on file with the committee. 



CONCENTRATION OF ECONOMIC POWER 



2685 



Exhibit No. 407 



CONSUMLR COST 

OF 

rOUR YEAR OLD &TWO Yt AR OLD 
WHISKItS 

DISTILLLD BY THL SAME. COMPANY 



CONSUMLR PAYS 

^3.79 

BOTTLED-IN-BOND 

STRAIGHT BOURBON 

WHISKEIY 

I QUART- 1 00° PROOF 



WHOLtSALLR 43*^ DISTILLER TO 
RCTAILCR »I.09/cONSUME:R 



STATt 25 «/ TAXLS 




DISTILLLR'5 
COST AND PROFIT 



FEOfRAL 56«\FLD.AND STATL f Ol /T 



CONSUMER PAYS 

5 1.92 

TWO YEAR OLD 
STRAIGHT BOURBON 

WHISKEY 
I QUART - IOO° PROOF 



DISTILLER T0/WH0LC5ALCR 24« 
CONSUMER t RCTAILCR 54* 

DISTILLER'S 
COST AND PROFIT 



ft, I (T 1 '^^D.anoSTATC/fCDCRAL 56 ♦ 
Ol'4'J XAXtS t STATC 23* 



FEOLRAL ALCOHOL ADMINISTRATION 
2-1-39 



2686 



CONCENTRATION OF ECONOMIC POWER 



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CONCENTRATION OF ECONOMIC POWER 2687 

Exhibit No. 409 

[Telegram] 

MoNTEEAL, Quebec, March IS, 1939. 
Philip E. Buck, 

General Counsel, Federal Alcohol Administration. 
With reference to your telegram on Economic Committee hearing, pressure of 
business that I discussed with you makes it impossible for me to be available 
Tuesday. I hope that after you have questioned Mr. Wachtel and Mr. Friel my 
presence at the hearing will not be necessary. 

Sam Bronfman. 



'Exhibit No. 410" faces this page. 



Exhibit No. 411 

Bank Credit Agreement Between Distillers Corporation-Seagrams, 
Limited, et al., and Bankers Trust Company; Manufacturers Trust 
Company; First National Bank of Boston; Continental Illinois Na- 
tional Bank and Trust Company of Chicago; Bank op the Manhattan 
Company; Pennsylvania Company for Insurance on Lives and Granting 
Annuities; Security-First National Bank of Los Angeles; The First 
National Bank of Chicago; First National Bank, Atlanta; National 
Bank of Detroit; First National Bank in St. Louis; Northwestern 
National Bank and Trust Company, Minneapolis; The National City 
Bank of Cleveland; Harris Trust & Savings Bank, Chicago; First 
National Bank, Philadelphia; Citizens Union National Bank, Louis- 
ville, Kentucky; First National Bank of Jersey City; First National 
Bank of Baltimore; The Boatmen's National Bank; Empire Trust Com- 
pany; Union Trust Company of Maryland 

Agreement, "dated as of July 12, 1937, between Distillers Corporation- 
Seagrams, Limited (hereinafter called "Parent Corporation"), a corporation 
organized under the laws of the Dominion of Canada; Joseph E. Seagram & 
Sons, Inc., an Indiana corporation; Joseph E. Seagram & Sons, Inc., a Delaware 
corporation; Joseph E. Seagram & Sons, Inc., a Maryland corporation; Sea- 
gram-Distillers Corporation, a Delaware corporation; Maryland Distillery, 
Inc., a Maryland corporation; The Calvert Distilling Co., a Maryland cor- 

? oration; Calvert-Distillers Corporation, a Maryland corporation; Lincoln 
nn Distilling Co., Inc.. a Delawaie corporation; Julius Kessler Distilling 
Co., Inc., an Indiana corporation (hereinafter collectively called the "Borrowers"), 
parties of the first part, and Bankers Trust Company; Manufacturers Trust 
Company; First National Bank of Boston; Continental Illinois Na- 
tional Bank and Trust Company of Chicago; Bank of the Manhattan 
Company; Pennsylvania Company for Insurance on Lives and Granting 
Annuities; Security-First National Bank of Los Angeles; The First 
National Bank of Chicago; First National Bank, Atlanta; National 
Bank of Detroit; First National Bank in St. Louis; Northwestern Na- 
tional Bank and Trust Company, Minneapolis; The National City Bank 
OP Cleveland; Harris Trust & Savings Bank, Chicago; First National 
Bank, Philadelphia; Citizens Union National Bank, Lousiville, Kentucky; 
First National Bank op Jersey City; First National Nank of Baltimore; 
The Boatmen's National Bank; Empire Trust Company; Union Trust 
Company of Maryland, (hereinafter collectively called the "Banks"), parties of 
the second part. 

Whereas the parties of the first part desire to establish a two-year credit avail- 
able on the terms and conditions herein set forth, up to a maximum of Ten million 
Dollars ($10,000,000) principal amount during the first year and up to a maximum 
of Seven million five hundred thousand Dollars ($7,500,000) during the second 
year (hereinafter called the "Term Loan"); and 

Whereas the parties of the first part desu-e to borrow during certain limited 
periods, on the terms and conditions herein set forth, in addition up to a maximum 
of Ten million Dollars ($10,000,000) prmcipal amount (hereinafter called th© 
"Temporary Loan"); and 



2688 



CONCENTRATION OF ECONOMIC POWER 



Whereas the Parent Corporation is willins; to guarantee the obligations of the 
other parties of the first part evidencing such borrowings, and the Banks are 
willing to grant such loans on the terms hereinafter set. forth^ 

Therefore It Is Agreed: 

First: The Banks agree to advance to the Borrowers on account of the Term 
Loan a principal amount which during the period ending one year from the date 
hereof shall not exceed Ten million Dollars ($10,000,000) principal amount at 
any time outstanding, and which thereafter during the life of this Agreement 
shall not exceed Seven million five hundred thousand Dollars ($7,500,000) principal 
amount at any time outstanding, upon the condilions, herein set forth, and, if, 
when, and during such time as the total principal amount outstanding on the Term 
Loan amounts to Ten million Dollars ($10,000,000) during such period of one 
year from the date hereof or to Seven million five hundred thousand Dollars 
($7,500,000) thereafter, the Banks agree to advance to the Borrowers, in addi- 
tion, on account of the Temporary Loan, an additional amount up to Ten million 
Dollars ($10,000,000) principal amount at any time outstanding on account of 
the Temporary Loan, upon the terms and conditions herein set forth. 

Each Bank agrees to advance to the Borrowers on account of the Term Loan 
and on account of the Temporary Loan up to the amounts set opposite its name 
below upon the terms and conditions herein set forth: 



Term Loan 








Temporary 






Loan 


First Year 


Second Year 




$1,600,000 


$1, 200, 000 


$1, 600. 000 


1,625,000 


1, 218, 750 


1, 625, 000 


1, 000, 000 


750,000 


1, 000, 000 


1,000,000 


750, 000 


1, 000, 000 


500, 000 


375, 000 


500,000 


500, 000 


375, 000 


500,000 


500, 000 


375, 000 


500,000 


500,000 
400, 000 


375, 000 


500,000 


300, 000 


400. 000 


375, 000 


281, 250 


375,000 


250,000 


187, 500 


250,000 


250,000 


187, 500 


250,000 


250, 000 


187, 500 


250, 000 


250,000 


187, 500 


250,000 


200,000 


150, 000 


200, 000 


150, 000 


112.500 


150, 000 


150,000 


112.500 


150,000 


150, 000 


112,500 


150, 000 


125, 000 


93, 750 


125, 000 


125, 000 


93, 750 


125, 000 


100,000 


75, 000 


100, 000 


$10,000,000 


$7,500,000 


$10,000,000 



Bankers Trust Company , 

Manufacturers Trust Company.. , 

First National Bank of Boston 

Continental Illinois National Bank and Trust Company of 

Chicago -- 

Bank of The Manhattan Company 

Pennsylvania Company for Insurance on Lives and Granting 

.\nnuities — 

Security- First National Bark of Los Angeles 

The First National Bank of Chicago 

First National Bank, Atlanta. 

National Bank of Detroit... ^ 

First National Bank in St. Louis... 

Northwestern National Bank and Trust Company, Minne- 
apolis 

The National City Bank of Cleveland 

Harris Trust & Savings Bank, Chicago 

First National Bank, Philadelphia 

Citizens Union National Bank, Louisville, Kentucky 

First National Bank of Jersey City — 

First National Bank of Baltimore 

The Boatmen's National Bank 

Empire Trust Company 

Union Trust Company of Maryland 

Total - -- 



Any wholly owned subsidiary of the Parent Corporation accepted by the Bank 
Agent as a "Borrower" may become a party to this Agreement and thereafter 
for the purposes hereof shall be a "Borrower." 

The Term Loan may be availed of by any one or more of the Borrowers in 
whole or in part, from time to time, and may be repaid in whole or in part and 
reavailed of subject to the foregoing limits as to amount until July 12, 1939, 
when said Loan and all obligations then outstanding under this Agreement shall 
mature. 

The Temporary Loan may be availed of by any one or more of the Borrowers 
in whole or in part, from time to time, and may be repaid in whole or in part and 
reavailed of during the penods from September 15, 1937, to March 15, 1938, and 
from September 15, 1938, to March 15, 1939, respectively, and all obligations 
relating thereto outstanding under this Agreement on March 15, 1938, or on 
March 15, 1939, shall, respectively, mature on said dates. 

Each Bank agrees that the failure of any Bank to extend credit as provided 
for hereunder shall not relieve any other Bank from its obligation to extend 
credit hereunder; and all parties agree that in no event shall any Bank be liable 
to extend credit hereunder in excess of the amounts set opposite its name above. 

Second: Each borrowing under each of said Loans shall be from each of the 
Banks and shall be divided among them in proportion to the shares set forth 



CO^X'ENTRATION OF ECONOMIC POWER 2689 

above of each of the Banks in the said Loans. Applications for borrowings under 
the Loans shall be made through Bankers Trust Company and shall be accom- 
panied by promissory notes made by the particular Borrower payable at the 
maker's option on any date within the time limits stated above, to the order of 
each of the Banks at the office of Bankers Trust Company in proportionate 
amounts above stated. Each of the Banks (other than Bankers Trust Company) 
hereby authorizes and requests Bankers Trust Company to advance for its 
account pursuant to the terms hereof any such proportional borrowing from it, 
upon the presentation of such notes, and agrees forthwith to reimburse Bankers 
Trust Company for such advances. 

Applications for loans by the Borrowers shall be granted hereunder by the 
Banks in the order received. 

Each note shall be in form satisfactory to the Banks and shall hear interest 
(a) if under the Term Loan at the rate of three and one-half per cent. (3}^%) per 
annum, quarterly, and (b) if under the Temporary Loan at the rate of one per 
cent. (1%) per annum above the Federal Reserve Rediscount Rate current at the 
dates of the respective notes but not less than two and one-half per cent. (2}^%) 
per annum, payable quarterly. 

Each note, other than notes of the Parent Corporation, shall bear on the back 
the following guarantee: 

"Distillers Corporation-Seagrams, Limited, hereby guarantees payment of the 
within note pursuant to the terms of its guarantee contained in agreement dated 
, between it, the payee and other parties." 

So long as there is no default under this Agreement, any and all notes outstand- 
ing hereunder, whether or not the same have matured, may be renewed upon the 
delivery by the maker to the payee of new notes for a like principal amount in 
similar form, maturing at the maker's option at any time within the limits herein- 
above set forth, provided, however, (a) that no notes under the Temporary Loan 
may be made or renewed unless the entire maximum under the Term Loan is out- 
standing, and (b) if at any time the total amount outstanding on the Term Loan 
falls below the maximum amount available as above set forth, all outstanding 
notes under the Temporary Loan shall forthwith be paid, whether matured or 
not, it being the intention that at no time will there be outstanding any borrowing 
under the Temporary Loan unless the full amount of the Term Loan has been 
availed of and is outstanding. 

Third: Distillers Corporation-Seagrams, Limited, hereby irrevocably and un- 
conditionally guarantees to the Banks, and each of them, and to each and every 
subsequent holder of the notes of the Borrowers, other than the Parent Corpora- 
tion, lepresenting borrowings hereunder, payment of the full amount of any and 
all obligations, direct or contingent, of the Borrowers under this Agreement or in- 
curred pursuant hereto, from time to time and at all times, at maturity thereof, 
by acceleration or otherwise, but subject to all the terms of this Agreement, 
hereby waiving notice of acceptance of this guarantee and of any obligation to 
which it applies or may apply under the teims thereof, and waiving demand of 
payment, protest, notice of protest, and notice of dishonor of any such obligations. 

Fourth. The Parent Corporation and each of the other parties of the first part 
jointly and severallj' agree to pay to the Banks as a consideration for the Term 
Loan, and for the term thereof, a commitment commission at the rate of one-half 
percent (H%) per annum on the unused portion of the Term Loan calculated 
annually on the basis of average borrowings, which commitment commission 
shall be payable annually on July 12, as to the year ending on such date as long 
as the Term Loan shall remain in effect, such payment to be divided among the 
Banks in proportion to their respective advances under the Term Loan; provided 
that if the Term Loan and this Agreement are determined by the Parent Cor- 
poration and the other parties of the first part, or by the Banks, in case of default 
by the parties of the first part or otherwise, such commitment commission at the 
rate of one-half percent (}^%; per annum shall be calculated on the unused portion 
of the Term Loan before such termination on the basis of average borrowings for 
the period elapsed since the date hereof or since the end of the last yea^", as the 
case may be, in respect to which the commitment commission shall have been paid, 
and shall be payable at the time of such termination. The parties hereto, other 
than the Banks, shall have the right to terminate this Agreement at any time, 
upon payment of all advances then unpaid under this Agreement, together with 
interest accrued thereon to date of payment, and the commitment commission 
to the date of termination as hereinabove provided, and thereupon any obligation 
of the Banks to advance further credit hereunder shall cease. 



2690 CONCENTRATION OF ECONOMIC POWER 

The intent of the foregoing paragraph is that the Parent Corporation and the 
other parties of the first part shall have the absolute right to terminate this 
Agreement at any time in whole or in part, in the manner above stated, upon 
payment of the commitment commission to the end of the relevant period above 
specified in which or at the end of which the Agreement is so terminated. 

Fifth: All repayments through Bankers Trust Company of obligations here- 
under shall be apportioned among the Banks, so that at all times each Bank's 
share in each unpaid advance under the Term Loan and the Temporary Loan 
shall be proportional to its commitments as above stated. 

Sixth: Each of the parties hereto, other than the Banks, covenants and agrees 
that, except with the written consent of the Bank Agent, throughout the life of 
this Agreement and until the Term Loan and the Temporary Loan have both been 
fully and finally repaid. 

(a) The consolidated net quick assets of the Parent Corporation and its sub- 
sidiaries shall at no time be less than $30,000,000. Consolidated net quick assets, 
as used herein, shall mean cash on hand or in bank, good and collectible accounts 
and notes receivable, all inventory of merchandise on hand or under commitment 
to pui chase valued at cost or market (whichever is lower) less (1) all unpaid 
advances under the loans herein provided for; (2) all liability for merchandise 
and supplies included in net Cjuick assets above; (3) all liability for the purchase 
of other property, and (4) all other liabilities irrespective of maturity. Except 
as otherwise specifically provided, the consolidated net quick assets referred to 
above and the consolidated total liabilities referred to below shall be computed in 
accordance with standard accounting practice approved by independent public 
accountants satisfactory to the Banks. 

(b) The consolidated total habilities of the Parent Corporation and its sub- 
sidiaries, including the Term and Temporary Loans, shall at no time exceed 
$37,000,000. 

(c) Government taxes and customs duties on spirituous liquors in bond and in 
process shall not be included as a liability in determining net quick assets under 
subparagraph (a) of this Paragraph Sixth or in determining total liabilities under 
subparagraph (b) of this Paragraph Sixth. 

(d) Neither the Parent Corporation nor any of its subsidiaries shall dispose of 
any stock of any subsidiary nor shall form or acquire any new subsidiaries umess 
such subsidiary so formed or acquired shall be wholly owned by the Parent Cor- 
poration or a wholly owned subsidiary of the Parent Corporation. 

(e) Neither the Parent Corporation nor any of its subsidiaries shall 

(1) pledge or mortgage any of their assets, other than liens to the United States 
or Canadian Governments or (2) borrow any money, except under said loans, 
and except for monies borrowed from the Parent Corporation or the subsidiary's 
parent company, or (3) execute any obligations except within the limit of con- 
solidated total liabilities specified above in subparagraph (b) of this Paragraph 
Sixth, or (4) sell any accounts receivable or debtor's paper with recourse to the 
Parent Corporation or to any of its subsidiaries. 

(f) _ Neither the Parent Corporation nor any of its subsidiarief, shall incur (nor 
permit to remain outstanding in any subsidiary hereafter acquired) any direct or 
contingent debts other than the Loans herein provided for, except such debts as 
arise in current operations, including the purchase and sale of distilled and fer- 
mented liquors, grain, and materials necessary in the distillation and sale of 

• spirits, labor, taxes, and the like. 

(g) Neither the Parent Corporation nor any subsidiary shall undertake any 
transaction by way of lending money or lending credit (as distinguished from 
sales on credit) to any person, firm, or corporation other than the Parent Cor- 
poration or one of its subsidiaries, except tliat the Parent Corporation and sub- 
sidiaries may lend money or credit or given financial assistance to customers 
within reasonable limits not exceeding Five hundred thousand Dollars ($500,000) 
in the aggregate at any one time outstanding, when undertaken in the interests 
of the business of the Parent Corporation and its subsidiaries. 

(h) Neither the Parent Corporation nor any of its subsidiaries shall enter 
into any transaction except such as may be incidental to the manufacture and 
sale of distilled and fermented liquors, whether involving the credit of such party 
or nol 

(i) Neither the Parent Corporation nor any subsidiary shall merge, consolidate 
or combine with or sell or lease all or substantially all of its assets t*^ another 
corporation or company, except a wholly owned subsidiary of the Parent 
Company. 



CONCENTRATION OF ECONOMIC POWER 2691 

Seventh: "Subsidiary," as used in this Agreement, means any corporation 
70% of more of whose voting stock is owned at the time by the Parent Corpora- 
tion or by a subsidiary of the Parent Corporation. 

All amounts stated in Dollars in this Agreement are in United States currency 
and all items in foreign currency shall for the purpose of this Agreement be con- 
verted into United States currency at the rate of exchange current at the time of 
the calculation, unless some other basis shall have been agreed to by the Bank 
Agent. 

Eighth: It is hereby agreed, jointly and severally, by the parties heieto other 
than the Banks, that the Parent Corporation shall furnish to each of the Banks 
quarterly (or oftener if required by the Bank Agent), a detailed consolidated 
balance sheet, consolidated earning statement, statement of consolidated net 
quick assets and statement of consolidated total liabilities calculated as provided 
in the subparagraphs (a) and (b) and Paragraph Sixth hereof, such balance 
sheet and statements to be certified by the Parent Corporation acting by its 
President or Treasurer, and shall furnish once a year (or oftener if required by 
the Bank Agent) a similar balance sheet and statements and a complete audited 
report to be certified by independent public accountants satisfactory to the 
Banks. The quarterly balance sheet and statements to be certified by the officers 
of the Parent Corporation shall be furnished within 60 days after the close of the 
fiscal quarter, and the annual balance sheet and statements within 90 days after 
the close of the fiscal year. The parties hereto, other than the Banks, further 
covenant and agree, jointly and severally, to furnish with reasonable promptness 
such other data as the Bank Agent may reasonably request. 

Ninth: If there shall be any breach of any of the terms or covenants of this 
Agreement on the part of any of the parties hereto other than the Banks, then 
unless the breach is cured within 20 days after written notice to the Parent Cor- 
poration and the Borrowers from the Banks or from the Bank Agent, the term 
of said Loans shall, at the election of the Banks forthwith cease and determine, 
and any and all liabilities under this Agreement or incurred pursuant thereto to 
theBanks shall become at once due and payable without notice, presentation or 
demand of payment, and without any credit or time allowed by this Agreement 
or any instrument evidencing any such liability. The written notice provided 
for herein shall be sent by registered mail, addressed to the Parent Corporation 
and the Borrowers at the addresses referred to below, and during said twenty-day 
period after the giving of such written notice, if the Bank Agent so determines, 
the Banks shall not be required to make any additional advances under said 
Loans. 

The Bank Agent referred to in this Agreement shall be Mr. Louis A. Keidel, 
of Bankers Trust Company and in case of Mr. Keidel's disability or inability 
or failure for any reason to act, Mr. Hugh H. McGee, of Bankers Trust Company, 
and Mr. L. P. Christenson, of Manufacturers Trust Company, shall jointly act 
as Bank Agent. In case of Mr. McGee's disability or inability or failure for any 
reason to act Mr. J. B. Everett, of Bankers Trust Company, shall act in his 
place, and in case of Mr. Christenson's disability or inability or failure for any 
reason to act, Mr. R. A. Lockwood, of Manufacturers Trust Company, shall act 
in his place. In case both Mr. McGee and Mr. Everett shall be unable or for 
any reason shall fail to act at any time during- the life of this Agreement, their 
successors shall be appointed in writing by the then President of Bankers Trust 
Company, and in case Mr. Christenson and Mr. Lockwood shall be unable to 
for any reason shall fail to act at any time during the life of this Agreement, 
their successors shall be appointed in writing by the then President of Manu- 
facturers Trust Company. The Bank Agent is authorized on behalf of the Banks 
to determine for them when any breach of any of the terms or covenants of this 
Agreement by any of the parties hereto other than the Banks shall have occurred, 
and is further authorized thereafter on behalf of the Banks in accordance with 
the terms hereof to terminate the Loans and mature the obligations hereunder, 
which action (joined in by both if two persons are then acting as Bank Agent) 
shall be binding upon the Banks. Any such action of the Bank Agent shall be 
evidenced in writing and addressed to the Parent Corporation at its office, 1430 
Peel Street, Montreal, and to all other Borrowers at 405 Lexington Avenue, 
New York City, and shall be operative when sent by registered mail, postage 
prepaid. 

Whenever in this Agreement the action or consent of the Bank Agent is required 
or provided for, the Banks agree that they will act in pursuance of such action 
or consent of the Bank Agent, or in the absence of action or consent of the Bank 
Agent, by unanimous consent or action of the Banks themselves. 



2692 CONCENTRATION OF ECONOMIC POWER 

Tenth: Upon the insolvency of, or upon the suspension of business of, or the 
filing of a voluntary petition in bankruptcy by, or the filing of a voluntary petition 
pursuant to or purporting to be pursuant to the Acts of Congress relating to 
bankruptcy or amendatory of such Acts by, or an adjudication of bankruptcy of, 
or the making of an assignment for the benefit of creditors by or the consent by 
any one of the parties of the first part to the appointment of any receiver of or 
of a substantial part of the property of such party or (if the Bank Agent above 
referred to shall so determine) of any one or more subsidiaries constituting so 
substa.ntial a part of the enterprise as seriously to affect the business as a whole, 
then and in any such event, any and all liabilities under this Agreement or incurred 
pursuant hereto shall become at once due and payable without notice, presentation, 
or demand of payment, and notwithstanding any credit or time allowed by this 
Agreement or any instrument evidencing any of said liabilities and the term 
of the said Loans shall thereupon forthwith cease. 

Upon the entry of an order pursuant to or purporting to be pursuant to the 
Acts of Congress relating to bankruptcy or amendatory of such Acts, approving 
a petition or answer seeking reorganization of, or of an order appointing any 
receiver of or of a substantial part of the property of, or the issuance of a warrant 
of attachment against the property of, any one of tlie parties of the first part or 
any one or more subsidiary constituting- so substantial a part of the enterprise 
as in the determination of the Bank Agent shall seriously affect the business as 
a whole, then and in that event unless such order approving a petition or answer 
seeking reorganization, or order appointing a receiver as dismissed or stayed 
within 90 days from its entry (during which period, if the Bank Agent so deter- 
mines, the Banks shall not be required to make any additional advances under 
said Loans) or such attachment be dismissed or bonded within a period of thirty 
days from its levy, then at the option of the Banks, acting through the aforesaid 
Bank Agent, any and all liabilities under this Agreement or incurred pursuant 
hereto shall become at once due and payable without notice, presentation or 
demand of payment, and notwithstanding any credit or time allowed by this 
Agreement or any instrument evidencing any of said liabilities, and the terms of 
said Loans shall thereupon forthwith cease. Nothing in this paragraph shall 
limit any rights which the Banks might otherwise have. 

Eleventh: No delay on the part of any of the parties in exercising any of the 
rights hereunder, and any one or more failures to act, and no partial or single 
exercise thereof, shall constitute a waiver of such rights. 

Twelfth: The Parent Corporation and each of the other parties of the first 
part jointly and severally agree that the first moneys advanced hereunder shall 
be used by them to effect repayment of certain notes payable to Bankers Trust 
Company and Manufacturers Trust Company in an aggregate amount of $6,250,- 
000, plus interest, and hereby authorize and request Bankers Trust Company, 
on its behalf and on behalf of Manufacturers Trust Company, to effect such 
repayment for account of the parties of the first part out of the first sums advanced 
hereunder. 

Thirteenth: It is understood that the presently outstanding note or notes of 
the Parent Corporation and/or the other parties of the first part, due November 
2, 1941, in an aggregate principal amount of Five million Dollars ($5,000,000), 
shall continue to remain outstanding and shall be unaffected by this Agreement. 

Fourteenth: This Agreement may be executed in any number of counterparts 
which, together shall constitute but one Agreement. 

In Witness Whereof the parties hereto have caused these presents to be 
signed by their proper officers thereunto duly authorized as of the day and year 
first above written. 

Distillers Corporation-Seagrams, Limited, 
By , President. 

Attest: 



Assistant Treasurer. 

Joseph E. Seagram & Sons, Inc., 
(an Indiana corporation) 

By , Vice President. 

Attest: 



Assistant Treasurer. 

Joseph E. Seagram & Sons, Inc., 
(a Delaware corporation) 
By , Vice President 



CONCENTRATION OF ECONOMIC POWER 2693 

Attest: 



Assistant Treasurer. 

Joseph E. Seagram & Sons, Inc., 
(a Maryland corporation) 

By -^r — , Vice President. 

Attest: 



Assistant Treasurer. 

Seagram-Distillers Corporation, 
(a Delaware corporation) 

By ■ , Vice President. 

Attest : 



Assistant Treasurer. 

Maryland Distillery, Inc., 
(a Maryland corporation) 

By , Vice President. 

Attest : 



Assistant Treasurer. 

The Calvert Distilling Co., 
(a Maryland corporation) 

By , Vice President. 

Attest: 



Assistant Treasurer. 

Calvert-Distillers Corporation, 
(a Maryland corporation) 

By , Vice President. 

Attest: 



Assistant Treasurer. 

Lincoln Inn Distilling Co., Inc., 
(a Delaware corporation) 

By , Vice President. 

Attest: 



Assistant Treasurer. 

Julius Kessler Distilling Co., Inc., 

By -, Vice President. 

Attest: 



Attest: 



Assistant Treasurer. 

Bankejrs Trust Company, 
By — . 



Attest: 



Attest: 



Attest: 



Attest: 



Manufacturers Trust Company, 

By .. 



First National Bank of Boston, 
By . 

Continental Illinois National Bank and 
Trust Company of Chicago, 
By . 



Bank of the Manhattan Company, 
By . 

Pennsylvania Company for Insurance on 
Lives and Granting Annuities, 
By 



2694 

Attest: 



Attest: 



Attest: 



Attest: 



Attest: 



Attest: 



Attest: 



Attest: 



Attest: 



attest: 



Attest: 



Attest: 



Attest: 



Attest: 



Attest: 



Attest: 



CONCENTRATION OF ECONOMIC POWER 



By 



SEcuniTY-FiRST National Ba;^k of Los An- 
geles, 



By 



The First National Bank of Chicago, 



By 



First National Bank, Atlanta, 



Bv 



National Bank of Detroit, 



by 



First National Bank in St. Louis, 



By 



Northwestern National Bank and Trust* 
Company, Minneapolis, 



The National City Hank o. <. i.eveland, 



By 



by 



Harris Trust & Savings Bank, Chicago, 



First National Bank, Philadelphia, 



Hv 



By 



Citizens Union National Bank, Louisville, 
Kentucky, 



By 



First National Bank of Jersey City, 



By 



First National Bank of Baltimore, 



By 



The Boatmen's National Bank, 



By 



Empire Trust Company, 



By 



Union Trust Company of Maryland, 



Exhibit No. 412 



DISTILLERS CORPORATION— SEAGRAMS LIMITED (CANADA) 



DIRECTORS AND COMPANIES WITH WHICH THEY ARE CONNECTiiD 



MANUFACTURERS TRUST CO. 

BROOKLVN-MANHATTAN TRANSIT CORP. 

EAGLE INDEMNITY CO. 

P/.TTISON & BROWNS, INC. 

ABOLIAN AMERICAN CO. 

ROTAL INDEMNITY CO., OP NEW YORK 

SHERIDAN-WYOMING COAT* CO. 

TEXTILE BANKING CO. 

UNITED STATES DISTRIBUTING CORP. 

NEW ENGLAND PUBLIC SERVICE CO. 

PITTSTON CO. 

SHUR-ON OPTICAL CO. 

INDIAN REFINING CO. 

WESTERN ELECTRIC CO., INC. 

INTBRBOROUGH RAPID TRANSIT 0% NOTEHOLDERS 
PROTECTIVE COMM. 

INTERNATIONAL HOLDING CO. OF GARWOOD 

NATIONAL BONDHOLDERS CORP. 

NEW YORK RAPID TRv^NSIT CORP. 

REf ONSTRUCTION FINANCE CORP. 

REORGANIZATION MANAGERS FOR NATIONAL 
SURETY CO. 

AMERICAN COMMITTEE OF SHORT TERM CREDI- 
TORS OF GERMANY 

UNITED BISCUIT CO. OF AMERICA 

UNITED STATES TRUCKING CORP. 

PARAMOUNT PICTURES, INC. 



SCHWENGEL 



BRONFMAN, A. 



BRINTCAN INVESTMENTS, LTD, 



BRONFM.4N. S. 



GLOBE BEDDING CO., LTD. 
BRINTCAN INVESTMENTS, LTD. 



JORDAN WINE CO., LTD. 
J. A. FOREST 4 CO., ITD. 



GEOFFRION 



GEOPFRION a. PliUD'HOMME 

ALUMINIUM LIMITED 

CANADA LIFE ASSURANCE CO. 

BEAUHAHNOIS POWER CORP. i SUBSIDIARIES 

TITLE GUARANTEE 4 TRUST CORP. 

CATELLI FOOD PRODUCTS, LTD. 

SAQUENAY POWER CO., LTD. 

COMPAGNIE BELGO-CANADIENNE DE CREDIT, LTEE. 

WINDSOR HOTEL CO., LTD. 

NATIONAL TRUST CO., LTD. 



WILLKIE 


HIRAM 


WALKER-GOODERHAM i WORTS LTD. | 


HIRAM 


WALKER 


& 


SONS LTD. 


HIRAM 


WALKER 


± 


SONS INC. 


HIRAM 


WALKER 


A 


SONS DISTILLERIES INC. 


HIRAM 


WALKER 


INC. 1 


HIRAM 


WALKER 


4 


SONS (NEW JERSEY), INC. 


HIRAM 


WALKER 


4 


SONS (WESTERN) INC. 


HIRAM 


WALKER 


(DELAWARE) INC. | 


HIRAM 


WALKER 


4 


SONS GRAIN CORP., LTD. 


JEFFERSON TRUST 


4 SAVINGS BANK, PEORIA, ILL. 


CENTRAL ILLINOIS 


LIGHT CO. 



McINNERNEY 



NATIONAL DAIRY PRODUCTS CORP. 

AMERICAN WATEB WORKS 4 ELECTRIC CO. 

TOBACCO PRODUCTS CORP. 

UNITED STORES CORP. 

WARD BAKING CO. 

LEHIGH VALLEY RY. 

GIMBBL BROTHERS, INC. 

NEW JERSEY, INDIANA 4 ILLINOIS RY. CO. 

MCLBLLAN STORES CO. 

B. F. GOODRICH CO. 

WEST PENN ELECTRIC CO. 

NEW YORK WORLD'S FAIR 1939, INC, 

FAIRFIELD WESTERN MARYLAND DAIRY CORP. 



SOURCE: TAKEN FROM "POOR'.S ; REGISTER OF 
DIRECTORS OF THE UNITED STATES AND CANADA." 
1938 EDITION, AND FEDERAL ALCOHOL ADMIN- 
ISTRATION RECORDS. 



19MM— 39— pt. « (Face p. SBVti 



CONCENTRATION OF ECONOMIC POWER 



2695 



Exhibit No. 413 

[Submitted by Joseph E. Seagram & Sons, Inc.] 

Seagram's — Metropolitan New York District 

Case prices effective January 27, 1939, and established under the fair-trade contract 
for sale to liquor' licensees 



Brand name 


Age 


Proof 


Quart 


Fifth 


Pint 


Mpint 


Bottled-in-Bond Rye Whiskies (under 
Canadian Oovernmeut supervision): 
Ancient Bottle Rye. 


5 Yrs 

8 Yrs 

5 Yrs 

8 Yrs 

SYrs 

6 Yrs 


100 
100 

100 
100 
90 

86.8 

90 

90 

90 

90 
90 
90 
90 

85 


$35. 95 
45.50 

35.95 
45,50 
34.70 

35.95 

19.95 

24.60 

19.75 

15.35 
13.95 


$29.60 


$36. 80 
46.35 

36.80 
46.35 
35.15 

36.80 

20.57 

25.25 


$38. 55 


Pedigree De Luxe Rye 


48.00 


Bottled-in-Bond Bourbon Whiskies 
(under Canadian Qovernment super- 
vision): 


29.60 


38.55 




48.00 


Seagram's "83": Canadian Whisky 


28.30 
29.60 
16.25 
19.95 




Seagram's V. 0.: Canadian Blended 
Whisky 




Seagram's Crown Blended Whiskies: 




Grain Neutral Spirits). 
Seagram's 7 Crown (60 percent 






Grain Neutral Spirits). 






only) (72>i percent Grain Neutral 
Spirits). 
Seagram's Distilled London Dry Gins 
(distilled from 100 percent Grain Neu- 
tral Spirits): 
King Arthur London Dry Gin.. 




12.40 


16.10 




Seagram's Superior Gin (Earsonly) 






■ Ancient Bottle Gin.. 




17.14 






Kessler's Private Blend (75 percent 




17.65 
13.70 


18.00 
14.50 




Grain Neutral Spirits). 
Kessler's Distilled L^ry Gin (dis- 
tilled from 100 perce- Grain Neu- 
Spirits). 




11.15 









Quantity Discounts: 

5 Cases of Assorted Seagram and/or Kessler Products, 2 percent. 
15 Cases of Assorted Seagram and/or Kessler Products, 3 percent. 
25 Cases of Assorted Seagram and/or Kessler Products ,4 percent. 
1 percent Discount for cash in 10 days. 
Above prices include New York State tax of $1.00 per wine gallon. 

The above price list applies to the Metropolitan New York District comprising Manhattan, Kings, 
Bronx, Queens, Nassau, Sulfolk, Richmond, and Westchester Counties. 
(This list supersedes all previous price lists.) 

Minimum consumer bottle prices established under the fair-trade contract effective 

Feb. 11,1939 



Brand name 



Bottled-in-Bond Rye Whiskies (under Canadian Government 
supervision): 

Ancient Bottle Rye 

Pedigree De Luxe Rye 

Bottled-in-Bond Bourbon Whiskies (under Canadian Govern- 
ment supervision): 

Seagram's Bourbon 

Pedigree De Lu.te Bourbon 

Seagram's "83": Canadian Whisky 

Seagram's V. O.: Canadian Blended Whisky 

Seag.am's Crown Blended Whiskies: 

Seagram's 5 Crown (72 >i percent Grain Neutral Spirits) 

Seagram's 7 Crown (60 percent Grain Neutral Spirits) 

Seagram s Crown Special (72>4 percent Grain Neutral 

Spirits) 

Seagram's Distilled London Dry Gins (distilled from 100 per- 
cent Grain Neutral Spirits): 

King Arthur London Dry Gin 

Seagram's Superior Gin 

Ancient Bottle Gin 

Kessler's Private Blend (75 percent Grain Neutral Spirits).. 

Kessler's Distilled Dry Gin (Distilled from 100 percent 

Grain Neutral Spirits) 



Quart 



$4.20 
5.30 



4.20 
5.30 
4.05 
4.20 

2.33 

2.87 



1.80 
2.00 



2.05 
1.60 



Fifth 



$3.45 



3.45 



3.30 
3.45 



1.90 
2.33 



1.45 



2.00 
1.30 



Pint 



$2.15 
2.70 



2.15 
2.70 
2.05 
2.15 

1.20 
1.48 



.05 



1.05 
.85 



K pint 



$1.15 
1.40 



1.15 
1.40 



Discount 1(1 percent per Case sale of Full or Assorted Seagram and/or Kessler Products. 
Above price; include New York State tax of $1.00 per wine gallon. 

The above price list applies to the Metropolitan New York District comprising Manhattan, Kings, Bronx, 
Queens, Nassau. Sullolk, Richmond, and Westchester Counties. 
(This list supersedes al! previous price lists.) 



2696 CONCENTRATION OF ECONOMIC POWER 

Exhibit No. 414 

[Submitted by James E. Friel, vice president, Joseph E. Seagram & Sons, Inc.] 
Item V. — Distribution list prices to wholesalers: Quart size only 



Brand 


Aug. 
1934 


Nov. 
1934 


Mar. 
1935 


Aug. 
1935 


Sept. 
1935 


Jan. 
1936 


July 
1936 


Nov. 
1937 


July 
1938 


Seagram Distillers Corporation:. 
(In Bond.) 
Ancient Bottle Rye 


18.00 
25.00 
16.00 
17.00 
14.50 




17.00 
24.00 
16.00 
16.50 
14.50 






14.90 
24.00 
14.90 
14.90 
13.90 






13.00 












21.00 


Seagram's Bourbon 










13.00 


"VO" ---- 






13.00 


"83" 










• 12. '00 


Silver Dollar 






11.50 






Five Crown _ 


19,00 
•23.00 


19.00 
23.00 


19.00 
23.00 


19.00 
23.00 




15.40 
19.70 
14.00 
15.40 

12. no 

13,40 
12.00 




14.68 


Seven Crown .... .. 






18.83 










Crown Special . 




19.50 


19.00 


19.00 
12.00 
14.00 








14.18 


Kessler Private 








11.68 


Kessler Preferred . . 




























(All prices are delivered, New York 
or Chicago.) 
Calvert Distillers Corporation: 

Calvert Whiskey. 


23.80 
















Special Reserve. 




20.23 














Calvert Reserve.. 








20.23 


17.75 
13.75 
11.75 
13.75 




18.00 
14.35 
12.00 
14.25 
12.65 


18.43 


Calvert Special .- 






16. 40' 


14.43 


Old Drum . ... 


12.03 




j^ 


11.50 
15. 60 


11.93 


Private Stock 






J 


13.93 


Kentucky Pride . 










13.93 


Carstairs Bros. Distilling Co., '^nc.: 
"1788" 
















21.05 


Lincoln Inn 


















12.93 


Harmony 


















11.93 


Qrandsire _ 


















11.93 


Silver Dollar, 90° 








•"■ 










9.68 


Silver Dollar, 86" 


















9.25 











































Exhibit No. 415 



SCHCNLCV DISTILUAS 
CORR 



DIRECTORS AND COMPANIES WITH WHICH THEY ARC CONNECTED 



NOMIUTCD NONtUSTCD 



FIRM Of covcwMu laipms 

CANAM JTEAM9IU> UmiTO. 
«NTUI(TCO»LCQ 

MIOLMO SHinuiLsmcco, 
CMvc smituiiwic t RCfluxiM; co, 

PltRCt OIL CORP 

CCORCIA & FLOfVM RH 

CULT MOeiU i NORTHOMmCO. 

MUOMO AIR LMC RAILWAY CO 



'^ 



NOMUSTU NONCUiTUI 



WNE UJTID NOW USIC* 



LEHMAN MMTHUS 

FUNTKOTt CO. 

EXPORT STCAMMIPCORR 

AtitMUH OKKTUMi INC 



MONTREAL TRUST Ctt 
RICHMOND. FRCDCRICKStURC 
t POTOMAC RR. CO. 

RICHMOND-WASHINGTOX CO, 
TENNESSCC, ALABAMA I 
CEOftCIA RY. 

REPUBLIC STEEL CORR 



TAKEN FROM POOR'J REGISTER 
OF DIRECTORS OF THE UNITED 
STATt5 AND CANADA. 1938 
EDITION AND FEDERAL ALCOHOL 
ADMINISTRATION RCCOR0.3. 



Ft\DERAL AlCOWL ADMINISTRATION 



AMERICAN EXPORT LINES INC 
PIERCE PETROLEUM CORP 



CONCENTRATION OF ECONOMIC POWER 
Exhibit No. 416 



2697 



DIRECTORS AND COMPANIES 
WITH WHICH THEY ARE CONNECTED 



HIRAM WALKER-GOODERHAM &WORTS,LIMITED. 



MORROW 



-£ 



Ogilvre Flour Mills Co. 
E^k of Toronfo 
Chrlsh'e.BroymS Co.Lfd 
CnsgliiiM&ik(riQ«l(natl3.Ucl 
Wilsll Ud. 
Beiss- Premier Pipe Co 
Mjple LuF Gandens Ltd 
Massey -Harris Co. LM. 
Consumers Glass C0.IW. 
SJandani Milling Co 
RibinsH Cofisolidaled Cone Co 
Federal FIrt Insurance Co 
Fairchlld Airoaft LM 
Ward Baking Co. 



WRKaHT 



IWII.ReiJ.Wn'9lilSthm'llan 
Cliariered Trust & Exrcufor Coi 
Cinads Mailing Co.. Ltd. 

AlgoM Sled Corp, Ltd. 



HATCH 

I 



Canada Malting Co, Ltd. 
Cio«ii«ilD(yriJAkoliolCo.Ltd. 
T E Bissell Co.. Ltd. 
T 6 Bright & Co., Ltd. 



McCarthy 



Mara 81 M'Cartliy 
Canada Malting Co, Ltd. 
Investment Foundstion, Ltd 
CmUabd Firt t Carilir InitDO G> 
UmlRie InwtiicUct taaia 
Mrol Oil k Gas Co.Ltd. 



QIBBONS 



TG6figl.t&Ca 



CHISHOLM 



Osier &. Hammond 
Alexandra Co., Ltd. 
TlKCansbNtrHi-tWLn)C<L.LId 
(■all Saskatdtewan land Co..Ltd 
Tb( Winnipeg Wniem Lad Csp Ltd. 
North 5tar Oil Ltd. 



600DERHAM 



Uala FVnanenl Morlgqe Corp. 
Daiwm gl [aod) Saxol hum Co. 
Canada ftnnanait Trust Co. 
Bank of Toronb 



LASH 

I 



BUt,Lish,Anglin&C<sjib 
Teck-lkijhesBokl Mines Ltd. 
\jin»f» GoU Mines,Ud. 
Massey-Haris Co.Ltd. 
[oldidayUFrintfGnadiLid. 
Clirislie. Bnwn jk Ca.Lld. 
Caaliii Western Lumber Co.,LW. 
IWn«»Coostlidal(dCMCt.lld 
Sainyer-Massey Ltd. 



WALTON 



Taken from 1938 Edition of Rjors Regisfer of DirKlors of tde United Slates and fanada. 
and Feoeral Alconol Administration Records 



Exhibit No. 417 

FINANCIAL DATA— CONSOLIDATED: FOUR DISTILLING COMPANIES 

[Compiled by Federal Alcohol Administration from published annual reports of Schenley Distillers Corp., 
National Distillers Products Corp., Seagrams, Ltd., and Hiram Walker-Gooderham & Worts, Ltd.] 



Assets: 

Receivables 

In ven tories 

Plant and equipment (net)... 
Other (goodwill, etc.). 

Total 

Liabilities: 

Bank loans... 

Payables 

Other (capital surplus) 

Capital stock _. 

Earned surplus 

Total 

Dividends ...» 

Companies reporting... 

Companies paying dividends 
Sales (net) 

Companies reporting 

Net profits— after ta\es_.- 

Companies reporting 



$27,399,060 
50,146,019 
18,501,159 
21,780,320 



$50. 204. 062 
86, 079, 997 
34, 099, 24C 
18, 598, 6.11 



$56, 737, 072 
109,027.132 
44,841,786 
i8, 923. 94! 



$75. 331, 222 
139, 651, 582 
53, 160, 002 
20,021, 10"3 



$76, 063, 391 
143, 777, 766 
57,415,299 
10,710,239 



117,826,558 



188,981,936 



229, 529, 931 



288, 163, 909 



287, 966, 695 



10, 253, 687 
16. 579, 923 
2, 407, 516 
51,971,448 
36, 613, 984 



24,574,914 
25, 728, 641 
1,426,664 
91, 287, 808 
' 45, 963, 909 



45, 300. 000 
34, 922, 266 
1,419.164 
93, 912, 788 
53,975,713 



64,631.712 
37, 623, 386 
6,063,019 
112,592,968 
67, 252, 824 



63, 672, 730 

26, 433, ,"131 

6,063,019 

114,092.938 

' 77, 704, 447 



117,826,558 



188,981,936 



229, 529, 931 



288, 163, 909 



287, 966, 695 



$1,011,025 
3 
1 

$90. 331, 984 
2 

$18,105,728 
2 



$4, 534, 560 
3 
2 

$115,642,400 
2 

$18,210,157 
3 



$14, 439, 774 
4 
3 

$265,204,390 
4 

$24, 987, 842 
4 



$12,817,581 
4 
3 

$291,679,832 
4 

$18, 105, 728 
4 



$12,421,854 

4 

4 

$282, 884, 973 

4 

$25, 499, 153 
4 



' Reduced by $11,400,000 by write off against surplus by National. 

' Reduced by $9,491,525 by write down of goodwill, etc., to $1 by Iliram Walker. 



2698 



CONCENTRATION OF ECONOMIC POWER 
Exhibit No. 418 



CONSUMER COST 



OP 



20% iXtYK.mo fTHT.WUUKnr 

5» 5 re.oiosrin'.wmsHeY 
75% avA/M Mei/mAL spnin3 

90' PHOOf-/ Qt/AUr 



WHOUSAIER 7M\ 
RCTAIUR V)i 



POPULAR SPIRIT BLEND 



^^AR - COMSUME/? 




uc£AfS£ sr/tre 

AND 

MONOPOLY STAT£ 

COMPAffEO 



LICENSE 
STATE 



MONOPOLY 
STATE 



/iJefo/ 4koM Mmim'slfvf/oo - 2-/-59 



BAseo 
CO/t/TfA/T usr/MOS 



Exhibit No. 419 

[Submitted by Col. McC. Bullington, Va. A. B. C. Board] 

Commonweallh of Virginia, Alcoholic Beverage Control Board Retail Price List A^o. 
60— Effective February 1, 1939 — Supersedes All Previous Price Lists 



Brand 



Age 



Froof 



Size 



Retail 
price 



STRAIGHT WHISKEY— BOURBON 



Grand National 

Grand National 

Windsor 

Windsor 

Frontier 

Frontier 

Mint Springs 

Mint Springs 

Golden Eagle 

Golden Eagle 

Virginia Gentleman. 
Virginia Gentleman. 

Crab Orchard 

Crab Orchard 

Falling Creek.. 

Falling Creek.. 

Old American 

Old American 

Bottoms Up 

Bottoms Up 

Shipping Port 

Shipping Port 

Ten High 

Ten High... 

Old Quaker.. 

Old Quaker 

Cream of Kentucky. 
Cream of Kentucky. 

Fairfax County ".. 

F^Tfa.x Countv 

Ol.J Polk " 

Old Polk 



Mo. 
Mo- 
Mo. 
Mo. 
Mo. 
Mo. 
Mo. 
Mo. 
Mo. 
Mo. 
Mo. 
Mo. 
Mo. 
Mo. 
Mo. 
Mo- 
Mo. 
Mo. 
Mo- 
Mo. 
Mo. 
Mo. 
Mo. 
Mo. 
Mo. 
Mo. 
Mo. 
Mo. 
Mo. 
Mo- 
Mo. 
Mo. 



90 
90 
90 
90 
90 
90 
90 
90 
100 
100 
90 
90 
90 
90 
90 
90 
90 
90 
90 
90 
90 
90 
90 
90 
90 
90 
90 
90 
90 
90 
100 
100 



Qt 

Pt.. 

Qt 

Pt 

Qt 

Pt 

Qt 

Pt 

Qt 

Pt 

Qt 

Pt-. 

Qt 

Pt- 

Qt 

Pt 

Qt 

Pt.. 

Qt 

Pt. 

Qt 

Pt... 

Qt 

Pt.. 

Qt 

Pt 

Qt .>., 

Pt 

Qt 

Pt 

Qt 

Pt. 



$1.?5 

.65 
1.30 

.70 
1.35 

.70 
1.35 

.70 
1.45 

.75 
1.45 

.75 
1.45 

.75 
1.45 

.75 
1.50 

.80 
1.50 

.80 
1..55 

.80 
1.55 

.85 
1. fiO 

.85 
l.fiO 

.85 
1.60 

.8.") 
1.65 

.85 



CONCENTRATION OF ECONOMIC POWER 



2699 



CotmnonweaUh of Virginia, Alcoholic Beverage Conlrol Board Retail Price List No. 
50 — Effective February 1. 1DS9 — Supersedes All Previous Price Lists — Contd. 



80 



101 
102 
109 

no 

103 
104 
115 
116 
111 
112 
125 
126 

m 

114 
127 
128 
110 
120 



Brand 



■TRAioiiT wiMSKEV — BOunuoN— contintied 



(llrriPiorP Onhl I.nhol 
Clpimiorp Cold Label. 

Old T,ewis Hunter 

Ola Lewis Hunter 

Old Mr Hostrm 

Old Mr noston 

rpnturv Cliih 

Century Club 



STRAIGHT WHISKEY— RYE 



Town Tavern 

Town Tavern - 

Fleet Sireet 

Fleet Street 

Ruxton Rye - 

Uuxton Rye_ 

Maryland Hunt Cup 

Marvland Hunt Cup 

Wolf Creek 

Wolf Creek 

^nrc-lay''' Private Stock 

Hau.dyS I'rivate Stock 

^herhrook 

Stierhronk 

Ritrenhouse Sqiare 

Ttitfenliouse Square 

Rewfo - 

Rewco.-- - 

Old Mr Boston 

Old ^rr. noston 

Ancient Aee 

Ancient Ane,.. 



STRAIOnT WHISKEY— CORN 



Colonel Clen... 
Colonel Olen.-. 
Midwest Corn. 
^Tidwest Corn. 
Tndian Queen. . 
Indian O'leen.. 
Cotton Picker. 
Cotton Picker. 



WHISKEY— BOURPON 



Old Whie; 

Old Whig 

Invader 

Invader 

Two Naturals. 
Two Naturals. 
Ace Brand 



WHISKEY- 

Scill brook 

Stillhrook 

Golden Harvest 



BLENDED WHISKEY 

Brigadier 

Brigadier 

Briarcliff 

Briarcliff 

Belle of Nelson 

Belle of Nelson 

Cobb's Creek 

Cobb's Creek 

O. & W 2 Star 

O. & W. 2 Ptar _ 

Old ^Tr Boston Rockins Chair.. 
Old Mr Boston Rocking Chair.. 

Kessler's Private Blend 

Kessler's Private Blend 

Old Treasure 

Old Treasure 

a. & W. 5 Star 

O. A- W 5 Star 



Age 



30 Mo.. 
30 Mo. 
36 Mo. 
30 Mo. 
36 Mo. 
30 Mo. 
4SMo. 
48 Mo. 



?4 Mo. 
24 Mo- 
24 Mo.. 
24 Mo.. 
24 Mo. 
24 Mo., 
27 Mo. 
27 Mo. 
24 Mo. 
24 Mo. 
24 Mo. 
24 Mo. 
27 Mo 
27 Mo 
36 Mo. 
36 Mo. 
30 Mo. 
30 Mo. 
36 Mo. 
36 Mo. 



48 Mo. 
48 ATo. 



24 Mo-. 
24 .Mo- 
24 Mo. 
24 Mo. 
24 Mo. 
24 Mo. 
24 Mo. 
24 Mo. 



18 Mo... 
18 Mo.. 
12 Mo.'. 
12 Mo.. 
12 Mo.. 
12 Mo.. 
18 Mo.. 



18 Mo. 
18 Mo. 
12 Mo. 



Proof 



100 
100 

no 

90 
90 
90 
90 
90 



90 
90 
90 
90 
90 
90 
90 
90 
90 
90 
90 
90 
93 
03 
100 
100 
90 
90 
90 
90 
90 
90 



90 
90 
100 
100 
90 
90 
100 
100 



Size 



Qt.... 

Pt 

Qt.... 
Pt.-.. 
Qt.... 

Pt 

Qt.... 

Pt 

Qt.... 

Pt 

Qt.... 

Pt 

Qt.... 

Pt 

Qt..-. 

Pt 

Qt 

Pt 

Qt.... 
Pt.... 
Qt.... 
Pt 



2700 



CONCENTRATION OF ECONOMIC POWER 



Commonwealth of Virginia, Alcoholic Beverage Control Board Retail Price List No. 
50 — Effective February 1, 19S9 — Supersedes All Previous Price Lists — Contd. 



o 
O 


Brand 


Age 


Proof 


Size 


Retail 
price 


117 


BLENDED WHISKEY— continued 
Calvert's Special 




90 
90 
90 
90 
90 
90 
90 
90 
90 
90 
90 
90 

90 
90 
90 
90 
90 
90 
90 
90 
90 
90 
90 
90 

90 
90 
90 
90 
92 
92 

100 
100 
100 
100 
100 
100 
100 
100 
100 
100 

100 
100 
100 
100 
100 
100 
100 
100 
100 
100 

86.8 
86.8 
90.4 
90.4 
90.4 
90.4 
100 


Qt 


$1.85 
1.00 


118 


Calvert's Special 




Pt . 


1?3 


Wilson— That's All 




Qt 


1 85 


1?4 


Wilson— That's All 




Pt 


1 00 


105 


Seagram's 5 Crown 




Qt . . 


1 90 


Iflfi 


Seagram's 5 Crown 




Pt:.:: 


1.00 


1?9 


Three Feathers 




Qt .. . 


1.90 


130 


Three Feathers 




Pt- 


1.00 


1?1 


Calvert's Reserve 




Qt 


2 40 


122 


Calvert's Reserve 




Pt 


1.25 


107 


Seagram's 7 Crown 




Qt 


2.40 


108 


Seagram's 7 Crown 




Pt 


1.25 


ISA 


BLEND OF STRAIGHT WHISKEYS— BOURBON 

Tom Hardy . 




Qt 


1.65 


IfiO 


Tom Hardy 




Pt 


.85 


Ifil 


Mattingly & Moore (M & M) 




Qt. .. . 


1.70 


1«2 


Mattingly & Moore (M & M) 




Pt 


.90 


171 


Old Tucker . 




Qt 


2.05 


172 


01d.Tucker 




Pt 


1 05 


153 


Golden Wedding 




Qt 


2.30 


154 


Golden Wedding 




Pt 


1 20 


155 


Paul Jones 




Qt 


2.45 


15fi 


Paul Jones 


< 


Pt 


1.25 


157 


Four Roses 




Qt 


2.85 


158 


Four Roses 




Pt 

Qt 


1.45 


1fi7 


BLEND OF STRAIGHT WHISKEYS— RYE 

Old Oscar Pepper (0 P) 




" 1.90 


168 


Old Oscar Pepper (0 P) 




Pt 


1.00 


1fi5 


Gibson's XXXX— 




Qt . - 


2.30 


Ififi 


Gibson's XXXX... ■ 




Pt 


"1.20 


Ififl 


Private Stock Rye— Park & Tilford 




Qt 


2.85 


170 


Private Stock Rye— Park & Tilford 




Pt... 


1.45 


207 


BOTTLED IN BOND WHISKEY — BOURBON 

Kentucky Tavern 




Qt 


2.60 


208 


Kentucky Tavern .. 




Pt 


1.35 


217 


Bonded Belmont 




Qt 


2.65 


218 


Bonded Belmont 




Pt . 


1.40 


201 


Old Grand Dad _ 




Qt 


3. 10 


202 


Old Grand Dad 




Pt 


1.60 


203 


Old Forester 




Qt , 

Pt 


3. 10 


204 


Old Forester. 




1.60 


213 


Old Taylor 




Qt 


3.10 


214 


Old Taylor 




Pt 


1.60 


219 


BOTTLED m BOND WHISKEY— RYE 

Philadelphia Rye _ 




Qt 


2.40 


220 


Philadelphia Rye 




Pt 


1.25 


215 


G. & W. Bonded Stock 




Qt . . 


2.45 


21fi 


G. & W. Bonded Stock 




Pt 


1.25 


209 






Qt 


2.65 


210 


Gibson's 




Ft 


1.35 


205 


Mount Vernon 




Qt 


2.75 


20R 


Mount Vernon . 




Pt _ 


1.45 


211 


Old Overholt 




Qt 


2.75 


212 


OldOverholt 




Pt. 


1.45 


187 


CANADIAN WHISKEY 

Seagram'sV.O 


6 Yr- _.. 

6 Yr . 


Ot 


3.65 


188 




Pt::::::::::: 


1.85 


183 


Canadian Club 


6 Yr 


Qt 


3.75 


184 


Canadian Club 


6Yr 


Pt 


1.90 


185 


Hiram Walker's Private Stock 


10 Yr 


Qt 


4.35 


i8f, 


Hiram Walker's Private Stock 


10 Yr 


Pt - 


2.25 


ISO 


Seagram's Pedigree 


8Yr.. . 


Pt.. 


2.40 


2fl9 


SCOTCH WHISKEY 

Harvey's Special Blended 




H Qt 


$2 75 


2fi5 


K'ng William IV 






HQt . 


2.80 


275 


Auld Glen Rossie . 






W Qt 


3.00 


299 


Old Angus 






HQt 


3.20 



CONCENTRATION OF ECONOMIC POWER 



2701 



Commonwealth of Virginia, Alcoholic Beverage Control Board Retail Price List No. 
50 — Effective February J, 1939 — Supersedes All Previous Price Lists — Contd. 



Brand 



Age 



Proof 



Size 



Retail 
price 



SCOTCH wHisKET— coutlnued 



Peter Dawson 

Black & White 

Black & White 

White Horse 

White Horse 

Dewar's White Labe' 

Johnnie Walker Red Label -. 

Sanderson's Vat 69 

Martin's V. V. O 

Teacher's Highland Cream 

Haig & Haig 5 Star - 

Haig <t Haig 5 Star 

Ballantine's 10 Year Old 

Old Rarity 12 Year Old 

Haig & Haig Pinched Decanter. 
Johnnie Walker Black Label 



IRISH WHISKEY 

Bushmill's - 

John Jameson's 3 Star 



IRISH AMERICAN WHISKEY 

William Jameson Irish American 



GIN 



American 

American 

Cavalier 

Cavalier 

Rhythm 

Rhythm 

Polo Club 

Polo Club 

Dixie Belle 

Dixie Belle 

Hiram Walker's London Dry. 
Hiram Walker's London Dry.. 

Gilbey's London Dry 

Qilbey's London Dry. 

Fleischmann's 

Pleischmann's 

Old Mr. Boston.... 

Old Mr. Boston 

Gordon's London Dry 

Gordon's London Dry 



DeKuyper's. 
DeKuyper's. 

Jacquin's 

Jacquin's 

Old Mr. Boston. 
Old Mr. Boston. 



SLOE GIN 



FRUIT FLAVORED GIN 

R. & Q Orange. 

Jacquin's Mint... 

Old Mr. Boston _ Orange. 

BRANDY GRAPE 



-Old Reserve. 
-Old Reserve. 



Vai Bros.- 
Val Bros.- 
Balboa... 
Balboa... 
A. R. Morrow Bottled in Bond. 

BRANDY APPLE 



Old Delaware Gold Label. 
Old Delaware Gold Label. 

Peak of Virginia 

Peak of Virginia 

Little Brown Jug 

Little Brown Jug 

Captain Apple Jack 

Captain Apple Jack 

Laird's 3 Star 



24 Mo. 
24 Mo. 



6Yr. 



24 Mo. 
24 Mo. 
24 Mo. 
24 Mo.. 
24 Mo.. 
24 Mo-. 
24 Mo.. 
24 Mo.. 
30 Mo.. 



86 



90 

90 

90 

90 

90 

90 

94.4 

94.4 



90 
90 
90 
90 
100 



90 
90 
90 
90 
100 
100 
90 
90 
90 



*iQt. 
H Pt-. 
HQt. 
H Pt.. 
WQt- 
HQt. 
H Qt.. 
H Qt. 
H Qt. 
n Qt.. 
Pt.... 
H Qt.. 
H Qt. 
WQt. 
H Qt.. 



HQt. 
HQt. 



HQt- 



HQt- 
Pt.... 
HQt. 
Pt.... 
H Qt. 
Pt.... 



HQt. 
Pt... 
HQt. 
Pt... 
Pt.... 



Qt. 
Pt- 
Qt. 
Pt. 
Qt- 
Pt. 
Qt. 
Pt. 
I Qt. 



$3.25 
3.2fi 
1.76 
3.25 
1.76 
3.25 
3.30 
3.30 
3.30 
3.35 
3.36 
2.15 
3.65 
4.25 
4.50 
4.55 



3.25 
3.40 



2.06 



1.06 

.55 
1.06 

.55 
1.10 

.60 
1.10 

.60 
1.26 

.66 
1.35 

.75 
1.45 

.80 
1.56 

.80 
1.65 

.80 
1.70 

.90 



1.25 
.75 

1.30 
.80 

1.55 

1.00 



.75 
.80 
1.00 



1.10 
.9£; 

1.66 
.95 

1.60 



1.65 

.80 
1.75 

.90 
J. 80 

.90 
1.85 

.95 
l.»6 



124491— 39— pt. 6 19 



2702 



CONCENTRATION OF ECONOMIC POWER 



Commonwealth of Virginia, Alcoholic Beverage Control Board Retail Price List No. 
60 — Effective February 1, 19S9 — Supersedes All Previous Price Lists — Contd. 



•a 
o 
O 


Brand 


Age 


Proof 


Size 


Retail 
price 


3fifi 


BRANDY APPLE— continued 
Laird's 3 Stnr 


30 Mo 


90 
100 
100 

85 

90 

84 
84 
80 

00 
00 

86 
86 
86 
00 

90 
89 
97 
90 
80 

70 
70 
70 
70 
71 
65 
SO 
60 
70 
80 

80 
80 
80 
80 

70 
70 
72 
72 
72 
72 
70 
64 
80 
80 

70 
65 
65 
70 
60 
80 

80 
86 
86 
86 


Pt 


$1 00 


3fi<) 


Hildlck White Label 


24 Mo 


Qt... 


2.45 


370 


Hildick White Label .. . 


24 Mo. 


Pt 


1 30 


37S 


Brandybrook... 


12 Mo 


Pt 


60 


302 


BRANDT PKACH 

Old Delaware Gold Label 


24 Mo 


Ft • .. 


1.00 


300 


BRANDT— IMPORTED— COGNAC 

Martell 




4/5 Qt. ... 


3.50 


397 


Hennessy 3 Star 




4/5 Qt 


3.50 


39fi 


Hennessy V. 8. 0. P. Over 20 Years Old 




4/5 Qt 


4.50 


401 


RUM— DOMESTIC 

Fe.lton's Pilgrim 




Qt 


1.00 


40? 


Felton's Pilgrim 




Pt 


1.00 


410 


RUM— IMPORTED 




4/5 Qt 


1.55 


420 


Carioca Gold Label— Puerto Rico 




Pt 


.05 


421 


Don Q Gold Label— Puerto Rico 


'' 


4/5 Qt 


■V i.fio 


4Z3 


Government House Gold Label— Virgin 

Island . 
Bornn's Gold Label— Vlrpin Island 




4/5 Qt 


1.75 


42.") 




4/5 Qt 


1.75 


435 


Bacardi Silver Label — Puerto Rico 




4/5 Qt . 


1.85 


4^7 


One Dagsrer — Jamaica 




4/5 Qt 


2.95 


431 


Red Heart — Jamaica 




4/5 Qt 


2 95 


429 


Bacardi Gold Label— Cuba 




4/5 Qt 


3.70 


4.10 


COCKTAILS 

Martini (Jacquin) 

Side Car (Jacquin) 

Manhattan (Jacquin) 

Old Fashioned (Jacquin) 

Martini Dry Club ....(Heublein) 

Manhattan Club .(Heublein) 

Old Fashioned Club .CHeub'eln) 

Side Car Club (Henblien) 

Dnlqulri Club (Rum) (Heublein) 

Gold Medal Mint Julep (R. & G.) 

CORDIALS— LIQUEURS— DOMESTIC 

Old Mr. Boston Line 
Apricot Nectar Liqueur 




Pt 


.95 


4.12 




Pt 


.95 


4M 




Pt 


.95 


4sn 




Pt 


1.00 


4fi1 




4/5 Qt 


1.70 


4R3 




4/5 Qt 


1.95 


4(1.') 




4/5 Qt 


1.05 


4f>7 




4/5 Qt 


1.95 


4.')9 




4/5 Qt 


1.95 


407 




4/5 Qt 


1.95 


530 




Pt 


1.00 


,132 


Peach Nectar Liqueur 




Pt 


1.00 


.134 


Blackberry Nectar Liqueur 




Pt 


1.00 


.130 


Rock & Rye 




Pt 


LOO 


Ml 


Jacquin Line 
Rock & Rye 




Qt 


L65 


,1.12 


Rock & Rye ^ 




Pt 


.85 


M2 


Apricot Nectar Liqueur 




Pt 


.90 


MO 


Peach Nectar Liqueur 




Pt 


.00 


.148 


Cherry Nectar Liqueur 




Pt 


.00 


.1,10 


Blackberry Nectar Liqueur 




Pt 


.90 


MO 


Kummel 




Pt 


.90 


fi40 


Annisette 




4/5 Pt 


.85 


M4 


Jacquintro 




4/5 Pt 


.90 


fi38 


St. Dominic 




4/5 Pt 


.05 


fi,1R 


Leroux Line 
Rock & Rye 




Pt 


.00 


(100 


Creme de Mentha, Green 




4/5 Pt 


.80 


fi72 


Creme de Menthe, White 




4/5 Pt 


.80 


.100 


Apricot ; .. 




4/5 Pt 


.85 


f>08 


Creme de Cacao J 




4/5 Pt 


.95 


(170 


Triple Sec Curacao 




4/5 Pt 


.05 


fiRI 


C0RDUL3—UQUEURS— IMPORTED 

Cointreau 




4/5 Qt 


4.16 


083 


Benedictine D. 0. M , 


_^, 


4/5 Qt 


4.65 


,184 


Benedictine D. 0. M 




3/4 Pt 


2.60 


585 


Chartreuse— Yellow 




4/6 Qt 


4.30 



CONCENTRATION OF ECONOMIC POWER 



2703 



Commonwealth of Virginia, Alcoholic Beverage Control Board Retail Price List No. 
50 — Effective February 1, 19S9 — Supersedes All Previous Price Lists — Contd. 



686 



590 
692 



.594 
.i98 



997 
999 



Brand 



E. CUSENIER A COMPANY 

Freezomint Creme de Menthe, Green. 
Freezomint Creme de Menthe, White. 

Blackberry Liqueur 

Creme de Cacao 

Extra Sec Orange Curacao 

Apricot Liqueur 

Peach Liqueur 



PURE GRAIN ETHYL ALCOHOL 

1 Qt. Container— Prices furnished on request. 
1 Gal. Container — Prices furnished on request. 



Proof 



Size 



1/2 Bot 
1/2 Bot 
1/2 Bot 
1/2 Bot 
1/2 Bot 
1/2 Bot 
1/2 Bot 



Retail 
r'ice 



$1.65 
1.6.5 
1.56 
1.6U 
1.60 
1.06 
1.65 



Ages as shown available Immediately upon exhaustion of younger stocks in this store. 



EzHierr No. 420 



STANDARD CONSUMER COST 



OF 



STANDAItO SCOTCH 
WUISKCV8 rSAOt OU> 

"«!» (fu uTT-ees 'us.pnoof 
pot/f^D srofuMC'^Aas 



SCOTCH WHISKEY 

LONDON-NEW VORK 



'^3.31 




LONDON 

feJera/ 4/coAo/ AdmnistmHon - 2- 1-59 



NEW YORK 



STAMDAltD P/Iice 

pegBom£ 

LONDOM X5/ 

NEW Y<MK 3J9 

t¥ASHINOTON 3.19-3.3S 
SANFMMCttCO S2f-Jii9 



;- TO < 52* WHOltSALia 

' cohswkh bitatTAiuR 






OlfTlllER'5 

Vecrrft- 



aAseo on a/tvi£n/T usnuas 
lomooM r/ei/na oerjunso by cof*v£KtioN of 
Anieer <w^ (iuAm, gafur /vtoor 



Exhibit No. 421 

[Submitted by Browne-Vintners Co., Inc.] 

White Horse Distillers Limited and Browne (Vintners) Co., Inc. 

agreement 

This agreement, made this day of , 19 , between 

Browne Vinters Co., Inc., a corporation with offices and a place of business at 

630 Fifth Avenue, New York, N. Y., hereinafter called "owner", and 

of , hereinafter called "retailer." 



2704 CONCENTRATION OF ECONOMIC POWER 

WITNESSETH: 

Whereas, the Owner is engaged in the sale and distribution of alcoholic bever- 
ages of standard quality which are advertised, distributed and sold under and 
bear trade-marks, brands, or names of the Owner or of Corporations or firms 
vhom Owner represents under franchise, which beverages are hereinafter referred 
to as "Products," and. 

Whereas, said Products are in fair and open competition with commodities of 
the same general class produced by others, and 

Whereas, the Owner and the Retailer desire to avail themselves and the public 

of the benefits of the Fair Trade Act of and to avoid having 

such trade-marked and branded Products made the subject of injurious and 
uneconomic practices and *o avoid the depreciation of or damage to said trade- 
marks, brands or names through such practices. 

Now THEREFORE, in Consideration of the premises and the mutual agreements 
contained herein and the benefits contemplated hereby, the parties agree as follows: 

First: Retailer will not sell, advertise, or offer for sale with the State of 

any of said Products which the Retailer has purchased or received in 

any manner whatsoever, or now has on hand, or which Retailer may hereafter 
purchase or receive, below the minimum prices stipulated from time to time, by 
Owner for sale to consumers. This contract shall be applicable to said Products 
purchased or received in any manner by the Retailer whether or not such Products 
have been bought or received from sources other than Owner. 

Second: The minimum sales prices of said Products by Retailer to consumers 
will be in accordance with written schedules thereof, furnished from time to time 
to Retailer by Owner, which schedules are to be considered a part of this contract. 
The schedule last delivered to Retailer shall goVem the resale prices to consumers. 
Owner reserves the right to change the schedule of prices from time to time upon 
ten (10) days written notice to Retailer. 

Third: The Retailer will not, directly or indirectly, give any article of value or 
make any refund, discount or concession, directly or indirectly, which would result 
in a price to the consumer below the price specified in the price schedules referred 
to in paragraph second above, and will not sell or offer for sale any of said Products 
in combination with any other article at a single or joint price, and the giving of 
any article of value, or the making of any concession, or the sale or offering for 
sale of any such Product in combination with any other article at a single or joint 
price shall constitute a violation of this agreement. 

Fourth: The Products may be resold by the Retailer without reference to th.s 
agreement in the following cases, as hereinafter provided: 

(a) In closi^ng out the Retailer's stock for the purpose of discontinuing delivery 
of such Products. 

(b) When the Products are damaged or deteriorated in quality and notice 
is gi ven to the public thereof. 

(c) By any officer acting under the order of the court. 
In either of the events specified in paragraphs (a) and (b) of this paragraph the 
Retailer shall, before offej-ing such Products for sale at a price less than the mini- 
mum resale prices stipulated in this agreement, first offer in writing to sell such 
Products to Owner in accordance with the terms of the Fiair Trade Act of the State 

of , or in the 'svent no terms are provided by law, then at the 

price at \^hich said Products were sold to the Retailer, which offer may be ac- 
cepted at any time within forty-eight hours of its receipt. 

Fifth: The parties hereto recognize and agree that it is impracticable or extreme 
tremely difficult to determine the actual damage which the Owner' will suffer as a 
result of any breach of +he termx of this agreement, and they, therefore, hereby 
expressly agree that, for each such breach the Retailer shall pay to the Owner the 
sumjjf Fifty ($50) Dollars, as liquidated damages and not as a penalty. It is 
furtlier agreed that in the event that any action shall be brought to enforce this 
agreement in any respect whatever, or to recover for any breach of this agreement, 
Retailer shall pay all costs of said action, including a reasonable attorney's fee. 

Sixth: It is further agreed that in addition to all other rights and remedies now 
existing or hereafter provided by law. Owner shall be entitled to injunctive relief 
against any and all threatened or actual breaches of this agreement. 

Seventh: In the event that any provision of this agreement shall be held to be 
invalid the remaining provisions thereof shall not be aiTected thereby and shall 
continue in full force and effect. 

Eighth: This agreement shall become effective , 19 , 

and shall continue in operation for a period of Five (5) years from said date unless 
sooner terminated by Owner on thirty (30) days written notice to Retailer. 



CONCENTRATION OF ECONOMIC POWER 



2705 



Such a notice shall be forwarded by registered mail to the Retailer's address above 
set forth (or in the event such address be changed and written notice be given there 
thereof to Owner then, at such changed address) and such notice shall be deemed 
given and received when it is deposited in United States mail. 

In Witness Whereof, the parties hereto have duly executed this agreement 
in duplicate as of the day and year first above mentioned. 

OWNER BROWNE VINTNERS CO., INC. 

By 

RETAILER 

By 

Browne Vintnens' prodvcts, consumers and retailers price list corrected July 1, 1938 

"prices 



Proof 



Size 



Price to 
consumer 
per bottle 



Wilson "That's All" whisky: 

Round Lottie... 

Flask 

White Horse Scotch Whisky (Blend of 100% Scotch Whiskies, all 
8 years old) : 

Concave Bottle, 8 years old 

Flask, 8 years old. 

FlasK (ifi-ounce),8-yearsold 

E. Remy Martin Cognac: 

Three Star, 12 years old 

Three Star 12 years old 

V. S. 0. P., 20 years old 

Cointreau Liqueur: 

Cointreau 

Cointreau 

Cointreau Cordials: 

Majestic 

Cursky Kummel 

Anisetteor Curacao Gala 

Creme De Menthe Green or White 

Creme De Cocoa or Banane 

Creme De Cassis.. __ 

Apricot, Cherry, Blackberry, Peach 

Liqueur Du Convent 

Piper Heidsieck Champagne: 

Brut 1928 

Brut 1928 

Extra Dry or Sec Non-Vintage 

Extra Dry or Sec Non-Vintage 

Heidsieck Champagne: 

Brut 1928 

Brut 1928 

Burnett's White Satin & Sloe Gins: 

London Dry or Deluxe... 

London Dry, Deluxe or Sloe (proof).. 

London Dry, Deluxe or Sloe (Sloe 60) 

Mitchell & Co. Irish Whisky (Blend of 100% Irish Whiskies): 

Shamrock, 14 years old 

Shamrock. 14 years old 

Fratelll Branca Vermouth: Sweet or Dry 30 ounces 

Cartavio Five Star Rum (distilled from sugar cane): Cartavio, Aged 
4 years in wood ^ 



Quart... 
Pint 

Fifth.... 
1^- Fifth., 
Pint 

Fifth 

H-Fifth. 
Fifth..y. 

Fifth.... 

h-Pint.. 

^i-Quart. 
3,^-Quart. 
^-Quart. 
54-Quart. 
»4-Quart. 
^-Quart. 
5-i-Quart. 
'/i-Quart. 

Bottle... 
}4 Bottle 
Bottle... 
}^-Bottle 

Bottle.. 
H-Bottle 

Quart... 
Fifth.... 
Pint 

Fifth.... 
H-Fifth. 
Bottle... 

Fifth.... 



$2.33 
1.20 



3.39 
1.84 
2.19 

3.69 
1.98 
4.23 

4.39 
2.29 

3.69 
3.59 
3.09 
2.99 
3.09 
2.49 
3.19 
3.19 

4.85 
2.55 
4.45 
2.35 

3.45 
1.90 

1.87 
1.55 
1.00 

3.47 

1.85 
.99 



This price list subject to change on due notice. State taxes included • • • Consumers discount on 
ca.se lots, 10%. Wilson "That's AH" whiskey is a blend, 72}^% grain neutral spirits— Burnett's distilled 
white stain gin is 100% grain neutral spirits. 



Exhibit No. 422 

[Submitted by Browne-Vintners Co., Inc.] 

[BROWNE VINTNERS— WHITE HORSE DISTILLERS, LTD., Import Agreement] ' 

This Agreement is made in London, England, the day of 

One thousand nine hundred and thirty-nine between White Horse Distillers 
Limited, whose registered office is at 120 St. Vincent Street, Glasgow, Scotland 
(hereinafter referred to as "the Company") of the one part and Browne (Vint- 
ners) Co., Inc., whose registered office is situate at International Building, Rocke- 

' Counsel for Schenley Distillers Corporation, after readine, returned this agreement to the committee 
with the statement that it is substantially typical of the Schenley import agreement. 



2706 CONCENTRATION OF ECONOMIC POWER 

teller Center, New York, N. Y., U. S. A. (hereinafter referred to as "the Sole 
Distributor" of the other part Whereby it is agreed as follows: 

1. The Company will not during the currency of this Agreement except as 
hereinafter mentioned sell any brand of Scotch Whisky specified in the Schedule 
hereto annexed or any other brand of Scotch Whisky which the Company may 
hereafter and during the term of this Agreement produce for sale under its own 
name to anyone within the Forty-eight States of the United States of America and 
the District of Columbia and the territory of Alaska (hereinafter called "the said 
territory") other than the Sole Distributor. 

2. The Company agrees to sell to and the Sole Distributor agrees to purchase 
from the Company the Company's brands of Scotch Whisky specified in the said 
Schedule in cases at the prices set out in the third column of the said Schedule (oi 
at such altered or modified prices as may be fixed by the Company under and by 
virtue of the proviso of this clause). Each cask shall contain as nearly as prac- 
ticable the quantities of American gallons set out in the second column of the 

said Schedule. 

All goods shall be delivered free on board any port in the United Kingdom 
Provided nevertheless that the Company reserves the right at any time and 
from time to time to increase or modify the said price 

3. All Scotch Whiskies purchased from the Company by the Sole Distributor 
under and by virtue of the terms of this Agreement shall be purchased for the 
purpose and only for the [purpose of enabling the Sole Distributor on its own behalf 
and not on behalf of the Company to resell such Scotch Whiskies in the same bot- 
tles or containers as those in which the same shall have been received by the Sole 
Distributor from the Company, such bottles or containers and their said contents 
then to be in the same condition as when received by the Sole Distributor from the 
Company and the Sole Distributor is not and shall have no right whatsoever to act 
as Agent for or otherwise to act for or represent the Company or to pledge the 
credit of the Companv or contract any liabilities whatsoever on the Company's 
behalf. 

4. The allowances set out in the fourth column of the said Schedule shall be 
made by the Company to the Sole Distributor in the corresponding prices set out 
in the third column of the said Schedule. 

5. Payment for all goods supplied by the Company under this Agreement shall 
be made as follows: At the date of each shipment the Company will cable to the 
Sole Distributor the net invoice value which shall be based on the prices set out in 
the third column of the said Schedule less two and a half per centum (cash dis- 
count) and less also the allowances detailed in the fourth column of the said Sched- 
ule. The Sole Distributor shall within Fourteen daj'S from the date of shipment 
establish at a London Bank a credit in the Company's name for the full amount 
diie. If the Company shall waive all or any of the provisions of this Clause in the 
case of any shipment it shall not operate as a waiver of all or any of the provisions 
of this clause as to any other shipment. 

6. The title to and the property in all goods so shipped to the Sole Distributor 
as before njentioned shall pass to the Sole Distributor on delivery any port in the 
United Kingdom to a Steamship Company or other common carrier. 

7. The Sole Distributor shall not knowingly sell any Whisky supplied to it 
under this Agreement to any person or persons firm or company for shipment 
resale or consumption outside the said territory or for^ resale within the said 
territory otherwise than in or from the said bottles and containers. 

8. The Company shall have the option to terminate this Agreement if within 
the said territory the Sole Distributor at any time whilst this Agreement remains 
in force shall either directly or indirectly sell or be concerned or interested 
whether directly or indirectly in the Sale of any Scotch Whisky whatsoever other 
than that supplied to the Sole Distributor under this Agreement. The exercise 
of this option shall become effective upon the mailing or cabling of a notice 
thereof by the Company in England. 

9. The Company reserves the right to sell its said brands of Scotch Whisky 
specified in the Schedule hereto direct to any customer within the said territory 
who declines to purchase the same from the Sole Distributor or who prefers to 
deal direct with the Company. Particulars of all such sales shall be furnished 
by the Company to the Sole Distributor as they are made. And in case of any 
such direct sale the Company will^ in addition to the allowances set out in the 
fourth column of the said Schedule, allow to the Sole Distributor an amount equal 
to the increase in price (if any) charged to and paid by any such customer over the 
gross price which would have been paid for the same goods by the Sole Distributor. 
A.11 such direct sales shall be counted as having been made by the Sole Distributor 



CONCENTRATION OF ECONOMIC POWER 2707 

for the purpose of arriving at the figure of One hundred thousand cases mentioned 
in Clause 12 hereof. 

10. The Sole Distributor will at its own expense use everj' endeavour by the 
employment of efficient salesmen who shall travel throughout the said territory 
and by all other possible and legitimate means to push its own sales of the said 
brands of Scotch Whiskies within the .said territory. 

11. The Company reserves the right to allocate at its sole discretion the quan- 
tities of Scotch Whisky to be supplied to the Sole Distributor from time to time if 
in the opinion of the Company its supplies shall not be sufficient to meet the re- 
quirements of all its customers. During the last three months of the currency of 
this Agreement whether determined by notice or effluxion of time the Company 
shall only be bound to supply the Sole Distributor with such quantities of Scotch 
Whisky as the Company in its absolute discretion shall consider sufficient to 
satisfy the reasonable requirements of the Sole Distributor for such period. The 
Company will not accept any responsibility and shall not be liable for any loss, 
damages or delay caused by war, riots, civil commotions, strikes, lock-outs, 
labour troubles, or any other events and contingencies which are unavoidable or 
for any other cause whatsoever beyond its control which may prevent or impede 
the Company in performing and observing any of the conditions and agreements 
on its part herein contained. If any reduction of the sales of the Sole Distributor 
shall be brought about by the operation of this clause then the figure of One 
hundred thousand cases mentioned in Clause 12 hereof shall be correspondingly 
reduced. 

12. The Sole Distributor will keep all usual and proper records of all sales made 
of the Company's Whiskies under this Agreement and the Company its Account- 
ants and other representatives duly appointed in that behalf in writing shall at 
all times have access to such records. And if in any calendar year calculated not 
from the First day of January but from the date when this Agreement first becomes 
operative or any anniversary thereof be sales actually made or under the pro- 
visions of this Agreement deemed to have been made by the Sole Distributor 
shall fall below a total of One hundred thousand cases then the Company shall 
be at liberty to put an end to this Agreement by giving notice in writing to that 
effect to the Sole Distributor: Provided Always, that such determination shall 
not prejudice or aflfect any antecedent rights of either of the parties hereto arising 
out of any failure to observe or perform any of the provisions conditions and 
agreements herein contained. 

13. The Sole Distributor will promptly notify the Company in writing at its 
registered office of any attempt that may come to its attention to simulate counter- 
feit or infringe the labels, capsules, corks, wrappers, or bottles used by the Company 
for its Whiskies or of any advertisement or advertising matter which may infringe 
the rights of the Company in its trade names and trade-marks. 

14. If either party shall become bankrupt or be dissolved by voluntary or in- 
voluntary proceedings or if Receivers shall be appointed for either party or for all 
or substantially all of the properties thereof this Agreement shall forthwith ter- 
minate without notice but without prejudice to the rights or claims hereunder of 
either party as against the other. 

15. This Agreement shall be deemed to have come into operation on the thir- 
tieth day of November One thousand nine hundred and thirty-seven and (subject 
as hereinafter mentioned) shall remain in force for a period of ten j^ears from that 
date. Provided Nevertheless, that (without prejudice to the right of either 
party arising out of any failure to observe or perform any of the provisions con- 
ditions and agreements herein contained prior to such termination) this Agree- 
ment shall be subject to termination at the option of the Company (a) if the Sole 
Distributor fails to observe and perform any of the conditions and agreements 
herein contained and on its part to be observed and performed; or (b) if the 
Government of the United States shall enact any law or shall promulgate any 
code or regulation whereby the purchase or sale of distilled alcoholic liquors 
wholesale or retail shall be prohibited or reserved to the Federal Government or 
any agency or instrumentality thereof Sixty days' notice of such termination of 
the Agreement shall be given by the Company to the Sole Distributor. In the 
event of this Agreement not being renewed the Company shall during the last 
month of its currency be at liberty to supply any of its brands of Scotch Whisky 
to such persons in the said territory as the Company may appoint as successors 
to the Sole Distributor provided that such Whisky shall only be so supplied on 
the express condition that it shall not be reso'd in the said territory until after 
the expiration of this Agreement. 



2708 



CONCENTRATION OF ECONOMIC POWER 



16. The Sole Distributor will not assign the benefit of this Agreement wholly 
or in part to any other party without the consent in writing of the Company and 
will not give any Subdistributor appointed by it any interest in this Agreement 
or any part thereof. 

17. Any notice provided for herein shall be suflScient if given in writing and 
mailed or cabled and if to the Company directed to the registered office of the 
Company and if to the Sole Distributor directed to it at International Building, 
Rockefeller Center, New York, N. Y. 

18. This Agreement shall in all respects be interpreted in accordance with the 
laws of England. 

In witness whereof the parties hereto have hereunto set their respective Seals 
the day and year first above written. 

White Horse Distillers, Limited, 

By , Director. 

-, Director. 



By 



Browne (Vintners) Co., Inc., 



Schedule 

"WHITE HORSE" 



1st column, cases of 



2nd column, 
American 
gallons. 
, per case 



3rd column, 

price per 

case 



4th column, 

allowance 

per case 



12 bottles. 
24 bottles. 
24 bottles. 
48 bottles. 
192 bottles 



2.40 
2.40 
3.00 
3.00 
2.40 



46/- 
60/- 
60/- 
70/- 
80/- 



2/6 
2/6 
3/- 
3/- 
2/6 



"ANCIE^JT SCOTCH" 


12 bottles 


2.40 
2.40 
2.40 


70/- 
76/- 
105/- 


6/- 


24 bottles * 


5/- 


192 bottles 


5/- 






"LAIRD 0' LOOAN" 


12botlles - 


2.40 


70/- 


5/- 






"BLACK HORSE" 


12bottles 


2.40 


27/6 


2/6 






"WHITE HOUSES" 


12 bottles 


2.40 


27/6 


1/6 







White Horse Distillers, Limited, 

By , Director. 

-, Director. 



By 



Browne (Vintners) Co., Inc., 



CONCENTRATION OF ECONOMIC POWER 2709 

Exhibit No. 423 

[Copy of Park & Tllford Import Corp.-Wm. Sanderson & Son, Ltd., import agreement furnished by counsel 
for Park & Tllford Import Corp.] 

Wm. Sanderson & Son, Ltd., 

S8 Eastcheap, London, E. C. S, England. 
Dear Sirs: We hereby authorize and request you to pay, as our Agents and on 
our behalf, all freight and Consular fees, and for Certificates of Age and Origin, 
in respect of all shipments of Scotch Whisky sold by you to us under and by virtue 

of the Agreement dated the — day of , 1939. 

Kindly render to us Statements showing the amounts expended by you on our 
behalf in making the above payments, and we hereby undertake to repay the same 
to you forthwith. 

Yours faithfully, 

Park & Tilford Import Corporation, 
F. G. Handren, President. 

William Sanderson & Son, Limited, and Park & Tilford Import 

Corporation 

agreement re "special RESERVE" 

This agreement is made in London, England, the — day of , One 

thousand nine hundred and thirty-nine, between William Sanderson & Son, 
Limited, whose registered office is at Charlotte Lane, Leith, Scotland (herein- 
after referred to as "the Company"), of the one part, and Park & Tilford Im- 
port Corporation, whose registered office is situate at 485 Fifth Avenue, New 
York, N. Y., U. S. A. (hereinafter referred to as "the Sole Distributor"), of the 
other part, whereby it is agreed as follows: 

1. The Company will not during the currency of this Agreement, except as 
hereinafter mentioned, sell the brand of Scotch Whisky specified in Clause 2 
hereof or any other brand of Scotch Whisky which the company may hereafter 
and during the terms of this Agreement produce for sale under its own name to 
anyone within the Forty-eight States of the United States of America and the 
District of Columbia and the territory of Alaska (hereinafter called "the said 
territory") other than the Sole Distributor. 

2. The Company agrees to sell to and the Sole Distiibutor agrees to purchase 
from the Company the Company's brand of "Special Reserve" Scotch Whisky in 

cases, at ' per case (or at such altered or modified price as may be fixed 

by the Company under and by virtue of the proviso to this Clause). Each case 
shall contain one doi.en bottles and each case of one dozen bottles shall contain 
as nearly as practicable 2.40 American gallons. 

All goods shall be delivered free on board any port in the United Kingdom: 
Provided, nevertheless, that the Company reserves the right at any time and 
from time to time to increase or modify the said price. 

3. All Scotch Whisky purchased from the Company by the Sole Distributor 
under and by virtue of the terms of this Agreement shall be purchased for the pur- 
pose, and only for the purpose, of enabling the Sole Distributor on its own behalf 
and not on behalf of the Company to resell such Scotch Whisky in the same bot- 
tles or containers as those in which the same shall have been received by the 
Sole Distributor from the Company such bottles are containers and their said 
contents then to be in the same condition as when received by the Sole Distrib- 
utor from the Company, and the Sole Distributor is not and shall have no right 
whatsoever to act as Agent for or otherwise to act for or represent the Company 
or to pledge the credit of the Company or contract any liabilities whatsoever on 
the Company's behalf. 

4. Payment for all goods supplied by the Company under this Agreement shall 
be made as follows: At the date of each shipment the Company will cable to the 
Sole Distributor the net invoice value which shall be based on the price set out 
in clause 2 hereof less Two and a half per centum (cash discount). The Sole 
Distributor shall within Fourteen days from the date of shipment establish at a 
London Bank a credit in the Company's name for the full amount due; if the 
Company shall waive all oi any of the provisions of this Clause in the case of any 
shipment it shall not operate as a waiver of all or any of the provisions Of this 
clause as to any other shipment. 

'Price deleted at the request of Park & Tilford Co. 



2710 CONCENTRATION OF ECONOMIC POWER 

5. The title to and the property in all goods so shipped to the Sole Distributor 
as before mentioned shall pass to the Sole Distributor on delivery any port in 
the United Kingdom to a Steamship Company or other common carrier. 

6. The Sole Distributor shall not knowingly sell any Whisky supplied to it under 
this Agreement to any person or persons, firm, or company for shipment resale or 
consumption outside the said territory or for resale within the said territory 
otherwise than in or from the said bottles and containers. 

7. The Company reserves the right to sell its said brand of Scotch Whisky 
direct to any customer within the said territory who declines to purchase the same 
from the Sole Distributor or who prefers to deal direct with the Company. Par- 
ticulars of all such sales shall be furnished by the Comi)an> to the Sole Distributor 
as they are made. And in case of any such direct sah^ the Company will allow to 
the Sole Distributor an amount equal to the increase in price (if any) charged to 
and paid by any such customer over the gross price which would have been paid 
for the same goods by the Sole Distributor. 

8. The Sole Distributor will at its own expense use every endeavour by the 
employment of efficient salesmen who shall travel throughout said territory and 
by all other possible and legitimate means to push its own sales of the said brand 
of Scotch Whisky within the said territory. 

9. The Company reserves the right to allocate at its sole discretion the quantities 
of Scotch Whisky to be supplied to the Sole Distributor from time to time if in the 
opinion of the Company its supplies shall not be sufficient to meet the require- 
ments of all its customers. After notice to terminate this Agreement has been 
given as hereinafter provided the Company shall onh^ be bound to supply the 
Sole Distributor with such quantities of Scotch Whisky as the Company in its 
absolute discretion shall consider sufficient to satisfy the reasonable requirements 
of the Sole Distributor for such period. 'J^'he Company will not accept any 
responsibility and shall not be liable for any loss, damages, or delay caused by 
war, riots, civil commotions, strikes, lock-outs, labour troubles, or any other events 
and contingencies which are unavoidable or for any other cause whatsoever 
beyond its control which may prevent or impede the Company in performing and 
observing any of the conditions and agreements on its part herein contained. 

10. The Sole Distributor will keep all usual and proper records of all sales made 
of the Company's Whisky under this Agreement; and the Company, its Account- 
ants, and other representatives duly appointed in that behalf in writing shall at 
all times have access to such records. 

11. The Sole Distributor will promptly notify the Company in writing at its 
registered office of any attempt that may come to its attention to simulate, coimter- 
feit, or infringe the labels, capsules, corks, wrappers, or bottles userl by the Com- 
pany for its Whisky or of any advertisement or advertising matter which m ly 
infringe the rights of the Company in its trade names and trade-marks. 

12. If either party shall become bankrupt or be dissolved by voluntary or invol- 
untary proceedings or if Receivers shall be appointed for either party or for all or 
substantially all of the properties thereof, this Agreement shall forthwith ter- 
minate without notice but without prejudice to the rights or claims hereunder of 
either party as against the other. 

!■■!. This Agreement shall be deemed to have come into operation on the — day 

of One thousand nine hundred and thirty — and (subject as hereinafter 

mentioned) shtill remain in force for a period of one year from that date and 
thereafter until determined by either party by not less than three calendar months 
notice in writing expiring on any date Provided, nevertheless, that (without 
prejudice to the rights of either party arising out of any failure to observe or 
perform any of the provisions, conditions, and agreements herein contained prior 
to such termination) this Agreement shall be subject to termination at the option 
of the Company (a) if the Sole Distributor fails to observe and perfcm any of the 
conditions and agreements herein contained and on its part to be observed and 
performed: or (b) if the Government of the United States shall enact any law or 
shall promulgate any code or regulation whereby the purchase or sale of distilled 
alcoholic liquors, wholesale or retail, shall be prohibited or reserved to the Federal 
Government or any agency or instrumentality thereof Sixty days' notice of such 
termination of the Agreement shall be given by the Company to the Sole Distri- 
butor. In the event of notice being given as above provided the Company shall, 
during the last month of the currency of this Agreement, be at liberty to supply 
the said brand of Scotch Whisky to such persons in the said territory as the 
Company may appoint as successors to the Sole Distributor provided that such 
Whisky shall only be so supplied on the express condition that it shall not be resold 
in the said territory until after the expiration of this Agreement. 



CONCENTRATION OF ECONOMIC POWER 2711 

14. The Sole Distributor will not assign the benefit of this Agreement wholly 
or in part to any other party without the consent in writing of the Company and 
will not give any Subdistributor appointed by it any interest in this Agreement 
or any part thereof. 

15. Any notice provided for herein shall be sufficient if given in writing and 
mailed or cabled and if to the Company directed to the registered office of the 
Company and if to the Sole Distributor directed to it at 485 Fifth Avenue, 
New York, N. Y. 

16. This Agreement shall in all respects be interpreted in accordance with the 
laws of England. 

In witness whereof the parties hereto have hereunto set their respective Seals 
the day and year first above written. 

William Sanderson & Son Limited, 
By , Director. 

, Director. 

Park & Tilford Import Corporation, 
By , 



Exhibit No. 424 

[Copy of Park & Tilford Import Corp. — Wm. Saniierson & Son, Ltd , import agreement furnished by counsel 
for Purl? & Tilford Import Corp.] 

Wm. Sanderson & Son, Ltd., 

38 Eastcheap, London, E. C. S, England. 
Dear Sir: We hereby authorize and request you to pay as our Agents and on 
our behalf all freight, and Consular fees, and for Certificates of Age and Origin, 
in respect of all shipments of Scotch Whisky sold by you to us under and by virtue 
of the Agreement dated the day of 1939. 

Kindly render to us Statements showing the amounts expended by you on our 
behalf in making the above payments and we hereby undertake to repay the 
same to you forthwith. 
Yours faithfully, 

Park & Tilford Import Corporation, 
F. G. Hand REN, President. 

William Sanderson & Son, Limited, and Park & Tilford Import Corporation 

agreement re "vat 69" AND "RARE OLD LIQUEUR" 

This agrb-3ment is made in London, England, the day of 1939, 

between "William Sanderson & Son, Limited, whose registered office is at 
Charlotte lane, Leith, Scotland (hereinafter referred to as "the Company"), of 
the one' part and Park & Tilford Import Corporation, whose registered office is 
situated at 485 Fifth Avenue, New York, N. Y., U. S. A. (hereinafter referred to 
as "the Sole Distributor"), of the other part, whereby it is agreed as follows: 

1. The Company will not during the currency of this Agreement, except as 
hereinafter mentioned, sell either of its two brands of Scotch Whisky specified in 
the Schedule hereto annexed to anyone within the 48 States of the United States 
of America and the District of Columbia and the territory of Alaska (hereinafter 
called "the said territory") other than the Sole Distributor. 

2. The Company agrees to sell to and the Sole Distributor agrees ip purchase 
from the Company the Company's brands of Scotch Whisky specified in the said 
Schedule in cases at the prices set out in the third column of the said i :hedule (or 
at such altered or modified prices as may be fixed by the Company u^4er and by 
virtue of the proviso to this Clause) . Each case shall contain as nearly as practica- 
ble the quantities of American gallons set out in the second coluiTiTi ,6i the said 
Schedule. , / 

All goods shall be delivered free on board any port in the United Kingdom: 
Provided, nevertheless, that the Company reserves the right at any titoe and from 
time to time to increase or modify the said prices. 

3. All Scotch Whiskies purchased from the Company by the Sde Distributor 
under and by virtue of the terms of this Agreement shall be purchased for the , 
purpose and only for the purpose of enabling the Sole Distributor on its own behalf/ 



2712 CONCENTRATION OF ECONOMIC POWER 

and not on behalf of the Company to resell such Scotch Whiskies in the same 
bottles or containers as those in which the same shall have been received by the 
Sole Distributor from the Company, such bottles or containers and their said 
contents then to be in the same condition as when received by the Sole Distribu- 
tor from the Company, and the Sole Distributor is not and shall have no right 
whatsoever to act as Agent for or otherwise to act for or represent the Company 
or to pledge the credit of the Company or contract any liabilities whatsoever on 
the Company's behalf. 

4. The allowances set out in the fourth column of the said Schedule shall be 
made by the Company to the Sole Distributor on the corresponding prices set out 
in the third column of the said Schedule. 

5. Payment for all goods supplied by the Company under this Agreement shall 
be made as follows: At the date of each shipment the Company will cable to the 
Sole Distributor the net invoice value which shall be based on the prices set out 
in the third column of the said Schedule less 2J^% (cash discount) and less also 
the allowances detailed in the fourth column of the said Schedule. The Sole 
Distributor shall within 14 days from the date of shipment establish at a London 
Bank a credit in the Company's name for the full amount due. If the Company 
shall waive all or any of the provisions of this Clause in the case of any shipment 
it shall not operate as a waiver of all or any of the provisions of this clause as to 
any other shipment. 

6. The title to and the property in all goods so shipped to the Sole Distributor 
as before mentioned shall pass to the Sole Distributor on delivery any poH in the 
United Kingdom to a Steamship Company or other common carrier. 

7. The Sole Distributor shall not knowingly sell any Whisky supplied to it under 
this Agreement to any person or persons, firm, or company for shipment, re-sale, 
or consumption outside the said territory or, for re-sale within the said territory 
otherwise than in or from the said bottles and containers. 

8. The Company shall have the option to terminate this Agreement if within 
the said Territory the Sole Distributor at any time whilst this Agreement remains 
in force shall either directly or indirectly sell or be concerned or interested whether 
directly or indirectly in the sale of any Scotch Whisky whatsoever other than that 
supplied to the Sole Distributor under this Agreement or under an Agreement of 
even date whereby the Sole Distributor is granted the Sole Distributorship of the 
Company's brand of Special Reserve Scotch Whisky. The exercise of this option 
shall become efifective upon the mailing or cabling of a notice thereof by the 
Company in England. 

9. The Company reserves the right to sell its said brands of Scotch Whisky 
specified in the Schedule hereto direct to any customer within the said territory 
who declines to purchase the same from the Sole Distributor or who prefers to 
deal direct with the Company. Particulars of all such sales shall be furnished 
by the Company to the Sole Distributor as they are made. And in case of any 
such direct sale the Company will ii. addition to the allowances set out in the fourth 
column of the said Schedule allow to the Sole Distributor an amount equal to the 
increase in price (if any) charged to and paid by any such customer over the gross 
price which would have been paid for the same goods by the Sole Distributor. 
All such direct sales shall be counted as having been made by the Sole Distributor 
for the purpose of arriving at the figure of 100,000 cases mentioned in Clause 12 
hereof. 

10. The Sole Distributor will at its own expense use every endeavour by the 
employment of efficient salesmen wlio shall travel throughout the said territory 
and by all other possible and legitimate means to push its own sales of the said 
brands of Scotch Whiskies within the said territory. 

11. The Company reserves the right to allocate at its sole discretion the quan- 
tities of Scotch Whisky to be supplied to the Sole Distributor from time to time 
if in the opinion of the Company its supplies shall not be sufficient to meet the 
requirements of all its customers. During the last three months of the currency 
of this Agreement whether determined by notice or effluxion of time the Company 
shall only be bound to supply the Sole Distributor with such quantities of Scotch 
Whisky as the Company in its absolute discretion shall consider sufficient to satisfy 
the reasonable requirements of the Sole Distributor for such period. The Com- 
pany will not accept any responsibility and shall not be liable for any loss, damages, 
or delay caused by war, riots, civil commotions, strikes, lock-outs, labour troubles, 
or any other events and contingencies which are unavoidable or for any other 
cause whatsoever beyond its control which may prevent or impede the Company 
in perfo''"ning and observing any of the conditipns and agreements on its part 
herein contained. If any reduction of the sales of the Sole Distributor shall be 



CONCENTRATION OF ECONOMIC POWER 2713 

brought about by the operation of this clause, then the figure of 100,000 cases 
mentioned in Clause 12 hereof shall be correspondingly reduced. 

12. The Sole Distributor will keep all usual and proper records of all sales made 
of the Company's Whiskies under this Agreement and the Company, its Account- 
ants, and other representatives duly appointed in that behalf in writing shall at 
all times have access to such records. And if in any calendar year calculated not 
from the 1st day of January but from the date when this Agreement first becomes 
operative or any anniversary thereof the sales actually made or under the pro- 
visions of this Agreement deemed to have been made by the Sole Distributor shall 
fall below a total of 100,000 cases then the Company shall be at liberty to put an 
end to this Agreement by giving notice in writing to that effect to the Sole Dis- 
tributor: Provided always, that such determination shall not prejudice or affect 
any antecedent rights of either of the parties hereto arising out of any failure to 
observe or perform any of the provisions, conditions, and a;^:reements herein con- 
tained. 

13. The Company shall not be under any obligation to supply the Sole Dis- 
tributor with more than 5,000 cases of Rare Old Liqueur Scotch Whisky in any 
period of 12 Calendar months calculated from the date when this Agreement 
first becomes operative or any anniversary thereof. 

14. The Sole Distributor will promptly notify the Company in writing at its 
registered office of any attempt that may come to its attention to simulate, 
counterfeit, or infringe the labels, capsules, corks, wrappers, or bottles used by 
the Company for its Whiskies or of any advertisement or advertising matter which 
may infringe the rights of the Company in its trade names and trademarks. 

15. If either party shall become bankrupt or be dissolved by voluntary ^Or 
involuntary proceedings or if Receivers shall be appointed for either party or for 
all or substantially all of the properties thereof, this Agreement shall forthwith 
terminate without notice but without prejudice to the rights or claims hereunder 
of either party as against the other. 

16. This Agreement shall be deemed to have come into operation on the 17th 
day of January 1938 and (subject as hereinafter mentioned) shall remain in force 
for a period of 10 years from that date: Provided nevertheless, that (without preju- 
dice to the rights of either party arising out of any failure to observe or perform 
any of the provisions, conditions, and agreements herein contained prior to such 
termination) this Agreement shall be subject to termination at the option of the 
Company (a) if the Sole Distributor fails to observe and perform any of the con- 
ditions and agreements herein contained and on its part to be observed and per- 
formed; or (b) if the Government of the United States shall enact any law or 
sha'l promulgate any code or regulation whereby the purchase or sale of distilled 
alcoholic liquors wholesale or retail shall be prohibited or reserved to the Federal 
Government or any agency or instrumentality thereof 60 days' notice of such 
termination of the Agreement shall be given by the Company to the Sole Dis- 
tributor. In the event of this Agreement not being renewed the Company shall 
during the last month of its currency be at liberty to supply any of its brands of 
Scotch Whisky to such persons in the said territory as the Company may appoint 
as successors to the Sole Distributor provided that such Whisky shall only be so 
supplied on the express condition that it shall not be resold in the said territory 
until after the expiration of this Agreement. 

17. The Sole Distributor will not assign the benefit of this Agreement wholly 
or in part to any other party without the consent in writing of the Company and 
will not give any Sub-distributor appointed by it any interest in this Agreement 
or any part thereof. 

18. Any notice provided for herein shall be sufficient if given in writing and 
mailed or cabled and if to the Company directed to the registered office of the 
Company and if to the Sole Distributor directed to it at 485 Fifth Avenue, New 
York, N. Y, 

19. This Agreement shall in all respects be interpreted in accordance with the 
law of England. 

In Witness whereof the parties hereto have hereunto set their respective Seals 
the day and year first above written. 

William Sanderson & Son, Limited, 

By , Director. 

, Director. 

Park & Tilford Import Corporation, 
By . 



2714 CONCENTRATION OF ECONOMIC POWER 

Exhibit No. 425 
[Copy of Canada Dry Qinger Ale, Inc. import agreement submitted by Canada Dry Ginger Ale, Inc.] 

Canada Dry Ginger Ale, Incorporated, 

100 East 42nd Street, New York, N. Y. 

Gentlemen: In the recent decision of the Court of Appeals of New York 
State, Section 2 of the Fair Trade Act of the State of New York was sustained. 
The decision of the Court reverses its previous holding on this Section. By 
reason of this latter decision, it is no longer necessary that the sales of the alcoholic 
beverages enumerated in Paragraph Third of our Retail Sales Agreement with 
you be limited by us and our wholesalers to retailers who have entered into 
contracts with us. The decision now enables us to restrain retailers who have 
not signed an agreement with us from selling below prices established by us in 
contracts entered into pursuant to the Fair Trade Act. We are therefore deleting 
from our Retail Sales Agreements with our retailers the paragraphs therein 
numbered and designated as "First" and "Second." 

In order to afford the retailers the same protection granted to them under the 
existing agreements with us from price cutting by non-contract signers, we are 
deleting from such agreements the Thiiteenth paragraph thereof in its present 
form and substituting in lieu thereof the following: 

"Thirteenth: The Owner, recognizing the damages id the Retailer by the 
sale of the Owner's products by dealers therein below ^;he -minimum price stipu- 
lated from time to time by the Owner pursuant to this agreement, agrees that 
in the event of a sale by any retailer of the Qwner's products below such minimum 
price to take immediate action in the Courts of this State for injunctive relief and 
to pursue the other remedies available to it, if in the opinion of the Owner and 
its counsel such action is warranted and advisable under the then existing circum- 
stances." 

Jt is essential that our present agreement be modified as above and, pursuant 
to Paragraph Fourteenth of such agreement with you, we hereby elect to termi- 
nate such agreement as of sixty (60) days from the date of receipt of this letter 
by you. It ia provided, however, that if, prior to such date, we receive a copy of 
this letter which we herewith enclose, with your duly signed consent to the above- 
mentioned modifications of our present agreement, our notice of cancellation 
shall be deemed to have been withdrawn and our agreement with you, as modified, 
shall continue in full force and effect. 

Will you kindly sign and return the consent to the foregoing changes on the 
copy of this letter which is enclosed herein. We shall appreciate your prompt 
cooperation in this matter. 
Very truly yours, 

Canada Dry Ginger Ale, Incorporated, 

By . 



It is hereby agreed that our Retail Sales Agreement with you be and the same 
is hereby modified as above provided. 

, Retailer. 

License No. 

This Agreement, made this day of December, 193. between 

Canada Dry Ginger Ale, Incorporated, a Delaware corporation, with an 
office and place of busine.ss at 100 East 42nd Street, Borough of Manhattan, 

New York, N. Y., hereinafter called "Owner", and 

of New York, hereinafter called 

"Retailer" 

WITNESSETH: 

Wherdas the Owner is engaged in the business of distributing alcoholic bever- 
ages in the State of New York produced by vai-ious corporations represented by 
Owner, which beverages are advertised, distributed and sold under and bear 
trade-marks, brands, and names of said corporations and affiliated corporations; 
and 

Whereaf said beverages are in fair and open competition with commodities 
of the same general class produced by others; and 

WHEnEAf? the Owner and the Retailer desire to avail them,«elves and the public 
of the benefits of the Fair Trade Practice Act of New York and to avoid having 
such trade marked and branded articles made the subject of injurious and un- 
economic practices and to avoid the depreciation of or damage to said trade 
marks, brands or names through such practice, 



CONCENTRATION OF ECONOMIC POWER 2715 

Now, Therefore, the parties hereto agree as follows: 

First: The Owner agrees that in selling such alcoholic beverages to distributors, 
jobbers, or selling agents that it will require, on delivery, in writing, that such 
distributors, jobbers, or selling agents will not in turn sell said commodities to 
any retailer who fails to maintain stipulated resale pi'ice or prices unless and 
until such retailer or retailers shall have executed an agreement similar hereto. 

Second: The Owner agrees that he will not sell or deliver any such products 
for resale to any person, firm, or corporation until and unless said persou, firm, 
or corporation shall have executed and delivered to the Owner an agreement, 
containing all of the terms, covenants, and conditions set forth herein. 

Third: The Retailer agrees that he will not sell, advertise, or offer for sale 
within the State of New York any beverages for which the Owner is distribuior 
and which bear trade-marks, brands, or names of Canada Dry Ginger Ale, 
Incorporated, or corporations represented by Owner, which Retailer has pur- 
chased or now has on hand, or which Retailer may hereafter purchase, below 
the minimum price stipulated from time to time by the Owner for sale to the 
consumer. The Retailer agrees that he will not directly, or indiiectly, give 
any article of value or make any concession, directly or in<..irectly, which wiU 
result in a price to the consumer below the price stipulated in the Consumer 
Price Schedule issued by the Owner, and that he will not sell or oiler for sale any 
of said products in combination with any other liquor or product at a single or 
joint price, and that the giving of any article of value or tlie making of any con- 
cession, or the sale or offering for sale of any such product in combination with 
any other article or product at a single or joint pi ice shall constitute a violation 
of this agreement. 

Fourth: In the event Retailer receives permission from the ])roper authorities 
to sell or transfer his store or any of his merchandise for resale. Retailer agrees 
that as a condition of the sale, he will require that his successor or assignee shall 
be bound by this contract. The Retailer agrees that this contract shall be applic- 
able to any merchandise purchased or received in any manner whatsoever by the 
Retailer in the State of New York, which shall bear such trade marks, brands, or 
names of Canada Dry Ginger Ale, Incorporated, or the corporations which 
it represents, and that such products which may have been bought from sources 
other than the Owner or its duly authorized wholesalers, jobl;ers or importers, as 
aforesaid, will not be resold at prices less than the minimum resale prices in effect 
under this agreement. 

Fifth: The minimum sales price of such beverages by Retailer to consumers will 
be in accordance with written schedules thereof, furnished from time to time to 
Retailer by Owner or distributor of Owner, which schedules are to be considered a 
part of this contract. The schedule last delivered to Retailer shall govern the 
resale price to consumer. 

Sixth: The Owner may from time to time by fifteen (15) days written notice to 
the Retailer add to those products specified in the Owner's Price Schedule, and as 
to those additional products all the provisions of this contract shall apply. 

Seventh: The Owner may upon at least fifteen (15) days notice to the Retailer, 
which notice shall be in writing mailed by the Distributor to the Retailer in a 
postpaid envelope addressed to the Retailer, revise such minimum resale prices. 

Eighth: If in accordance with Section C of Article II of the Fair Trade Act 
Retailer may sell his products without reference to this contract, Retailer shall, 
before offering such commodity for sale at a rrice less than the minimum resale 
prices stipulated in this agreement, first offer in writing upon five (5) days notice 
to sell such commodity, or commodities, to the Owner at the said proposed resale 
price or the price at which said product was sold to Retailer, whichever shall be 
lower. 

Ninth: The parties hereto recognize and agree that it is impossible to determine 
the actual damage which will result to the Retailer as a result of the sale and/or 
delivery of merchandise for resale to any person, firm or corporation who shall not 
have previously executed and delivered an agreement as set forth in paragraph 
"Second" in contravention of the terms of this agreement and they therefore, 
agree that in addition to other legal rights and remedies. Retailer shall be entitled 
to injunctive relief against any and all actual or threatened breaches of this agree- 
ment. 

Tenth: The parties hereto' recognize that it is impossible to determine the actual 
damage which will result to the Owner and other Retailers from sales made by the 
Retailer in contravention of the terms of this Agreement and the parties therefore 
agree that immediately upon any breach of this agreement on the part of the 
Retailer that the Owner shall have the right to forthwith demand delivery by 
the Retailer to the Owner of all said products held in the Retailer's stock, for which 



2716 



CONCENTRATION OF ECONOMIC POWER 



Owner shall pay to the Retailer at the current net prices quoted to the Retail trstde 
for the same quantities of said products. Nothing herein contained, however, 
shall be considered to be a waiver of the Owner's right to recover damages for 
such breach. 

Eleventh: The Retailer recognizing further that his breach of this agreement 
damages every other Retailer who has signed a similar contract agrees that the 
Retailer shall pay in addition to the Owner, as liquidated damages a reasonable 
attorney's fee if and when and as often as the Owner shall obtain a final judgment 
in any court for a breach of this agreement by an action at law or in equity. 

Twelfth: It is further agreed that the parties recognizing the damage that will 
necessarily follow a breach of this agreement to all other retailers who have signed 
similar contracts, further agree that in addition to all other rights and remedies 
the Owner shall be entitled to injunctive relief against any and all or actual or 
threatened breaches of this agreement and in addition theretp shall be entitled to 
specific performance of the repurchase agreements contained herein. 

Thirteenth: The Owner recognizing the damages to the Retailer by the actual 
or threatened breach of a similar agreement by a retailer handling the Owner's 
products for resale to the consumer agrees that in the event of a breach of a similar 
agreement by any other retailer, to take immediate action in the Courts of this 
State for injunctive relief as well as damages for the breach thereof, and to pursue 
the other remedies available to them under this agreement and to apply to the 
courts of this State for specific performance of the terms of such agreement, if in 
the opinion of Owner and its counsel, such action is warranted under the then 
existing conditions. 

Fourteenth: This agreement shall become effective December 15th, 1936, and 
shall continue in operation for a period of five (5) years from date unless pre- 
viously cancelled as hereinbelow provided. 

The Owner shall have the right to cancel this agreement on sixty (60) days prior 
written notice delivered to the Retailer. 

Fifteenth: This contract is made in pursuance of and by authority of the Fair 
Trade Act of the State of New York, must be executed in the State of New York 
by both parties hereto, and shall apply only to the sales made within the State of 
New York of beverages located therein. 

CANADA DRY GINGER ALE, INCORPORATED, 

By Owner. 

Retailer. 

Witness: 

Exhibit No. 426 

[Submitted by Canada Dry Ginger Ale, Inc.] 

Price Schedule, Metropolitan Area, Canada Drt Ginger Ale, Incorpo- 
rated Products, Effective Nov. 1. 1938 

[Note. — This price list embodies all the corrections that have taken place in our schedules since our last price 
list dated July 1, 1938. May we ask your full cooperation in maintaining these prices?] 



Brand 



Pkge. 



Sug- 
gested 
Quantity 
Price 



Sug- 
gested 
Dealer's 
Price 



Con- 
sumer 
Price Per 
Bottle 



Johnnie Walker Scotch: 

Eed Label 

Do 

Black Label 

Do.. 

John Power's Three Swallow Irish 

Whisky 

Do 

Cinzano Vermouth: 

Italian _ 

Do 

Italian White ._ 

French 



12/5 , 

24/12-1/5. 

12/5 

24/12-4/5. 



12/5 

24/12-4/5. 



12/30. 
24/15. 
12/30. 
12/30. 



$30. 55 
32.55 
40.55 
h2.55 

30.55 
32.05 

10.00 
10.60 



8.75 



$32.20 
34.20 
42.20 
44.20 

32.20 
33.70 

10.25 
11. 15 
12.65 
9.00 



$3.39 
1.84 
4.39 
2.44 

3.24 
1.89 

1.20 
.65 
L47 
1.05 



CONCENTRATION OF ECONOIVIIC FOWP^R 



2717 



Price Schedule, Metropolitan Area, Canada Dry Ginger Ale, Incorpo- 
rated Products, Effective Nov. 1, 1938 — Continued 



Brand 




Ron Daiquiri Coctelera Puerto Rico Rum 

White & Gold Label 

Do..- 

HoUoway's London Dry Gin 

Do - 

Do 

Holloway's Sloe Gin 

Do 

Holloway's Oranee Bitters 

Do 

Holloway's prepared cocktails: 

Martini 

Do 

Manhattan 

Do 

Old Fashioned 

Do 

Holloway's Rock & Rye.. 

Do 

Nuyens Cordials 

Anisette ..-__ 

Do 

Creme De Cocoa 

Do 

Creme de Menthe... 

(White & Green) 

Creme de Cassis 

Creme de Violette 

Curacao Bottles 

Gold wasser 

Apricot... _ 

Do... 

Blackberry 

Do.. 

Cherry 

Do 

Peach 

Do 

Triple Sec 

Do 

Creme de Rose , 

Curacao Jugs 

• Do.. 

Kummel 

Do.- 

Marasquin ^ 

Prunelle Jugs 



12/5 

24/12-4/5., 

12/32 

12/5 

12/16 

12/5 

24/12-4/5.. 

12/5 

24/6-2/5... 

12/5 

24/12-4/5. 

12/5 

24/12-4/5., 

12/5 

24/12-4/5.. 

12/32 

24/16 

12/5 

24/12-4/5T 

12/5 

24/12-4/5.. 

12/5 

24/12-4/5.. 

12/5 

12/5 

12/5 

12/5 

12/5 

24/12-4/5., 

12/5 

24/12-4/5.. 

12/5 

24/12-4/5., 

12/5 

24/12-4/5., 

12/5 

24/12-4/5.. 

12/5 

12/5 

24/12-4/5.. 

12/5 

24/12-4/5.. 

12/5 

12/5 



Sug- 


Con- 


gested 


sumer 


Dealer's 


Price Per 


Price 


Bottle 


$16.90 


$1.97 


17.45 


1.02 


14.30 


1.67 


11.95 


1.40 


15.25 


.89 


13.15 


1.53 


14.00 


.82 


12.95 


1.51 


9.30 


.54 


15.20 


1.77 


16.10 


.94 


16.40 


1.91 


16.80 


.98 


15.05 


1.82 


16.55 


.97 


17.70 


2.06 


18.70 


1.09 


17.60 


2.10 


17.95 


1.10 


17.95 


2.10 


18.80 


1.10 


17.70 


2.10 


18.60 


1.10 


18.10 


2.10 


16.65 


2.10 


18.05 


2.10 


17.75 


2.10 


18.35 


2. 15 


19. 25 


1.15 


18.30 


2.15 


19.25 


1.15 


18.30 


2.16 


19.25 


1.15 


18.35 


2.15 


19.30 


1.15 


19.00 


2.22 


20.55 


1.20 


16.45 


2.17 


20.30 


2.37 


22.20 


1.30 


19.65 


2.29 


20.55 


1.20 


18.65 


2.18 


24.35 


2.84 



Consumer's case price: 12 bottles for the price of 11 bottles. 



Exhibit No. 427 

[Prepared by Federal Alcohol Administration] 

Advertising of Distilled Spirits 

The figures below set forth the available information by dollar volume of news- 
paper and national magazine advertising by National Distillers Products Cor- 
poration, Schenley Distillers Corporation, Seagram Distillers Corporation, and 
Hiram Walker & Sons, Inc., and subsidiaiies during the years 1934, 1935, 1936, 
1937, and 1938: 





News- 
papers ' 


National 
magazines ' 




193*: 

National Distillers 


$850, 000 
880, 000 
800,000 
800,000 


$218, 533 
345, 338 
96. 215 
248, 375 




Schenley 




Seagram 




Hiram Walker 










3, 330, 000 


908, 461 


$4,238,461 



2718 



CONCENTRATION OF ECONOMIC POWER 





News- 
papers ' 


National 
magazines ' 




1935: 

National Distillers . . 


$1. 800, 000 

2, 285, 000 

1, 310, 000 

540, 000 


$903, 762 
341,004 
407, 275 
120, 943 




Schenley 








Hiram Walker. . .'. .. 










5. 935. 000 


1, 773, 044 


$7,708,044 


1936: 


2, 400, 000 

3, 200, 000 

1, 400, 000 

655,000 


677,719 
517,960 
344, 160 
419,491 








Seafiram . . . . . . . . .. . 














7,555,000 


1. 959, 330 


9, 514, 330 


1937: 

National Distillers 


2, 250, 000 

3, 100, 000 

1,705,000 

585,000 


601,816 
824, 400 
801,268 
589, 425 




Schenley . . ... . . 




Seagram . . 




Hiram Walker 










7, 640, 000 


2, 816, 909 


10,456.90"J 


1938; 

National Distillers 


3 1, 636, 560 

2 2. 589, 204 

« 2, 000, 058 

2 882, 564 


1,043,634 
764, 613 

1, 105, 557 
899, 276 




Schenley . 




Seagram .. . 




Hiram Walker j.. 










7,108,386 


3, 813, 080 


10,921,466 


Total, National Magazines and Newspapers 






$42, 839, 200 











1 Submitted by Advertising Age. It is understood that the magazine figures were compiled by Publishers' 
Information Bureau and newspaper figures by Media Records, Inc. 
> Taken from questionnaires submitted by industry members. 

These figures represent the most accurate information obtainable on this subject. 
They do not include, however, the total advertising expenditures by the companies 
involved, since outdoor, point of sale, and specialty advertisements are not 
included. 

Outdoor Advertising, Inc., advised that $4,000,000 was spent last year for 
national outdoor advertising and approximately $1,000,000 for local outdoor 
advertising. 

The Federal Alcohol Administration regularly subscribes to approximately 60 
daily newspapers and 30 magazines, in which appear an average of approximately 
1 ,350 advertisements of alcoholic beverages per week. 

Attached hereto is a representative cross section of current national magazine 
and newspaper advertisements for distilled spirits. 



"Exhibit No. 428", introduced on p. 2628, is on file with the Committee 



Exhibit No. 429 
Distilled Spirits Institute, Inc., statement of income 





December 14, 

1933 to 
December 31, 
1934, inclusive 


1935 


1936 


1937 


1938 


Total 


Dues 


$206, 126. 19 


$142, 216. 89 
300.00 


$221, 028. 47 
3, 715. 00 


$348, 755. 85 
140.00 


$323, 364. 27 


$1, 241, 491. 67 


Initiation fees . 


4, 155. 00 


Sales of copies of code, etc .. 


27.27 




27.27 


Miscellaneous income 


39.26 








39.26 


Sales of summaries of State 
laws 




394. 40 






394. 40 


Sale of oflace equipment.. 






435.00 


76.00 


511.00 












Total 


206, 153. 46 


142, 556. 15 


225, 137. 87 


349, 330. 85 


323, 440. 27 


1, 246, 618. 60 







CONCENTRATION OF ECONOMIC POWER 

Distilled Spirits Institute, Inc., statement of disbursements 



2719 



Dec. 14, 

1933- Dec. 

31. 1934 



1935' 



1937 



1938 



Salary and expense allowance of president 
(W. F, Morgan) 

Salaries of executives. 

Salaries of clerical and other employees 

Office expenses: 

Rent - 

Office alterations 

Office equipment purchased 

Telephone and telegraph 

Postage 

Printing, stationery, and supplies 

Moving expenses (New York to Wash- 
ington) 

Miscellaneous 

Traveling expenses: 

Directors and committee members 

Other traveling expenses 

General expenses: 

Insurance 

Taxes 

Surety-bond premiums 

Expenses of meetings... 

Accounting and organization survey 

fees 

Legislative reporting service 

Other expenses: 

Special investigations 

Institute advertising ^ 

Advertising at exhibitions 

Legal fees and expenses 

Legislative committee expense.. 

Clipping service 

Organization expense 

Education and publicity 

Membership? and dues 

Books and publications. 

Lease of New York office space less 

receipts from sublease: 

Expenses of miniature distillery exhibit 

Technical consultant's services 

Gift to Mrs. Sarah Morgan 

Settlement of salary claim (Max Mil- 
ler) 



$51,263.37 
13, 463. 50 



4, 160. 00 



$50, 000. 00 
35,918.33 



6, 000. 00 



000.00 
321. 43 



4, 099. 40 
5, 185. 34 
1, 759. 50 
2, 431. 86 



1, 082. 25 
9, 428. 69 
3, 997. 58 
3, 605. 47 



747. 10 
098. 67 
949. 56 
192. 04 



1,166.44 



43.00 
43.40 



1,338.30 



1, 807. 28 
12, 221. 71 



186. 77 



2, 348. 60 



1, 435. 00 
13, 378. 98 



8.87 



775. 00 
19, 239. 31 



12, 948. 20 
» 30, 840. 56 



3, 399. 81 
10, 494. 03 

96.29 
859. 08 
250. -00 
683. 48 

1. 750. 00 

6. 430. 01 

8, 333. 67 



$18,055.56 
67,044.98 
72, 279. 42 

15, 025. 24 
3, 065. 44 
9, 5.55. 59 
9, IGO. 78 
5, 217. 13 
6, 663. 56 

2, 140. 66 
3, 652. 66 

6, 237. 71 
23, 736. 13 

195. 10 
3. 174. 14 

326. 54 
1, 686. 93 

1,889.05 
6,411.06 



5, 188. 89 



6, 042. 80 



751. 22 
544. 30 
835. 20 
600. 79 



2, 819. 26 
'7i,"379."7S 



15, 000. 00 



1,175.00 



, 239. 76 
,"236."46" 



3 6, 198. 84 
"57,"645"6i' 
""2,"i58"62" 



Total disbursements 

Less amount received from Association of 
Distilled Spirits Industry in reimburse- 
ment of proportion of expenses applicable 
to both organizations ' 

Total - -. 



111.832.24 



45, 000. 00 



211.357.15 



59, 000. 00 



219, 557. 50 



395, 124. 69 



66, 832. 24 



152,357.15 



219, 557. 50 



395, 124. .59 



$73, 269. 20 
49, 862. 14 



8, 658. 00 



264. 76 
3, 330. 38 
5. 592. 30 
10, 332. 15 



2, 933. 39 



3, 495. 50 
19.881.00 



454. 85 
4. 654. 52 



1, 243. 87 



1,650.00 
3, 344. 75 



625. 00 
'24,"69i.'67 



283.20 
"3'56,"i5i.'7i 



1,221.80 

7. 421. 87 

3,108.38 

5, 000. 00 

20. 000. 00 

850. 00 



308,319.84 



308.319.84 



' The Association of Distilled Spirits Industry and the Distilled Spirits Institute occupied the same offices 
and functioned through the same salaried personnel. The Association reimbursed the Institute in the 
amounts shown for the proportion of the joint expenses applical le to both organizations. 

' The amount of $30,<'40.56 for Advertising includes $25,000 paic; to the distillers' executive committee on 
account of an appropriation of $35,000 made by the board of directors on Oct. 29, 1935, to meet expanses in 
giving publicity to statistics and other data in Kentucky. 

3 Payments to Repeal Associates included in "Clipping service" in 1936 and 1937. In 1938 these paynionts 
are Included in "Education and publicity." 



, Exhibit No. 430 
Ohio 

Whereas the members of the Distilled Spirits Institute, Incorporated, desire, 
in furtherance of the declared purposes of the Institute, to cooperate with the 
Board of Liquor Control and the Director of Liquor Control of the Department 
of Liquor Control of the State of Ohio in promoting sound and ethical trade prac- 
tices in the State, 

Be it resolved, That for the more definite and specific guidance of representatives 
of members of the Institute, no agent, employee, or representative of any member 
"shall directly or indirectly engage in any of the following transactions or actions: 

1. Grant, allow, pay, or rebate, directly or indirectly, any cash or merchandise 
to any permittee, imcluding (a) purchase of merchandise at retail for delivery to 
a permittee; (b) Grant or allow or pay anything of value to permittees for the priv- 
ilege of displaying advertising; (c) Grant, allow or pay tips to bartenders to induce 



2720 CONCENTKATION OF ECONOMIC POWER 

the sale of merchandise; and (d) Purchase drinks "for the House" to induce the 
sale of merchandise. 

2. Visit state stores or personally contact the store employees for the purpose 
of promoting the sale of merchandise. 

3. Solicit store or office personnel to promote the sale of particular brands 
otherwise than as authorized in regulations promulgated by the Director of 
Liquor Control. 

4. Induce permittees to acquire excessive amounts of merchandise inventory. 

5. Sales to permittees on any terms of credit. 

6. Apply for information as to merchandise which has left bailment warehouse 
only at the central office in such manner as shall be prescribed by the Director 
of Liquor Control. 

7. Entertain or offer gratuities to store or office personnel, or otherwise contact 
such persons except in matters arising in the regular course of business. 



SUPPLEMENTAL DATA 



The following letter is included at this point in connection with 
testimony on p. 2598, supra. 

Exhibit No. 432 

Archibald Kelly, 
British Empire Building, 620 Fifth Avenue, 

New York,lMarch 21st, 1939 
Philip Buck, Esq., 

General Counsel, Federal Alcohol Administration, 

Washington, D. C. 
Dear Mr. Buck: Last Friday morning when I testified before the Temporary 
National Economic Committee, you asked if I would supply you with a list of the 
principal Brands owned or controlled by the Distillers Company Limited (Edin- 
burgh), now being imported by American Distributors. 
The list is as follows: 

Buchanan's "Black & White." 

Dewar's "White Label." 

"Johnny Walker." 

"White Horse." 

"Haig & Haig." 

"Vat 69." 

"King George" and "Highland Nectar." 

"Sandy Mac" and "Old Parr." 

"Usher's Green Stripe." 

"John Begg." 

"Glen Garry." 

"Peter Dawson." 

Bulloch Lade's "Gold Label" and "Old Rarity." 

Mitchell Bros. "Heather Dew." 

Harvey's "Special." 

McCailum's "Perfection." 

"King William." 

Robertson's "B. E. B." and "Yellow Label," etc. 

Yours very truly, 
AK:EG. A. Kelly. 



The following price lists are included at this point in connection 
with testimony on p. 2580, supra. 



CONCENTRATION OF ECONOMIC TOWER 
Exhibit No. 433 



2721 



Commonwealth of Virginia, Alcoholic Beverage Control Board, retail price list 
No. 43, effective July 16, 1937 — svpersedes all previous price lists 



Code 



Brand 



Ape 



354 
355 
60 
61 
45 
46 
59 
44 
356 
357 
358 
359 
91 
92 
49 
50 
93 
94 
67 
68 
51 
52 
13 
14 
19 
20 
23 
24 



362 

363 

360 

361 

27 

28 

25 

26 

35 

36 

364 

3B5 

53 

54 

39 

40 

57 

58 

79 

80 



STRAIGHT WHTSKEY— BOURBON 



65 
•Vi 
66 
42 
81 
48 
350 
351 



OldWhis 

Old Whig 

Old American 

Old American 

Ten High _-_ 

Ten High 

Windsor 

Windsor 

Old Quaker 

Old Quaker 

Qlenmore. 

Olenmore 

Bottoms Up 

Bottoms Up 

Crab Orchard... 

Crab Orchard 

Cream of Kentucky. 
Cream of Kentucky. 

Old Polk 

Old Polk. 

Shipping Port 

Shipping Port 

Virginia Oentieman. 
Virginia Gentleman. 
Old Lewis Hunter... 
Old Lewis Hunter... 

Century Club. 

Century Club 



STRAIGHT WHISKEY— RYE 



Fleet Street 

Fleet Street 

Maryland Hunt Cup 

Maryland Hunt Cup 

Sherhrook 

Sherbrook... , 

Town Tavern 

Town Tavern 

Barclay's Private Stock 

Barclay's Private Stock... 

Rittenhouse Square 

Rittenhouse Square 

Wolf Creek 

Wolf Creek 

Kinsey Pennsylvania Rye. 
Kinsey Pennsylvania Rye. 

Rewco 

Rewco - 

Ruxton Rye 

Ruxton Rye 



STRAIGHT WHISKEY — CORN 



Cotton Picker. 
Cotton Picker. 



WHISKEY— BOURBON 



Two Naturals. 
Two Naturals. 

Frontier 

Frontier 

Invader. 

Invader 

TMint Springs., 
Mint Springs.. 
Ooldcn Eagle.. 
OoWen Eagle.. 



18 Mo. 
IS Mo. 
24 Mo. 
24 Mo. 
24 Mo. 
24 Mo. 
24 Mo 
24 ATo. 
24 Mo. 
24 Mo. 
18 T>ro. 
18 Mo. 
20 Mo. 
20 Mo. 
18 Mo. 
18 Mo. 
18 Mo. 
18 Mo. 
20 Mo. 
20 Mo. 
18 Mo. 
18 Mo. 
18 Mo. 
18 Mo. 
24 "Mo. 
24 Mo. 
30 Mo. 
30 Mo. 



Boiir.. 
Bour.. 
Bonr.. 
Bour. 
Bour. 
Bour. 
Bour. 
Bour. 
Bour. 
Bour. 
Bour. 
Bour. 
Bour. 
Bour. 
Bour. 
Bour. 
Bour. 
Bour. 
Bour. 
Bour. 
Bour. 
Bour. 
Bour. 
Bour. 
Bour. 
Bour. 
Bonr. 
Bour. 



1 i Stillbrook. 
98 . SJUbrook. 



WHISKEY- RYE 



24 Mo. 
24 Mo. 
18 Mo. 
18 Mo. 
18 Mo. 
18 Mo. 
24 Mo. 
24 Mo. 
24 Mo. 
24 Mo. 
24 Mo. 
24 Mo. 
18 Mo. 
18 Mo. 
24 Mo. 
24 Mo. 
30 Mo. 
30 Mo. 
20 Mo. 
20 Mo. 



Rye 

Rye 

Rye 

Rye 

Rye 

Rve 

Rye 

Rye 

Rve 

Rye 

Rve 

Rve 

Rve 

Rve 

Rye 

Rve 

Rve 

Rve 

Rye. 

Rye 



IS Mo. Corn. 
18 Mo. Corn. 



8 Mo. Bour.. 
8 ATo Bour.. 
12 Mo. Bour. 
12 Afo. Bour. 
12 Mo. Bour. 
12 Mo. Bour. 
12 Mo. Bour. 
12 Mo. Bour. 
8 Afo. Bour.. 
8 Arc, Bour.. 



90 
90 
90 
90 
90 
90 
90 
90 
90 
90 
90 
90 
90 
93 
93 
90 
90 
100 
100 
90 
90 
90 
90 
100 
100 
90 
90 



90 
90 
90 
90 
93 
93 
90 
90 
90 
90 
100 
100 
90 
90 
90 
90 
93 
93 
93 
93 



100 
100 



Qt.. 
Pt.. 
Qt. 
Pt.. 
Qt- 
Pt.. 
Qt. 
Pt. 
Qt. 
Pt. 
Qt. 
Pt.. 
Qt. 
Pt. 
Qt. 
Pt. 
Qt. 
Pt. 
Qt- 
Pt. 
Qt. 
Pt. 
Qt. 
Pt. 
Qt. 
Pt. 
Qt. 
Pt. 



Qt. 
Pt. 
Qt. 
Pt. 
Qt. 
Pt. 
Qt. 
Pt. 
Qt. 
Pt. 
Qt. 
Pt. 
Qt. 
Pt. 
Qt. 
Pt. 
Qt. 
Pt. 
Qt. 
Pt. 



Qt. 
Pt. 



Qt. 
Pt. 
Qt. 
Pt. 
Qt. 
Pt. 
Qt. 
Pt. 
Qt. 
Pt. 



9 Ato. Rye. 
9 AIo. Rye. 



Qt. 
Pt. 



1.20 

.6.5 



2722 



CONCENTRATION OF ECONOMIC POWER 



Commonwealth of Virginia, Alcoholic Beverage Control Board, retail price list No. 43, 
effective July 16, 1937 — supersedes all previous price lists — Continued 



Brand 



Age 



Proof 



Size 



A.M.S 

A. M. S 

Indian Queen. 
Indian Queen. 



WHISKEY— CORN 



12 Mo. Corn. 
12 Mo. Corn. 
7 Mo. Corn.. 
7 Mo. Com.. 



BLENDED WHISKEY 

Briarcliff - 

Briarcliff - . . 

Brigadier 

Brigadier 

Cobb's Creek 

Cobb's Creek - 

G. & W. Two Star 

O. & W. Two Star 

Belle of Nelson 

Belle of Nelson 

Calvert'.s Special 

Calvert's Special 

Wilson "That's All" 

AVils-i'i "That's All"... 

n. & W. Five Star 

O. A- W, Five Star 

Seagram's Five Crown 

Seaeram's Five Crown 

Penn.-]\Td. DcLuxe 

Penn-Md . DeLuxe 

Calvert's Reserve. 

Calvert's Reserve 

Seagram's Seven Crown 

Seagram's Seven C rown 



nLEND OF STRAIGHT WHISKIES— BOURBON 

Old Hawthorne 

Old Tlawthorne 

Afaftinely <t Moore (M & M) 

Mattingly & Moore (M & M) 

Tom Hardy _ 

Tom Hardy 

Oolden Wedding 

Ooldeu Wedding.- 

Paul Jones -.- 

Paul Jones - 

Four Roses - 

Four Roses --- 



Bour. 
Bour. 
Bour. 
Bour. 
Bour. 
Bour. 
Bour. 
Bour. 
Bour. 
Bour. 
Bour. 
Bour. 



BLEND OF .STRAIGHT WHISKIES — RYE 

Old Oscar Popper fO O P) ... 

Old Oscar Prpner CO O P) 

Oibson'<: X.XXX 

nibson's XXXX 

Privnte Stock Rye-Park & Tilford 

Priva'e Siof k Rye-Park & Tilford 



Rye. 
Rye. 
Rye. 
Rye. 
Rye. 
Rye. 



!<OTTI.F.t IN BOND WHISKEY— BOURBON 

O .^- W Bonried Stock (Canadian) 

O & W. Bonded Stock (Canadian) 

Old Forester . 

Old Forester . - 

Old Crand Dart. 

Old Orand Dad -.-. 

Kentucky Tavern 

Kentucky Tavern 

Cascade -.- - 

Cascade 



Bour. 
Bour. 
Bour. 
Bour. 
Bour. 
Bour. 
Bour. 
Bour. 
Bour. 
Bour. 



BOTTLED IN BOND WHISKEY — RYE 



Mount Vernon. 
Mount Vernon. 
Olfl Ovorholt... 
Old Ovorholt... 

nibson's 

Gibson's . .. 



Rye. 
Rye. 
Rye. 
Rye. 
Rye. 
Rye. 



CANADIAN WHIMKEY 

SeaLT;.ni's "H,S". . 

Seagram's "83" . 

Canadian Club 

Canadian Club 

Hiram Walker's Private Stock 

Hirara Walker's Private Stoclf'.... 



5Yr.. 

5 Yr.. 

6 Yr.. 
6 Yr... 
10 Yr. 
JOYr. 



ino 
mo 
ion 
ino 
inn 
ion 

100 

inn 
inn 
ion 



100 

ino 

100 
100 
100 
100 



90 

90 

90.4 

90.4 

90.4 

90.4 



Qt. 
Pt. 
Qt- 
Pt. 

Qt. 
Pt. 
Qt. 
Pt- 
Qt- 
Pt. 
Qt. 
Pt. 
Qt. 
Pt. 
Qt. 
Pt. 
Qt. 
Pt. 
Qt. 
Pt. 
Qt. 
Pt. 
Qt. 
Pt. 
Qt. 
Pt. 
Qt. 
Pt. 

Qt- 
Pt. 
Qt. 
Pt. 
Qt. 
Pt. 
Qt. 
Pt. 
Qt. 
Pt. 
Qt. 
Pt. 




CONCENTRATION OF ECONOMIC POWER 



2723 



Comtyionweallh of Virginia, Alcoholic Beverage Control Board, retail price list No. 43, 
effective July 16, 1937 — supersedes all previous price lists — Continued 



Brand 



Age 



Proof 



Size 



Price 



139 
140 
154 
ir.l 
153 
142 
155 
152 
lf)2 
156 
163 
165 
143 
144 
\r,9 
157 
146 
167 
131 
149 
132 
401 
150 



173 
174 
272 
289 
285 
288 



263 
257 
262 

256 



SCOTCH WHISKEY 

Auld nien Rossie 

KinR William IV V. O. P 

Black <t White- --. 

Black & White 

Sanderson's Vat 69 

Johnny Walker Red Label 

Teacher's Higldand Cream 

White Horse - - 

Marlin's V. V. O 

Dewnr's White Label 

Hiip <t Haig 5 Star 

riaic & Hfiip 5 star 

Baliantine's 10 Year Old 

Old Rarity-Bulloch Lade 

ITaie & iraip Pin''he<l Decanter- 
Johnny Walker Black Label 



IRISH WHISKEY 

Bushmill's - 

John Jameson's 3 Star.. 



IRISH WHISKEY— AMERICAN TYPE 



Jameson Irish American. 



GIN 



American 

American -- 

Rhythm 

Rhythm 

Cavalier .- --- 

Caviilier. ... .- 

Polo Chib... 

Bnlo CInb. 

niriim Walker's London T)ry. 
TTiram Walker's London Dry. 

Oillicy's T,ondon Dry 

Cilhey's London Dry 

Dixie Belle... 

Dixie Belle 

Milshire 

Milshire 

Old Mr. Bosti n 

Old Mr. Boston... : 

Fleisehmann''^- 

Fleischniiinn's 

Ciordon's London Dry 

Gordon's London Dry 

DeKuyppr's Oeneva 



189 

lf,--l 

1.S7 



SLOE GIN 

DeKuyper's 

DeKuyper's 

Craham fJacqnin's) 

Oraham fJacqiiin's) 

Old Mr. Boston 

Old Mr. Boston 



FnVIT-FT.AVORED GIN 



R. & O. (Oranp-e) 

Jacqiiin's (Mint) 

Old Mr. Boston (Orance^. 
Old Mr. Boston (Lemon). 



nRANDY, GRAPE 



VpI Bros.— Old Reserve. 
Vai Bros.— Old Reserve. 

Balboa 

Balboa 



BRANpy, APri.E 



Old Delaware Cold Label. 
Old Delaware Or, II Label. 

Peak of Virrinjn. 

rnptain \pplf' -lack. 
I ('aif.'nn Vri' l-' .lick 

I Lrn-.!'s3 !^t:\r 

' T -vrd's 3 '"-■r:ir 

■..lirk White Label 

' I'.k WVite Label... . 



24 ATo. 
?4 Mo. 
36 TVTo. 
36 IMo. 



21 ^ro.. 

21 l\To 
ISlNTo.. 
21 Afo. 
2« Mn. 
'>4 ATo. 
•Jl ATo. 
24 Mo. 
24 Mo. 



1* Qt 




90 
9(1 

90 
90 
90 
90 
100 
100 



H Qt. 
Pt .. 
H Qt. 
Pt..., 



2724 



CONCENTRATION OF ECONOMIC POWER 



Commonwealth of Virginia, Alcholic Beverage Control Board, retail price list No. 43, 
effective July 16, 1937 — supersedes all previous price lists — Continued 



Brand 



BRANDY, PEACH 

OH Delaware Geld Label 



BRANDY— IMPORTED — COGNAC 

Martell 3 Star 

Hennessy 3 Star 

Hennessy 3 Star 



RUM — DOMESTIC 

Carioea -. 

Carioca.. 

Fclton's Pilgrim... 

Felton's Pilgrim 



RUM— IMPORTED 

Don Q Gold Label— Puerto Rico... 
(^lovernment House- Virgin Island. 

Bornu's Virgin Island 

One Dagger— Jamaica 

Red Heart— Jamaica 

Bacardi White Label... 

Bacardi Gold Label... -- 



COCKTAILS 

Martini (Jacquin) 

Side Car (Jacquin) 

ATanhattan (Jacquin) 

Old Fashioned (Jacquin) 

Martini Dry Club (Heublein) 

Manhattan Club (Heublein) 

Old Fashioned Club (Heublein)... 

Side Car Club (Heublein) 

Daiquiri Club (Rum) (Heublein). 



CORDIALS— LIQUEURS— DOMESTIC 

Old Mr. Boston Line 



Apricot Nectar Liqueur 

Peach Nectar Liqueur 

Blackberry Nectar Liqueur. 

Rock & Rye 

Rock & Rye.... 



Jacquin Line 

Apricot Nectar Liqueur 

Peach Nectar Liqueur 

Cherry Nectar Liqueur 

Blackberry Nectar Liqueur 

Rock & Rye 

Rock & Rye.. 

Annisette. 

Jacquintro... 

Kummel 

St. Dominic-.- 



Lerovx Line 

Rock & Rye 

Creme de iMenthe, Green 

Apricot 

Blackberry 

Peach 

Creme do Cacao 

Triple Sec Curacao 



CORDIALS— LIQUEURS- 

Cointreau 

Benedictine — D. O. M 

Benedictine — D. O. M. 

C hartreuse — Yellow 



E. Ousenier & Company 

Freezomint — Creme de Menthe 

Liqui'>nr Jaune 

Blackhfrry Brandy , 

Creme de Cacao 

Apricot Brandy 

Peach Br'indy 

Extra Sec Orange — Curacao 



Age 



24 Mo. 



Proof 



Size 



Pt... 

% Qt 
% Qt 
HPt. 

^iQt 
Pt... 
Qt... 
Pt... 

HQt 

not 

HQt 
HQt 
nQt 
^iQt 
nQt 

Pt... 
Pt... 
Pt... 
Pt... 

HQt 
HQt 
HQt 
HQt 
5iQt 



Pt... 
Pt... 
Pt... 
Pt... 
Qt... 
Pt... 
HPt. 
HPt. 
Pt... 
HPt. 



Pt... 
HPt. 
HPt. 
HPt. 
H Pt- 
H Pt. 
HPt- 



•)i Qt. 
HQt. 
H Pt.. 
H Qt. 



34 Qt. 
H Qt- 
y* Qt. 

?'4 Qt- 
3/4 Qt. 

HQt. 

84 I 4i Qt. 



CONCENTRATION OF ECONOMIC POWER 



2725 



Commonwealth of Virginia, Alcholic Beverage Control Board, retail price list No. 43, 
effective July 16, 1937 — supersedes all previous price lists — Continued 



WINE LIST 
DoMEs;ic 



Code 


Brand 


Size 


Price 


500 
SOI 
512 
513 


SPECIAL TYPE— BRANDS 

Thomas Jefferson Red 

Thomas Jefferson White -. 

Wldraer's Hillside Fortified 

Widmer's Hillside Fortified 

Widmer's Hillside Fortified 

Virginia Dare Red •. 


M.S. 

M. S. 

M.S. 

M.S. 

M.S. 

..S. 


^Qt 

^^Qt 

HQt 

Pt 


$0.55 
.65 
.60 
.35 


'^t 


Gal 


1.95 


HQt 

^iQt 

*iQt 

Gal 


.65 


50S 
SIS 

637 


Virginia Dare White 

Southern Hospitality Blackberry - 

PORT 

Vai Bros. Mira-Llnda 


M.S. 

...S. 

s. 


.65 
.65 

1.40 


638 
539 


Vaf Bros. Old Reserve 

Val Bros. Old Reserve - 

Cerrito 


s. 

s. 

s. 


HQt 

Gal 


.40 
1.70 


548 


HQt 

Qt 


.40 


687 


Mt. Sinai (Kosher) 

O. & D. Private Stock (White) - 

S-J (Shewan-Jones, Inc.) 


s. 

s. 

s. 


.56 


540 
542 


HQt 

HQt 

HQt 

Pt 


.55 
.55 


544 


Widmer's Hillside 


....s. 


.60 


646 


Widmer's Hillside 


s. 


.35 


547 


Widmer's Hillside 

Old Constitution 


s. 

s. 


Gal 


1.95 


641 


HQt 

H Qt 

H Qt 

Gal 


.65 


643 


Taylor's 


8. 


.70 


545 


Italian Swiss Colony... 


s. 


.75 


649 


Italian Swiss Colony 

SHEERY 

Vai Bros. Mira-Linda 

Vai Bros. Old Reserve 

Val Bros. Old Reserve 


s. 

...s. 

.M. S. 

M.S. 

s. 


1.80 


603 


Gal 


1.40 


600 
601 


HQt 

Gal 


.40 
1.70 


610 


HQt 

Qt 


.40 


688 


Mt. Sinai (Kosher) 

S-J (Shewan-Jones, Inc 

Widmer's Hillside 

Widmer's Hillside 

Widmer's Hillside ..- 

Old Constitution 


.-. M.S. 

M.S. 

M. D. 

M. D. 

M. D. 

S. 


.65 


602 
614 
616 


HQt 

HQt 

Pt 


.56 
.60 
.35 


617 


Gal 


1.95 


611 


H Qt 

H Qt 

H Qt 

Gal 


.65 


613 


Taylor's 


• M. D. 


.70 


616 
619 


Italian Swiss Colony 

Italian Swiss Colony., 

MUSCATEL 

Vai Bros. Mira-Llnda 

Cerrito 


M.S. 

M.S. 

S. 

s. 


.75 
1.80 


677 


Gal 


1.40 


682 


H Qt 

Gftl 


.40 


679 


Cerrito 


s. 


1.60 


680 
686 


Vai Bros. Old Reserve 

Vai Bros. Old Reserve 

Mt. Sinai (Kosher) 

S-J (Shewan-Jones, Inc.) 

Widmer's Hillside 


s. 

s. 

s. 

s. 

s. 


HQt 

Gal .. .. 


.40 
1.70 


689 


Qt 


.65 


686 
683 


H Qt 


.65 
.60 


684 


Widmer's Hillside 


s. 


.35 


681 


Old Constitution 


s. 


H Qt 

H Qt - 

H Qt 

HQt 

HQt 

HQt 

H Qt — 

Bot 


.65 


730 
739 


CLARET 

Vai Bros. Old Reserve 

Cerrito 


D. 

D. 


.35 
.35 


736 
731 


S-J (ShewanJones, Inc.) 

Old Constitution 


D. 

D. 


.60 
.65 


740 


Taylor's 


D. 


.70 


733 
737 


Italian Swiss Colony 

Vintner's Superior 

Vai Bros. Old Reserve 

Cerrito 


D. 

.-...D. 

M.S. 

M.S. 


.70 
.70 


770 
776 


H Qt 

HQt 

H Qt 

H Qt 

HQt 

H Qt 

Bot 


.36 
.35 


782 
771 
780 

777 


S-J (Shewan-Jones, Inc.) 

Old Constitution 

Widmer's Hillside 

Taylor's . 


M. D. 

M.S. 

D. 

M. D. 


.60 
.55 
.60 

.70 


778 


Vintner's Superior 

Italian Swiss Colony „ 


M.S. 

M.D, 


.70 


774 


H Qt - 


.76 



Letters following brand names indicate the producer's classifications, namely— 



S— Sweet 
D— Dry 



M. S. Moderately Sweet 
M.D. Moderately Dry 



2726 



CONCENTRATION OF ECONOMIC POWER 



Commonwealth of Virginia, Alcoholic Beverage Control Board, retail price list No. 43 
effective July 16, 1937 — supersedes all previous price lists — Continued 



WINE LIST— Continued 
Domestic— Continued 



Code 



Brand 



Size 



667 
668 
669 
665 
670 
668 
660 
6C3 
664 
661 
662 



887 

894 
896 

506 



840 
841 



873 



977 
975 
976 



973 
974 
978 
979 
971 
972 



293 
294 
291 
292 



259 
945 
946 
312 
313 



Vat Bros. Mira-Linda 
Vai Bros. Old Reserve 

Val Bros. Old Reserve 

Cerrito 

S-J (Sliewan-Jones, Inc.) 

Italian Swiss Colony 

Widmer's Hillside (White), 
Widmer's Hillside (White). 
Widmer's Hillside (White). 

Old Constitution 

Taylor's 



S. 

S. 

S. 

S. 

s. 

s. 

s. 

s. 

s. 

s. 

.M.S. 



Gal... 
HQt. 
GmI... 
<^Qt. 
".5 Qt. 
Gal... 

n Qt. 
pt... 

Gal.. 
% Qt. 
HQt. 



S-J (Shewan-Jones, Inc.). 
Old Constitution. 



KHINE 
ZINFANDEL 



Vintner's Special D. 



Bot. 



^4Qt. 
HQt- 



ITALIAN 



Tipo Red (Chianti) M. D. 



Vai Bros. Old Reserve. 
Old Constitution 



BURGUNDY 



H Qt- 
5fcQt. 



SPARKLING RED 



Vintner's Ruby Cuvee ......M. S. 



Bot. 



Chateau Rheims... 

Vintner's Private Cuvee.. 
Vintner's Private Cuvee.. 



SPARKLING WHITE 



.M. D. 
.M. D. 
.M. D. 



Gold Seal 1916 

Gold Seal 1916 

Great Western Special Reserve. 
Great Western Special Reserve. 

Cook's Imperial 

Cook's Imperi.il 



CHAMPA'TNE 



.M. D. 

.M.D. 

D. 

D. 

D. 

D. 



H Qt... 
Bot.... 
J^Bot. 



Bot.... 
HBot. 
Bot.... 
HBot. 
Bot.... 
HBct. 



Tribuno— Dry... 
Tribuno — Sweet. 
G. & D.— Dry... 
G. & D.— Sweet. 



Qt... 
Qt... 
30 oz. 
30 Qz. 



Orange Bitters 

Anpostura Bitters. 

Grenadine 

Grenadine 

Grenadine 



MISCELLANEOUS 



. (Jacquin) 



.(Jacquin) 
..(Leroux) 
..(Leroux) 



8oz.., 
4 oz.. 
12 oz., 

not. 

tiPt. 



Imported 



626 
622 


POUT 

Southern Cross— Australian 

Commodore — O & B 

Cockburn White Label 

Sandeman'.- Old Invalid 

Invalid— O & B 

Cockburn Dry Club 

SHERBT 

Southern Cross— Australian 

Duff Gordon Nina 

Jos. C. Gordon's Special Table 

Jos. C. Gordon's Amontillado. 

Sandeman's 3 Star Brown .;... 

Duft Gordon White LabeL. 

Garvey's Vino de Pasto 

Duff Gordon Amontillado 


S. 

S. 

M.S. 

M.S. 

M.S. 

M.D. 

D. 

D. 

M.D. 

...D. 

M.S. 

M.S. 

D. 

D. 


HQt 

Bot 


$0.E 

i.e 


621 


Bot 


i.e 


525 


Bot 


i.e 


523 


Bot 


l.S 


524 


Bot 


2.5 


589 
583 
586 


5i Qt 

H Qt 

Bot 


.5 
1.5 

i.a 


587 


Bot - 


i.f 


585 


Bot 


I.e 


582 


Bot 


I.e 


5&1 


Bot 


I.e 


588 


Bot 


2.3 



CONCENTRATION OF ECONOMIC POWER 



2727 



Commonwealth of Virginia, Alcoholic Beverage Control Board, Retail price list No. 4S, 
effective July 16, 1937 — supersedes all previous price lists — Continued 



WINE LIST— Continued 
Imported — Continued 



Code 


Brand 




Size 


Price 


fi78 

710 
706 


yUSCATKl. 

Southern Cross— Australian... 

CLARET 

Southern Cross-Australian 

Bordeaux Rou?e Superieur 192S-Bellows 

St. Emilion B & G _ ■ 

Teyssonniere La Blunie 

Chateau Lagrange 1928-Bellows 

Teyssonniere Comte d'Eymet Rouge 

Or. Vin. Chat. Pontet Canet Cruse 

Gr. Vin. Chat. Pontet Canet Cruse 

SAUTERNE3 (WHITE BORDEAUX) 

Southern Cross- Australian 

Sauternes 1928-Sichel & Fils Freres 

Graves Cruse et Fils Freres 

Haut Sauternes B & 

Chateau Grillon 1929-Bellows 

MADEIRA 

Old Malmsey . . 


S. 

D. 

D. 

D. 

D. 

D. 

D. 

D. 

-.D. 

S. 

.M.D. 

D. 

S. 

M.D. 

..M.S. 


*.i Qt 

^Qt... 

Bot 


$0. 8(t 

.80 
1.00 


703 


Bot 


1.20 


701 


Bot . ... 


1.30 


709 


Bot 


1.30 


705 


Bot 


1.G5 


707 


Bot 


1.75 


708 

758 
752 
751 


H Bot 

^*Qt 

Bot 

Bot... 


.90 

N 

.80 
1.25 
1.30 


757 


Bot 


1.65 


763 


Bot 


1.65 


640 


Bot 


1.70 


812 


BURGUNDY RED 

Pommard 1929 


D. 


Bot .. 


1.45 


810 


Macon Cruse et Fils Freres : 

Macon Cruse et Fils Freres 

Chambertin-Chauvenet 

Chambertin-Chauvenet 

BURGUNDY WHITE 

Chablls Superieur 1926-Sichel & Fils Freres 

SPARKLING BURGUNDY 

Chauvenet Red Cap 

RHINE 

Kreuznacher 1934-Bellows 

Laubenheimer . 


D. 

D. 

D. 

D. 

D. 

D. 

D. 

D. 


Bot 


1.65 


811 
814 


14 Bot 

Bot . ... 


.85 
2.70 


815 
826 


HBot 

Bot 


1.35 
1.65 


861 


Bot 


3.20 


882 


Bot 


1.15 


883 


Bot 


1.40 


901 


MOSELLE 

Zeltingeu 1933 


D. 


Bot 


1.45 


903 


Berncastel 1933 

ITALIAN 

Chianti Antinori 


M.D. 

D. 


Bot 


1.60 


922 


Bot 


1.35 


921 


Marsala Hopps <t Rons 

CHAMPAGNE 

Moet & Chandon 1928 White Seal 

Moet & Chandon 1928 White Seal 

Lanson Extra Dry 

Lanson Extra Dry 


D. 

D. 

D. 

M.D. 

M. D. 


Bot 


1.50 


955 


Bot 


3.25 


956 
957 


H Bot 

Bot 


1.80 
3.45 


958 


H Bot 

Bot 


1.90 


953 


Pommery & Oreno Non Vin 

Pommery & Oreno Non Vin 

Clicquot Non Vintage 

Clicquot Non Vintage 

Q. H. Mumm Extra Dry 

DUBONNET 

Dubonnet 


D. 

D. 

D. 

D. 

M.D. 


3.55 


954 
959 


JiBot 

Bot 


1.95 
4.05 


960 
951 


M Bot 

Bot 


2.20 
4.06 


948 


Bot 


1 70 


253 


VERMOUTH 

Martini & Rossi-Dry 


Bot 


1.16 


254 


Noilly Prat-French 


Bot 


1.20 


255 


Martini & Rossi-Italian 


Bot 


1.30 











2728 



CONCENTRATION OF ECONOMIC POWER 
Express Shipments to Individuals 



HARD LIQUORS 

According to the Act NOT MORE THAN one gallon of distilled spirits can 
be sold to one person at ONE TIME. 

On receipt of certified check, cashier's check or money order covering the 
amount of your purchase, shipment will be made promptly. Prices shown 
are delivered prices on quantities of ONE GALLON. Less than one gallon 
orders will be shipped EXPRESS COLLECT. 

The buyer must certify that he or she is entitled to make this purchase under 
the Virginia ABC Act. 

WINES 

There are no restrictions as to quantity of wine shipments. 

On receipt of certified check, cashier's check or money order covering the 
amount of your purchase, shipment will be made promptly. 

Prices shown are delivered prices on quantities of ONE CASE OR MORE. 
Less than one case orders will be shipped EXPRESS COLLECT. 

ITEMS APPEARING ON THIS LIST BUT NOT STOCKED IN THIS STORE CAN BE SUPPLIED 

PROMPTLY ON ORDER AT PRICES LISTED. SEE STORE MANAGER. 

PRICES SUBJECT TO CHANGE WITHOUT NOTICE 



Commonwealth of Virginia, Alcoholic Beverage Control Board, retail price list No. 46, 
effective February 1, 1938 — Supersedes all previous price lists^ 



Code 



Brand 



Age' 



Proof 



Size 



Retail 
price 



STRAIGHT WHISKY— BOURBON 



Old Whig 

Old Whig.. 

Frontier 

Frontier 

Windsor 

Windsor 

Old American 

Old American 

Ten High 

Ten High.. 

Old Quaker 

Old Quaker 

Qlenmore.. 

Qlenmore 

Bottoms Up.. 

Bottoms Up 

Crab Orchard 

Cn^b Orchard 

Cream of Kentucky. 
Cream of Kentucky. 
Virginia Gentleman. 
Virginia Gentleman. 

Old Polk 

Old Polk 

Old Lewis Hunter... 
Old Lewis Hunter... 

Shipping Port 

Shipping Port 

Old Mr. Boston 

Old Mr. Boston 

Century Club 

Century Club 



STRAIGHT WHISKEY— RYE 



Fleet Street 

Fleet Street 

Maryland Hunt Cup... 
Maryland Hunt Cup... 
Barclay's Private Stod^ 



18 Mo. 
18 Mo. 
18 Mo. 
18 Mo. 
24 Mo. 
24 Mo. 
24 Mo. 
24 Mo. 
24Tvro. 
24 Mo. 
24 Mo. 
24 Mo. 
24 Mo. 
24 Mo. 
24 Mo. 
24 Mo. 
24 Mo. 
24 Mo. 
24 Mo. 
24 Mo. 
24 Mo. 
24 Mo. 
24 Mo. 
24 Mo. 
24 Mo. 
24 Mo. 
18 Mo. 
18 Mo. 
24 Mo. 
24 Mo. 
46 Mo. 
36 Mo. 



Bour... 

Bour... 

Bour... 

Bour. . . 

Bour... 

Bour... 

Bour... 

Bour... 

Bour. . 

Bour... 

Bour... 

Bour. . . 

Bour... 

Bour... 

Bour... 

Bour. . . 

Hour. . . 

Bour... 

Bour... 

Bour... 

Bout - 

Bour?. . 

Bour... 

Bour. - 

Bour... 

Bour. . 

Bour. . . 

Bour... 

Bcsur... 

Bour... 

Bour... 

Bour. . . 



24 Mo. Rye. 
24 Mo. Rye. 
22 Mo. Rye. 
22vMo. Rve. 
24 Mo. Rya. 



Barclay's Private Stock. .| "•24 Mo. Rye. 



Sherbrook. 
Sherbrook. 
Town Tavern. 
Town Tavern. 



22 Mo. Rye. 
22 Mo. Rye. 
24 Mo. Rye. 
24 Mo. Rye. 



90 
90 
90 
90 
90 
90 
90 
90 
90 
90 
90 
90 
90 
90 
90 
93 
93 
90 
90 
90 
90 
100 
100 
100 
100 
90 
90 
90 
90 
90 
90 



Qt.. 
Pt.. 
Qt.- 
Pt.. 
Qt.. 
Pt.. 
Qt.. 
Pt.. 
Qt.. 
Pt.. 
Qt.- 
Pt.. 
Qt.. 
Pt.. 
Qt.. 
Pt.. 
Qt.- 
Pt.. 
Qt.- 
Pt.. 
Qt-- 
Pt.. 
Qt.- 
Pt.. 
Qt.. 
Pt.. 
Qt.. 
Pt-. 
Qt.. 
Pt.. 
Qt- 
Pt- 



Qt. 
Pt. 
Qt. 
Pt. 
Qt. 
Pt- 
Qt. 
Pt. 
Qt. 
Pt. 



$1.15 

.60 
1.25 

.65 
1.30 

.70 
1.40 

.75 
1.45 

.80 
1.50 

.80 
1.50 

.80 
1.55 

.80 
1.65 

.85 
1.60 

.85 
1.-60 

.85 
1.65 

.85 
1.65 

.85 
1.65 

.90 
1.75 

.95 
1.90 
1.00 



1.40 

.75 
1.45 

.75 
1.45 

.80 
1.50 

.80 
1.50 

.80 



'Written in ink across top of list: "Please note there was an increase in Fed. Tax oh July 1st, 1938, of 25^ 
per proof gallon which is reflected in higher prices on Feby. 1st, 1939." 
' Aees as shown available! mmediately upon exhaustion of .vounger stocks in this store. 



CONCENTRATION OF ECONOMIC POWER 



2729 



Commonwealth of Virginia, Alcoholic Beverage Control Board, retail price list No. 46, 
effective February 1, 193S — Supersedes all previous price lists — Continued 



163 
164 

161 
162 
159 
IfiO 
153 
154 
155 



Brand 



STRAIGHT ■WHISKEY— RYE — continued 



Rlttenhouse Square. 
Rittenhouse Square. 

KInsey 

Kinsey 

Wolf Creek 

Wolf Creek 

Ruxton Rye 

Ruxton Rye 

Rewco 

Rewco 1.. ... 



STRAIGHT ■WHISKEY— CORN 



Mid West Corn 

Mid West Corn 

Colonel Glen Corn. 
Colonel Glen Corn 

Cotton Picker 

Cotton Picker 



WHISKEY— BOURBON 

Invader 

Invader 

Two Naturals 

Two Naturals. 

Mint Springs 

Mint Springs... 

Golden Eagle 

Golden Eagle 



Stillbrook. 
Stillbrook. 



■WHISKEY — RYE 



Indian Queen. 
Indian Queen. 



■WHISKEY-CORN 



BLENDED ■WHISKEY 

Briarcliff 

Briarcllft i 

Brigadier 

Brigadier 

Cobb's Creek 

Cobb's Creek 

G. & W. Two Star 

O. & W. Two Star 

Belle of Nelson 

Belle of Nelson 

Old Mr. Boston Rocking Chair.. 
Old Mr. Boston Rocking Chair- 
Old Treasure 

Old Treasure 

G. & W. Five Star 

G. & W. Five Star 

Calvert's Special 

Calvert's Special 

Wilson— That's All 

Wilson— That's All 

Seagram's Five Crown _.. 

Seagram's Five Crown 

Pcnn.-Md. DeLuxe 

Penn.-Md. DeLuxe... 

Calvert's Reserve.. 

Calvert's Reserve 

.Seagram's Seven Crown 

Seagram's Seven Crown 



Age 



30 Mo. Rye. 
30 Mo. Rye. 
24 Mo. Rye. 
24 Mo. Rye. 
21 Mo. Rye. 
21 Mo. Rye. 
24 Mo. Rye. 
24 Mo. Rye. 
30 Mo. Rye. 
30 Mo. Rye. 



18 Mo.' Corn. 
18 Mo. Corn. 
18 Mo. Corn. 
18 Mo. Corn. 
18 Mo. Corn. 
18 Mo. Corn. 



12 Mo. Bour. 
12 Mo. Bour. 
12 Mo. Bour. 
12 Mo. Bour. 
15 Mo. Bour. 
15 Mo. Bour. 

9 Mo. Bour. 

9 Mo. Bour. 



12 Mo. Rye. 
12 Mo. Rye. 



12 Mo. Corn. 
12 Mo. Corn. 



BLEND OF STRAIGHT -WHISKIES— BOURBON 



Old Hawthorne . 

Old Hawthorne 

Mattingly & Moore (M & M). 
Mattingly & Moore (M & M). 

Tom Hardy 

Tom Hardy 

Golden Wedding ... 

Golden Wedding.". 

P-aul Jones 



Bour. 
Bour. 
Bour. 
Bour. 
Bour. 
Bour. 
Bonr. 
Bour. 
Bour- 



Proof 



100 
100 
90 
90 
90 
90 
93 
93 
93 
93 



100 
100 
90 
90 
100 
100 



90 
90 
90 
90 
90 
90 
100 
100 



90 
90 
90 
90 
90 
90 
90 
90 
90 
90 
90 
90 
90 
90 
90 
90 
90 
90 
90 
90 
90 
90 
90 
90 
90 
90 
90 
90 



Size 



Qt- 
Pt. 
Qt. 
Pt. 
Qt. 
Pt. 
Qt. 
Pt. 



Qt. 
Pt. 
Qt. 
Pt. 
Qt. 
Pt. 
Qt. 
Pt. 
Qt. 
Pt. 
Qt. 
Pt. 
Qt. 
Pt. 
Qt- 
Pt. 
Qt. 
j^t. 
Qt. 
Pt. 
Qt- 
Pt. 
Qt. 
Pt. 
Qt- 
Pt. 
Qt. 
Pt. 



2730 



CONCENTRATION OF ECONOMIC POWER 



Commonwealth of Virginia, Alcoholic Beverage Control Board, retail price list No. 46, 
effective February 1, 19S8 — Supersedes all previous price lists — Continued 



Brand 



Age 



Proof 



Size 



BLEND OF STRAIGHT WHISKIES— BOURBON— COn. 



Pnul Jones. 
Four Roses- 
Four Rosos. 



Bour. 
Bour. 
Bour. 



BLEND OF STRAIGHT WHISKIES— RTE 



Old 0<;car Pepper (O OP) 

Old Oscar Pepper (O O P) 

Gibson's XXXX 

Gibson's XXXX 

Priv;ite Stock Rj'e— Park & Tilford. 
Private Stock Rye— Park & Tilford. 



Rye. 
Rye. 
Rye. 
Rye. 
Rye. 
Rye. 



BOTTLED IN BOND WHISKEY— BOURBON 



Old Grand Dad... 
Old Grand Dad... 

Old Forester 

Old Forester 

Kentucky Tavern. 
Kentucky Tavern, 



Bour. 
Bour. 
Bour. 
Bour. 
Bour 
Bour. 



BOTTLED IN BOND WHISKEY — RTE 



Mount Vernon. 
Mount Vernon. 
Old Overholt... 
Old Overholt... 

Gibson's 

Gibsons 



Rye 
Rye. 
Rye. 
Rye. 
Rye. 
Rye. 



CANADIAN WHISKEY 



Seagnui'.'s "83" 

Seainin's "S3" 

G. & \V. Bonded Stock 

G. & W. Bonded Stock 

Canadian Club 

Canadi;in Club 

Hiram Walker's Private Stk. 
Hiram Walker's Private Stk. 



5Yr..- 

SYr - 

7 Yr. Bour. 
7 Yr. Bour. 

Yr. .- 

6 Yr 

10 Yr. 

10 Yr 



SCOTCH WHISKEY 

Old Benefacto Pinched Decanter. 

Harvey's Special Blended _.. 

Auld Glon Rossie. 

King Willinm IV V. O. P 

Peter Dnwson _ 

Black & White 

Black & White.... 

Sanderson's Vat 69 

Johnny Walker Red Label 

Teacher's Hichland Cream 

White Horse 

White Horse 

De war's White Isabel 

Martin's V. V. O.. 

Haig & Haig Five Star 

Haig & Haig Five Star 

Ballantine's 10 Year Old 

Old Rarity 12 Year Old 

Haig & Haig Pinched Decanter... 
Johnny Walker Black Label 



IRISH WHISKEY 

Bushmill's 

John Jameson's 3 Star 



IRISH AMERICAN WHISKEY 

William Jameson Irish American 



.\merican. 
.American. 
Cavalier... 
Cavalier... 
Rhythm... 



100 
100 
100 
100 
100 
100 



100 
100 
100 
100 
100 
100 



90 
90 

100 

100 
90.4 
90.4 
90.4 
90.4 



Qt. 
Pt. 
Qt. 
Pt- 
Qt. 
Pt. 



Qt 
Pt, 
Qt. 
Pt. 
Qt. 
Pt. 



Pt . 
4/5 0( 
4/5 Qt 
4/5 Qt 
4/5 Qt. 
4/5 Qt 
4/5 Pt 
4/5 Qt 
4/5 Qt 
4/5 Qt 
4/5 Qt 
4/5 Pt 
4/5 Qt 
4/5 Qt 
4/5 Qt 
Pt,_, 
4/5 Qt 
4/5 Qt, 
4/5 Qt 
4/5 Qt 

4/5 Qt 
4/5 Qt 

4/5 Qt. 

Qt.... 
Pt... 
Qt.... 
Pt... 
Qt..-. 



CONCENTRATION OF ECONOMIC POWER 



2731 



Commonwealth of Virginia, Alcoholic Beverage Control Board, retail price list-No. 46, 
effective February 1, 19S8 — Supersedes all previous price lists — Continued 



Brand 



Age 



Proof 



Size 



Retail 
price 



OiN — continued 

Tthythm - 

PoloClnb 

PoloChib 

Hiram Walker's London Dry... 
Hiran Walker's I, nndon Dry... 

O ilbpy's London Dry 

OilheV's London Dry 

Dixie Belle 

Dixie Belle ..... 

Mil<hire 

Mihliire 

Old Mr. Boston 

Old ^f^. Boston 

Flclsclirnann's 

Floischm inn's 

Oorfion's London Dry 

Gordon's London Dry 

DeKuyper's Geneva 



SLOE OIN 

DeKny per's 

DeKuyper's 

Oraliam (Jncquln's) 

Graha.n CTarquin'sl 

Old Mr. Boston.. 

Old Mr. Boston... 



FRXHT FLAVORED GIN 



528 R. & O. (Oranee) 

524 Jaeqtiin's (MIntl.. 

526 I Old Mr. Boston (Orange). 



BRANDT ORAPE 



Vrti Bros.-Old Reserve. 

Vai Bros.-Old Reserve 

Balhoa... 

Balhoa 

A. R. Morrow Bottled in Bond. 



BRANDY APPLE 



Old Delaware Gold Label. 
Old Delaware Gold Label. 

Peak of Vlreinia 

Captain Apple .Tack 

Cantain ApDle Jack 

Laird's? Star 

Laird's 3 Ptar 

Hildick White Label 

Hildick White Label 



24 Mo . 
24 Mo.. 
3f) Mo. 
36 Mo., 
6 Year. 



BRANDT PEACH 

392 Old Delaware Gold Label.. ... 



BRANDT— IMPORTED — COGNAC 



Marten 3 Star... 
Hennessy 3 Star. 
Hennessy 3 Star. 



RUM- 

Carioca . 

Carioca _. 

Felton's Pikrim 

Felton's Pilgrim 



RtJM— IMPORTED 



Don Q Gold Label-Puerto Rico... 
Government Hou.se-Vircin Island. 
Bornn's Virein I?land Gold Label- 
One Daeper-Jamaica 

Red Heart-Jamaica 

Bacardi 'V\'Tiite Label 

Bacardi Gold Label. 



21 Mo. 
21 Mo. 
16 Mo. 
24 Mo. 
24 Mo. 
30 Mo 
30 Mo 
24 Mo. 
24 Mo. 



24 Mo... 



S.5 
85 
S5 
90 
90 
90 

on 

90 

50 

00 

90 

90 

90 

90 

90 

94.4 

94.4 

90 



90 
90 
90 
90 
100 



90 
90 
90 
90 
90 
90 
90 
100 
100 



90 



Pt 

Qt ... 

I't 

Qt ... 
Pt.... 
Qt... 
Pt.... 
Qt.... 

Pt 

Qt.... 
Pt.... 
Qt.... 

Pt 

Ot.... 

Pt 

Ot... 

Pt 

4/5 Qt. 



4/5 Qt. 
Pt... 
il^ Qt. 
Pt.. 

4/.'5 Qt 
Pt 



Pt. 

Pt. 
Pt. 



4/5 Qt I 

Pt 

4/.'iQt 

Pt... 

Pt.._ 



Pt 



4/5 Ot. 
4/5 Qt. 
4/5 Pt. 



4/5 Qt. 

Pt 

Ot.... 
Pt 



4/5 Qt. 
4/5 Qt. 
4/5 Qt. 
4/5 Qt. 
4/5 Ot. 
4/5 Qt. 
4/5 Qt. 



$0.55 
1.05 

.TO 
1.30 

.70 
1. 3.-) 

L40 
.75 
1.40 

.75 
1.40 

.80 
1.50 

.SO 
1.65 

.90 
1.85 



1.25 
.80 

1.35 
.85 

1.45 
.9.' 



.75 
.75 
.95 



1.50 
.95 

1.55 
.95 

L50 



1.65 

.85 

.90 

1.85 

.95 

2.00 

1.05 

2.40 

1.25 



1.00 



4.00 
4.05 
2.15 



1.50 
.90 

1.80 
.95 



1.55 
1.65 
1.70 
2.85 
3.10 
3.20 
3.R(> 



2732 



CONCENTRATION OF ECONOMIC POWER" 



Commonwealth of Virginia, Alcoholic Beverage Control Board, retail price list No. 46 
effective February 1, 19S8 — Supersedes all previous price lists — Continued 



Code 



Brand 



Age 



Proof 



Size 



450 
452 
454 
456 
461 
463 
465 
457 
459 



630 
532 
634 
535 
536 



542 
546 
548 
650 
551 
652 
640 
654 
556 
538 



560 
562 
564 
568 
570 



581 
583 
584 
585 



586 
588 
590 
592 
694 
596 
598 



»»97 
999 



COCKTAILS 



Martini (Jacquin)... , 

Side Car (Jacquin) 

Manhattan (Jacquin) 

Old Fashioned (Jacquin) 

Martini Dry Club (Heublein) 

Manhattan Club (Heublein) 

Old Fashioned Club (Heublein)... 

Side Car Club (Heublein) 

Daiquiri Club (Rum) (Heublein). 



COBDIALS—UQUEUES— DOMESTIC 

Old Mr. Boston Line 



Apricot Nectar Liqueur 

Peach Nectar Liqueur 

Blackberry Nectar Liqueur- 
Rock & Rye 

Rock & Rye 



Jacquin Line 



Apricot Nectar Liqueur 

Peach Nectar Liqueur 

Cherry Nectar Liqueur 

Blackberry Nectar Liqueur. 

Rock & Rye 

Rock & Rye 

Annisette 

Jacquintro - 

Kummel- 

St. Dominic 



Leroux Line 

Rock & Rye 

Creme de Menthe Green 

Apricot - 

Blackberry 

Peach 

Creme de Cacao 

Triple Sec Curacao 



CORDIALS— LIQUEURS— IMPORTED 



Cointreau 

Benedictine-D. O. M. 
Benedictine-D. O. M. 
Chartreuse-Yellow. . . 



E. Cusenier & Company 



Creme de Menthe— Green., 
Creme de Menthe— White. 

Blackberry Brandy 

Creme de Cacao 

Apricot Brandy 

Extra Sec Orange Curacao. 
Peach Brandy. 



80 



Pt.... 
Pt.... 
Pt.... 
Pt.... 

4/5 Qt 
4/5 Qt 
4/6 Qt 
4/6 Qt 
4/5 Qt 



Pt.... 
Pt..-. 
Pt.... 
Qt.... 
Pt 

Pt.... 
Pt.... 
Pt.... 
Pt.... 
Qt..-. 
Pt.... 
HPt.. 
WPt.. 

Pt 

HTt.. 

Pt.... 
HPt.. 
HPt.. 
fiPt.. 
^Pt.. 
HPt.. 
H Pt.. 

?4Qt.. 
HQt- 
HTt.. 
5iQt.. 

HBot 
^Bot 
HBot 
HBot 
HBot. 
HBot. 
HBot 



PURE GRAIN ETHYL ALCOHOL 

1 Qt. container— Prices furnished on request. 
1 Qai. container— Prices furnished on request. 



CONCENTRATION OF ECONOMIC POWER 



2733 



Commonwealth of Virginia, Alcoholic Beverage Control Board, retail price list No. 46, 
elective February 1, 19S8 — Supersedes all previous price lists — Continued 



WINE 
Domestic 



Brand 



Size 



SPEQAI, TYPE— BEANDS 

Thomas Jefferson Red ....M. S. 

Thomas Jefferson White , M. S. 

Widmer's Hillside Fortified M. S. 

Widmcr's Hillside Fortified -M. S. 

Widmer's Hillside Fortified - M. S. 

Virginia Dare Red ...S. 

Virginia Dare White M. S. 

Southern Hospitality Blackberry -..S. 

PORT 

Vni Bros. Mira-Linda - S. 

Vai Bros. Old Reserve.. S. 

Vai Bros. Old Reserve S. 

Cerrito— Fruit Industries. S. 

Mt. Sinai (Kosher)— Fruit Industries S. 

O. & D. Private Stock (White) S. 

S-J (Shcwan-Jones, Inc.) - - - S. 

Widmer's Ili'I.side - S. 

Widmer's Hillside. - : S. 

Widmer's Hillside -- --S. 

Old Constitution— Fruit Industries .S. 

Taylor's -.. S. 

Italian Swiss Colony -. S. 

Italian Swiss Colony... S. 

SHERRY 

Vai Bros. Mira-I.inda ! ...S. 

Vai Bros. Old Reserve M. S. 

Vai Bros. Old Reserve... M. S. 

Cerrito— Fruit Industries S. 

Mt, Sinai (Kosher)— Fruit Industries M. S. 

S-J CShewan-.iones, Inc.) M. S. 

Widmer's Killsido... ...M. D. 

Widmer's Hillside M. D. 

\\'idnier's Hillside - M. D. 

Old Constitution— Fruit Industries S. 

Taylor's. M. D. 

Italian Swiss Colony..: -M. S. 

Italian Swiss Colony M. S. 

MUSCATEL 

Vai Bros. Mira-Linda S. 

Corrito— Fruit Industries ■. S. 

Cerrito— Fruit Industries S. 

Vai Bros. Old Reserve... -• S. 

Vni Bros. Old Reserve... S. 

Mt. Sinai (Kosher)— Fruit Industries S. 

3-J (Shewaii-jones, Inc.) S. 

Widmer's Hillside S. 

Widmer's Hillside. S. 

Old Constitution — Fruit Industries.. S. 

CLARET 

Vai Bros. Old Reserve. .D. 

Cerrito— Fruit Industries .. D. 

S-J (Shewan-Jfines, Inc.) D. 

Old Constitution— Fruit Indastries D. 

Vintner's Superior D. 

Italian Swiss Colony D. 

Taylor's D. 

SAUTERNES 

Vai Bros. Old Reserve.. .M. S. 

Cerrito— Fruit Industries M. S. 

S-J (Shewan-Jones, Inc.) M. D. 

Old Constitution — Fruit Industries M. S. 

Widmer's Hills'de D. 

Vintner's Superior M. S. 

Taylor's -'. M. D. 

Italian Swiss Colony. ...M. D. 

Letters following brand names indicate the producer's classification, namely— 

S— Sweet M. S.— Moderately Sweet 

D— Dry M- D.— Moderately Dry 

Vintage years as shown may change without notice. 
124491— 39— pt. 6—21 



HQt. 

n Qt- 

HQt. 
Pt..-. 
Oal... 
^Qt. 

n Qt. 

HQt. 



Gal... 
HQt. 
Oal.. 
^A Qt. 
Qt... 
HQt. 
HQt. 
HQt. 
Pt-... 
Oal... 
HQt. 
HQt. 
H Qt. 
Oal... 



Gal... 
H Qt. 
Gal... 
HQt. 
Qt... 
HQt. 
H Qt. 
Pt.... 
Gal... 
HQt. 
H Qt. 
3/^Qt. 
Gal... 



Gal... 
H Qt.. 
Oal... 
H Qt.. 
Gal... 
Qt-.-.. 
HQt . 
H Qt- 
Pt.... 
H Qt- 



H Qt. 
H Qt. 
H Qt. 
H Qt. 
Hot... 
¥a Qt.. 
HQt.. 



H Qt- 
HAt. 
H Qt. 
H Qt. 
HQt. 
Bot... 
H Qt. 
U Qt. 



2734 



CONCEMTRATION OF ECONOMIC POWER 



Commonwealth of Virginia, Alcoholic Beverage Control Board, retail price list A'o. 46, 
effective February 1, 1938 — Supersedes all previous price lists — Continued 



WINE— Continued 
Domestic— Continued 



Brand 



TOKAT 

Vai Bros. Mira-Linda_ S 

Vai Bros. Old Reserve - -.. S 

Vai Bros. Old Reserve .-S 

Cerrito — Fruit Industries S 

S-J (Shewan-Jones, Inc.) . S 

Italian Swiss Colony ._ S 

Widmer's Hillside (White) .S 

Widraer's Hillside (White).. S 

Widmer's Hillside (White) S 

Old Constitution— Fruit Industries.. S 

Taylor's ....M. S 

RHINE 

Vintner's Special; D 

7INFANDEL 

S-J (Shewan-Jones, Inc.) .: D 

Old Constitution— Fruit Industries ....D 

ITALIAN 

Tipo Red (Chianti) M. D 

BURGUNDY 

Vai Bros. Old Reserve _^ D 

Old Constitution— Fruit Industries D 

SPARKLING BURGUNDY 

Great Western M. S 

SPARKLING RED 

Vintner's Ruby Cuvee . M. S 

SPARKLING •WHITE 

Chateau Rheims _ M.D 

Vintner's Private Cuvee M. D 

Vintner's Private Cuvee. M. D 

CHAMPAGNE 

Gold Seal 1916_ M. D 

Gold Seal 1916 M. P 

Great Western Special Reserve D 

Great Western Special Reserve D 

Cook's Imperial _ -D 

Cook's Imperial _ D 

VERMOUTH 

Tribuno-Sweet 

Tribuno-Dry _ _ 

G. & D.-Dry 

G. & D. -Sweet. _. 



Size 



Gal... 
H Qt- 
Gal... 

n Qt-. 

Gal... 
Vs Qt.. 
Pt.... 
Gal... 
H Qt.- 
H Qt- 

Bot... 

HQt.. 
HQt.. 

Bot... 

HQt.. 

n Qt.. 

Bot... 

Bot... 

*/o Qt 
Bot... 
],i Dot 

Bot... 
H Bot 
H Qt.. 
HVt.. 
Bot... 
J^Bot 

Qt.... 
Qt.... 
30 oz.. 
30 oz.. 



I.\I PORTED 







PORT 








655 


Southern Cross-Australian 




S. 


H Qt 


$0.80 


650 


Cockburn White Label 




M.S. 


Bot 




651 


Commodore-G & B.. 




...S. 


Bot 


1.60 


653 


Cockburn Dry Club 


a. . 

SHERRY 


..M.D. 


Bot 


2.15 


688 


Southern Cross-Australian 




D. 


^'s'Qt 


.8C 


683 


Duff Gordon Nina 




..D. 


>^Qt 


1.20 


685 


Jos. C. Gordon's Special Table. 




..M.D. 


Bot 


1.35 


686 


Jos. C. Gordon's Amontillado. . 




D. 


Bot.. 


1. OC 


682 


Duff Gordon White Label 

Sandcman's 3 Star Brown 




_ M.S. 

M. S. 


Bot 


1.60 


684 


Bot 

Bot 


1 65 


681 


Garvey's Vino de Pasto 




D. 


1.65 


687 


Dull Gordon .\montillado 


MUSCATEL 


D. 


Bot 


2.30 


723 


Southern Cross-Australian 


CLARET 


S. 


^Qt 


.80 


749 


Southern Cross-Australian 




D. 


HQt 


.80 


743 


Bordeaux Rouge Superieur 1928-Benows 

St. Emilion B & G.. 


D. 

D. 


Bot 


.95 


741 


Bot 


1.20 


740 


Tey.ssonnierc La Blunie 




D. 


Bot.... 


1.30 


746 


Chateau Lagrange 1928-BeIlows 




_ D. 


Bot 


1,30 


744 


Or. Vin. Chat. I'ontet Canet C 


ruse 


. D. 


Bot 


1.45 


745 


Gr. Vin. Chat. Ponttt Canct C 


ruse 


D. 


3^2 Bot 


.75 


742 


1 Teyssonniere Comted'Eymet Rouge 


D. 


Bot 


1.65 



CONCENTRATION OF ECONOMIC POWER 



2735 



Con^monwealth of Virginia, Alcoholic Beverage Control Board, retail price list No. 46, 
effective February 1, 1938 — Supersedes all previous price lists — Continued 



WINE— Continued 
Imported — Continued 




SAUTERNES (WHITE BORDEAUX) 

Southern Cross-Australian - --- Vi^--,^ 

Bordeaux Blanc Superieur 1928-Bellows M. D 

Graves Cruse et Fils Freres - "vS 

Sauternes 1928-Sichel & Fils Freres - M. D 

Chateau Qrillon 1934-Bellows M. D 

Haut Sauternes B & Q - -° 

MADEIRA 

Old Malmsey - M- S 

BURGUNDY RED 

Macon Cruse et' Fils Freres - -- D. 

Macon Cruse et Fils Freres - D 

Pommard 1929... - - -D 

Chanibertin-Chauvenet -- - - D. 

Chambertin-Chauvenet - -- -D 

BURGUNDY WHITE 

Chablis Superieur 1029-Sicliel & Fils Freres D 

SPARKLING BURGUNDY 

Chauvenet Red Cap.. --- -D 

RH^NE 

Langenbach's Hoch Superior-Bellows _ D, 

Laubenheimer D 

MOSELLE 

Zeltinger 1935 - - -D, 

Berncastel 1933... M. D. 

ITALIAN 

Martini & Rossi Chianti T>. 

Chianti A ntinori D. 

Marsala Hopps & Sons 1 D. 

CHAMPAGNE 

Moet & Chandon ^ilxtra Dry White Seal D. 

Meet & Chandon Extra Dry White Seal _■ D. 

Lanson Extra Dry. M. D. 

I-anson Ext ra Dry M . D . 

Pommery & Oreno Von Vin _ D. 

Pommery & Oreno Non Vin D. 

Clicquot .- .D. 

Clicquot D. 

Q. H. Mumm Extra Drv M. D. 

Q. H. Mumm Extra Dry. M. D. 

DUBONNET 

Dubonnet , 

VERMOUTH 

Martini & Rossi-Dry --. 

Noilly Prat-French 

Martini & Rossi-Italian 



% Qt. 
Bot.. 
Bot.. 
Bot.. 
Bot.. 
Bot.. 



Bot. 



Bot..-. 
H Bot. 
Bot ... 
Bot... 
)4 Bot. 



Bot. 
Bot. 



Bot. 
Bot. 



Bot. 
Bot. 



Qt.. 
Qt.. 
Bot. 



Bot... 
!■« Bot. 
Bot... 
\i Bot. 
Bot... 
V> Bot. 
Bot... 
],i Bot.. 
Bot... 
H Bot. 



Bot. 



Bot. 
Bot. 
Bot. 



Mlscellaneous 



977 Orange Bitters. ..(Jacquin) 

976 Angostura Bitters --- 

980 Grenadine ..(Jacquin) 

978 Grenadine. -- (Leroux) ^ 

979 I Grenadine. (Leroux) i 



8oz.. 

4 0Z.. 

12 oz. 

*r, Qt 
<iPt. 



2736 



CONCENTRATION OF ECONOMIC POWER 



Express Shipments to Individuals 
hard liquors 

According to the Act NOT MORE THAN one gallon of distilled spirits may 
be sold to one person at ONE TIME. 

On receipt of certified check, cashier's check, or money order, covering amount 
of your purchase, shipment will be made promptly EXPRESS COLLECT. 

The buyer must certify that he or she is entitled to make this purchase under 
the Virginia ABC Act. Orders from territories where the sale of alcoholic bever- 
ages other than wine or beer are prohibited must be made in accordance with 
special form, copy of which will be furnished on request. 



There are no restrictions as to quantity of wine shipments. 

On receipt of certified check, cashier's check, or money order, covering amount 
of your purchase, shipment will be made promptly. 

Prices shown are delivered prices on quantities of one case or more. Less 
than one case will be shipped EXPRESS COLLECT. 

SPECIAL ORDERS FOR WINES 

We carrj' a repic.scntative list of Domestic and Foreign wines, but all wines 
on the American market are available to citizens of the State. Upon request, 
prices will be secured, and orders placed on receipt of the amount involved. 
No delivery charge will be made on such nonlisted items if delivery is accepted 
at your nearest ABC Store on regular weekly shipment. If shipped direct to 
customer, EXPRESS charges will be COLLECT. Special orders MUST BE 
IN CASE LOTS. 

All wines, as weU as liquors, must be purchased through this Board or its 
licensees within the State in accordance with the ABC Act. 

ITEMS APPEARING ON THIS LIST MARKED THUS (X), ARE NOT STOCKED IN THIS 
STORE BUT CAN BE SUPPLIED PROMPTLY ON ORDER AT PRICES LISTED. SEE 
STORE MANAGER. ITEMS APPEARING ON THIS LIST MARKED THUS (0), HAVE 
BEEN DISCONTINUED 

PRICES SUBJECT TO CHANGE WITHOUT NOTICE 



Commonwealth of Virginia, Alcoholic Beverage Control Board, retail price list No. 49 
effective October 1, 1938 — supersedes all previous price lists 



Code Brand 


Age I 


Proof 


Size 


Retail 
price 


61 


STEAIGHT WHISKEY— BOURBON 

Frontier.. . 


24 Mo 


90 
90 
90 
90 
90 
90 

100 

100 
90 
90 

■ 90 
90 
90 
90 
90 
90 
90 
90 
90 
90 
90 
90 
90 
90 

100 


Qt 

Ft 

Qt 

Ft 

Qt 

Ft 

Qt 

Ft 

Qt 

Ft 

Qt 

Ft 

Qt--. 

Ft... 

Qt 

Ft. 

Qt 

Ft 

Qt. 

Ft 

Qt 

Ft 

Qt 

Ft 

Qt. 


$1.35 


62 


Frontier 


24 Mo. 


.70 


11 


Mint Springs . 


24 Mo... 


1.35 


12 


Mint Springs . 


24 Mo 


.70 


17 


Windsor ._ 


24 Mo 


1.40 


18 


Windsor. 


24 Mo 


.75 


63 


Golden Eagle. _ 


24 Mo.. 


1.45 


64 


Golden Eagle ,. 


24 Mo 


.75 


1 


Vireinia Gentleman . 


24 Mo 

24 Mo . . . 


1.45 


2 


Virginia Gentleman 

Old American 


.80 


29 


36 Mo 


1.50 


30 


Old American 


36 Mo 


.80 


35 


BottomsUp . . 


24 Mo. 

24 Mo. 

24 Mo 


1.50 


36 


Bottoms Up . . 


,80 


21 


Crab Orchard 


1.55 


22 


Crab Orchard 


24 Mo 


.80 


IS 


Ten High . . . 


24 Mo - - - 


1.55 


20 


Ten High . . 


24 Mo 


.85 


41 


Old Quaker 


36 Mo 


1.60 


42 


Old Quaker 


36 Mo 


.85 


37 


Cream of Kentucky... . . 


24 Mo . 


1.60 


38 


Cream of Kentucky.. . . 


24 Mo 


.85 


23 


Shipping Port. 


24 Mo 


l.GO 


24 


Shipping Port 


24 M^) 


.85 


31 


Old Polk ,. 


24 Mo 


1.6 



'Ages as 3hown available immediately upon exhaustion of younger stocks in this store. 



CONCENTRATION OF ECONOMIC POWER 



2737 



Com inon wealth of Virginia, Alcoholic Beverage Control Board, retail price list No. 49, 
effective October 1, 1988 — supersedes all previous price lists — Continued 



Code 


Brand 


Age 


Proof 


Size 


Retail 
Price 


32 


STRAIGHT -WHISKEY— BOURBON— continued 

Old Polk - 


24 Mo 


100 
100 
100 
90 
90 
90 
90 
90 
90 

90 
90 
90 
90 
90 
90 
90 
90 
90 
90 
93 
93 
90 
90 
300 
100 
93 
93 

100 

100 

90 
90 
90 
90 
90 
90 
85 

90 
90 
85 

90 
90 
90 
90 
100 
100 

90 
90 
90 
90 
90 
90 
90 
90 
90 
90 
90 
90 
90 
90 
.90 
90 
90 
90 
90 


Pt - 

Qt 

Pt 

Qt 

Pt 

Qt 

Pt 

Qt 

Pt ; 

1 

Qt 1 

Pt 1 

Qt 1 

Pt 1 

Qt. -- 

Pt 

Qt 

Pt 

Ot 

Pi 

Qt 

Pt. - 

Qt -. 

Pt.. 

Ot - 

Pt 

Qt 

Pt 

Ot 

Pt-- 

Ot.- 

Pt-_ 

Ot 

Pt 

Ot_. 

Pt 

Pt. 

Qt.- 

Pt-- 

Pt.. 

Qt.- 

Pt.-- 

Qt.. 

Pt. 

Qt. 

Pt..- 

Qt 

Pt 

Qt -. 

Pt 


$0.85 


57 




30 Mo 


1.65 


58 




30 Mo 


.90 


35 


Old Lewis Hunter - 


36 Mo 


1.85 


16 


Old Lewis Hunter . 


36 Mo 


.95 


51 


Old Mr. Po.ston -.- 


36 Mo 


1.85 


52 


Old Mr Posttin . - 


36 Mo 


1.00 


5 




36 Mo 


1.90 


6 


Century Club 


36 Mo 


1.00 


7 


STEAIGHT WHISKEY— EYE 


24 Mo 


1.40 


g 




24 Mo 


.70 


47 


Fleet Street - --- 


24 Mo 


1.55 


4H 


Fleet Street .. 


24 Mo 


.80 


S3 




24 Mo- 


1.50 


34 


Puxton Rve 


24 Mo 


.80 


45 




27 Mo 


1.55 


46 




27 Mo 


.80 


13 




24 Mo- 


1.55 


14 


Parelav's Private Stock 


24 Mo 


.85 


9 




27 Mo, 


1.60 


10 




27 Mo 


.85 


25 


■U'olf Creek 


24 Mo 


1.60 


26 


Wolf Creek 


24 Mo 


.85 


49 


Ritfonhouse Square . . 


36 Mo 


1.65 


50 




36 Mo 


.85 


27 


Rewco - 


30 Mo. 


1.65 


28 




30 Mo 


.85 


53 




24 Mo 


1.35 


54 


Midwest Corn 


24 Mo 

IS Mo 

18 Mo - 


.70 


93 


WHISKEY— BOURBON 

Old Whitr 


1.25 


94 


Old Whig 


.65 


89 




12 Mo 


1.25 


90 




12 Mo . 


.65 


9! 




12 Mo 


1.30 


99 




12 Mo 


.70 


80 




12 Mo 


.60 


83 


WHISKEY— RYE 


IS Mo 


1.25 


84 


Stillhrook . . 


18-Mo 


. 05 


88 




12 Mo -. 


.60 


85 


Colonel Glen 


ISMo 


1.30 


86 




IS Mo 


.70 


97 




12M'o 


1.35 


98 


Indian Queen . 


12 Mo 


.70 


81 


Cotton Picker.. 


ISATo-... 


1.45 


82 


Cotton Picker . . ... .. 


18 Mo 


.75 


101 


BLENDED WHISKEY 

Brieadier : 




3.30 


102 


Brieadier 




.70 


109 


Briarcliff - . 




1.35 


110 






1 .70 


103 


Belle of Nelson . .. - -- 




Qt 

Pt.. 

Qt 

Pt 

Ot 

Pt - 

Qt 

Pt 

Qt-- 

Pt. 

Qt .- 

Pt 

Qt... 

Pt 

Qt 


1.40 


104 






.75 


115 


Cobh's Creek 




1.45 


116 


Cobb's Creek 




.75 


111 


O. & W. Two Star .-. 




1 1. 50 


112 


O. & W. Two Star 




.80 


127 


Old Treasure 




i 1. 65 


128 


Old Trea,sure 




; . So 


119 


G. & W. Five Star 




1 1.80 


120 


G. & W. Five Star 




.95 


125 


Old ]\Tr. Boston Racking Chair 




I.S.- 


126 


Old Mr. Boston Rocking Chair 




! 1. 00 


117 


Calvert's Special. 




1. S5 


118 


Calvert's Special . . .... 




1.00 


123 


Wilson— That's All 




l.So 



2738 



CONCENTRATION OF ECONOMIC POWER 



Commonwealth of Virginia, Alcoholic Beverage Control Board, retail price list No. Jf9y 
effective October 1, 1938 — supersedes all previous price lists — Continued 



Code 


Brand 


Age 


Proof 


Size 


Retail 
price 


124 


BLENDED WHISKEY— Continued 
Wilson— That's All... 




00 
90 
00 
90 
90 
90 
90 

90 
90 
90 
90 
90 
90 
90 
00 
90 
90 
on 

90 

90 
90 
90 
90 
92 
02 

100 
100 
100 
100 
100 
100 
100 
100 
100 
100 

100 
100 
100 
100 
100 
100 
100 
100 
^ 100 
100 

86.8 
86.8 
90.4 
90.4 
90.4 
90.4 
100 


Pt 

Qt. ....... 

Pt. 

Qt 

Pt 

Qt -. 

Pt 

Qt 

Pt 

Qt 

Pt 

Qt--. 

Pt.. 

Qt 

Pt 

Qt .- 

Pt 

Qt 

Pt 

Qt 

Pt 

Qt. 

Pt 

Qt 

Pt 

Qt 

Pt 

Qt - 

Pt 

Qt 

Pt 

Qt.... 

Pt 

Qt 

Pt 

Qt.. 

Pt 

Qt 

Pt 

Qt 

Pt 

Qt 

Pt 

Qt 

Pt 

Qt 

Pt 

Qt 

Pt 

Qt 

Pt 

Pt 

f.Uit ..-- 

lAQt 

•»,fi Qt 

♦■s Ql - - 

HQt 

■H Qt 

'.^. Pt 

^r. Qt 

^r.Vt 


$1.00 
1.P5 


105 


Reagram'.s Five Crown.. 




106 


Soaeram's Five Crown . . 




1 05 


121 


Calvert's Reserve 




2.40 


122 


Calvert's Reserve 




1.25 


107 


Seagram's Seven Crown . 




2 50 


108 


Seasram's Seven Crown 




l.cO 


159 


BI.END OF STRAIGHT WHISKEYS- BOURBON 

Tom TIardy • 




1.65 


160 


Tom Hardy 




.85 


Ifil 


Mattinely & Moore (M & M)„ 




1.70 


162 


Mattinely & Moore (M & M) . 




.90 


171 


Old Tucker 




2.05 


172 


Old Tucker 




1.05 


15.3 


(}o]den Weddin?. 




2.30 


l.'i4 


Oolden Wedding 




1.20 


155 


Paul Jones.*. 




2.45 


156 


PaulJones . 




1.25 


157 


Four Roses 




2.85 


158 


Four Roses 




1.45 


167' 


BLEND OF STRAIGHT WHISKEYS— RYE 

Old Oscar Pepper CO P) 




2.00 


168 


Old Oscar Penner (0 P) 




1.05 


165 

rt6 


Oib.son'sXXXX _ 

Gib.son's XXXX 




2.30 
1.20 


169 


Private Stock Rye— Park & Tilford 




2.85 


170 


Private Stock Rye— Park & Rilford. 




1.45 


207 


BOTTLED IN BOND WHISKF.Y— BOURBON 

Kentucky Tavern 




2.60 


208 


Kentuck V Tavern 




1.35 


217 


Bonded Pclmont 




2. (nr 


218 






1.40 


201 


Old Grand Dad 




3.10 


202 


Old Grand Dad.... 




1.60 


203 


Old Forester. 




3.10 


204 


Old Forester 




1.60 


213 


Old Tavlor... 




3.10 


214 


Old Tavlor 




1.60 


210 


BOTTLED IN BOND WirL<<KEY — RYE 

PhiiadelTihia Rve 




2.40 


220 


Philadflphia Rve 




1.25 


215 


O. & W. Bonded Stock 




2.55 


216 


G. <<r W. Bonded Stock ... 




1.35 


209 


GiKson's 




2.65 


210 


Gibson's 




1.35 


205 


Mount Vernon . 




2.75 


206 


Mount Vernon 




1.45 


211 


01d,Overh()lt . 




2.75 


212 


Old Overholt 




1.45 


187 
188 


(^ANADIAN WHISKEY 

Seacranj's V. 

Seapram's V. 


6 Yr 

6 Yr 


3.65 
1.85 


183 


Canadian riiih . 


6 Yr 


3.75 


184 


Canadian Club . . 


6 Yr 


1.90 


185 


Hiram Walker's Private Stock 


10 Yr 


4.35 


186 


Hiram ^\aIker's Private Stock.. . . 


10 Yr 

8 Yr 


2.25 


180 


Seagram's Pcdii'ree 


2.40 


269 


SCOTCH WHISKEY 

Harvey's Special Blended 


2.75 


265 


King Wiiliam IV 




' i 
— 1 


2.80 


275 


Anld Glen Rossio 


3.00 


299 


Old Angus Scotch 




3.20 


267 


Peter Dawson 


3.25 


295 


Black & White. 




3.25 


296 


Black & White .... 




1.75 


279 


White Horse 




3.30 


280 


WhiteHorse. .. . 




1.80 



CONCENTRATION OF ECONOMIC POWER 



2739 



Commonwealth of Virginia, Alcoholic Beverage Control Board, retail price list No. 49, 
effective October 1, 1938 — supersedes all previous price lists — Continued 



Code 


Brand 


Age 


Proof 


Size 


Retail 
price 


293 


SCOTCH WHisKET— continued 






^SQt...... 

ii Qt 

Pt 

ISQt 

14 Qt 

n Qt 

V, Qt. 

1*.Qt 

IsQt. 

V. Qt. 

liQt 

^iQt 

^iQt 

f/oQt 

Qt 

Pt 

Qt 

Pt 

Qt 

Pt 

Qt 

Pt 

Ot 

Pt 

Qt 

Pt 

Ot 

Pt 

Ot 

Pt. 

Qt. 

Pt 

Ot 

Pt 

Ot 

Pt 

14 Qt..:... 

"r-Qt 

Pt 

^^,Qt 

Pt 

'-.Qt 

Pt 

Pt 

Pt 

Pt... 

4^.Qt 

Pt 

*5Qt 

Pt. 

Pt 

Ot 

Pt 

Ot 

Pt 

Ot 

Pt. 

Ot 

Pt 

Ot 

Pt 


$3.30 


297 


Haie & HaifT Five Star 






3.30 


298 


Haig & Haie Five Star . . - . 






2.15 


2S7 








3. 35 


289 


Teachor's ITiphland Cream 






3.35 


283 








3.35 


273 

281 


Martin's V. V. O 

Ballentino's 10 Year Old . -- 






3.35 
3.65 


271 


Old Rarity 12 Year Old 






4.25 


277 


naig & Haie Pinched Decanter 






4.50 


291 


Johnny Walker Black Label . . .. 






4.55 


195 


IRISH ■WHISKEY 

Bushmill's 




90 
90 

80 

85 

85 

85 

85 

85 

85 

85 

85 

90 

90 

90 

90 

90 

90 

90 

90 

90 

90 

90 

90 

94.4 

94.4 

90 

f.O 

m 

70 
70 
70 
70 

SO 
70 
80 

90 
90 
90 
90 
100 

90 

90 

90 

90 
100 
100 

90 

90 

90 

90 


3.25 


196 


John Jameson's 3 Star . . .. 




3.40 


197 


IRISH AMERICAN WHISKEY 

William Jameson Irish American .. .. 




2.05 


305 


GIN 

American .. 




1.05 


306 


American . . 




.55 


307 


Cavalier . . . .. .' 




1.05 


308 


Cavalier 




.55 


319 


Rhythm .... .. 




1.10 


320 


Rhythm.. 




.60 


317 


Polo Club ... .. 




1.10 


318 


Polo Club 




.60 


309 


Dixie Belle 




1.25 


310 


Dixie Belle 




.65 


315 


Hiram Walker's London Dry 




1.35 


316 


Hiram Walker's London Dry 




.75 


313- 


Oilbey's London Dry .. .. . 




1.45 


314 


Oilhev's London Dry 




.80 


321 


Milshire.. . . . ..' .. .. 




1.50 


322 


Milshire . ... ... 




.80 


301 


Fleischmann's . 




1.55 


302 


Fleischmann's . . 




.80 


311 


Old Mr. Boston 




1.60 


312 


Old Mr. Boston...: 




.85 


303 


Gordon's London Dry 




] 65 


304 


Gordon's London Dry 




.90 


323 






1.90 


519 


SLOE GIN 

DeKuyper's 




1.25 


520 


DeKuyper's ... 




.75 


•511 


Graham fJacquin's) :_.. 




1.30 


512 


Graham ("Jacouin's) 




.80 


513 


Old Mr. Bo.ston 




1.55 


514 


Old Mr. Boston 




1.00 


528 


FRUIT-FLAVORED GIN 

R <fe Q (Oranee) .. 




75 


524 


Jacquin's (Mint).. ... 




.80 


526 


Old Mr. Boston (Orange) . 




1.00 


353 


BRANDY— GRAPE 

Vai Brothers — Old Reserve. 


24 Mo 


1..50 


354 


Vai Brothers — Old Reserve 


24 Mo 


.95 


351 






1.55 


352 


Balboa 




.95 


356 


A. R. Morrow Bottled in Bond 


6Yr 


1.50 


367 


BRANDY— APPLE 


24 Mo 


1.55 


368 


Old Delaware Gold Label 


24 Mo 


.80 


373 


Peak of Virginia... 


24 Mo 


1.75 


374 


Peak of Virginia ..... 


24 Mo 


.90 


375 


Little Brown Jug... 


24 Mo 


1.80 


376 


Little Brown Jug _. . 


24 Mo 


.90 


371 


Captain Apple Jack 


24 Mo 


1.85 


372 


Cantain Annie Jack... . 


24 Mo 


.95 


365 


Laird's 3 Star 


30 Mo 


1.95 


366 


Laird's 3 Star 


30 Mo 


1.00 



2740 



CONCENTRATION OF ECONOMIC POWER 



Co'mmonwealth of Virginia, Alcoholic Beverage Control Board, retail price list No. 4^, 
effective October 1, 1988 — supersedes all previous price lists — Continued 



Code 


Brand 


Age 


Proof 


Size 


Retail 
price 


369 


BB \NDT— APPLE— continued 
Hilrtick ViSitt '.abel 


24 Mo 


100 
100 
85 

90 

84 
84 
80 

86 
86 
90 
90 

89 
90 
90 
97 
90 
89 
89 

70 
70 
70 
70 
71 
65 
80 
60 
70 
SO 

80 
80 
80 

?0 
80 


Qt 

Pt. 

Pt 

Pt 

M Qt 

n Qt 

% Qt 

*iQt 

Pt. 

Qt 

Pt 

*^0t. 

HQt. 

<iQt: 

5^Qt 

^4Qt 

•^^Qt 

HQt 

Pt.. 

Pt 

Pt 

Pt.. 

HQt 

H Qt 

H Qt...... 

a Qt.- 

H Qt 

HQt 

Pt 

Pt 

Pt 

Qt 

Pt 

Pt. 

Pt 

Pt 

.Pt.. 


$2.45 


sy^" 


Uildic'' White Laov' 


24 Mo 


L30 


37.. 


Br:iijdybrook . . . 


12 Mo . 


.60 


392 


BRANDY— PEACH 

Old Delaware Gold Label 


24 Mo 


1.00 


399 


BRANDY— IMPORTED— COGNAC 

Marten 




3.60 


397 


Hennessy 3 Star...." 




3.50 


395 


Hennessy V. S. 0. P. Over 20 Yrs. Old 




4.80 


403 


RUM— DOMESTIC 

CarJoca — Gold Label 




1.55 


404 


Carioca— Gold Label ... 




.95 


401 


Fellon's Pilgrim 




1.90 


402 


Felton's Piknin 




1.00 


421 


RUM— IMPORTED 

Tron Q Gold Label— Puerto Rfco... 




L60 


,423 
425 


Government House Gold Label — Virgin Island. 
Bornn's Virgin Island Gold Label 


- -.- 


1.70 
1.75 


427 


One Dagger — Jamaica 




2.95 


431 


Red Heart — Jamaica.. 




2.95 


933 


Bacardi White Label 




3.30 


429 


Bacardi Gold Label 




3.70 


450 


COCKTAaS 

Martini (Jacquin) 


' 


.95 


452 


Side Car (Jacquin) 




.95 


454 


Manhattan (Jacquin) 




.95 


456 


Old Fashioned (Jacquin) 




1.00 


461 


Martini Dry Club (Heublein) 




1.70 


463 


Manhattan Club (Heublein).. 




1.95 


465 


Old Fashioned Club (Heublein) 




1.95 


457 


Side Car Club (Heublein). 




1.95 


459 


Daiquiri Club (Rum) (Heublein) 




1.95 


467 


Gold Medal Mint Julep (R & G) 




1.95 


530 


CORDIALS- LIQUEURS— DOMESTIC 

Old Mr. Boston Line 
Apricot Nectar Liqueur 




1.00 


532 


Peach Nectar I^iqucur 




1.00 


534 


BlacUherry Nectar Liqueur 




1.00 


535 


Rock & Rye._ 




1.90 


536 


Rock & Rye 




1.00 


542 


Jacquin Line 
Apricot Nectar Liqueur 




72 


.90 


546 


Peach Nectar Liqueur ... ^ . 




72 
72 

70 
70 
64 
80 
70 
80 

70 
65 
70 
70 
70 
60 
80 


.90 


648 


Cherry Nectar Liqueur Z 




.90 


550 


Blackberry Nectar Liqueur 




.90 


551 


Rock & Rye 




Ot 

Pt 

H Pt 

n pt_ 

Pt 

HPt 

Pt 

HPt 

HPt 

n Pt 

H Pt. 

H Pt 

HPt 


1.70 


652 


Rock & Rye 




.90 


640 


Annisctte 




.85 


654 


Jacquintro 




.90 


556 


Kummel ;. , ... 




.90 


638 


St. Domiuic. '.. 




.95 


658 


Lerotix Line 
Rock & Eye 




.90 


566 


Creme de Menthe Green 




.80 


660 


Apricot 




.85 


562 


Blackberiy. ., 




.85 


564 


Peach 




.86 


668 


Creme de Cacao.. „ .. 




.95 


670 


Triple Sec Curacao 




.96 



CONCENTRATION OF ECONOMIC POWER 



2741 



Commonwealth of Virginia, Alcoholic Beverage Control Board, retail price list No. 49, 
effective October 1, 19S8 — supersedes all previous price lists — Continued 



Brand 



Age 



Proof 



Size 



CORDULS—UQUEURa— IMPORTED 



Cointreau... 

Benedictine D. O. M. 
Benedictine D. O. M. 
Chartreuse — Yellow. . 



E. CusenieT & Company 

Freezomint Creme de Menthe-Oreen. 
Freezomint Creme de Menthe- White- 
Blackberry Liqueur 

Creme de Cacao 

Extra Sec Orange Curacao ., 

Apricot Liqueur 

Peach Liqueur 



80 



PURE GRAIN ETHYL ALCOHOL 

1 Qt. Container— Prices furnished on request. 
1 Qal. Container— Prices furnished on request. 



H Qt.. 
H Qt.. 
H Pt-. 
HQt- 

HBot. 
)^ Bot. 
HBot 
H Bot 
H Bot. 
Vi Bot. 
HBot. 



WINE 
Domestic 



Code 


Brand 


Size 


Retail 
price 


648 


special type brands 

Widmer's Hillside Fortified 

Thomas Jefferson Red 

Widmer's Hillside Fortified 


M.S. 

..M. S. 

.M. S. 

S. 


Pt.. 


$0.35 


600 
647 
602 


54 Qt 

WQt .. 

HQt 

HQt 

i^Qt 

Oal 


.50 
.60 
.60 


603 
604 
649 


Virginia Dare White 

Southern Hospitality Blackberry 

Widmer's Hillside Fortified 

PORT 

Widmer's Hill.oidfe 


...M.S. 

...S. 

M.S. 

S. 


.60 
.60 
1.05 


676 


Pt 


.36 


66S 
674 
670 
672 
675 


Vai Bros. Old Reserve.... _ 

Cerrito-Fruit Industries 

O * D Private Stock (M'hite).... _ 

S-J (Shcwan-Jones, Inc.) 

Widmer's Hillside 


s. 

R. 

- S. 

-■. S. 

S. 


HQt 

*4Qt 

■^^Qt 

HQt- 

54 Ot 

54 Qt 

HQt- 

HQt 

Qt 


.40 
.40 
.50 
.56 
.60 


671 
673 


Old Constitution-Fruit Industries. 

Tavlor's 


s. 

s. 


.70 
.76 


678 
680 


Italian Swiss Colony 

Mt Sinai fKosherVFruit Ind . 


s. 

. . . s. 


.76 
.65 


667 


Vai Bros. Mira-Linda__ 

Vai Bros. Old Reserve 

Italian Swiss Colony 

Widmer's Hillside .. . .. 


s. 

s. 

s. 

s. 


Oal 


1.40 


669 


Oal 


1.60 


679 


Osl 


1.66 


677 


Qal 


1.96 


715 


SHERRY 

Widmer's Hillside 

Vai Bros. Old Reserve... 

Cerrito-Fruit Industries 

S-J CShcwan-Jones. Inc.) 

Widmer's Hillside 

Old Constitution-Fruit Ind. 

Tavlor's . 


....M. D. 

M. S. 

.M. S. 

M.S. 

M. D. 

M. D. 

M. D. 


Pt 


.35 


708 
713 
711 
714 
710 
712 


HQt 

HQt 

HQt 

HQt 

HQt 

HQt 

HQt. 

Qt 


.40 
.40 
.55 
.60, 
.7tf 
.75 


717 
720 


Italian Swiss Colony 

Mt. Sinai fKosherVFruit Ind 

Vai Bros. Mira-Linda 

Vai Bros. Old Reserve 

Italian Swiss Colony. „ 

Widmer's Hillside.. 


..M.S. 

M. S. 

_ S. 

M. S. 

M.S. 

M. D. 


.76 
.55 


709 


Oal 


1.40 


707 
718 


Gal 

Oal 


1.60 
1.65 


716 


Oal 


1.95 



Letters following brand names indicate the producer's classification, namely — 



S- Sweet 
D— Dry 



M. 8.— Moderately Sweet 
M. D.— RCoderately Dry 



Vintage years as shown may change without noticei 



2742 



CONCENTRATION OP ECONOMIC POWER 



Commonwealth of Virginia, Alcoholic Beverage Control Board, retail price list Xo. 49, 
effective October 1, 1938 — siipersedes all previous piice lists- — Continued 



^VINE— Continued 
Domestic— Continued 



Brand 



MUSCATEL 

Widmer's Hillside. - S. 

Cerrito-Fruit Industries.. S. 

Vai Bros. Old Reserve S. 

S-J (Shewan-Jones, Inc.') S. 

Widmer's Hillside . -S. 

Old Constitution-Fruit Tnd S. 

Mt. Sinai CKosherVFruit Ind.... ...S. 

Italian Swiss Colony ..M. S. 

Vai Bros. Mira-Linda ^.- S. 

Cerrito-Fruit Industries S. 

Vai Bros. Old Reserve S. 

Italian Swiss Colony - --S. 

TOKAY 

Widmer's Hillside (White) , S. 

Vai Bros. Old Raserve S. 

Cerrito-Fruit Industries ...S. 

S-J fShewan-Jones. In&.) ...S. 

Widmer's Hillside (White) S. 

Old Constitution-Fruit Ind..:. S. 

Taylor's v M. S. 

Vai Bros. Mira-Linda. S. 

Vai Bros. Old Reserve S. 

Italian Swiss Colon v S. 

Widmer's Hillside (White).. .S. 



Vai Bros. Old Reserve. ..D. 

Cerrito-Fruit Industries... D. 

S-J (She wan- Jones. Inc.) T>. 

Old Constitution-Fruit Ind D. 

Tavlor's... D. 

Italian Swiss Colony D. 

Vintner's Superior '. ..D. 

SAUTE RNES 

Vai Bros. Old Reserve M. S. 

Cerrito-Fruit Industries M. S. 

S-J (Shewan-Jnnes, Inc.).. M. D. 

Widmer's Hillside . . .D. 

Old Constitution-Fruit Ind AI. S. 

Taylor's M. D. 

Italian Swiss Colony .M. D. 

Vintner's Superior M. S. 

RHINE 

Vintner's Special ..D. 

ZINFANDEL 

S-J (Shewan-Jones, Inc.) ...D. 

BURGUNDY 

Vai Bros. Old Reserve ..D. 

Old Constitution-Fruit Ind •. D. 

SPARKLING BURGUNDY 

Great Western M.S. 

SPARKLING WHITE 

Chateau Rheims ..M.D. 

CHAMPAGNE 

Padre Sec ...M. D.. 

Vintner's American .M.D. 

Gold Seall934. . .".. M.D. 

Gold Seal 1934 M. D. 

Great Western Special Reserve D. 

Great Western Special Reserve D. 

Conk's Imperial.. ..L ...D. 

Cook's Imperial D. 



Tribuno-Sweet. 
Tribuno-Dry 
O.&D.-Drv.... 
G. & D. -Sweet 



VERMOUTH 




Pt . . 
<<; Ot.. 
*f, Ot. 
4^0t 
HOt . 
HQt. 
Ot. . 
iiQt. 
Gal... 
Gal... 
Gal... 
Gal... 

Pt . 
^i Ot . 
H Ot . 
i^Ot . 
HOt.. 
HOt 
H Qt.. 
Gal... 
(Jnl .. 
Gal... 
Gal... 

HOt.. 
*^, Ot.. 
*\ Ot 
*i. Ot.. 
H Ot.. 
HQt.. 
Bot... 

H Ot.. 
H Ot.. 
*^Ot.. 
HOt.. 
HOt . 
HOt.. 
HQt.. 
Bot... 

Bot... 

H Qt.. 

HOt.. 
HQt-. 

Bot... 

HQt- 

Bot... 
Bot... 
Bot... 
Xi Bot 
H Ot. 
*i Pt.. 
Bot... 
HBot 

Ot 

Ot.... 
30 Oz. 
30 Oz. 



CONCENTRATION OF ECONOMIC POWER 



2743 



Commonwealth of Virginia, Alcoholic Beverage Control Board, retail price list No. 49, 
effective October 1, 1938- — supersedes all previous price lists — Continued 



WINE— Continued 
Imported 




PORT 

Doulbe Diamond (Silva & Cosens) M. S 

Cockburn Wiiite Label - -- M. S 

Commodore-G &B - - S 

Cookburn Dry Club M. D 

SHERRY 

Duff Gordon Nina - D 

Joseph C. Gordon's Special Table.. M. D 

Joseph C. Gordon's Amontillado D 

Duff Gordon White Label M. S 

Sandeman's 3 Star Brown M. S 

Qarvey's Vino de Pasto .- D 

Dufl Gordon Amontillado D, 

CLARET 

Bordeaux Rogue Sup. 1928-Bellows D 

St. Emilion B. & G D, 

Chateau LaGrange 1928-Bellows D, 

Chateau Pontet Canet --D, 

Teysonniere Comted' Eymet Rouge D, 

SATUERNES (WHITE BORDEAUX) 

Bordeaux Blanc Sup. 1928-Bellows M.D, 

Sauternes 1928-Sichel & Fils Frs ^..M. D. 

Graves Cruse et Fils Freres-1928 D, 

Haut Sauternes B. & O S. 

Chateau Grilion 1934-Bellows M. D, 

MADEIRA 

Old Malmsey M.S. 

BURGUNDY RED 

Pommard 1929-Sichel & Fils Frs D. 

Macon Cruse et Fils Freres-1928 ._ D. 

Chambertin-Chayvenet D. 

Chambertin-Chauvenef....- D. 

BURGUNDY WHITE 

Chablis 1929-Sichel & Fils Frs D. 

SPARKLING BURGUNDY 

Chauvenet Rod Cap _. J>. 

RHINE 

Langenbach's Hock Superior-Bellows D. 

Laubenheimer ...D. 

MOSELLE 

Zeltinger 193.5-H. Sichel Sohne_ ._ D. 

Berncastel 1933-H. Sichel Sohne M. D. 

ITALIAN 

Martini & Rossi Chisnti-Melini .- D. 

Marsala-Hopps & Sons D. 

Chianti Antinori... .-- D. 

CHAMPAGNE 

Moet & Chandon Extra Dry White Seal D. 

Moet & Chandon Extra Dry White Seal -D. 

Lanson Extra Dry --M. D. 

Pommery & Oreno Non Vin D. 

Q. H. Mumm Extra Dry M. D. 

G. H. Mumm Extra Dry M. D. 

DUBONNET 

Dubonnet 



Bot. 
Bot. 
Bot. 
Bot. 



HQt. 
Bot.. 
Bot.. 
Bot.. 
Bot.. 
Bot.. 
Bot.. 



Bot. 
Bot_ 
Bot. 
Bot. 
Bot. 



Bot. 
Bot. 
Bot. 
Bot. 
Bot. 



Bot. 



Bot.... 
Bot.... 
Bot..-. 
}^Bot. 



Bot. 
Bot. 



Bot. 
Bot. 



Bot. 
Bot. 



Qt.. 
Bot. 
Qt.. 



Bot.... 
J^Bot- 
Bot.... 
HBot. 
Bot... 
HBot. 



Bot. 



L70 



2744 



CONCENTRATION OF ECONOMIC POWER 



Commonwealth of Virginia, Alcoholic Beverage Control Board, retail price list No. 49, 
effective October 1, 1938 — supersedes all previous price lists — Continued 



WINE— Continued 
Imported— Continued 



Code 


Brand 


Size 


Retail 
Price 


952 


Cinzano-French 


VERMOUTH 




Bot... 


$1.00 


9.13 




Bot 


1.05 


949 


Martini & Rossi Dry 


Bot 


1.15 


951 


Noilly Prat-French 


Bot 


1.15 


950 


Martini & Rossi-Italian 


Bot 


1.30 










Miscellaneous 


977 


Oranpe Bitters 

Angostura Bitters 




(Jacquin) 


8 Oz... 


$0.65 


976 


4 Oz 


.80 


9«0 


Grenadine . . . 




(Jacquin) 


12 Oz 

4/5 Qt - 

4/5 Pt 


.45 


978 






(Leroux) 


.85 


979 


Grenadine - 




n>eroiix) 


.50 









Express Shipments to Individuals 
hard liquors 

According to the Act NOT MORE THAN one gallon of distiUed spirits may 
be sold to one person at ONE TIME. 

On receipt of certified check, cashier's check, or money ordet, covering amount 
of your purchase, shipment will be made promptly EXPRESS COLLECT. 

The buyer must certify that he or she is entitled to make this purchase under 
the Virginia ABC Act. Orders from territories where the sale of alcoholic bever- 
ages other than wine or beer are prohibited must be made in accordance with 
special form, copy of which will be furnished on request. 



There are no restrictions as to quantity of wine shipments. 

On receipt of certified check, cashier's check, or money order, covering amount 
of your purchase, shipment will be made promptly. 

Prices shown are delivered prices on quantities of one case or more. Less than 
one case will be shipped EXPRESS COLLECT. 

SPECIAL ORDERS FOR WINE 

We carry a representative list of Domestic and Foreign wines, but all wines 
on the American market are available to citizens of the State. Upon request, 
prices will be secured, and orders placed on receipt of the amount involved. No 
delivery charge will be made on such nonlisted items if deHvery is accepted at 
your nearest ABC Store on regular weekly shipment. If shipped direct to cus- 
tomer, EXPRESS charges will be COLLECT. Special orders MUST BE IN 
CASE LOTS. 

All wines, as well as liquors, must be purchased through this Board or its 
licensees within the State in accordance with the ABC Act. 

ITEMS APPEARING ON THIS LIST MARKED THUS (X), ARE NOT STOCKED IN THIS 
STORE BUT CAN BE SUPPLIED PROMPTLY ON ORDER AT PRICES LISTED. SEE 
STORE MANAGER. ITEMS APPEARING ON THIS LIST MARKED THUS (0), HAVD 
BEEN DISCONTINUED 



PRICES SUBJECT TO CHANGE WITHOUT NOTICE 



CONCENTRATION OF ECONOMIC POWER 2745 

The following letter and list submitted by National Distillers 
Products Corporation was introduced at hearings held May 10, 
1939, and are printed herewith in connection with testimony on p. 
2458 and 2465, supra. 

Exhibit No. 516 

National, Distillers Products Corporation, 

New York, N. Y., April 6, 1939. 
Mr. Phillip E. Buck, 

General Counsel, Federal Alcohol Administration Division, 
Treasury Department, Washington, D. C. 
Dear Mi^. Buck: In the course of my testimony before the Temporary 
National Economic Committee on Tuesday, March 14, 1929, I agreed to put 
into the record a list of all the subsidiaries of National Distillers Products Cor- 
poration as of 1924, 1933 and 1938, together with a statement of the brand 
names controlled by National Distillers Products Corporation as of those dates. 
Accordingl}^ I enclose herewith a separate list of the subsidiaries of National 
Distillers Products Corporation as at December 31st in each of those years. 
There is indicated on these lists by an asterisk those companies which are pri- 
marily "brand name companies," that is, companies with a nominal capitaliza- 
tion. Many of the companies in the 1924 list had owned and operated distilleries 
prior to the enactment of the prohibition amendment, but in 1924 no distillery 
was permitted to be operated. 

I have also included three lists showing the principal brands of domestic 
whiskeys owned by National Distillers Products Corporation in each of the years 
in question. I would like to point out that the increase in brands occurring 
between the years 1924 and 1933 accompanied the expansion of this company 
prior to repeal, and particularly arose out of its association with the American 
Medicinal Spirits Company. 

The Committee also apparently was particularly interested in the number of 
brands acquired subsequent to repeal in December, 1933. We can find no record 
of any brands having been acquired since December, 1933. However, certain 
new brands were created by National Distillers Products Corporation and I have 
marked with an asterisk such brands appearing on the li t for 1938. 
Very truly yours, 

Seton Porter, 

President. 

StJBSIDIARIES AS AT DECEMBER 31, 1924 

Allen Bradley Company * Old Time Molasses Company f 

A. Mayfield & Co.* Sam Clay Distilling Company* 

Atlas Distilling Company f S. P. Lancaster Co.* 
Belle of Nelson Distillery Company* Steamship Julius Kessler Corporationf 

Boldrick Callaghan Co.* Stoll & Co., Inc.* 

Bond & Lillard* Sugar Products Co.f 

Coon Hollow Distillery Company* T. B. Ripv Co.* 

E. J. Curley* The A. Kellar Company* 

E. L. Miles & Company* The Anderson Distilling Company* 

G. G. White Co.* The Distilling Company of Americaf 

Henry H. Shufeldt & Co. The Ilannis Distilling Company* 

J. & J. M. Saffell Co.* The Nelson Distilling Company* 

J. N. Blakemore Co.* The New Hope Distillery Company* 

John Cochran & Co.* Trans Oceanic Commercial Corporationf 

Julius Kessler & Co.f U. S. Food Products Car Line Corpora- 
Kentucky Alcohol Corporationf tionf 
Kentucky Distilleries and Warehouse LT. S. Food Products Corporation (of 

Co.f Illinois) t 

Liberty Yeast Corporationf William Tarr Company* 
Mellwood Distillery Company* 

•Brand name companies, di.ssolved or discontinued, 
t Dissolved or discontinued. 



2746 



CONCENTRATION OF ECONOMIC POWER 



SUBSIDIARIES AS AT DECEMBER 31, 1933 



Alex D. Shaw & Co., Inc. 

A. Overholt & Co., Inc. 

Carthage Distilling Corp. 

Crown Fruit and Extract Company. 

Henry H. Shufeldt & Co. 

Large Distilling Company. 

Medicinal Holding Corp.f 

Medicinal Products Corp.f 

National Distillers Corporation of New 
England 

National Straight Whiskey Distributing 
Company, Inc.f 

Penn-Maryland Company, Inc.f 

Penn-Maryland Corp.f 

Penn-Maryland, Inc.f 

Security Warehouse Company, Inc.f 

Sunny Brook Distillery Co.* 

The American Medicinal Spirits Com- 
panyf 

The Americapi Medicinal Spirits Cor- 
poration f 

The Black Gold Distillery Company* 

The Blue Grass Distillery Company* 



The Bond & Lillard Distillery Com- 
pany* 
The Cedar Brook Distillery Company* 
The Chicken Cock Distillery Company* 
The Federal Distillery Company f* 
The Green River Distillery Company f* 
The Gwynnbrook Distillery Company* 
The Hannis Distillery Company* 
The Hermitage Distillery Company* 
The Hill & Hill Distillery Company* 
The Medical Arts Products Company* 
The Mellwood Distillery Company* 
The Mt. Vernon Distillery Company* 
The Old Crow Distillery Companv* 
The Old Grand Dad Distillery 'Com- 
pany* 
The Old McBrayer Distillery Company* 
The Old Taylor Distillery Company* 
The Pebbleford Distilleiy Company f* 
The Rewco Distillery Company* 
The Spring Garden Distillery Com- 
pany* 



SUBSIDIARIES AS AT DECEMBER 31, 1938 



Alex D. Shaw & Co., Inc. 

A. Overholt & Co., Inc. 

Crown Fruit and Extract Company, 

Inc. , 

Henry H. Shufeldt & Co. 
Large Distilling Company 
National Distillers Corporation of New 

England 
Sunnv Brook Distillerv Co.* 
The Black Gold Distillery Company* 
The Blue Grass Distillery Company* 
The Bond & Lillard Distillery Com- 
pany* 
The Cedar Brook Distillery Company* 
The Chicken Cock Distillery Company* 
The Crab Orchard Distillery Company* 
The Farmdale Distillery Companj' * 
The Gwynnbrook Distillery Company* f 
The Hannis Distillery Company* 



The Hermitage Distillerv Companv* 
The Hill & Hill Distillery Company* 
The Medical Arts Products Company*f 
The Mellwood Distillery Company* 
The Mt. Vernon Distillery Company* 
The Old Crow Distillery Companv* 
The Old Grand-Dad Distillery "Com- 
pany* 
The Old McBrayer Distillery Com- 
pany* 
The Old Taylor Distillery Company* 
The Rewco Distillery Company* 
The Spring Garden Distillery Company* 
Penn-Maryland Corporation 
W. A. Gaines & Co. 
W. & A. Gilbey, Ltd. 
John deKuyper & Son, Incorporated 
Chickasaw Wood Products Company 
Train & Mclntvre Limited 



PRINCIPAL BRANDS OF DOMESTIC WHISKEYS OWNED BY NATIONAL 
PRODUCTS CORPORATION AND ITS SUBSIDIARIES IN 1924 



DISTILLERS 



Allen Bradley 
Belle of Marion 
Bond & Lillard 
Cedar Brook 
Elk Run 
Hannis Mills 
Hendrik Hudson 



Jefferson 

King of Kentucky 

Old Log Cabin 

Old Ripy 

Mellwood 

Mount Vernon 



•Brand name (ompanies. 
tSubscQuently discontinued. 



Nelson 

J. G. Roach 

G. R. Sharpe 

Shenandoah 

Sweetwood 

U. S. Club 



CONCENTRATION UF ECONOMIC POWER 2747 

PRINCIPAL BRANDS OF DOMESTIC WHISKEYS OWNED BY NATIONAL DISTILLERS 
PRODUCTS CORPORATION AND ITS SUBSIDIARIES IN 1933 

Allen Braley, A. M. S., Annapolis, Atherton. 

Babbling Brook, Belle of Marion, Belle of Nelson, Black Gold, Blue Grass, 
Bond & Lillard, Boone's Knoll, Bourbon de Luxe. 

Cantan, Cedar Brook, Cedar Run, Chicken Cock, Commonwealth, Coon 
Hollow, Crab Orchard. 

Dorchester, Drink a Little Large, Eastbourne, Edgewater, Edgewood, Elk 
Run, Everglade. 

Farm dale, Fisher, Franklin. 

Garland, Gladstone, Golden Premium, Gold Star, Great Lakes. 

Hannis Mills, Hendrik Hudson, Hill & Hill, Honeymoon. 

JefTerson, Jersey Cream, Jersey Jack, Jockey Club. 

Kentucky Climax, Kentucky Club, Kentucky Criterion, Kentucky Sunshine, 
Knob Creek. 

Lackawanna, S. P. Lancaster, Large, Lexington Club. 

Mayfield, Medical Arts, Mellwood, Monarch, Mount Vernon, Mutual, Nahum 
hapin Rum, Nelson, New Hope. 

Old Crow, Old Darling, Old Delaware, Old Farm, Old Grand-Dad, Old Hermi- 
tage, Old Hospitality, Old Kentucky Colonel, Old Log Cabin, Old Madison Club, 
Old McBrayer, Old Overholt, Old Prentice, Old Puritan, Old W. S. Stone, Old 
Tarr, Old Taylor. 

Paragon, Park Hill, Peerless, Penwick, Pontiac, Picture of a Star within a Star. 

Ramona, Rewco, Richwood, J. G. Roach, Rossville, Roxbury, Royal Arms. 

G. R. Sharpe, Shenandoah, Since 1788, W. B. Saffell, Sovereign, Spring Garden, 
Spring Hill, Sunn3'brook, Sweetwood. 

E. H. Taylor, Jr. & Sons, Tea Kettle, Tip Top. 

U. S. Club. 

Van Hook. 

Wathen Distillers Since 1788, R. E. Wathen & Company, J. T. Welch, West- 
brook, Windsor. 

Special Old Reserve. 



PRINCIPAL BRANDS OF DOMESTIC WHISKEYS OWNED BY NATIONAL DISTILLERS 
PRODUCTS CORPORATION AND ITS SUBSIDIARIES IN 1938 

• Allen Bradley, A. M. S., Annapolis, Atherton. 

Babbling Brook, I^elle of Marion, Belle of Nelson, Black Gold, Blue Grass, 
Bond & Lillard, Boone's Knoll, Bourbon de Luxe, *Brigadier. 

Cantan, Cedar Brook, Cedar Run, Chicken Cock, Commonwealth, Coon Hol- 
low, Crab Orchard, *Dividend No. 2, Dorchester, Drink a Little Laj'ge. 

*Eagle , Eastbourne, Edgewater, Edgewood, Elk Run, Everglade. 

Farmdale, Fisher, Franklin. 

Garland, Gladstone, Golden Premium, Gold Star, Great Lakes. 

Harinis Mills, Hendrik Hudson, Hill & Hill, Honeymoon. 

Jefferson, Jersey Cream, Jersey Jack, Jockey Club. 

Kentucky Climax, Kentucky Club, Kentucky Criterion, Kentucky Sunshine, 
Knob Creek. 

Lackawanna, S. P. Lancaster, Large, Lexington Club. 

Mayfield, Medical Arts, Mellwood, Monarch, Mount Vernon, Mutual, Nahum 
Chapin Rum, *Nationars Eagle, Nelson, New Hope. 

Old Crow, Old Darling, Old Delaware, Old Farm, Old Grand-Dad, Old Hermi- 
tage, Old Hospitality, Otd Kentuckv Colonel, Old Log Cabin, Old Madison Club. 
Old McBrayer, Old" Overholt, Old Prentice, Old Puritan, Old W. S. Stone, Old 
Tarr, Old Taylor, *01d Warrior. 

Paragon, Park Hill, Peerless, *Penn- Maryland Bar Special, *Penn-Marylaiid 
De Luxe, *Penn- Maryland Private Stock, *Penn-Maryland Regal, Penwick, 
Pontiac, Picture of a Star within a Star. 

Ramonn, Rewco, Richwood, J. G. Roach, Rossville, Roxburv, Roval Arms. 

W. B. Saffel, G. R. Sharpe, Shenandoah, Since 1788, Sovereign, Spring Garden. 
Spring Hill, Sunnybrook, Sweetwood. 



2748 



CONCENTRATION OF ECONOMIC POWER 



E. H. Taylor, Jr. & Sons, Tea Kettle, Tip Top, *Town Tavern. 
U. S. Club. 
Van Hook. 

Wathen Distillers Since 1788, R. E. Wathen & Company, J. T. Welch, West- 
brook, Windsor. 

Special Old Reserve. 

Note: AH the foregoing brands were owned by National Distillers Products Corporation in 1933 with the 
exception of those marked (•). These brands marked (*) were created by National Distillers Products 
Corporation or its subsidiaries and were not acquired from outside interests. 



The following tabulation, introduced during hearings held June 7, 
1939, is included at this point in connection with testimony on p. 2562, 
supra. 

Exhibit No. 678 

CALVERT DISTILLERS CORPORATION 

Sales of Domestic Whisky by Brands Nationally 



Brands 



Fiscal year 

ending 1937 

(July 31) 



Fiscal year 

ending 1938 

(July 31) 



Calvert Reserve Blended Whisky 

Calvert Special Blended Whisky 

Old Drum Blended Whisky.. 

JPrivate Stock Blended Whisky 

Private and Other Labels 

Old Durham Brand Blended Whisky 

Durham Bar Special Blended Whisky 

Kentucky Pride Kentucky Straight Bourbon Whisky. 

Maryland Club Maryland Straight Rye Whisky 

Little Straight Rye Whisky... 

Virginia Club 

Calvert Club Maryland Straight Rye Whisky 



$7, 880, 686. 19 

17, 449, 492. 4^1 

5, 200, 805. 02 

1, 824, 934. 83 

164, 806. 98 

88, 235. 14 

39, 134. 25 

714,319.32 

6, 913. 50 

6, 355. 50 

404.30 



$9, 228, 245. 49 

21, 353, 746. 40 

5, 193. 332. 32 

1, 621, 990. 24 

31, 696. 60 

7, 755. 40 

26, 040. 25 

418, 957. 38 

43, 678. 62 



133, 861. 74 



The following list is included at this point in connection with 
testimony on p, 2655, supra. 



Exhibit No. 1172 

Active and assor'ate members of Distilled Spirits Institute, Inc., July 1, 1939 
ACTIVE MEMBERS 





(') 




(') 


I. Strou.<;e, Vice President, The Balti- 




Viovanni Vai, Cucamouga Valley Wine 
Company, 1101 East A Street, On- 




more Pure Rye Distilling Co., Dun- 






dalk, Maryland 


W 




GB 


Owsley Brown, Pres-ident, Brown-For- 


Herbert L. Felton, President, Felton & 




man Distillery Company, 1908 How- 




Sons, Inc., 516 East Second Street, 




ard Street, Louisville, Kentucky _ .. 


w 


South Boston, Mass 


R 


Arthur E. Blankenship, Asst. Treas., 


Warren Oakes, Vice President, The 




A. & Q. J. Caldwell, Inc., 126 Merri- 




Fleischmann Distilling Corp., 595 
Madison Avenue, New York City 




mac Street, Newburyport, Mass 


R 


Q-A 


Antonio Moramarto, California Mis- 




James F. Brownlee, President, Frank- 




sion Vintage Co., 330 North Mission 




fort Distilleries, Inc., Columbia 




Road, Los Angeles, California 


QB 


Building, Louisville, Kentucky 


w-A-a 


F. Crihari, Vice President, B. Cribarl 




Frank B. Thompson, President, Olen- 




& Sons, Inc., Madrone, Santa Clara 




more Distilleries Company, P. 0. 




County, CpJifornia 


OB 


Box 900, Louisville, Kentucky 


w 



1 Legend 

W— Whiskey Q— Qin AB— Apple Brandy 

A— Alcohol R-Rum QB— Grape Brandy 

Whs— Warehouse 



CONCENTRATION OF ECONOMIC POWER 



2749 



Active and associate members of Distilled Spirits Institute, Inc., July 1, 19S9 — Con. 
ACTIVE MEMBERS— Continued 



Yt illiam A. Golden, President, The 
Oolden-Rossell Company, 580 Fifth 
Avenue, Kew York City 

E. R Poolcy, Sec'y-Treas., Hood River 
Distillers, Inc., State Street, Hood 
River, Oregon 

J. P. Carter, President, Hunter Balti- 
more Rye Distillery, Inc., 1900 East 
Fort Avenue, Baltimore. Maryland... 

John E. Laird, President, Laird & 
Company, Seobeyville, New Jersey. .. 

S. Loewenthal, President, The Sieg- 
fried Loewenthal Company, ICl 
High Street, Cleveland. Ohio. 

Alvin G. Mayer, Secretary, Lord Stir- 
ling Distilleries, Inc., Pittstown, 
New Jersey 

L. M. Martini, L. M. Martini Grape 
Products, P. O. Box #158, Kingsburg, 
California 

Frank Mayr, Jr., Chairman of the 
Board, Merchants Distilling Corp., 
1535. South First Street, Terre Haute, 
Indiana 

James S. McKenna, President, H 
McKenna, Inc., Fairfield, Kentucky 

M. J. MacNamara, Vice President 
National Distillers Products Corp. 
120 Broadway, New York City. _ 

George A. Follett, President, Old Med 
ford Rum Distillery, Inc., 24 M'ater 
Street, Wakefield, Mass 

Old Mountaineer Distilling Co., c/o 
Philip Blum & Co., Inc., .Wl-SOy West 

Chicago Avenue, Chicago, Illinois 

' M. R. Weiner, President, Pennsylvania 
Distilling Co., Inc., 12 South 12th 
Street, Philadelphia, Penn 



AB 

AB 

W 
AB 

W 

AB 

GB 

W-A-G 

W 

W-A-G 
R 
W 

w 



Charles John Demateis, Secy.-Treas., 
San Gabriel Vineyard Company, 836 
Putney Avenue, San Gabriel, Cali- 
fornia 

Lester E. Jacohi, President, Schenley 
Distillers Corjioratiou, Empire State 

Building, New York City .. 

(Herbert Hoffheimer, President, 
The New England Distilling Co., 
Inc., 115 Pike Street, Covington, 
Kentucky.) 

F. R. Schwenpel, Vice Pre.'^ident, Sea- 
gram Distillers Corporation, Chrysler 

Building, New York City 

(W. W. Waehtol, President, Calvert 
Distillers Corporation, Chrysler 
Building, New York City.) 

Lee Jones, President, Shewan-Jones, 
•Inc., 86 Second Street, San Francisco, 
California 

Mr. Powell Williams, Speas Manufac- 
turing Company, 2400 Nicholson Ave- 
nue, Kansas City, Missouri.. 

B. H. Burnstein, President, Virginia 
Distillery Corp., P. O. Box 775, Rich- 
mond, Virginia 

H. R. Walton, Vice President, Hiram 
Waker-Qooderham & Worts, Ltd., 
Walkerville, Ontario, Canada 

Frank L. Wight, Vice President, The 
Frank L. Wight Distilling Co., Gillet 
Building, Baltimore, Maryland 

D. Garlock, Manager, Wilson Distilling 
Company, Inc., Bristol, Pennsyl- 
vania - 



OB 

W-G-A-R 



ASSOCIATE MEMBERS 



James C. Brown, Manager, Camden 
Warehouses, Baltimore, Maryland... 

Harry Foster, General Manager, Cin- 
cinnati Terminal Warehouse, Inc., 
49 Central Avenue, Cincinnati, Ohio. 

Morris M. Cook, Treasurer, Cook- 
McFarland Company, 905-27 Mateo 
Street, Los Angeles, California 

Jos. C. Trainer, President, J. A. 
Dougherty's Sons, Inc., 1135 North 
Front Street, Philadelphia, Penn 

0. Hildreth, Secretary, Lawrence 
Warehouse Company, 37 Drumm 
Street, San Francisco, California . .. 

Albert B. Drake, Pre.sident, Lehigh 
Warehouse & Transportation Co., 
98-108 Frelinghuysen Avenue, New- 
ark, N. J. 

Jack Marshall, Asst. Mgr., Los Angeles 
Brewing Company, 1920 North Main 
Street, Los Angeles, California 




Louisville Public Warehouse Co., 131 
East Main Street, Louisville, Ken- 
tucky 

H. F. Hiller, President, San Francisco 
Warehouse Company, 625 Third 
Street, San Francisco, California 

Juhan Simon, President, Security 
Warehouse Company, Inc., 4116 
North Union Blvd., St. Louis, Mis- 
souri .- 

Louis Mann, President, The Sherwood 
Distilling' & Distributing Company, 
212 E. Lombard Street, Baltimore, 
Maryland 

H. A. Page, Vice President, South End 
Warehouse Company, 631 Second 
Street, San Francisco, California 

Wakem & McLaughlin, Inc., 225-235 
East Illinois Street, Chicago, Illinois 



1 Legend 

W— Whiskey Q— Gin AB— Apple Brandy 

A— Alcohol R— Rum OB— Grape Brandy 

Whs— Warehouse 



124491— 39— pt. 



2750 CONCENTRATION OF ECONOMIC POWER 

The following letter is included at this point in connection with 
testimony on p. 2595. 

National Distillers Phoducts Corporation 

120 Broadway 

New York, November 1, 1939. 
Director of public relations. 

Mr. William A. Heflin, 

Temporary National Economic Committee, 

Room 79, The Capitol, Wa'ihinijton, D. C. 
Dear Sir: In reply to your letter of September 11, 1939, addressed to our Mr. 
T. W. Balfe, the additional information which Mr. Buck and Vice Chairman 
Sumuers requested Mr. Balfe to obtain regarding the item of notes and accounts 
receivable in the consolidated financial statements of National Distillers Products 
Corporation and wholly owned subsidiaries as at December 31, 1938 (p. 2595 of 
the printed record) is as follows: 

Notes receivable ' i $7, 514, 587. 86 

Trade acceptances 5, 037. 37 

Accounts receivable: 

Trade 12, 200, 291. 58 

Other . 228, 627. 7 1 

Total 19, 948,544. 52 

Yours very truly, 

Robert Barry. 



INDEX 

Page 

Adams, Charles E 2494, 2686 

Advertising, cost of to four largest distilleries 2628, 2717-2718 

Aeolian American Corp Facing 2694 

Agfa Ansco Corporation -. 2494, 2686 

Air Reduction Co., Inc 2494, 2496, 2686 

Alcoholic Beverage Control Act 2662, 2744 

Alexandra Co., Ltd 2697 

Algona Steel Corp., Ltd 2697 

Amerex Holding Corporation 2495, 2686 

American Art Association-Anderson Galleries, Inc 2494, 2686 

American-Canadian Properties Corporation _' . 2494, 2686 

American Commercial Alcohol Corp 2568-2569 

American Committee of Short Term Creditors of Germany Facing 2694 

American Distilling Co 2568-2569 

Corporate organization of 2569-2570 

Credit, extension of, to wholesalers 2570-257 1 

American Export Lines, Inc 2696 

American Express Co /I.- 2495, 2686 

American Express Co., Inc 2495, 2686 

American Medicinal Spirits Corporation 2495-2496, 2686, 2746 

American Rolling Mill Company, The, . . - 2494, 2686 

.American Sumatra Tobacco Corp 2494-2495,2686 

American Water Works & Electric Co -■_.- 2494, 2686, facing 2694 

A. M. S. Brand.:.--: 2747 

Ancient Bottle Aged Brand 2513 

Afiderson Distilling Co 2745 

Annapolis Brand 1 _ 2747 

Assets, increased, of four largest distributors 2541, 2697 

Atlas Distilling Company . 2745 

Babbling Brook Brand 2747 

Balf e, T. W 2584, 2587, 2591-2596 

Baltimore Pure Rye Distilling Co 2655-2656 

Bankers Trust Co 2508, 2528, 2547, 2687-2693, 2696 

Banking loans to: 

Glenmore Distillery .- 2547-2548 

Schenlev Distillers Corporation 2547-2548, 2528-2529 

Seagram, Joseph E., & Sons, Inc 2547-2548, 2507-2509 

Bank of the Manhattan Company 2687-2688,2693 

Bank of New York & Trust Co 2494, 2686 

Bank of Toronto 2697 

Barclay, James, & Co., Ltd -. 2538 

Bar Special Brand (Seagram's) 2513 

Baxter, Norman 2671 

Beauharnois Power Corp. and Subsidiaries Facing 2694 

B. E. B. Brand 2720 

Becker, S. B 2535,2696 

Belle of Marion Brand 2746-2747 

Belle of Nelson Distillerv Company 2745 

Belmont Distillery Co__l--^ 2529 

Beneman, George R 2603 

Berg, David 2569 

Bernheim Distilling Co 2529-2530 

Bissell, T. E., Co., Ltd 2697 

Black Gold Brand - 2499, 2747 

Black Gold Distillery Co 2459,2746 

Black & White Brand 2586, 2597-2598, 2720 



II INDEX 

Page 

Blake, Lash, Anglin & Cassels 2697 

Blakemore, J. N., Company .- 2745 

Blended Irish whisky, definition and description of v - 2422 

Blended rye whisky, definition and description of 2421 

Blended Scotch whisky, definition and description of 2422 

Blended whisky, definition and description of 2421 

Blue Grass Brand : 2474,2499,2747 

Blue Grass Distillery Co 2459, 2746 

Blue Ridge Corporation, . 2495 

Boatmen's National Bank 2687-2688, 2694 

Boeschenstein, Harold . 2467, 2686 

Boldrick Callaghan Co 2745 

Bond & Lillard Distillery Co 2459, 2745-2747 

Boone's Knoll Brand . 2747 

Boord's Brand I 2600 

Bootlegging problem 2650, 2666-2668 

Borg Warner Corporation 2495 

Bottled in Bond Act of (1897), excerpts from 2441-2443, 2681-2684 

Bourbon de Luxe Brand • 2747 

Bourbon whisky, definition and description of 2420 

Bowman, A. Smith, Sr 2542-2546 

Bowman, A. Smith, Distillery, cost to produce "quality" whisky 2542-2546 

Bradley, Allen Co 1 2745-2747 

Breed, Abbott & Morgan 2494,2686 

Breed, William C ' 2494 

Brieadier Brand 2747 

Bright, T. G. & Co., Ltd . 2697 

Brintcan Investments, Ltd Facing 2694 

Bronfman, Allan 2514, facing 2694 

Bronfman, Samuel 2512-2513, 2515, 2687, facing 2694 

Brookings Institute . . 2027 

Brooklyn-Manhattan Transit Corp 1 Facing 2694 

Brown-Forman Distillery Co 2655-2656 

Brown, Harriman & Co., Inc 2495 

Brown, Owsley 2656 

Brown, Robert, Limited Facing 2Q87 

Brown, Robert, & Co 2507 

Browne-Vinters Co., Inc 2598, 2601, 2603, 2703, 2705, 2708 

Agency contract 2602, 2605, 2703-2705 

Agreement with White Horse Distillers Ltd 2705-2708 

Prices, retail suggested by 2605, 2612 

Brownlee, James F 1 2656 

Buchanan's 2720 

Buck, Walter, Commercial Alcohol Co 2569 

Buckner, Mortimer N ^- 2494, 2686 

Bullington, Col. R. McC 2572, 2582, 2643, 2663 

Bulloch Lade's Gold Label and Old Rarity Brands -..- 2720 

Burnett's Brand 2600 

Bush Terminal Co 2495, 2686 

Caldwell, A. & G., Inc 2655 

California Mission Vintage Co 2655 

Calvert Club Brand 2513 

Calvert Distillers Corporation 2505-2506, 

2548-2549, 2552, 2568, 2596, 2687, Facing 2687, 2693, 2748 

Distribution in "monopoly" States 2553-2556 

"Missionary" marketing methods used by 2549-2552 

Quality and price of products of 2560-2563 

Sales of whisky by brands 2748 

Calvert Distillers Corp. of Mass Facing 2687 

Calvert Reserve Brand . _ 2513 

Calvert Special Brand 2513, 2559 

Cameron, Stewart, & Son, Ltd Facing 2687 

Canada Dry Ginger Ale, Inc 2496, 2598, 2612-2613, 2623, 2686, 2714-2717 

Contract, sale agency for Johnnie Walker and Haig and Haig 2613-2614 

Price, maintenance policy and typical agreement of 2614-2620, 

2623-2627, 2714-2716 
Metropolitan retail price list of 2620-2623, 2716-2717 



INDEX , III 

Page 

Canada Life Insurance Co Facing 2694 

Canada Malting Co., Ltd 2697 

Canada North-West Land Co., Ltd 2697 

Canada Permanent Mortgage Corp 2697 

Canada Permanent Trust Co 2697 

Canada Saskatcliewan Land Co., Ltd.. 2697 

Canada Steamship Lines Ltd 2696 

Canadian Club Brand 2537-2.538 

Canadian Industrial Alcohol Co., Ltd 2697 

Canadian Western Lumber Co., Ltd 2697 

Canadian whisky, definition and description of 2422 

Cantan Brand 2747 

Carolina, Clinchfield & Ohio Railway Co 2495, 2686 

Clay, Sam, Distilling Co 2745 

Carstairs Bros. Distilling Co., Inc Facing 2687 

Carstairs Corporation Facing 2687 

Carthage Distilling Corp 2746 

Cascade Brand 2530-2531 

Catelli Food Products, Ltd Facing 2G94 

Cedar Brook Distillery Co 2459, 2746-2747 

Cedar Run Brand 2747 

Central Illinois Light Co Facing 2694 

Century Coal Co 2696 

Chartered Trust & Executor Co 2697 

Cheramy, Inc 2495, 2686 

Chicago, Milwaukee, St. Paul & Pacific Railroad Co 2495, 2686 

Chickasaw Wood Products Co 2463, 2466, 2495-2496, 2686, 2746 

Chicken Cock DistiUing Co 2459, 2461, 2746-2747 

Chisholm, George T 2697 

Christenson, L. P 2691 

Christie, BroM^n & Co., Ltd 2697 

Citizens Union National Bank 2687-2688, 2694 

Clark, Thomas A 2494-2495 

Clarkson, R. L 2494-2495 

Cleland, William B 2514, facing 2694 

Cochran, John, & Co . 2745 

Columbia Graphophone Factories, Corp 2495, 2686 

Commercial Acetylene Supply Co., Inc 2494, 2496, 2686 

Commercial National Bank & Trust Co 2528, 2696 

Commonwealth Brand 2747 

Commonwealth of Virginia Alcoholic Beverage Control Board 2721-2744 

Compagnie Belgo-Canadienne De Credit, Ltee Facing 2694 

Coon Hollow Brand.... 2747 

Consolidated Bakeries of Canada, Ltd 2697 

Consolidated Fire & Casualty Insurance Co 2697 

Consolidated Gas, Electric Light & Power Co 2495, 2686 

Consolidated Oil Corporation .' L 2495, 2686 

Consumers Glass Co., Ltd 2697 

Continental Baking Corporation 2495, 2686 

Continental Illinois National'Bank & Trust Co 2687-2688, 2693 

Coon Hollow Distillery Co 2745 

Corn whisky, definition and description of 2420-2421 

Cost, production." 

Bourbon 2516-2517 

Comparative, of 2- and 4-year-old whiskies 2522-2526 

SiTiall distiller 2542-2546 

Spread between and retail price 2522-2526 

Covcrdale, William H 2696 

Coverdale & Colpitts 2696 

Crab Orchard Distillery Co . 2459, 2746-2747 

Cribari, B. & Sons, Inc 2655 

Crown Fruit & E.xtract Co., Inc 2452, 2459, 2495, 2686, 2746 

Crown Special Brand 2513 

.Cuba Distilling Co 2494, 2496, 2086 

Cuban Air Products Corporation 2494, 2496, 2686 

Cucamonga Valley Wine Co 2655 



IV INDEX 

Page 

Curley, E. J , 2745 

Davie Shipbuilding & Repairing Co 2696 

Davis, Pierpont V - 2494-2495,2686 

Deacon, J. B 2696 

Dewar's Brand 2586-2587, 2597-2598, 2720 

Dictaphone. Corporation 2494, 2686 

Distilled Spirits Institute, Inc 2526, 

2535, 2539-2540, 2573, 2628-2647, 2651-2672, 2718-2719 

Activities of 2632-2637, 2639-2640, 2645-2646 

Director and Public Relations Counsel, salaries of 2668-2673 

Directors and Officers, duties of 2657-2663 

Members, active and associate 2748-2749 

Membership and contributions to 2539-2540, 2655, 2748 

Organization and operations of 2629-2632 

Price to consumer, interest in , 2643-2644 

Receipts and disbursements of 2651-2655, 2718-2719 

Tax legislation, interest in 2642-2644, 2647-2648, 2666-2668 

Distillers Bulletin 2657, 2660, 2662 

Distillers Co., Ltd., of Delaware: 

Corporate organization of 2596-2597 

Gins manufactured in United States by 2600 

Distillers Co., Ltd., of Great Britain, operations in marketing Scotch 

whisky 2597-2599 

Distillers Corporation-Seagrams, Ltd 2504-2505, 2507, 2514, 2526, 

2548, 2687, Pacing 2687, 2689, 2692, Facing 2694 

Distillers Products Sales Corp Facing 2687 

Distillers Warehouses, Inc Facing 2687 

Distilling Cattle Feeders Co 2452 

Distilling Co. of America 2451,2745 

Dividend No. 2 Brand 2747 

Dominion of Canada General Insurance Co 2697 

Doran, Dr. James M 2628-2651, 2656, 2664, 2669-2670 

Dorchester Brand ■._ 2747 

Dougherty, Emmet 2638 

Drink a Little Large Brand 2747 

Drug, Inc 2496, 2686 

Drv Dock Savings Institution 2495 

Dry Ice, Inc 2494,2496,2686 

Durham Bar Special Brand 2513 

Eagle Brand 2747 

Eagle Indemnity Co Facing 2694 

Eastbourne Brand 2747 

Edgewood Brand 2747 

Edwardsville (111.) National Bank & Trust Co 2686 

Eighty-three Brand 2513 

Electric Power Associates, Inc 2494, 2686 

Elk Run Brand 2746-2747 

Empire Trust Company 2687-2688, 2694 

Everett, J. B 2691 

Everglade Brand 2747 

Export Steamship Corp 2696 

Fairchild Aircraft, Ltd 2697 

Fairfield Western Maryland Dairy Corps Facing 2694 

Fair Trade Act 2667,2704,2714 

Fair Trade Laws, effect of, on liquor industry 2556-2558 

.Farmdale Distillery Co 2459,2746-2747 

Federal Alcohol Administration: 

Creation of 2426 

Distillers' permits, revocation of 2 ±33 

Labeling, provision of 2425 

Purpose of 2426-2427 

Statutory standards for operation of distillery 2433 

Federal Alcohol Administration Act 2426, 2440-244 1 , 2665 

Federal Distillery Co 2746 

Federal Fire Insurance Co 2697 

Felton & Sons. Inc 2655 

Fidelity Co., The 2495, 2686 



INDEX V 

Page 

Finance Act (British) ^ 2426 

First National Bank, Atlanta ' 2687-2688, 2694 

Fft-st National Bank of Baltimore . 2687-2688, 2694 

First National Bank of Boston 2687-2688, 2693 

First National Bank of Chicago 2687-2688,2694 

First National Bank of Jersey City . . . : 2687-2688, 2694 

First National Bank, Philadcli:)hia 2687-2688, 2694 

First National Bank, St. Louis 2687-2688, 2694 

Fisher Brand 2747 

Fishers Island Corporation 2495, 2686 

Five Crown Brand 2513, 2525 

Fleischmann Distilling Corn 2457. 2598. 2655 

Flintkoke Co 2696 

Flood Credits Corporation 2495, 2686 

Food Control Act 2649 

Forgan, J. Russell 2494-2495 

Forrest, James A., & Co., Ltd 2514, facing 2687, facing 2694 

4 East 72d Street Corporation 2494, 2496,2686 

Frankfort Distilleries, Inc 2655-2656 

Franklin Brand 2747 

Friel, James E 2501,2503, 2526, 2548,2687, facing 2694 

Gaines, W. A., & Co 2460,2495,2686.2746 

Garland Brand . 2747 

Gauger's Manual 2658 

General Theatres Equipment Co 2494-2495, 2686 

Geoffrion, Aime K. C 2514, facing 2694 

Geoffrion & Pruri-Homme - ■ Facing 2694 

Georgia & Florida R. R 2696 

Gibbons, T. H 2697 

Gibson, Harvey D 2513-2514, facing 2694 

Gilbey, W. & A., Ltd 2462, 2495-2496, 2686, 2746 

Gimbel Brothers, Inc Facing 2694 

Gladstone Brand 2747 

Glen Garry Brand 2720 

Glenmore Distilleries Co 2547, 2655-2656 

Globe Bedding Co., Ltd Facing 2694 

Globe & Rutgers Fire Insurance Co 2495, 2686 

Glore, Forgan & Co 2495 

Gold Label Brand 2597, 2720 

Gold Star Brand 2747 

Golden Premium Brand 2747 

Golden-Russell Co 2655 

Gooderham, William G 2697 

Gooderham & Worts, Ltd 2538 

Gooderham & Worts, Ltd., Sales Co 2538 

Goodrich, B. F., Co Facing 2694 

Gordon's Brand .- : 2600 

Great Lakes Brand 2747 

Green Stripe Brand 2597, 2720 

Greenlee, Walter R 2584 

Gulf, Mobile & Northern R. R. Co 2696 

Gwynnbrook Distillery Co 2459, 2746 

Haig & Haig Brand 2586, 2597-2600, 2613, 2720 

Handren, F. G 2709 

Hannis Distillery Co 2460. 2745 

Hannis Mills Brand 2746-2747 

Harris Trust & Savings Bank 2687-2688, 2694 

Harvey's Special Brand 2720 

Hatch, H. C 2.535,2697 

Heather Dew Brand . 2720 

Hendrik Hudson Brand 2746-2747 

Hermitage Distillery Co 2460, 2746 

Heymsfeid, Ralph t 2696 

Highland Nectar Brand 2720 

Hill & Hill Distillery Co 2460,2474,2600,2746-2747 



VI INDEX 

Page 

Hiram Walker-Gooderham & Worts, Ltd 2536-2537, 2656, facing 2694, 2697 

Advertising, cost of 2541 

Corporate organization of 2536-2538 

Directors and companies with which they are connected 2540, 2697 

Financing operations of 2539-2540 

Hiram Wa]ker-G. & W. Sales Corp 2536 

Hiram Walker & Sons Distilleries, Inc Facing 2694 

Hiram Walker & Sons Grain Corp., Ltd Facing 2694 

Hiram Walker & Sons, Inc 2436, 2440, 2447, 

2514, 2535-2539, 2595-2596, 2627, 2657, facing 2694, 2717 

Hiram Walker & Sons, Ltd. (Scotland) 2536 

Hiram Walker & Sons, Inc. (Western) 2536, facing 2694 

Home Insurance Co 2495, 2686 

Hood River Distillers, Inc 2655 

Honeymoon Brand 2747 

Houbigant Inc . 2495 

Hunter Baltimore Rye Distillery, Inc 2655 

Huntley Brand . 2586 

Importers, allocation of exclusive agency contracts to 2587-2590 

Indian Refining Co Facing 2694 

Interborough Rapid Transit Co 2495, 2686 

Interborough Rapid Transit 6% Noteholders Protective Comm Facing 2694 

International Holding Co Facing 2694 

Internationa] Power Securities Corp 2495, 2686 

Investment Foundation, Ltd ,. 2697 

Invisible Glass Co., of America 2495 

Irish whisky, definition and description of 2421 

Italian Super-Power Corporation 2495 

Jacobi, Harold 2535, 2696 

Jacobi, Lester E 2501, 2526-2535, 2656, 2696 

Jameson, William, & Co, Inc 2465, 2584, 2686 

Production and control of whisky in British Isles 2584-2587 

Jefferson Brand : 2746-2747 

Jefferson Trust & Savings Bank Facing 2694 

Jersey Cream Brand 2747 

Jersey Jack Brand 2747 

Jockey Club Brand 2747 

John Bcgg Brand 2720 

Johnnie Walker Brand 2586, 2597-2598, 2613, 2615, 2622, 2625 

Johnnie Walker Red Label Brand 2618 

Jones, Charles L 2494-2495, 2686 

Jones, Howard 2638 

Jordan Wine Co., Ltd Facing 2694 

Kellv, Archibald 2584, 2587, 2596-2601, 2720 

Keidol, Louis A 2508, 2528, 2547-2548, 2691, 2696 

Kcllar, A. Co 2745 

Kentucky Alcohol Corp 2456, 2745 

Kentucky Climax Brand 2747 

Kentucky Club Brand 2747 

Kentucky Criterion Brand 2747 

Kentucky Distilleries & Warehouse Co 2456,2745 

Kentucky Pride Brand 2513 

Kentucky Sunshine Brands 2747 

Kessler, Julius DistiUing Co., Inc 2505-2506, 2513. 2687, 2693, 2745 

Kimble Glass Co 2495 

.King George Brand 2586, 2597, 2720 

King of Kentucky Brand 2746 

King William Brand 2586, 2597, 2720 

Knob Creek Brand 2747 

Kuyper, John de, & Son, Inc 2454, 2462, 2495, 2086, 2746 

Kuyper, Jolis de, <fe Zoon 2454 

Lackawanna Brand ^ 2747 

Laird & Co 2655 

Lanaque Gold Mines, Ltd 2697 

Lancaster, S. P. Co 2745-2747 

Large Distillery Co 2457-2458, 2462, 2467, 2490, 2495, 2686, 2746-2747 



INDEX VII 

Page 

Lash, John F 2697 

Lehigh Valley Railroad Co Facing 2694 

Lehman Brothers 2696 

Levis, William E 2467, 2494-2495 

Lexington Club Brand 2747 

Libbey Glass Co - '., 2494-2495 

Liberty Yeast Corporation 2745 

Liberty Inn Bourbon Brand 2513 

Liquid Inn DistUling Co., Inc _. 2687, 2693 

Liquid Carbonic Corporation — 2496 

Liquor: 

See whisky. 

Liquor Control Act of the State of Ohio 2659-2661 

Liquor Control Authority of the State of Ohio, code of.. 2658-2659, 2719-2720 
Liquor Industry: 

Assets, increased, of four largest distributors 2541, 2697 

Brands, trade-marks, patents and good-will, value of 2408-2475 

Conditions in, presentation of 2419-2423 

Four largest distributors, advertising expenditures of_ 2627-2528, 2717-2718 

Holding companies, advantage of 2510-2511 

Legislative background of 2423-2425 

Overproduction 2518-2520 

Price, fixed for benefit of retailer 2563-2567 

Production by four largest companies, compared with total production. 2435- 

2437 

Production and control of whisky in British Isles 2584-2587 

Small distillers: 

Cost to produce "quality" whisky 2542-2546 

Credit, effect of 2570-2571 

State system of control ' 2425, 2675 

Taxation and control of 2423-2425 

Taxation, increased, problem of 2566-2508 

Literary Digest ■ 2662 

Little Straight Rye Brand 2513 

Lockwood, R. A__. 2691 

Loose-Wiles Biscuit Co 2530 

Lord Calvert Distilleries, Inc Facing 2687 

Lord Sterling Distilleries, Inc 2655 

MacKinlay, R. A 2697 

MacLaren, Alexander, & Co., Ltd Facing 2687 

MacNamara, M. J 2494-2495,2656,2686 

Macy, R. H. & Co 2609,2615-2618,2620,2627 

Magnolia Airco Gas Products Co 2494, 2496, 2686 

Malt whisky, definition and description of 2420 

Manufacturers Trust Co 2495, 2508, 2528, 2686-2688, 2691-2693, facing 2694 

Maple Leaf Gardens, Ltd 2697 

Mara & McCarthy 2697 

Marks, Lionel 2584 

Martini, L. M. Grape Products 2655 

Maryland Club Brand 2513 

Marvland Club Distilling Co., Inc -.. Facing 2687 

Maryland Distillery, Inc .... 2506, 2687, facing 2687, 2693 

Maryland Pure Rye Distillery, Inc Facing 2687 

Mason, Guy • 2602 

Massey-H arris Co., Ltd 2697 

Maver, S. M., & Co . 2659 

Mayfield, A., & Co 2745-2747 

Mayr, P>ank, Jr 2656 

McCallum's Perfection Brand 2720 

McCarthy, Leigh M j 2697 

McGee, Hugh H 2528. 2691 

McGuire, James P., & Co 2495, 2686 

McTnnerny, Thomas H 2514, facing 2694 

McKenna, H., Inc 2656 



VIII INDEX 

Page 

McLeiJan Stores Co Facing 2694 

Meadow Cream Brand 1 2513 

Meadwood Brand ^ 2571 

Medical Arts Products Co 2746-2747 

Medicinal Holding Corporation 2455, 2746 

Medicinal Products Corp 2746 

Mellon, Andrev/ W •_ 2472 

Millwood Distillery Co 2460,2745-2747 

Merchandise Marks Act (British) 2426 

Merchants Distilling Corporation 2656 

Midland Shipbuilding Co 2696 

Miles, E. L., & Co 2745 

Mitchell Bros.' Heather Dew 2720 

Monarch Brand 2747 

Monarch Mortgage & Investments, Ltd ._ 2697 

Monongahela Brand 2460 

Monongahela, West Penn Public Service Co 2686 

"Monopoly" States: 

Distribution of whisky in j: 2552-2556 

Price, policy of 2576 

Profit on liquor sales, percent of 2575-2576, 2578 

Montreal Trust Co - - _ - 2696 

Morgan, Mrs. Sarah ' 2654 

Morgan, William Forbes . 2638, 2652, 2719 

Morrow, Frederick K '_ 2697 

Mount D'or Wine Co., Inc Facing 2687 

Mount Vernon Prand 2468, 247^, 2482, 2487, 2490, 2746-2747 

Mount Vernon Distillery Co • 2460, 2490-2491, 2746 

Munson, Charles S 2494,2496,2686 

Mutual Brand 2747 

Mutual Life Insurance Co., The - 2494,2686 

Nahum Chapin Rum Brand ! . 2747 

National Bank of Detroit 2687-2688, 2694 

National Bank & Trust Co_..^. 2494 

National Bondholders Corp Facing 2694 

National Carbide Corp 2494, 2496, 2686 

National City Bank 2528. 

National City Bank of Cleveland, The 2687-2688, 2694 

National Conference of State Liquor Administrators: 

Aims and purpose of 2573-2574 

Members of -' 2572 

Price concessions sought by 1 2574-2575, 2579-2582 

National Dairy Products Corp 2514, facing 2694 

National Distillers Corporation of New England 2459, 2746 

National DistiUers Products Corporation 2436, 

2440, 2443, 2450-2460, 2462, 2465, 2467, 2469, 2480, 2493-2494, 
2496, 2582, 2591-2592, 2595, 2627, 2655-2656, 2657, 2697, 2717, 
2745-2748. 

"Brands, trade-marks, patents, and goodwill," value of - 2468-2475 

Purchase and use of 2497-2499 

Credit, extension of, to wholesalers 2592-2596 

Directors of, and companies associated with 2493-2496, 2686 

History and organization of 2451-2468 

Price and cost of producing 2-year- and 4-year-old whiskies 2475-2489 

Subsidiaries of, and brand names controlled by 2458-2468, 2745-2748 

National Industrial Recovery Act. (<See N. R. A.) 

National Pure Spirits Corporation 2455 

National Straight Whiskey Distributing Co. , Inc 2746 

National Trust Co., Ltd Facing 2694 

Nelson Distilling Company 2745-2747 

New England Public Service Co Facing 2694 

New Hope Distillery Company 2745-2747 

New Jersey, Indiana & lUinois Ry. Co Facing 2694 

Newman, Joseph H 2601-2612,2614, 2621, 2624,2626 

New York Life Insurance Co 2495,2686 

New York Rapid Transit Co Facing 2694 

New York Trust Co 2494, 2686 



d American Bourbon Brand 2571 

d American Rye Brand 2571 

d Angus Brand-. 2586 

d Cronv Brand i - . . 2513 

d Crow Brand 2490, 2747 

d Crow Distillery Co 2460-2461, 2746 

d Darling Brand i 2747 

d Delaware Brand 2747 

d Drum Brand 2513 

d Durham Brand 2513 

d Farm Brand 2747 

d Grand Dad Brand 2474-2475, 2499, 2747 

d Grand Dad Distillery Co 2460-2461, 2746 

d Hermitage Brand ■_ 2747 

d Hospitality Brand 2747 

d Kentucky Colonel Brand 2747 

d Log Cabin Brand 2746-2747 

d Madison Club Brand 2747 

d Man River Brand . 2513 

d McBrayer Distillery Co 2460, 2746-2747 

d Medford Rum Distillery, Inc 2656 

d Mountaineer Distillery Co 2656 

d Overholt Brand 2468-2469, 2472-2475, 2747 

d Parr Brand 2720 

d Prentice Brand 2747 

d Puritan Brand 1 2747 

d Rarity Brand.--' 2720 

d Ripy Brand 2746 

d Tarr Brand 2747 

d Tavlor Brand 2468, 2474-2475, 2482, 2487, 2490-2491, 2747 

d Tavlor Distilling Co 2460-2461, 2746 

d Time Molasses Co 2745 

d Warrior Brand 2747 

d W. S. Stone Brand 2747 

Osier & Hammond 2697 

Outdoor Advertising, Inc 2718 

Overholt, Abraham 2472 

Overholt, A., & Co., Inc 2457-2459, 2461, 2467, 2490, 2495-2497, 2686, 2746 

Owens-Illinois Can Co 2494 

Owens-Illinois Glass Co 2467, 2494-2495, 2686 

Owens-Illinois Pacific Coast Co 2494-2495 

Owens Staple-Tied Brush Co 2495 

Padre Vineyard Co 2656 

Paragon Brand 2747 

Paramount Pictures, Inc Facing 2694 

Park Hill Brand 2747 

Park & Tilford Import Corporation 2709, 2711, 2713 

Agencv contracts of 2612, 2709-2713 

Park & Tilford, Inc 2598, 2602-2603, 2612 

Pattison & Browns Facing 2694 

Pebbleford Distillery Co 2746 

Pedigree Brand 2513 

Peerless Brand 2747 

Penn-Maryland Corporation 2460, 2495-2496, 2686, 2746 

Pennsvlvania Company for Insurance on Lives and Granting Annuities.- 2687- 

2688, 2693 

Pennsylvania Distilling Co., Inc 2656 

Pennsylvania Water & Power Co 2495, 2686 

x'enwick Brand 2747 

Pepper, James E., Co 2529 



X INDEX 

Page 

Peter Dawson Brand 2597-2720 

Petrol Oil & Gas Co., Ltd.. 2697 

Philadelphia & Reading Coal & Iron Co : .. 2495, 2686 

Philadelphia & Reading Coal & Iron Corporation 2495, 2686 

Philippine RailW-ay Co 2495, 2686 

Picture of a Star within a Star Brand 2747 

Pierce Oil Corp _• 2696 

Pierce Petroleum Corp 2696 

Pierce, S. S., & Co 2599 

Pittston Co '. Facing 2694 

Pontiac Brand 2747 

Porter, Seton 2443, 2450-2494, 2496-2501, 2534, 2569, 2639. 2686, 2745 

Porto Rico Mercantile Co 2496,-2686 

Price : 

Browne- Vintners Co., Inc., retail, suggested 2605-2612 

Canada Diy Ginger Ale, Inc., metropolitan price list and maintenance 

policy of 2614-2627,2714-2717 

Dependent upon quality 2560-2563 

"Monopoly" States, policy of 2576 

National Distillers Products Corp., comparative, of 2- and 4-vear-old 

whiskies- '. . - 2475-2489 

"Open" States, minimum retail, suggested 2552-2553 

Seagram, Joseph E., & Sons, Inc., metrojoolitan price list of 2695-2696 

Scotch whisky, comparison of, London and New York 2590-2591 

Private Stock Brand <. _ .. i 25 1 3 

Production and control of whiskies in British Isles 2584-2587 

Provident Loan Societv " 2495. 2686 

Publica, Philip -' 2569 

Pure Carbonic Co., Inc 2494. 2496, 2686 

Ramona^Brand .; 2747 

Rare Old Jviqueur Brand 2711 

Reconstriietion Finance Corp.J _' Facing 2694 

Rector Rolling Co 2495 

Regal Brand . 2747 

Reinsurance Corporation 2496, 2686 

Reiss-Premier Pipe Co 2697 

Reliance Distilling Co., Inc Facing 2687 

Reorganization Managers for National Surety Co Facing 2694 

Republic Steel Corp 2696 

Revenue Act of 1918 2683 

Rewco Distillery Co : 2460. 2746-2747 

Richmond, Fredericksburg & Potomac R. R. Co - 2696 

Richmond- Wash ington Co 2696 

Richwood Brand, r 2747 

Ripv, T. B. Co 2745 

Roach J. G - 2746-2747 

Robertson s -. - 2720 

Robinson Con.solidated Cone Co -_ 2697 

Roscnstiel, Lewis T - 2696 

Roseton Brick Cdrporation 2495, 2686 

Rossville Brand 2747 

Rossville Chemical & Alcohol Co 2504 

Rossville Union Corporation 2-505 

Rowell, Rcid, Wright & McMillan 2697 

Roxburv Brand 2747 

Royal Arms Brand 1 . 2747 

Roval Indemnity Co Facing 2694 

Rublee, George 2451 

Russell, Paris S 2494, 2496, 2686 

Rve whiskv, definition and description of 2420 

SafTell,.!. & J. M., Co 2745 

Saffell, W. B 2747 

Saguenay Power Co., Ltd Facing 2694 

Sanderson, William, & Son, Limited ----- 2709, 2711, 2713 

Sanderson & Porter 2686 

Sandy Mac Brand . 2720 

Sandy Mac Donald Brand.. 2597 



INDEX XI 

Page 

San Gabriel Vineyard Co 2656 

Sawyer-Massey, Ltd 2697 

Schenlev Distillers Corporation 2436, 

2440, 2526-2529, 2535, 2547, 2582, 2584, 2587, 2590, 2595, 2603, 
2627, 2656-2657, 2696-2697, 2717. 

Advertising, cost of during past 4 years 2535 

Banking arrangements of 2528-2529, 2547-2548 

Brands, allocation of 2587-2590 

Corporate structure of 2527 

Directors and companies with which the}' are connected 2535, 2696 

Whiskv stock, acquisition of 2529-2532 

Schenlev Imoort Corporation 2587, 259S, 2603 

Schenley Products Co 2527, 2529 

Scotch whisky, definition and description of 2-i21 

Price, co'mparision of, in London and New York 2500-2591 

Schwengfcl, Frank R 2514, 2656 

Seaboard Air Line Railway Co 2495, 2686, 2696 

Seaboard Airline Railway Co. and Subsidiaries . 1 2696 

Seagram Distillers Corp., of Mass Facing 2687, 2693 

Seagram, Joseph E., & Sons, luc 2436, 

2440, 2446-2447, 2504-2508, 2522, 2529, 2547-2549, 2582, 2595- 
2596, 2627, 2655-2657, facing 2687, 2687, 2692-2693, 2695, 
2697, 2717. 

Banking Arrangements of 2507-2509, 2547-2548, 2687-2694 

Bourbon, cost of manufacturing 25 1 6-25 1 7 

Corporate structure of 2504-2507, 2514-2510, facing 2686 

Directors of, and companies with which they are connected 2513-2514, 

facing 2694 

Distilling operations and brands owned bv 251 1-2513 

Price, Metropolitan list to retailers and wholesalers.. 2522-2526, 2695-2096 

Seagram. Joseph E., & Sons, Ltd Facint;- 2687 

Security-First National Bank 2687-2688, 2694 

Security Warehouse Co., Inc 2746 

Seven Crown Brand 2513, 2525 

.Sharpe, G. R ' 2746-2747 

Shaw, Ale.x D., Inc 2452, 2454, 2459, 2495-2496, 2086, 2746 

Siienandoa.h Brand 2746-2747 

Sheridan- Wyoming. Coal Co Facing 2694 

Shewan-Jones Co 2459 

Shufeld, Henrv H. & Co 2452, 2456, 2459. 2495, 2686. 2745-2746 

Shur-on Optical Co Facing 2094 

Siv. ;fried-Lowenthal Co 2655 

Silver DoUar Brand 2513 

Since 1788 Brand 2747 

Small distillers: 

Cost to nroduce quality vrhiskv 2542-2546 

(Jredit, effect of :.-_.. 2570-2571 

Somerset Impo)-ters, Ltd 2598 

Sovereign Brand 2747 

Spcas Mpinufacturing Co 2656 

Special Old Re.serve Brand 2747 

Special Reserve Brand 2513, 2709 

Spirit whisky, definition and description of 2421 

Sprini? Garden Distillery Co 2460, 2746-2747 

Soring Hill Brand 2747 

Standard Alcohol Co 2686 

Standard Milling Co 2697 

Standard P.aving & Materials, Ltd 2697 

State system of lic(uor control 2425, 2675 

Steamship Julius Kcssler Corp - 2745 

Sterno Corporation 2494, 2496 

Stoll & Co., Inc 2745 

Straight whiskv, definition and description of 2421 

Strouse, I S 2656 

Sturges, Dr. Wesley A 2651-2673 

Sugar Products Co 2745 

Sunny Brook Brand 2499, 2747 



XII INDEX 

Page 

Sunny Brook Distillery Co 2459, 2461 

Sweetwood Brand 2746-2747 

Taft, President William H • 2427 

Tarr, William Company 2745 

Taxes : 

Effect on revenue and consumption 2648-2651 

Interest in, by Distillers Institute 2642-2644, 2647-2648 

Taylor, E. H., Jr., & Sons 2747-2748 

Tea Kettle Brand 2747 

Teck-Hughes Gold Mines, Ltd 2697 

Tennessee, Alabama & Georgia Ry 2696 

Textile Banking Co ' Facing 2694 

Thomas, Joseph A 2696 

Thompson, F. B 2656 

Tip Top Brand 2747 

Title Guarantee & Trust Co Facing 2694 

Tobacco Products Co Facing 2694 

Train & Mclntyre, Ltd . 2463,2465-2466,2746 

Trans-Oceanic Commercial Corp 2745 

Tunney, Gene 2568-2572 

Twentieth Century Fox Film Corp 2494, 2686 

Twenty-One Brands 2539 

Underwood Elliott Fisher Co 2495, 2600, 2686 

Underwriters Trust Co 2528 

Union Trust Company 2087-2688, 2694 

United Biscuit Co -- Facing 2694 

United Drug, Inc 2496, 2686 

United States Distributing Corp Facing 2694 

United States Food Products Corporation 245 1 

L'nited States Trucking Corp Facing 2694 

U. S. Club Brand 2746-2748 

U. S. Food Products Car Line Corp 2745 

U. S. Food Products Corp ._i 2745 

U. S. Industrial Alcohol Co 2494, 2496, 2686 

U. S. Industrial Chemical Co 2494,2496, 2686 

United Stores Corp Facing 2694 

Usher's Brand 2720 

Vanadium Corporation of America 2494, 2686 

Van Hook Brand 2747-2748 

Vat 69 Brand 2586, 2597-2598, 2711, 2720 

Virginia Alcohol Beverage Control Board: 

Price list, retail for past three years 2578, 2580, 2698-2703, 2721-2744 

Purchasing stocks, method of 2577-2579 

Virginia Club Brand 2513 

Virginia Distillery Corp 2056 

V. O. Brand 2513 

VVachtel, W. W 2548-2508, 2687 

Walker, John, & Son?, Ltd 26]4, 2620 

Walton, Howard R -. 2501,2535-2541,2056.2097 

War Revenue Act 2649 

Ward Baking Co 2694, 2697 

Wathen, Distillers Since 1788 2747-2748 

Wathen, R. E., & Co 2747-2748 

Watson No. 10 Brand 2597 

Webb-Kenvon Act 2423 

.Weco Products Co 2494-2495, 2686 

Weiner, M. R 2656 

Weiskoph. D. K 1 2494, 2496, 2680 

Wclcii, J. T 2747-2748 

Wells-Fargo & Co 2495,2680 

Western Electric Co., Inc Facing 2094 

Westbrook Brand 2747-2748 

West Pcnn Electric Co Facing 2094 

West Penn Power Co 2080 

West Penn Railways - 2080 

Wheat whisky, definition and description of 2420 



INDEX . XIII 

Whisky: 

Aging, importance of 2532-2534 

American type whiskies ' 2420-242 1 

Bonded stock, amount held by four largest companies 2437-2438 

Cost to consumer of 2- and 4-ycar-old 2475-2493, 2685 

Definition and description of 2420-242 1 

Malt whisky ■ 2421 

Rye whiskv 2420 

Scotch whiskv 242 1 

Spirit : 2421 

Straight 2421 

Wheat 2421 

Definition and description of blended whiskies ^ 2421 

Irish whisky 2422 

Rye 2422 

Scotch 2422 

Definition and description of Bourbon whisky 2420 

Distribution of, in monopoly States 2553-2556 

Fair Trade laws 2556-2557 

Fixed price, benefit of 2563-2567 

Foreign types of - 2421-2422 

Imported, total (1934-1938) 2446-2450, 2684 

Merchandiv^ing of 2549-2552, 2567-2568 

Price, minimum in "open" States 2552-2553 

Production and control of, in British Isles 2584-2587 

Production of (1933-1938) 2428, 2676 

Production cost and price to consumer 2522-2526 

Production exceeding consumption 2432 

Production., percentage of, by four largest companies 2439-2440 

Quality and price of 2560-2563 

Sale of, in 45 wet States 2425 

Statutes of each covering manufacture and sale 2425 

Scotch, price of in London and New York 2590-2591, 2703 

Small distiller, cost to produce 2542-2546 

State systems of control — 2425 

Stocks of, in bonded warehouses (1933-1938) 2428-2429. 2676 

Tax, increase effecting revenue and consumption .- 2648-265 1 

Withdrawn tax paid 2429-2432, 2677 

Whiskv Trust 2450-2451 , 2461, 2489 

White," G. G., & Co 2745 

White Horse Brand 2586, 2597-2598, 2603, 2608, 2612, 2620, 2624, 2720 

White Horse Distillers, Ltd 2605, 2615. 2703, 2705, 2708 

Agreement with Browne-Vintners Co., Inc 2603,2705-2708 

White Label Brand 2720 

Wiche, Theodore C 2096 

Weight, Frank L 2656 

Wight, Frank L., Distilling Co . 2650 

Wile, Oscar J ..----■- 2587-2590 

Williams, William .1 - -- 2812-2627 

Willkic. H. F : 2514, facing 2694 

Wilsil Brand 2697 

Wilson Act 2423 

Wilson Distilling Co 2604, 2656 

Wilson V/elder & Metals Co., Inc 2494, 2496, 2086 

Windsor Brand 2747-2748 

Windsor Hotel Co., Ltd Facing 2694 

Winnipeg Western Land Corp., Ltd 2697 

Wright, Ward 2697 

Yellow Label Brand 2720 

Yomig's Market Co. vs. State Board of K(|ualization of the State of 

California . 2425. 2635 



BOSTON 



PVJBUCLlBBAfJ 



3 9999 



06351 



933 2