Page Item of $11,400,000 designated in National Distillers balance sheet as for "Brands, Trade-Marks, Patents, and Goodwill". Prices of 2-year-old and 4-year-old whiskies. Directors of National Distillers Products Corporation and the companies with which they are connected ------ Corporate structure of Distillers Corporation Seagrams, Ltd.- Banking connections of Seagrams--- Advantage of holding company set-up to producer.. Distilling operations and brands owned by Seagrams. Overproduction of whisky not reflected in price to consumer. Spread between production cost and price to consumer_ Corporate organization of Schenley Distillers Corporation.. Banking arrangements of the Schenley Corporation.- Schenley's acquisition of whisky stocks.. Importance of aging whisky----- Corporate organization of Hiram Walker-Gooderham & Worts, Ltd. 2536 Hiram Walker's financing operations-- Increased assets of four largest distributors. Cost to small distiller of producing "quality" whisky Bankers loan agreements with Schenley and Seagrams “Missionary” type of marketing employed by Calvert--- Minimum prices suggested by Calvert in "open" states_ Distribution of liquor in "monopoly” states--- Effect of fair-trade laws on whisky prices_ Whisky prices dependent on quality- Price maintenance to support retailers. Corporate organization of American Distilling Company Extension of credit to wholesalers - Aims and purposes of the National Conference of State Liquor Adminis- Price concessions to distributors in “open” states sought by “monopoly” Method of purchase by Virginia Alcohol Beverage Control Board . 2577 Production and control of whisky in British Isles Allocation of brands to importers in United States through exclusive Comparison of consumer costs of Scotch whisky in London and New Operations of D. C. L. and its subsidiaries in marketing Scotch whisky-- 2597 Sole agency contract for Johnnie Walker and Haig & Haig whiskies. 2613 Question of enforcing price maintenance by large retailer Method of determining retail liquor prices -- Canada Dry's retail liquor price maintenance policy. Advertising expenditures of four largest distributors_ Inception and operations of Distilled Spirits Institute Office and personnel of the Institute Interest in liquor tax legislation. Receipts and disbursements of Distilled Spirts Institute. Membership and their contributions to the Institute- Duties of director and other officers. Bootlegging problem involved in increased taxation. Salaries of the director and public relations counsel. Tuesday, March 14, 1939 (Afternoon session) I SCHEDULE OF EXHIBITS Number and summary of exhibits Intro- Appears 394. Chart: Systems of state liquor control -- 395. Chart: Production of whiskey in the United States. 396. Chart: Stocks of whiskey in bonded warehouses, 1933–1938-2428 2676 397. Chart: Whiskey withdrawn tax paid, 1933–1938- 398. Chart: Whiskey distilleries in operation, annual capacity and 399. Chart: Whiskey distillers operated and whiskey produced- four companies compared with entire industry, 1934-1938- 2435 2678 400. Chart: Production of whiskey in the United States by four companies compared with total production, 1934–1938.--- 2436 2679 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 by four companies, 1934-1938. 403. Text of United States Bottling in Bond Act--- 404. Chart: Total Whiskey imported into United States, 1934- 405. Report on Whiskey Trust Investigation (52d Cong., 2d Sess.), 2450 (1) the Digest of Evidence in the Preliminary Report on Trusts 2450 (1) 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 inability to appear before the Committee:- 410. Chart: Corporate organization of Distillers Corporation- 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 Na- tional 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 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 412. Chart: Distillers Corporation-Seagrams Limited, directors 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 SCHEDULE OF EXHIBITS-Continued Number and summary of exhibits Intro: Appears page on 415. Chart: Schenley Distillers Corporation, directors and com- panies with which they are connected.-- 416. Chart: Hiram Walker-Gooderham & Worts, Ltd., directors and companies with which they are connected. 417. Chart: Financial data, consolidated, four major distilling 418. Chart: Consumer cost of popular spirit blend, comparison between license and monopoly States- 419. Commonwealth of Virginia A. B. C. Board retail price list 420. Chart: Standard consumer cost of Scotch whiskey, compari- son between New York and London.. 421. Sole agency agreement between White Horse Distillers, Ltd., 2703 2703 2705 2709 2711 2714 2716 2717 (1) 2602 422. Import agreement between White Horse Distillers, Ltd., and Browne-Vintners Co., Inc.- 2603 423. Import agreement between Wm. Sanderson & Son, Ltd., and Park & Tilford Import Corporation re “Special Reserve”. 2612 424. Import agreement between Wm. Sanderson & Son, Ltd., and Park & Tilford Import Corporation re “Vat 69" and "Rare Old Liquer” 2612 425. Copy of Canada Dry Ginger Ale, Inc., import agreement. 2615 426. Price schedule for New York Metropolitan area of Canada Dry Ginger Ale, Inc., products, effective November 1, 1938- 2620 427. Table, prepared by Federal Alcohol Administration, showing advertising expenditures of four major distilling companies for years 1934-1938.- 2628 428. Scrapbook, prepared by Federal Alcohol Administration, of advertisements of liquors appearing currently in news- 2628 2654 430. Code regulating the sale and distribution of alcoholic bev- erages in Ohio. 2659 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 Virginia 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, from Seton Porter, president, National Distillers Products Corp., 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 by the company as at 1924, 1933, and 1938. Entered in the record May 10, 1939.- 678. Table showing the sales of domestic whisky by brands na- tionally by Calvert Distillers Corp. for fiscal years ending July 31, 1937, and July 31, 1938. Entered in the record June 7, 1939--- 1172. List of active and associate members of Distilled Spirits In- stitute, Inc. Entered in the record September 27, 1939.- Unnumbered. Letter, dated November 1, 1939, from National Distillers Products Corporation to the Committee, containing additional information regarding the item of Notes and Accounts Receivable of the Corporation and its wholly owned subsidiaries. 2718 2719 2720 2721 2745 2748 2748 2750 1 On file with the Committee. INVESTIGATION OF CONCENTRATION OF ECONOMIC POWER AFTERNOON SESSION—TUESDAY, MARCH 14, 1939 UNITED STATES SENATE, Wshaington, D. C. Present: Senators O'Mahoney (chairman) and King; Representatives 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 Administration. The CHAIRMAN. The committee will please come to order. My apologies must again be presented to the members who have been delayed 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. BALLINGER. 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 committee was established, it has been the purpose and 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 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 are 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 any 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 PHILLIP E. BUCK, GENERAL COUNSEL, FEDERAL 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, different from most industries. The product itself is what might be determined a technical product in that it is divided into many classifications, all of which are set up under Government regulations, and I believe for the benefit of the committee it may be well in the beginning 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 distinguished from the entire industry. DEFINITION AND DESCRIPTION OF TYPES 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 possesses 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 (a) through (j) 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 |