Mr. Davis. Mr. Buck, isn't it a fact, however, with rare exceptions these wildcat distilleries have very small 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 offer 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 Administration promulgated which changed or modified the act to which you are about to refer?

Mr. BUCK. Senator King, I have been counsel for this Administration 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 rather indistinct. I had something 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 I thought we gave you some authority which we repealed by implication, if it did not do it directly, some of the provisions of the act to which you are about to refer.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 regulation 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 taxing act.

The CHAIRMAN. Let me interrupt to ask you to answer Congressman 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

in bond (Act of March 3, 1897), as amended by Act of March 2, 1929; Act of June 26, 1936, 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 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 containing the same, the distiller or owner of said distilled spirits, if he has declared his purpose 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 exclusively for that purpose, and there, under the supervision of a United States storekeeper-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 of the same kind, differing only in 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 business, summer and fall. That is what 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 as 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 affixed thereto and passing over the mouth of the same a stamp denoting the quantity of the distilled 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 the 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. It 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?

Mr. Buck. I am not. Mr. Seton Porter 1 is here, and I 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.)

INVESTIGATION OF CONCENTRATION OF ECONOMIC POWER

WEDNESDAY, MARCH 15, 1939

UNITED STATES SENATE,
TEMPORARY NATIONAL ECONOMIC COMMITTEE,

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

Present: Senators O'Mahoney (chairman) and King; Representatives 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 Commissioners William A. Ayres and Charles H. March; Willis J. Ballinger, Director of Studies and 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 think there are enough of us around to begin the hearings. Mr. Ballinger, 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, illustrates 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 whisky 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 trying 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.

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