Senator King. You are just 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 program here we selected certain industries which we believe exhibit monopolistic practices, 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 was yesterday impossible for me to be present, but I will read the record.

The 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 respect 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 investigation with a prosecuting agency presenting evidence to secure an indictment. That, of course, is the farthest thing from our thought.

Mr. BUCK. Yesterday we noticed some decline in withdrawals of whisky which we use in this study to indicate consumption; that is, withdrawals of domestic whisky, and some thought was expressed by myself, I believe, that maybe imports had increased and thereby causing the 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 gallons from 1934 to 1938.

(The chart referred to was marked “Exhibit No. 404” and is included in the appendix on p. 2684.)

Mr. Buck. It began in '3À with five-million-six-hundred-and-someodd thousand; '35 was five-million-eight-hundred-odd thousand; '36, 13,375,339 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 gallons, 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 agreement with Great Britain contains any provision that would be likely to affect the importations of liquor from Great Britain?

Mr. Buck. It is my recollection, Senator, that under the trade agreement with Great 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.

Mr. Buck. I will give you my opinion of that. I think it is substantiated by the conditions in the industry: In the beginning, such companies aš Seagram-Seagram is primarily, I say, a Canadian com

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 (interposing). Do you happen to know where they are incorporated ?

Mr. BUCK. Well, there are so many corporations, the parent companies, 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 consumption or withdrawal from consumption on and after January 1, 1936.

Senator King. Read the next paragraph.
Mr. Buck. That is not all the second one: Do you want me to

. complete the second ?

Senator KING. Yes. Mr. Buck (continuing reading): The effective date of the Canadian trade agreement under the most-favorednation principle applied to whisky from all countries with the following excep. tions: (1) Germany, including Austria and part of Czechoslovakia when recently 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 King. 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 interested 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 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 withdrawal 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 rectifying under our system—you would then have approximately 40,000,000 gallons to the consumer. I see your point, and these figures, as I 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. Judge, you have it both ways. If the whisky is imported 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.
The CHAIRMAN. Proceed.

Mr. BUCK. This chart, again, of course, is broken down into classifications of whisky. 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, 52 percent. You see in ́ 38 it dropped down to 35 percent. Í would say it indicates the two companies using American stocks instead of their Canadian stocks, Senator O'Mahoney, as we discussed.

United Kingdom whiskys are indicated, and that is principally Scotch whisky. Now Scotch whisky is a blended whisky also. It is a whisky that is made from a certain percent of highly flavored or characteristic malt mixed with what they call plain British spirits. There is some contention among the experts in the industry as

I

a

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 whisky is usually a blend of heavy Scotch malt whisky with plain British spirits.

The peculiarity about those factors is this: Under the British system 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

do you mean?
Mr. BUCK. This country, the industry.
The CHAIRMAN. 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 distilled. 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 characteristic, because it actually comes from having been smoked.

The CHAIRMAN. That is not simulated in the domestically manufactured 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 Administration 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 mixture 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 in 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 opinion on that, and lots of people express the opinion 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.

BUCK 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 1 indicated that there is a substantial domestic overproduction, what, in your opinion, is the reason for the importation? Is it based upon a normal and natural demand for a foreign product?

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 10year-old whisky 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 bottledin-bond whisky was cheaper than Scotch, any appreciable amount cheaper.

There is, I might say—in this miscellaneous percentage of whiskythere 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 references, 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, pages 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.

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. Buck. President of the National Distillers Products?