my recollection of what happened in 1924. I believe the brands of whisky owned by our company today are worth in ordinary commerce, 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 supposition 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 receives 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 substantially 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 because of its quality, because the consumer has confidence in its continuity of quality, because people like it, because it is fairly priced, because it is fairly sold, because the public believes that the manufacturer 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 applies to whisky that would apply to almost any other article in commerce, 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 class of goods with the particular brand name?

Mr. PORTER. Class of goods? Yes.
Mr. BUCK. Or particular 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.

Mr. BUCK. Or to market any whiskies.

Mr. PORTER. You must have misunderstood me, because, Mr. Buck, you must be aware that during prohibition there was what they call medicinal whisky, and our company, as owning a considerable quantity of whisky, supplied the medicinal trade, and insofar as we possibly 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 disuse 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. We hoped so. It 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 distillers; 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 developing 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.

UCK.

Mr. PORTER. That is correct.

Mr. Buck. Is it necessarily true that the brand and type of whisky that was made by Mr. Overholt, which 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 years 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; so do we.

Mr. BUCK. Dó you make Old Overholt by the same distilling apparatus as 100 years ago?

Mr. PORTER. No; the apparatus has been renewed many times, but the operation is

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 company, had a great deal bigger capitalization, had a great deal more property, and as far as my study of the industry goes, 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 being 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 purposes 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

very similar.

a

I should say

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 number 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 Vernon 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 Blue Grass, and several other whiskies of that kind made at one plant.

The CHAIRMAN. You say several others. Frankly, what I am trying 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 them 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.

Mr. PORTER. Very great value.

The CHAIRMAN. But the thought that is running through my mind is the extent to which the production of whiskies by four large distillers 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, except 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?

Mr. Buck. That is perfectly all right, Senator. Glad to have you do it. Mr. Porter, you, the corporation, spends considerable money

, in advertising each year?

Mr. PORTER. Yes; a large sum.

Mr. Buck. I believe in 1938 according to the report you made to the committee's questionnaire you expended $3,136,999. What particular brands have you emphasized in your advertising? Do you emphasize certain particular brands over others?

Mr. PORTER. Well, we advertise all the brands that we sell, practically speaking. We try to apportion our advertising intelligently as we can between the different brands, depending upon how much whisky we have of each to sell and how hard a task it is to sell it. In general 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 emphasized four particular brands-Old Taylor, Overholt, Old Grand Dad?

Mr. PORTER. Yes; and emphasizing there may not have been an advertisement run in which 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?
Mr. PORTER. Those four; yes, sir.

PRICES OF 2-YEAR-OLD AND 4-YEAR-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 4year-old whisky sells to the consumer for $3.70, the same kind of whisky, straight bourbon whisky, we will 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?