Mr. PORTER. Yes. Mr. Buck. Physical properties? Mr. PORTER. Yes; the Mt. Vernon distillery, the Grand Dad distillery.

Mr. BUCK. But haven't you completely rebuilt them out of profits made?

Mr. PORTER. No; we haven't completely rebuilt them. We have remodeled them to considerable extent, but they have both been 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 percent 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 41/2 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

Mr. Buck (interposing). To a price based upon reasonable cost and profit.

Mr. PORTER. 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 $3.79, or whatever it is, unless he wanted to. He can buy a bottle of whisky for $2 if he wants to.

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. I hadn't intended to get into it until tomorrow. 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 the 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 constituted about 6 or 7 percent maximum of the total sales of whisky in the United States.

Mr. BLAISDELL. 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. It 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 accumulating

Mr. PORTER (interposing). They will all be bottled in bond some day.

Mr. BERGE. Isn't most of that being held for bonded sale?

Mr. PORTER. That is very hard to say. It is in a great many different hands, perhaps 100 different distillers.

Mr. BERGE. When you talked about this oversupply requiring a curtailment in current production, then you are not contending that there 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 standing 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 seem 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 suppose 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 something 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 undoubtedly 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 years old. It does require something 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 necessary to hold it, and I supposed you were amply covering thať factor.

Mr. PORTER. Well, 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 don't think mathematically there is a great difference there.

DIRECTORS OF NATIONAL DISTILLERS PRODUCTS CORPORATION AND THE

COMPANIES WITH WHICH 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 corporations 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 companies?
Mr. BUCK. Yes.

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-how 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. Adams. According to Poor's Directory 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 (Ill.) National 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 Corporation; Carolina, Clinchfield & 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 Corporation; Flood Credits Corporation; Globe & Rutgers Fire Insurance Co.; the Home Insurance Co.; Houbigant, 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 Securities 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 Corporation; and Chickasaw Wood Products Co.

Mr. BUCK. R. L. Clarkson.

Mr. Brown. Mr. Clarkson is a director in Amerex Holding Corporation; American Express Co.; the American Express Co., Inc.; American Sumatra Tobacco Corporation; Consolidated Oil Corporation; Continental Baking Corporation; General Theatres Equipment Corporation; Underwood Elliott Fisher Co.; Seaboard Air Line Railway Co.; and Wells-Fargo & Co. of Colorado.

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 Corporation, Italian Super-Power Corporation, Invisible Glass Co. of America, 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 Invisible 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

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