X Х CORPORATE ORGANIZATION OF HIRAM WALKER-GOODERHAM & WORTS, LTD. Mr. Buck. Mr. Walton, will you briefly give the committee a résumé of the origin and evolution of the Hiram Walker corporations? Mr. Walton. Yes, sir. The parent firm, Hiram Walker-Gooderham & Worts, Ltd., was incorporated in Canada in 1927 under the laws of Canada. It owns in Canada Hiram Walker & Sons, Ltd., located at Walkerville; Gooderham & Worts, Ltd., located at Toronto, and James Barclay & Co., Limited, which is primarily a Canadian sales company. It also owns in the United States Hiram Walker & Sons, Inc., at Peoria, which is a manufacturing company. Hiram Walker & Sons, Inc., owns the American sales companies of Hiram Walker, Incorporated, Gooderham & Worts, Ltd., and James Barclay & Co., Limited. There are some other United States subsidiaries, Mr. Buck, which were created largely in view of State law; the Massachusetts Corporation, which had to be incorporated in order to conduct sales operations in the State of Massachusetts. I believe that is the only one. Mr. BUCK. Mr. Walton, how many subsidiaries are there in the United States! Mr. WALTON. Well, I have enumerated those four. If you will let me refer to a chart I will be glad to add any more. There may be one or two others. There is Hiram Walker & Sons Western, Inc., which is a California company and which owns a rectifying plant on the Pacific coast, in San Francisco. Then there is the Massachusetts—I think I have enumerated all of them. Mr. Buck. That takes care of your corporate subsidiaries in the Mr. WALTON. That's right. Mr. WALTON. In Canada we have the three. I don't recall any others. Mr. BUCK. What other foreign subsidiaries or associate corporations do you have? Nr. WALTON. The parent company also owns our properties in Scotland, which are owned by Hiram Walker & Sons, Scotland, Ltd. That company in Scotland owns a lot of subsidiary companies, I would say 20 or 25, most of which are merely brand-name companies. Mr. BUCK. That is in Scotland ? Mr. WALTON. That's right, sir. There are three companies in that group which are more than brand-name companies, I would say, namely, one company which owns a small malt distillery, a second which owns another small malt distillery in Scotland—just those two, as a matter of fact. Mr. Davis. You mean barley malt? Mr. Walton. To make malt whiskies exclusively, Judge, in northern Scotland. Mr. Davis. All of the Scotch whisky made in Scotland is made from barley, is it not? Mr. WALTON. Barley malt. Mr. WALTON. That's right, sir. All the Scotch malt whiskies are. 1 Hiram Walker-G. & W. Sales Corp. Mr. Buck. As I understand it, Hiram Walker & Co. is one of the old companies in the whisky business. How long has it been in operation from the beginning of the thing? Mr. WALTON. I have heard it said, Mr. Buck, that Hiram Walker formed this company, the original Hiram Walker formed the old company of Hiram Walker, Ltd., way back in 1858, I think it was. Mr. Buck. And one of your principal brands in the United States before prohibition was Canadian Club? Mr. WALTON. Yes, sir. Mr. Btck. I bring that out so that the committee might associate it with the particular corporation, and it still is a leading brand here? Mr. WALTON. It still is a very prominent brand with us. Mr. Buck. As I understand it, you have recently constructed a very modern and very large plant in this country. Mr. WALTON. Yes; that plant was started late in the fall of 1933 at Peoria, Ill. It was completed in the spring of 1934 and went into production the early part of 1934. Mr. Buck. How does it compare with other distilleries in the United States? Mr. WALTON. In point of size, Mr. Buck? Mr. WALTON. We think it is the largest distillery in the United States. Mr. Davis. What is the capacity? Mr. WALTON. The capacity is about 100,000 gallons a day if operated at full capacity. However, we have never operated at full capacity Mr. Brck. That is on a 24-hour basis? Mr. Brck. So, when repeal came in December 1933, in the United States, what did you have here in the way of corporate organization and set-up? Mr. WALTON. We had nothing, to my knowledge. Mr. Buck. How did you enter it? What was the organization, the mechanics ? Mr. WALTON. This, of course, will have to be my recollection. I was not with the company until after repeal. It is my understanding, and this is all confirmed in our questionnaire, that the company took steps toward the erection of the Peoria distillery prior to repeal in anticipation of repeal. Mr. BUCK. In other words, your people in Canada thought repeal was coming ? Mr. WALTON. They thought they saw repeal coming: Mr. Buck. So they stepped into this country; and did they organize a new corporation? Mr. WALTON. A new corporation was formed at that time. Mr. BUCK. I see. From that date on, what has been the chronological corporate evolution in the United States? Mr. WALTON. When repeal took place, obviously Hiram Walker was desirous of entering the United States market. They formed Hiram Walker, Incorporated, which was a selling company and is a selling company. Also at that time was formed Gooderham & Worts, Ltd., a Delaware company which, too, is a selling company. Along about 1935 another selling company was formed, known as James Barclay & Co. That is another Delaware company. All of the stock of those three companies was owned by Hiram Walker & Sons, Inc., which is a Michigan corporation. Mr. BUCK. And that in turn is owned by the Canadian company? Mr. WALTON. That in turn is owned by the Canadian companies. Mr. Davis. What is the idea of having three_sales companies? Mr. WALTON. The main idea behind that, Judge, was that in Canada we had three selling companies. Each one of those companies sold its own products. The Hiram Walker Sales Co. in Canada sold products that were made at the Hiram Walker plant in Walkerville. Gooderham & Worts, Ltd., Sales Co. in Canada sold products that were made at Toronto, in another distillery; James Barclay & Co., in Canada, sold products that were largely made at Niagara Falls, another distillery in Canada. It was, we thoughtor I should say the management of the company thought, I wasn't a part of the management at that time—that it was only logical that that same sales structure should be carried out in the United States, and that policy was followed. Mr. Davis. Was that for the sale of three different types of whisky; in other words, rye and Kentucky bourbon- Mr. WALTON (interposing). No, sir; we have just one plant in the United States. That is at Peoria. Those companies that I enumerated sell products that are made in that one plant. Mr. Davis. Do you make separate types of whisky in that plant? Mr. Walton. Oh, yes; we make several types of whisky in that one plant. Mr. Davis. Are these three United States companies sales companies? Mr. WALTON. Yes, sir. Mr. Davis. Undertaking to sell products comparable in type, respectively, as those three in Canada? Mr. WALTON. Well, of course, Hiram Walker, Incorporated, for instance, sells Canadian Club. Gooderham & Worts, Ltd., specializes mainly in the sale of spirit blends. At the start, of course, all three of those companies sold largely the products that were sold by their comparable companies in Canada. Mr. Davis. The point I am getting at is, are you manufacturing at Peoria, Canadian Club whisky? Mr. WALTON. No, sir. Mr. Davis. In other words, your brands that you are manufacturing and distributing in the United States are different from your Canadian brands? Mr. WALTON. They are, sir. They are all American type whiskies that we are making in the United States. In Canada we make Canadian whiskies. W HIRAM WALKER'S FINANCING OPERATIONS Mr. Buck. Now, Mr. Walton, that goes to the mechanics of the thing. Now what about your financing. I assume that when you saw repeal approaching here your company was in a fairly good financial condition in Canada. Mr. WALTON. That is my understanding, Mr. Buck; yes. Mr. WALTON. I am not familiar with the facts and figures, but Iknow that the company had cash. They had not, I believe, paid any dividends in Canada for some little time on the common stock. They had accumulated cash. Mr. BUCK. Did you bring over Canadian capital, or did you get capital here? Mr. WALTON. Both. Mr. WALTON. Entirely. Mr. WALTON (interposing). Since that time we have sold $8,000,000 worth of debentures in the United States which are convertible into common stock of the parent company. That is all the United States financing we have done. In other words, to partially finance our Scotch acquisitions in Scotland, we have sold a million and a half pounds of debenture stock in Great Britain. Here recently we sold 100,000 shares of our preferred stock in Canada. Mr. Buck. You have continuously built up your properties here from earnings? Mr. WALTON. Yes, sir. Mr. Buck. And now you do have one of the finest distilleries in the country? Mr. WALTON. We think so. Mr. WALTON. One of our Scotch companies has a contract with Twenty-One Brands whereby they are supplied Ballantine Scotch whisky, which we make, which one of our Scotch companies makes. Mr. Buck. Are you in the gin business? Mr. WALTON. Hiram Walker & Sons, Inc., makes the gin in this country. Mr. Brck. We will have the chart of the board of directors. I will ask you while we are getting that chart: Your company is also a member of the Distilled Spirits Institute ? Mr. WALTON. Yes, sir. Mr. BUCK. What services does the Institute perform for your contribution ? Mr. WALTON. They supply us with all sorts of statistical data relative to the industry and tax payments and what-not. They also promote good will within the industry designed toward improving the public relations and putting the industry on as high a plane as we can; and then, of course, there are the connections in various ·legislative matters. Mr. Buck. What, in the way of promoting good will, do they do? I mean how do they go about that? Mr. WALTON. I should qualify that possibly by saying it applies mainly to trade practices. You are probably familiar with the code that Dr. Sturgis has just helped draw up down in the State of Ohio, intended primarily to improve practices within the industry? Mr. BUCK. He works with the State authorities there? Mr. BUCK. I notice your contributions, according to your report, have been $176,442.08 for 4 years. Mr. WALTON. Yes, sir. Mr. Buck. And the Institute contacts the various State legislatures and authorities in working out problems in the industry? Mr. WALTON. They do have men in the field; yes. Mr. Buck. I wish you would look at the chart [referring to exhibit No. 416], Mr. Walton, and tell me if there are any changes. The directors themselves are taken, I think, from your own report, and their corporate connections are taken from Poor's Manual, the 1938 edition of Poor's Register of Directors of the United States and Canada. Do they look approximately correct? Mr. WALTON. Yes. Of course, I don't know what boards our directors are on, but that is a correct list of the board of directors. Mr. BUCK. I offer the chart for reproduction in the record. (The chart referred to was marked "Exhibit No. 416” and is included in the appendix on p. 2697.) Mr. Buck. How many brands do you have in the United States, Mr. Walton, do you know? Mr. WALTON. All three sales companies, I would say, Mr. Buck, probably have a total of 125 different brands. That includes whiskies, gins, cordials, bottled cocktails, everything. Mr. Buck. I just ask you this for information in the record. Is it possible under existing conditions in the trade to buy brands and hold them in reserve or take them off the market? Mr. WALTON. I really would have to get a little legal advice, I am afraid, on that. I don't know myself. Mr. BUCK. Do you have many brands that are not in active use? Mr. WALTON. No; we have none. Mr. BUCK. The reason I ask you, some of the other gentlemen preceding you have testified that they own, for instance, two or three hundred brands, and are only using 25 or 30. That would indicate that it was possible to acquire a brand. Mr. Walton. I couldn't say myself. I know that our brands are all brands that are being actively used. |