great deal in the formula that you use. It is just like anything else; it is just like the difference between a Virginia ham that is 3 years old and well cooked and a ham from one of those big companies that is mass production-just the difference that I can't tell you, but it is there. Sometime I will let you see the difference between them.

Mr. BUCK. I want to agree with you as to the ham.

Mr. Bowman. That is true of whisky, too, and the public are becoming more and more quality conscious. Just after repeal of prohibition, anything that was legal that had a little alcohol in it, you know, would sell and sell fast, and if I could have got my permit to do business, I expect I would have been tempted to do the same thing, but Virginia didn't repeal until some time after the National Government and I got a late start, and I saw by that time that there was no chance for me unless I made the best that could be made, and that is just what I am trying to do.

Mr. BUCK. All right, sir; thank you.

Mr. Bowman. There is one angle of this. As I said a while ago, I am a farmer more than I am a distiller. As I see it, prohibition was repealed for the benefit of the farmer. We all talked it. We talked, if prohibition could be repealed that the farmer would be benefited by it and the farmer voted for the repeal of prohibition just for that purpose. And I have been led to believe-I may be wrong—that the farmer hasn't gotten a just break on the repeal of prohibition. It's been a little baby handed to the Government here 6 years ago and it has been surrounded by big interests that I just didn't think was good for the farmer. I never saw why a town up there in Illinois should be able to make 100,000 gallons of whisky a day and let the farmers around there have the benefit of that grain that other farmers didn't. I may be wrong on that.

Mr. BERGE. How old is your whisky when you sell it?

Mr. BOWMAN. I have whisky 3 years old. I sell some at 2 years old and 3 years old.

Mr. BERGE. You intend to sell bonded whisky later, I suppose, you are holding it.

Mr. Bowman. I will if the public wants it, but my idea is that possibly bonded whisky will not be as popular. As you might imagine bonded whisky is a little too strong, it is a little too high proof. If a man came to me and wanted bonded whisky and my whisky was 4 years old, I would sell it to him.

Mr. BERGE. Have you any idea what the difference of cost would be between selling your whisky at 2 years and selling it at 4?

Mr. BOWMAN. I couldn't give it here. If I were at my office I could tell you.

Mr. BERGE. Do you think it would be very much?

Mr. BOWMAN. It is considerable. The loss by evaporation is considerable, the cost of carrying and all of those things. You have a lot of costs toward carrying it. You have to keep a cooper in there all the time to see whether there is a leak in the barrels. If there is a leak a lot of whisky can go out in a mighty short time, you know.

(The witness, Mr. A. Smith Bowman, was excused.) The CHAIRMÁN. Call the next witness, please.

Mr. BUCK. Mr. Keidel.

The CHAIRMAN. Do you solemnly swear, in the testimony you are about to give, to tell the truth, the whole truth, and nothing but the truth, so help you God?

Mr. KEIDEL. I do.

TESTIMONY OF LOUIS A. KEIDEL, NEW YORK CITY Mr. BUCK. State your name, business connection, and address, please, sir.

Mr. KEIDEL. Louis A. Keidel, in the banking business at 16 Wall Street.

Mr. BUCK. What bank are you connected with?
Mr. KEIDEL. Bankers Trust Co.
Mr. BUCK. Any other bank?
Mr. KEIDEL. No.

Mr. BưCK. Do you act as bankers' agent for any other banks under any agreements ?

Mr. KEIDEL. Yes.
Mr. BUCK. What banks?
Mr. KEIDEL. Seagrams.

Mr. Buck. I mean are you agent for other banking groups other than Bankers Trust?

Mr. KEIDEL. Yes.

BANKERS LOAN AGREEMENTS WITH SCHENLEY AND SEAGRAMS

Mr. BUCK. Of course, I don't want to go into your entire financial position, but as to the whisky industry, what groups of bankers do you represent, or have you represented in the past 4 years, dealing with what distilleries, or distillery corporations?

Mr. KEIDEL. Only those banks that are participants in the loans that our bank made to Schenley and to Seagrams.

Mr. Buck. When were those loans or agreements made, Mr. Keidel?

Mr. KEIDEL. Within the last 4 years, or 5, I don't remember the exact dates.

Mr. Buck. And what was the length of time which they ran and what was the minimum banking credit allowed by each?

Mr. KEIDEL. One ran 5 years and another ran 2.
Mr. Brck. Five and two.

Mr. KEIDEL. Let me correct myself. We also lent money to the Glenmore Distillery in Kentucky.

Mr. BUCK. Is that Glenmore?
Mr. KEIDEL. Glenmore; yes.

Mr. Buck. Let's take the two agreements. What was the maximum amount of credit under each?

Mr. KEIDEL. As I recall it, the Schenley was twenty-seven millions and the Seagrams twenty-eight, divided into short-term and longterm loans of ten millions each.

Mr. Buck. And you are also a director in Schenley's Distilling Corporation

Mr. KEIDEL. Yes.
Mr. BUCK. Are you a director in Seagram also ?
Mr. KEIDEL. No.

Mr. Buck. That is all, thank you sir.
(The witness, Mr. Louis A. Keidel, was excused.)

Mr. Buck. At this point, Mr. Chairman, I don't know whether the committee is ready to rule upon whether or not the bankers' contracts should be admitted to the record. If the committee has reached some conclusion on that, this may be a good place to put it in the record. If not, of course, it can go in at any time.

The CHAIRMAN. The committee itself has had no opportunity to pass upon it. In fact, I have just learned of the offer myself, and Congressman Reece advises me that it was just withheld until the committee would

have the opportunity to examine it. Mr. JAMES E. FRIEL. We will waive the objection to the admission of the bank credits in the record.

Mr. Buck. You have no objection?
Mr. FRIEL. No objection.
The CHAIRMAN. This is the witness who expressed objection?

Mr. Buck. This is Mr. Friel, treasurer of Seagram Corporation, who this morning had some hesitancy to consenting to this agreement being admitted to the record. Mr. Friel now withdraws whatever objections he has to it and agrees it may be printed in the record.

The CHAIRMAN. If there is no objection on the part of the witness, and I take it there is none, and if there is no objection on the part of any member of the committee, the exhibit may be admitted to the record for printing.

(The exhibit previously marked “Exhibit No. 411” was admitted to the record and is included in the appendix on p. 2687.)

Mr. Guy Mason. Representing a client to be heard, that does not apply to any witness except the one just referred? I may object, and do object at this time.

The CHAIRMAN. You are objecting to something that hasn't arisen yet.

Mr. Mason. I am trying to find out what the procedure is.
The CHAIRMAN. We will cross that bridge when we come to it.
Mr. Buck. Is Mr. Gene Tunney here? (Not present.)?

Mr. Buck. Mr. Chairman, at this point I might note for the record that with the time at our disposal I think this concludes the investigation into the corporate evolution of the four big corporations. Now we propose to take up distribution and the price structure of the industry, and I had supposed that Mr. Tunney would be here. In his absence we might call Mr. Wachtel.

The CHAIRMAN. Do you solemnly swear, in the testimony you are about to give, to tell the truth, the whole truth, and nothing but the truth, so help you God?

Mr. WACHTEL. I do.

TESTIMONY OF W. W. WACHTEL, PRESIDENT, CALVERT DISTILLERS

CORPORATION, NEW YORK CITY

Mr. BUCK. State your name and business connections.

Mr. WACHTEL. My name is W. W. Wachtel. I am president of Calvert Distillers Corporation, a subsidiary of Distillers Corporation, Seagrams, Ltd., of Canada.

Mr. BUCK. It is one of the Seagram group of corporations?
Mr. WACHTEL. Yes.

Mr. BUCK. Are you active in charge of sales of the whisky for Calvert Distillers?

Mr. WACHTEL. Yes, sir.

Mr. Buck. What is the volume of whisky business in dollars done by Calvert per year?

Mr. WACHTEL. Mr. Buck, we have never published that information of a subsidiary. Mr. Buck. Well

, you know, I am just a country boy. I don't know a thing about corporations, so if you will excuse me if I pry into something

Mr. WACHTEL. Well, if it is important I don't think our counsel would have any objection, but without his advice, I should rather not answer that question.

Mr. BUCK. All right, sir, could you give us an approximation on the volume of business in gallons, or cases probably. I think you market in cases.

Mr. WACHTEL. I would say approximating 9,000,000 gallons (whisky and gin).

Mr. Buck. Nine million per year?
Mr. WACHTEL. Yes.
Mr. Buck. That is for Calvert, one subsidiary of Seagram’s?
Mr. WACHTEL. Right.

Mr. BUCK. And you are actively engaged in the managing of sales and distribution of that subdivision?

Mr. WACHTEL. Yes.
Mr. BUCK. What are the principal brands involved in that?

Mr. WACHTEL. We have a rather unique position in that our brands are rather limited. We have 4 major brands of whisky in 4 buying brackets, all of the same type of whisky. We have 2 gins and we have one or two nondescript straight whisky brands in which we have no interest whatsoever and which we produce and sell in very small quantities, so I would say the answer to your question is probably 5 brands of importance, a total of 8 brands altogether.

Mr. Buck. You sell the Calvert brands of Seagrams?

Mr. WACHTEL. No; we sell the Calvert brands of Calvert. We are not affiliated with the American company of Seagram. We are a direct subsidiary of the Canadian company.

Mr. BUCK. What's the difference, they are all one litter of pups?

Mr. WACHTEL. I don't know whether they are pups; they may be a litter.

Mr. Buck. You will excuse the comparison, but they all belong to the same family group.

Mr. WACHTEL. That is right.

“MISSIONARY” TYPE OF MARKETING EMPLOYED BY CALVERT

Mr. Buck. How is the marketing done? How do you market your whisky?

Mr. WACHTEL. We market our whisky through wholesalers throughout the United States, having appointed distributors to handle our products in most of the major markets of the country, and we direct that distribution through a direct sales force of our own of 300 men. Mr. Buck. What do you mean by “directing” the distribution? Mr. WACHTEL. Well, our salesmen support and assist and aid the wholesaler in making placements and in securing orders where it is legally permitted to do so. In some States it is not, one State in particular, and to promote the sale of our products and to educate the wholesaler salesmen in a complete knowledge of our product and how to sell it.

Mr. BUCK. How does he educate them?

Mr. WACHTEL. Well, he attends meetings in many markets whenever they have meetings of their own salesmen. He will at that time expound the virtues of this product, tell our sales policy, what our philosophy of doing business in the whisky business is, and it happens to be just a little different from most of our competitors, and therefore we have to do more of that than the average distiller.

Mr. BUCK. What are those men commonly known as?
Mr. WACHTEL. Missionary men.
Mr. BUCK. They are distinguished from the regular salesmen?

Mr. WACHTEL. The wholesaler has his own staff of salesmen. Probably our group has 2,500 men.

Mr. BUCK. Who sells to the wholesaler?
Mr. WACHTEL. We do.
Mr. BUCK. Whom do you mean by "we"?

Mr. WACHTEL. Salesmen. Usually a contact man for each wholesaler, and usually the district manager in that market takes care of the important accounts and does the selling himself.

Mr. Buck. Let me try and get the structure. Your main office is in New York?

Mr. WACHTEL. Yes, sir.
Mr. Buck. Your plant is at Laurel, Md.? One of your plants ?
Mr. WACHTEL. It is now called Baltimore.
Mr. BUCK. It is on the road between here and Baltimore!
Mr. WACHTEL. That is right.

Mr. Buck. You are distributing whisky throughout the United States?

Mr. WACHTEL. Yes, sir.
Mr. BUCK. Wherever it is legally sold?
Mr. WACHTEL. Yes, sir.
Mr. Buck. Now, you have one man who contacts each wholesaler?

Mr. WACHTEL. No; we have a district manager in a State who will contact at various times all of the wholesalers. If his sales force is large enough, he may assign one man to each wholesaler or one man to two wholesalers to more or less carry out the details of watching stocks and taking orders and doing all the necessary contacts.

Mr. BUCK. Yes. Now, what do these missionary men do? They are not connected with that transaction.

Mr. WACHTEL. Well, they are direct salesmen of ours who promote the sale of our product, in some cases suggest window displays, and teach the wholesaler's salesmen the virtues of our products and why he should sell them in preference to somebody else's.

Mr. BUCK. What I am trying to arrive at is, does your effort cease with the wholesaler ?

Mr. WACHTEL. Oh, definitely.
Mr. Buck. Does your missionary man contact the retailer, too?