Mr. Buck. Let's stay strictly on prices here for a moment. Mr: BUCK: After your respective committees were organized, that is, the committee on behalf of the distilleries and the committee on behalf of the States, did you reach some agreement as a result of those committee actions? Colonel BULLINGTON. Yes, sir. We started out on the premise, first, that we were opposed to deals. Mr. Buck. Yes; but what did this agreement provide, in short and simple language? Did it provide that the distillers should rebate to the States any amount of the moneys found to be the difference between the open State price which they had sold at and the price which they had sold to the State at? Colonel BULLINGTON. I will have to answer that just this way, Mr. Buck. It seems that all of a sudden there was an epidemic of deals and special prices that broke out among the distillers, and from that time, we insisted that, if there were going to be special deals and special prices made in open-license States, that we wanted the same concession in our States, no more, no less. Mr. Buck. I understand that. Colonel BULLINGTON. And from that time, from the time that this thing had been in effect, I think the last meeting we really got down to cases was at White Sulphur Springs. We had numerous confer es. I believe those men of the distilling industry were in earnest, we were in earnest, we tried to clean up the condition that they didn't like. I think things have been working on an even keel since. Mr. Buck. Thank you very much for that, but that still doesn't clear up the point I am after. Let's assume that all that happened. As a result of those agreements was your State paid by the distillers some sum of money or given some discount on future transactions which would recoup the State in respect to the transactions that had been made before the agreement was entered into? Colonel BULLINGTON. We did not receive any; I don't think there had been many deals going on at that time. If there were we were not aware of it nor could we put our fingers on it, but from March 1938 to date, the State of Virginia has received from several concerns who has made special deals, in special territories, in open-license territories, probably some thirteen or fourteen thousand dollars that we would not otherwise have gotten. Mr. BUCK. I see. Mr. Davis. Mr. Bullington, when you gave $70,000,000 as the sales in dollars Colonel BULLINGTON (interposing). I didn't say 70. Colonel BULLINGTON. In our State? You are talking about Virginia ? Mr. Davis. Yes. Colonel BULLINGTON. That was for the fiscal year running to July 1, 1938, the ending of our year. Mr. Davis. Then you gave the figures in response to a question by Congressman Reece of your sales for the calendar year of 1938. Could you either give the dollar sales on the calendar-year basis or the gallon sales on a fiscal-year basis? Colonel BULLINGTON. Before I left Richmond I thought the question might be asked as to the amount of gallons sold in the State of Virginia for the year ending 1938, and I have that information, but I do not know what it amounts to in dollars and cents. Mr. BERGE. This thirteen or fourteen thousand dollars which was paid to the State, you say was during 1938 ? Colonel BULLINGTON. From March, I should say, 1938, to date. Mr. BERGE. Was that in regard to current business or was it retroactive? Colonel BULLINGTON. I will put it this way. If, for instance, the National or Schenley or Seagram's or any one of them would, for a period of, say, a week or 10 days or 2 weeks, in the open license territory, make a special concession of 50 cents or a dollar a case on a certain item during that period, we were offered the same opportunity to take advantage of that if we desired to do it. In no instance do we anticipate our requirements; we buy as we sell, and where we could take advantage of that we did so and where we couldn't we didn't. We were placed on the same basis as the open license territory, which was all we wanted. Mr. BERGE. Are these concessions granted retroactively? That is, if they have made them in other territory and concurrently have charged you a higher price, would they later refund ? Coloneỉ BULLINGTON. I am not in position to say they charged us a higher price prior to going into this organization. Mr. BERGE. Were any concessions paid relating to the time prior to the establishment of this? Colonel BULLINGTON. No, sir; not in my State, and I am not in position to say that they were definitely made. I have the feeling that they were, but I don't know. Acting Chairman REECE. Thank you very much. (The witness was excused.) Àcting Chairman REECE. The committee will stand adjourned until 10 a. m. tomorrow morning. (Whereupon, at 4: 50 p. m., a recess was taken until Friday, March 17, 1939, at 10 a. m.) INVESTIGATION OF CONCENTRATION OF ECONOMIC POWER FRIDAY, MARCH 17, 1939 UNITED STATES SENATE, Washington, D. C. The committee met at 10:10 a. m., pursuant to adjournment on Thursday, March 16, 1939, in the Caucus Room, Senate Office Building, Representative Carroll B. Reece, presiding. Present: Representatives Sumners (vice chairman), Reece, and Williams; Messrs. Henderson; Ferguson; Davis; O'Connell; Berge; Lubin; Ernest Tupper, representing Department of Commerce; Thomas D. Lynch, representing Securities and Exchange Commission; Willard Thorp and Robert R. Nathan, representing Department of Commerce. Also present: Federal Trade Commissioners William A. Ayres and Charles H. March; Willis J. Ballinger, Director of Studies and Economic Advisor to Federal Trade Commission; William T. Kelley, chief counsel, Federal Trade Commission; Phillip Buck, chief counsel; and John P. Brown, attorney, Federal Alcohol Administration. Acting Chairman REECE. The committee will please come to order. Mr. Ballinger, are you ready to proceed ? Mr. BALLINGER. Yes; Mr. Buck will continue the examination. Mr. Buck. Mr. Chairman, I should like to say that in view of the time we have in which to complete the hearing, we will necessarily have to restrict the examination of some of the witnesses to particular points that my investigation has convinced me to be probably the most important of many points that they could testifiy to. I should like to call two other witnesses to close out this particular phase of the hearing, that is, on distribution and prices, and the first witness I should like to call is Mr. Balfe, of National Distillers. Acting Chairman REECE. Mr. Buck, is it your wish this morning that you complete the examination of the witnesses before the members of the committee ask questions of the witness? Mr. Buck. I think that would facilitate the hearing considerably in view of the time allowed. Acting Chairman REECE. If it is agreeable to the committee, we will try to follow that policy. Of course, if at any time a committee · member thinks it is desirable to ask a question, he can do so. Mr. Buck. I might say I have six witnesses to put through this morning and, as I say, I won't be able to develop their entire testimony. Acting Chairman REECE. As I understand, it is the wish of the 2583 chairman that we complete this phase of the hearing today so that we might have a recess. Mr. BUCK. Mr. Balfe. (No response.) If Mr. Balfe isn't here, I will call Mr. Greenlee, of Schenley Distillers. (No response.) . Is Mr. Archibald Kesley here? (No response.) Mr. Marks. Acting Chairman REECE. Do you solemnly swear, in these proceedings, to tell the truth, the whole truth, and nothing but the truth, so help you God? Mr. MARKS. I do. TESTIMONY OF LIONEL MARKS, PRESIDENT, WILLIAM JAMESON & CO., INC., NEW YORK, N. Y. Mr. Buck. Mr. Marks, will you state your name and business connection, please, sir? Mr. MARKS. Lionel Marks, managing director, William Jameson & Co., London, and president of William Jameson & Co., Inc., New York. Mr. BUCK. I notice you have a shamrock this morning. It is an Irish company, isn't it? Mr. MARKS. It is an Irish company. I think I should share it with you, Mr. Buck. Mr. Buck. Dnes your company hold whisky in stocks in Ireland ? Mr. MARKS. Yes. Mr. BUCK. Mr. Marks, I believe you had occasion over the past few years to become fairly well acquainted with the situation in Great Britain so far as the manufacture and production and control of whisky is concerned in that country. Mr. MARKS. Yes, sir. PRODUCTION AND CONTROL OF WHISKY IN BRITISH ISLES Mr. BUCK. Will you give to the committee, for the committees benefit here, a short résumé of how whisky is produced there, how it is controlled—that is, Scotch and Irish and English whiskys? Mr. Marks. Well, Scotch whisky is divided into two classes. There is the malt whisky and the grain spirits, or grain whisky, as it is called. The malt whisky is comparable to the straight whisky in this country and gives the character and flavor to the blends of Scotch whisky. The grain spirits are comparable in a manner to the grain spirits in this country, and are used for diluting the heavier straight whiskys. Mr. BUCK. And the resultant product is known as Scotch whisky. Mr. Marks. Both the straight pot-still_whisky and the resultant · blends are known as Scotch whisky in England. In this country the blend is known as blended Scotch whisky, because of your regulations. Mr. BUCK. Now, give us a short résumé of the situation in Ireland. Mr. Marks. In the south of Ireland the manufacture of whisky is being practically confined to manufacturing or distilling straight whiskies. Mr. BUCK. Straight Irish pot-still whisky? Mr. BUCK. What is the situation with respect to stocks on hand and ages? Mr. MARKS. In the south of Ireland I think the present stock on hand are about 8,000,000 British proof gallons, and the average age would be in excess of 8 years, as far as I remember. The bulk of the stock in the south of Ireland is pot-still whisky; there is very little spirits in bond. Mr. BUCK. Tell the committee what you mean by pot-still whisky. Mr. Marks. Pot still was the original form of manufacture. It is made in a still which is comparable to a glass retort, I mean the oldfashioned manner of distillation, in which there is not a continuous distilling process. Mr. BUCK. You mean by that that the whisky must be distilled over again? Mr. Marks. Whisky in Ireland is frequently and mostly distilled three times. Mr. BUCK. Whereas in a continuous still such as is used by large commercial plants here, there is one continuous process. Mr. Marks. There is one continuous process. The real difference is the fact that pot-still whisky is taken out at 145° British proof, that is approximately 160 American proof, whereas in the continuousdistilling process it is taken out at approximately 190 proof American. Mr. Buck. The British use what is known as a Sykes. Mr. Marks. They use a Sykes hydrometer for ascertaining the proof. Mr. BUCK. Now, with respect to the commercial ownership of those stocks, how is that arranged in Britain ? Mr. Marks. The custom of trade in production of whisky has changed greatly in the last 20 years in the United Kingdom, particularly in Scotland. The malt distilleries are mainly small-capacity distilleries, of which there are approximately, I think, around 140, and there are a number of them that are held, owned by one concern, others are held individually. In the grain-whisky production there are eight producing distilleries today, a number of them are shut down, but eight of them are producing, of which five are held in one group and one is held as a subsidiary of a Canadian company and is a subsidiary of a London company, and the other is independent. Mr. BUCK. Out of the total distillery capacity there is one independent? Mr. Marks. One independent of any selling organization. Mr. Buck. What is the corporation or trust that controls a large share of the production ? Mr. MARKS. The Distillers Co., Ltd. Mr. BUCK. And what part of the total Scotch whisky would you say is controlled directly or indirectly by the D. C. L. ? Mr. Marks. You mean production, stocks, or sales? Mr. MARKS. Well, I think that figure was given under oath at a recent investigation in Scotland only about 4 or 5 weeks ago—December, as a matter of fact-and a witness who was from the statistical a |