Dr. DORAN. Thank you.
Acting Chairman WILLIAMS. Call your next witness.
Mr. BUCK. Dr. Wesley Sturges.

Acting Chairman WILLIAMS. 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?

Dr. STURGES. I do.

TESTIMONY OF DR. WESLEY A. STURGES, EXECUTIVE DIRECTOR,

DISTILLED SPIRITS INSTITUTE, INC., WASHINGTON, D. C. Mr. Buck. Doctor, state your name and business, please, sir.

Dr. STURGES. My name is Wesley Sturges, executive director of the Distilled Spirits Institute.

Mr. BUCK. How long have you been executive director of the Institute?

Dr. STURGES. Since October 22, 1938.

Mr. BUCK. What was your business before becoming connected with the Institute?

Dr. STURGES. Professor of law, School of Law, Yale University.
Mr. BUCK. Yale University ?
Dr. STURGES. Yes, sir. I am still.

RECEIPTS AND DISBURSEMENTS OF DISTILLED SPIRITS INTITUTE

Mr. BUCK. Doctor, one point the committee asked Dr. Doran, and he wasn't able to give them the information. Will you give the committee the total receipts of the institute for each year from 1934 to 1938 ?

Dr. STURGES. I will: 1934, $206,153.46; 1935, $142,556.15; 1936, $225,137.87; 1937, $349,330.85; 1938, $323,440.27.

Mr. Brown. What was 1934 again?
Dr. STURGES. $206,153.46.
Mr. Buck. Do you have the total, Doctor?
Mr. STURGES. The total I have here is $1,246,618.60.

Mr. BUCK. What have been its expenditures during that period? Give it by years; it will be all right if you have it set up that way.

Dr. STURGES. Statement of disbursements: Total, 1934, $111,832.24; 1935, $211,357.15; 1936, $209,557.50; 1937,

$209,557.50; 1937, $395,124.59; 1938, $308,319.84.

Mr. Buck. That constitutes the official expenditures of the Institute in their entirety in those periods?

Mr. STURGES. I cannot state of my own knowledge except for 1939, but I have reason to believe this record is correct.

Mr. Brown. Have you the total expenditures there?
Dr. STURGES. Mr. Brown, I do not have a total of them.
Mr. BUCK. How large a staff does the Institute now maintain?
Dr. STURGES. The personnel now consists of 21 persons.
Mr. BUCK. What is the cost of the personnel per year?
Dr. STURGES. As I have it set up here, do you wish it for each year?
Mr. BUCK. Yes; if you have it.

Dr. STURGES. Under the designation of “Salary and expense allowance of the President,” Mr. William Forbes Morgan, in 1937 only, $18,055.56. For all 5 years, “Salaries of executives,” 1934, $51,263.37.

Mr. Buck. How many executives?

Dr. STURGES. I do not know of my own personal knowledge in 1934; 1935, $50,000; 1936, $50,000; 1937, $67,044.98; 1938, $73,269.20.

The next designation is "Salaries of clerical and other employees”: 1934, $13,463.50; 1935, $35,918.33; 1936, $37,321.43; 1937, $72,279.42; and in 1938, $49,862.14.

Mr. BUCK. Would that take care of all the salary expenses, those figures that you have read ?

Dr. STURGES. I believe it does.

Mr. Buck. What other expenses would the Institute have in operating? Dr. STURGES. I shall be very glad to read them. Do you

wish them for each year?

Mr. BUCK. Yes; if you can give them.

Dr. STURGES. “Office expenses”: The first designation is “Rent?': 1934, $4,160; 1935, $6,000; 1936, $6,396; 1937, $15,025.24; 1938, $8,658.

Under the second designation, “Office alterations,” there is an entry for only the year 1937, $3,065.44. .

Under the next designation, “Office equipment purchased”: 1934, $4,099.40; 1935, $1,082.25; 1936, $747.10; 1937, $9,555.59; 1938, $264.76.

Under the next designation, “Telephone and telegraph”: 1934, $5,185.34; 1935, $9,428.69; 1936, $6,098.67; 1937, $9,160.78; 1938, $3,330.38.

The next designation is “Postage”: 1934, $1,759.50 ; 1935, $3,997.58; 1936, $2,949.56; 1937, $5,217.13; 1938, $5,592.30.

The next designation, “Printing, stationery, and supplies": 1934, $2,431.86; 1935, $3,605.47; 1936, $2,192.04; 1937, $6,663.56; 1938, $10,332.15.

The next designation, “Moving expenses, New York to Washington”: An entry only for the year 1937, and the amount, $2,146.66.

The next designation, “Miscellaneous”: For the year 1934, $1,166.44; 1935, $1,338.30; 1936, $2,348.60; 1937, $3,652.66; 1938, $2,933.39.

The next designation, "Traveling expenses”; a subdivision of that, “Directors' and committee members”: There is no sum entered for the year 1934; 1935, $1,807.28; 1936, $3,399.81; 1937, $6,237.71; 1938, $3,495.50. “Other traveling expenses”; 1934, $6,694.81; 1935, $12,221.71; 1936, $10,494.03; 1937, $23,736.15; 1938, $19,881.

Under the designation “General expenses,” first subdivision, "Insurance”: 1934, $43; no entry for 1935; 1936, $96.29; 1937, $195.10; 1938, $454.85.

The next designation, “Taxes”: 1934, $43.40; 1935, $186.77; 1936, $859.08; 1937, $3,174.14.

Mr. BUCK. What is that item, Doctor—“insurance” ?
Dr. STURGES. “Taxes”: 1938, $4,654.52.

Mr. Buck. Does the Institute pay Federal taxes? What kind of taxes would that be?

Dr. STURGES. I have had no personal experience.

Mr. HOWARD JONES (counsel, Distilled Spirits Institute). Social security, principally.

Dr. STURGES. The next entry, “Surety bond premiums”: The first year is 1936, the amount, $250; 1937, $326.54.

The next designation, “Expenses of meetings": 1934, $343.75; 1935, $888.87; 1936, $683.48; 1937, $1,686.93; 1938, $1,243.87.

The next designation is “Accounting and organization survey fees": The first entrance is for the year 1935, the amount, $775; 1936, $1,750; 1937, $1,889.05; 1938, $1,650.

The next designation, “Legislative”

Mr. Davis (interposing). Before you leave that, what did that service cover ?

Dr. STURGES. Of my own knowledge I know of only one thing, Judge, and that is of the auditing charge of our books at the close of the fiscal year. That came to my attention, and I cannot break that down to tell you what the exact amount of it was or if we have paid the bill yet.

The next designation is "Legislative reporting service”: For the year 1934, $1,435; 1935, $19,239.31; 1936, $6,430.01; 1937, $6,411.06; 1938, $3,344.75.

The next general designation is “Other expenses,” and the first i subdivision under that is “Special investigations”: 1934, $13,378.98;

1935, $12,948.20; 1936, $8,333.67. That is the last year for any entry under that designation.

The next designation, “Institute advertising”: Entry for the first time in the year 1935, $30,840.56. There is no amount for 1936; for 1937, $2,819.26; for 1938, $625.

The next designation, “Advertising and exhibitions”: One entry for the year 1936, $33,751.22.

Mr. Buck. I didn't get that.

Dr. STURGES. It is under the designation, Mr. Buck, of “Advertising and exhibitions."

Mr. BUCK. What is the sum? Dr. STURGES. $33,751.22 for the year 1936, only for that year. “Legal fees and expenses,” the next designation: For the year 1934 $5,188.89; 1935, $6,042.80; 1936, $12,544.30; 1937, $71,379.78; 1938, $24,691.07.

“Legislative committee expenses” is the next designation : For 1 year only, 1936 $6,835.20.

The next designation, “Clipping service”: The first entry is for the year 1936, the amount, $6,679; 1937, $6,198.84; 1938, $283.20.

“Organization expenses” is the next entry: For the year 1935 only and the amount, $15,000.

The next designation, “Education and publicity”: First entry for the year 1936 $18,239.76; 1937, $57,045.01; 1938, $56,151.71.

“Membership and dues,” the next designation: An entry for the year 1934 only, $1,175.

“Books and publications” is the next entry, and the first entry is for the year 1936, the amount $1,236.46; 1937, $2,158.02; 1938, $1,221.80.

The next designation, “Lease of New York office space less receipts from sublease”: The entry appears for the year 1938 only, the amount $7,421.87.

The next designation, “Expenses of miniature distillery exhibit,” the entry for the year 1938 only, and the amount $3,108.38.

The next designation, "Technical consultant services,” the first entry for the year 1938, the amount $5,000.

The next entry is a gift to Mrs. Sarah Morgan and the entry is for the year 1938, the amount is $20,000.

The next and final entry is' “Settlement of a salary claim 1938 only,” and the amount, $850.

Nr. Bucķ. Does that statement you have read balance with the receipts ?

Dr. STURGES. Approximately, Mr. Buck. That is, the expenditures for 1938 were $308,319 in round figures, and the reported income for 1938 was $323,000, in round numbers.

Mr. Buck. I wonder if you could leave that to be filed in the record.

Dr. STURGES. May I have permission to file another copy? I am not sure I have an extra one.

Mr. BUCK. It would save anyone from having to read all this, if they could have that set up as you have it.

Dr. STURGES. I shall be very pleased to supply you with a copy.

Mr. BUCK. I will ask the committee if it may be submitted as an exhibit to be printed.

Acting Chairman WILLIAMS. It may be received.

(The tabulation referred to was marked "Exhibit No. 429" and is included in the appendix on p. 2718.).

Mr. Buck. Doctor, you are new in the whisky business, so to speak?

Dr. STURGES. Exceedingly so.

Mr. BUCK. You had no particular connection with the business until you got into the Institute and were appointed director in 1938 ?

Dr. STURGES. That is correct.

Mr. BUCK. So you wouldn't know of your own knowledge a great deal about what happened in the Institute before that time?

Dr. STURGES. That is true.

Mr. Buck. These figures that you have presented here have been made up from the books and records of the Institute as you found them?

Dr. STURGES. That is true.
Mr. BUCK. And you furnish them on that basis?
Dr. STURGES. That is correct.

Mr. Buck. Now, what employees do you presently have in the Institute? What are their positions, their duties; how do they function?

Dr. STURGES. We have what is entitled a public relations director, secretary and general counsel, a director of research, statistician, four field men, an organizer, attorney.

Mr. Buck. How many does that make?
Dr. STURGES. Twenty-one.
Mr. BUCK. Twenty-one all told?
Dr. STURGES. That is correct.
Mr. BUCK. How many members do you have?
Dr. STURGES. Of the Institute?
Mr. BUCK. Yes, sir.

Dr. STURGES. The members of the Institute are divided into two classes, the so-called distiller group and the associate group.

Mr. BUCK. How many distillers?
Dr. STURGES. The distillers are 35.
Mr. BUCK. Thirty-five distiller members?
Dr. STURGES. That is correct.

Mr. BUCK. What is the present method of assessing dues ?

Dr. STURGES. Just at the moment the basis of figuring the dues is on the stripped sales, sales of the several members, stripped of any taxes, and the rate per thousand dollars of such sales is $2.

Mr. BUCK. You get $2 per thousand for all sales by distilleries? Dr. STURGES. That is the temporary present set-up.

Mr. BUCK. And was that in effect last year when your revenue was $223,440

Dr. STURGES. I believe that the system changed during the last year,

if you mean 1938, from an assessment of some rate which I do not know on a production basis, to the sales basis. I think the system of assessment was changed during the year 1938 from a production basis to the strip-sales basis.

MEMBERSHIP AND THEIR CONTRIBUTIONS TO THE INSTITUTE

Mr. BUCK. Is the number of members that you have mentioned, 32, based upon corporate units or distilleries?

Dr. STURGES. Those are individual units, either corporate or otherwise.

Mr. BUCK. The point I am getting at is this. Take for illustration the Seagram Co., that is one unit?

Dr. STURGES. Seagram is counted but once.
Mr. BUCK. One time?
Dr. STURGES. That is correct.
Mr. BUCK. And the same is true of National ?
Dr. STURGES. That is right.
Mr. BUCK. And so on?
Dr. STURGES. Yes.

Mr. Buck. Now, Doctor, will you explain to the committee your duties as director of the Institute under its present policies?

Mr. Davis. Mr. Buck, before you leave that, Dr. Sturges referred to associate members. How many associate members are there and who are they with respect to the industry?

Dr. STURGES. There are 15 in number, and most of those are warehousing people. Mr. Buck. Would you file for the record a list of all your members? Dr. STURGES. I would be very happy to.1 Mr. Buck. You might read the list of distilleries for the benefit of the committee here.

Dr. STURGES. You want just the names of the organizations, not the executive officers?

Mr. BUCK. Yes.

Dr. STUGES. The Baltimore Pure Rye Distilling Co., Brown-Forman Distillery Co., A. & G. Caldwell, Inc., California Mission Vintage Co., B. Cribari & Sons, Inc., Cucamonga Valley Wine Co., Felton & Sons, Inc., The Fleischman Distilling Corp., Frankfort Distilleries, Inc., Glenmore Distilleries Co., The Golden-Rossell Co., Hood River Distillers, Inc., Hunter Baltimore Rye Distillery, Inc., Laird & Co., The Siegfried Loewenthal Co., Lord Stirling Distilleries, Inc., L. M. Martini Grape Products, Merchants Distilling