Corp., H. McKenna, Inc., National Distillers Products Corp., Old Medford Rum Distillery, Inc., Old Mountaineer Distilling Co., Padre Vineyard Co., Pennsylvania Distilling Co., Inc., San Gabriel Vineyard Co., Schenley Products Co., Seagram Distillers Corp., Speas Manufacturing Co., Virginia Distillery Corp., Hiram Walker-Gooderham & Worts, Ltd., The Frank L. Wight Distilling Co., Wilson Distilling Co., Inc.

Mr. Buck. How many of those are whisky distilleries? Dr. STURGES. Seventeen, as I count them. Mr. BUCK. You have 17 members who are whisky distillers out of the total of 32?

Dr. STURGES. Yes.

Mr. Buck. Now as Dr. Doran testified, the Institute is divided in sections, that is whisky section, brandy section, and so forth. Is that the present organization?

Dr. STURGES. That is true today, for purposes of the board of directors.

Mr. Buck. You have 17 distilleries out of a total, according to our figures, of 97 in operation. Who are the members of your board of directors, and what whisky distillery companies do they represent?

Dr. STURGES. Whisky distilleries, only?
Mr. Buck. Yes, sir.
Dr. STURGES. Do you wish me to read them?

Mr. BUCK. Yes; the individual members and the whisky distillers they represent.

Dr. STURGES. The president is Mr. Owsley Brown, president of the Brown-Foreman Distillery Co.

Mr. Davis. It would be sufficient to just print those in the record.

Mr. Buck. It is satisfactory if you have the whisky separated from the general. I am afraid that isn't the set-up. I notice from his papers he has all distilleries and we are concerned only with whiskies. It won't take a moment, I guess.

Dr. STURGES. Mr. James F. Brownlee, president of Frankfort Distilleries, Inc. ; Mr. Lester E. Jacobi, president of the Schenley Distillers Corporation; Mr. M. J. MacNamara, vice president, National Distillers Products Corporation. I don't know whether Merchants Distilling is whisky or not.

Mr. Buck. Yes; it is.
Dr. STURGES. Frank Mayr, Jr., Merchants Distilling Corporation;
Mr. F. R. Schwengel, vice president, Seagram Distillers Corporation;
Mr. I. Strouse, vice president, the Baltimore Pure Rye Distilling
Co.; myself

Mr. BUCK (interposing). You are not a distiller.
Dr. STURGES. I am a member of the board of directors.
Mr. BUCK. I mean just those who are distillers.

Dr. STURGES. Mr. F. B. Thompson, president, Glenmore Distilleries Co.; Mr. Howard R. Walton, vice president, Hiram Walker-Gooderham & Worts, Ltd.; M. R. Weiner, president, Pennsylvania Distilling Co.; Mr. Frank L. Wight, vice president, the Frank L. Wight Distilling Co.

Mr. BUCK. Is that a subsidiary of one of the Big Four?
Dr. STURGES. No.

Mr. Buck. What percent, or what part, of the last year's income, $323,440, was paid by Schenley, National, Walker, and Seagram's?

Dr. STURGES. I can't say of my own personal knowledge, but my estimate is between two-thirds and three-quarters of the total income.

Mr. BUCK. Then the four corporations which I have mentioned, whisky-distilling corporations, paid between two-thirds and threefourths of the total income of the institute.

DUTIES OF DIRECTOR AND OTHER OFFICERS

Mr. Buck. What are your specific duties as director, Doctor, under the policy of the organization?

Dr. STURGES. My duties are determined by the articles of incorporation of the Institute and by my contract with the Distilled Spirits Institute, and elaborating upon that, it will be the policy of the Institute to carry on its business services that it has performed heretofore, and it will also undertake to carry out regulation of the industry according to the provisions of the articles of incorporation, namely, to induce law enforcement, both Federal and State, with respect to itself and with respect to the industry generally so far as seems feasible.

Mr. BUCK. Well, is that as specific as you can make it to the committee?

Dr. STURGES. No; it is not.

Mr. BUCK. Would you care to make it more specific? I take it the committee was interested in that.

Dr. STURGES. So far as what has gone on before is concerned, I can only speak from information. One line of activity is the rendition of services to the members of the Institute and on occasion, like services are rendered to non-members. Those services are rather varied. In one particular it is the supplying of information with respect to legislation that is pending, with respect to business conditions in the industry, in which there may be a general interest. So far as public relations are concerned, we publish what is known as a Distillers Bulletin. That publication is very largely comparable to a literary digest of expressions of views of editors of things that are deemed to be, by the public relations director, of current interest to our members. So far as our counsel is concerned, he is engaged in interpretation of the laws for us, for the Institute, in order that the Institute may advise or help out one or more of our members.

In that connection possibly I may give you an illustration. A small distiller on the Pacific coast wished to change the practice that has heretofore existed with respect to bottling—and I do not understand the technicalities of bottling—which under the existing regulations was not permissible. We had two or three similar requests. We took that request to the head of the department of the Government who has charge. I believe in this instance it was Mr. Berkshire of the Alcohol Tax Unit. The matter was laid before him for his consideration as to whether an amendment of the regulations would be permitted. It was taken under advisement by the deputy. After about 3 or 4 weeks, as I recall, the matter was passed upon. The request for the change was granted and the regulations were amended and sent out.

A very technical field of regulations covered in the Gauger's Manual—which I have not yet had opportunity to read-relates to the conduct by the distiller of his business in his physical plant. These regulations and the amendments that would seem to be desirable to the existing manual have been a matter of conference between members of the Alcohol Tax Unit and other proper authorities; and I understand that such a manual in its amended form is soon to be published, if it has not already been published. I instance those as two illustrations of the type of service that is offered of a more or less helpful nature to particular individuals, possibly to groups of individuals who are our members.

So far as the conception which I have of what the function of the Institute shall be under my contract with the Institute and carrying out the articles of incorporation of the Institute, I am very much concerned with two considerations: The first is the matter of the competitive practices within the distilling industry itself. I share the conviction of some of the witnesses who have already appeared here that the industry is exceedingly competitive and that it is going to continue to be exceedingly competitive; that it is going to continue to be exceedingly competitive notwithstanding the fact of the existence of the four companies that have been recurringly referred to. The competition is so excessive in my opinion that at times it leads to unfortunate business practices, and I measure the unfortunate aspect of those practices by the impact upon the human beings that are involved, particularly the salesmen in the field. In carrying out that policy the Institute has already closed what I presume to call, for lack of a better name, a code, with the administrative authority, the Liquor Control Authority of the State of Ohio. That code manifests the conclusions of what the administrator in the State of Ohio thought should be done to insure compliance with the local laws of the State of Ohio, regulating the sale of alcoholic beverages, and what should be done as a matter of sound business practice also in Ohio.

That code, after conference with the administrator, has been presented to the board of directors and has been in effect now nearly a month.

Mr. Buck. Do you assist the State of Ohio in the promulgation of it in the formation of it, and so forth?

Dr. STURGES. Yes.

Mr. Buck. You do that on behalf of 17 distilleries of the United States?

Dr. STURGES. No. I do it on behalf of the members of the Distilled Spirits Institute for whom only am I authorized to act. Mr. BUCK. They are 17.

Dr. STURGES. That is true, and any other distillers and their representatives, not members, are of course entitled to share in the program.

Mr. BUCK. Suppose they disagree with your philosophy in these situations?

Dr. STURGES. It isn't a matter of philosophy, Mr. Buck. It is a matter of practice which the local authority says for his particular State ought to be in effect, and the practical situation is this, as I see it with my experience limited as it is: That these details of competitive practice run out into human activity so remotely and in such fineness that if the political state undertakes to enforce compliance, the enforcement program will be largely a sampling program, and largely a matter of enforcement of particular instances from time to time; whereas if the industry which is being regulated, the individuals who are being regulated, are also assuming a correlative responsibility, I think the discipline within the industry is very helpful to the administrator. And these terms of the code, if I may call it that again, are such as are laid down by the administrator of Ohio.

Mr. BUCK. My point is simply this: Here you are in Ohio, we will say, consulting with the State authorities there in respect to the formulation of a certain philosophy in the law in the distribution, and so forth, of whisky. With all your resources and whatever they may be, you represent only 17 out of a total of 97 distilleries. Who represents the other 80 ?

Dr. STURGES. The administrator.
Mr. BUCK. The administrator of the State of Ohio?
Dr. STURGES. That is true.
Mr. BUCK. He is representing the State and the consumer?

Dr. STURGES. With respect to these other nonmembers, as well as the members, he is concerned in getting as full and faithful compliance with the prescriptions that are set forth in the code as is possible.

Mr. Buck. Yes; but you are assisting him, as I understand it, in writing a certain philosophy in your code.

Dr. STURGES. I don't know what you mean by a certain philosophy. I know what the provisions of the code are.

Mr. Buck. Well, whatever they be, you are there participating in the crystalization of these principles into a form of law on behalf of 7 distilleries, and the other 80 distilleries are not represented in the proceedings except, as you say, through the administrator of the State of Ohio. "Is that the situation?

Dr. STURGES. So far as the Institute's activities are concerned with this code, it is to try to cooperate with the public authorities of the State of Ohio in improving, according to the yardstick prescribed by the administrator of the State of Ohio, the practices of the distillers, those who are members of the Institute quite as impartially as those who are not members.

Mr. Davis. Has that been approved by the State of Ohio authorities?
Dr. STURGES. By the administrator; yes, sir.
Mr. Davis. Will you file a copy of it for the record ?
Dr. STURGES. Yes, sir.

(The code referred to was received in evidence and marked "Exhibit No. 430” and is included in the appendix on p. 2719.)

Mr. BUCK. Does this proposed code become law under the laws of the constitution in the State ?

Dr. STURGES. That is the law so far as the administrator and the administration of the Liquor Control Act of the State of Ohio is concerned.

Mr. BUCK. Is it enforceable in the courts?
Dr. STURGES. I suspect that it is.

Mr. BUCK. All right; we started off on this trying to have the work of each of the executive officers stated. What, for instance, are the duties of your public relations men?

Dr. STURGES. Do you wish me to complete my own conceptions of my own duties?

Mr. BUCK. I don't know that we are so much interested-personally, I am not; I don't know about the committee—in the philosophy of the thing. I simply want the mechanics of it. What does he do? What is he charged with doing?

Dr. STURGES. The public relations director has charge of the publication of the Distillers’ Bulletin; he also has charge of the handling of news releases which emanate from the Distilled Spirits Institute. He has charge very frequently of assisting me in trying to write an article or speech, particularly a speech; he is also concerned with our research in directing the scope and direction of the research, whether it may be in the field of revenues or whether it may be in the field of laws, or what.

Mr. Buck. What is his salary?

Dr. STURGES. Mr. Chairman, I believe that I should like to be excused from giving the salaries of any of the staff in public. I would be very pleased to submit them to the committee in confidence. The reason is necessarily protective. My salary was published in the newspapers at the time I was appointed. It only means more and more salesmen and that sort of thing. I am not reluctant to make available for the confidential use of the committee the salary of any member of the staff of the Institute. I wish to be excused from submitting it publicly.

Acting Chairman WILLIAMS. That will be a matter for the committee to consider. I can't pass on that myself.

Does the committee desire to consider that now at this time?

Mr. O'CONNELL. Mr. Chairman, of course, I can't speak for the other people here, but it seems to me that the request of Dr. Sturges is entirely reasonable. It is information that I think the committee might like to have. I am not sure to what use it should be put, I have no feeling. I don't know about the other men here, but I have no feeling if it becomes an essential part of the record.

Acting Chairman WILLIAMS. I can see no use of it at all, unless it is part of the record itself. I personally don't care anything about it. Dr. STURGES. I am very glad to submit it to each of

you a statement, or to submit it to you as a group in confidence.

Acting Chairman WILLIAMS. We will withhold that matter for the present, and it will not be admitted at this time.

Dr. STURGES. It will be available to the committee at your pleasure at my office.

Mr. NATHAN. What are the duties of the organizer?

Dr. STURGES. The organizer is associated with the other line of activity in the field of law enforcement, in which I am particularly interested. The impression I have had, and the complaints I have had about the industry, seem to center not inconsiderably around what the public sees by way of the behavior of the retail outlets, in particular the “on premise," the tavern keeper. I have complaints coming to me all the time of children's cocktail parties in hotels and in taprooms and so forth, and that there are sales to drunks contrary

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