« PreviousContinue »
might be able to withdraw 6 or 7 months' supply. Another concern might not feel it feasible to finance the additional 25 cents even for more than a 2 or 3 months' supply.
As I have previously said, these distillers are looking at this matter of the floor-stock tax, which is not to be paid by them, from the viewpoint of an enlightened self-interest. They would want to get the advantage, if there is to be no floor-stock tax, that comes from the duality of withdrawing at the lower tax and keeping their customers on an even basis to the extent that their financial ability permits.
I would imagine that the Treasury certainly is the best equipped to make the estimates as to prospective withdrawals. I would have no means of saying that they are not accurate.
But the one thing that I do want to impress upon you is that the amounts for paying the tax for large withdrawals are not staggering.
Let me say that these distilling coporations have probably threequarters of a billion dollars invested in their business in the United States, and they are possessed of comparable credit. I have no hesitancy in saying that Hiram Walker & Sons, Inc., will not have the slightest difficulty in the world in financing their tax transactions with the banks. And, let us get rid of our predilections for or against liquor and understand that stored liquor is about the best security that can be offered to a bank. A certificate for whisky in either a bonded or a general warehouse is about the best collateral which one can imagine in these days. It is infinitely better than a great many of the other types of collateral that banks are lending on at this time. Borrowing on liquor is made on the basis of a storage warehouse receipt as the collateral. So that there is no trouble at all with the distiller in conducting the financing operations.
Mr. ROBERTSON. When the revenue bill was pending before the Senate Finance Committee, did you appear before the committee?
Mr. COVINGTON. I did not.
Mr. ROBERTSON. Who appeared there in behalf of the liquor interests?
Mr. CovingTON. Mr. Robertson, I do not know.
Mr. ROBERTSON. Do you think the liquor interests favored my 25-cent-tax amendment to the revenue bill?
Mr. COVINGTON. I do not know.
Mr. ROBERTSON. You do not know that they opposed it very vigorously?
Mr. CovingTON. Now, do not misunderstand me. I am not answering your question by quibbling. I simply say I do not personally know.
Mr. ROBERTSON. Is this just a special employment for today, or are you regularly employed by these people? Are you regularly retained by these interests that you have mentioned here, for whom your are speaking this morning?
Mr. COVINGTON. No, sir; not all of them. My firm is regularly retained by the Hiram Walker Co. in the United States. We are their American counsel. I am speaking today, however, for all the distillers whose names I have given.
Mr. ROBERTSON. What was the attitude of Hiram Walker?
Mr. ROBERTSON. They did not appear?
Mr. ROBERTSON. And you do not know the attitude of the liquor industry generally toward the 25-cent tax?
Mr. COVINGTON. Mr. Robertson, I do not. You see, I do a great many things
Mr. ROBERTSON. Frankly, I do not see how you could fail to know, when it was published in the papers repeatedly that the liquor interests were opposed to it, and witnesses had appeared before the Senate committee. I do not see how you could have missed it.
Mr. COVINGTON. I tell you, Mr. Congressman, I miss a great many things. I do not want to seem in any sense extravagant in my statement, but I am the head of a rather large law firm. Many things go on in my office, perhaps from day to day and week to week, that I know nothing about. We happen to have a number of partners and a number of employed lawyers in our firm. In that sort of an office many things take place about which one person may not know.
Mr. Duncan. Can you tell us what proportion of the output of liquor those distillers whom you represent produce?
Mr. COVINGTON. I should think that the group produces 75 percent of the annual output.
Mr. DUNCAN. Have you put in the record the names of those distillers?
Mr. CovingTON. Yes; I have.
Mr. Cullen. We thank you very much. Mr. Covington, for your statement and the information you have given the committee. Mr. Hankerson.
Give your name and whom you represent in a manner that it may be understood by the members of the committee.
STATEMENT OF F. P. HANKERSON, REPRESENTING THE ASSO
CIATED COOPERAGE INDUSTRIES OF AMERICA, ST. LOUIS, MO.
Mr. HANKERSON. My name is F. P. Hankerson and I represent the Associated Cooperage Industries of America.
Mr. irman and gentlemen, the Associated Cooperage Industries of America is the trade association for the manufacturer of wooden barrels and kegs and staves and headings, which make up those barrels.
Mr. Cullen. How much time do you require?
Mr. CULLEN. That is fine; proceed. Do you prefer to proceed without interruption?
Mr. HANKERSON. I would, if that is agreeable to the committee.
Our association represents approximately 90 percent of the products of barrels and barrel-making materials. I want to emphasize that our association is entirely independent, and that we have opposed the distilling industry on occasions, and we will do it again, if we think it is advisable.
The Associated Cooperage Industries wants to go on record as very strongly in favor of the proposed floor-tax and stock-tax amendments. We feel very strongly that the tax bill, as it is now written, will work to the harm and to the detriment of our industry, for several reasons.
In the first place, we are convinced that the tax bill, as it is now written, will cause the large distillers who have the available funds and available credit to tax-pay every drop of whisky they can tax-pay before July 1, to avoid this 25 cents tax.
This will result in a flood of whisky upon the market, which may cause the distilling industry to shut down for an indefinite period of time.
Furthermore, these distillers who have tax-paid this whisky will not, in many cases, have the funds to operate again until they get the money out of this whisky which they have tax-paid.
This would result in great harm to our industry, and many of our plants, we feel, would be forced to close down entirely, throwing many thousands of men out of work and making our members face the difficulty of trying to assemble new and skilled crews at the end of the period when the distillers had suspended operations.
That is only one of the reasons, gentlemen, why we favor a floorstock tax.
Another one, and to me a more serious one, is the fact that the economic advantage enjoyed by the large distiller is going to place the small distiller at a tremendous disadvantage.
The majority of our members sell cooperage to small distillers. The large distiller is going to tax-pay, as I say, every drop of whisky that he can between now and July 1 to save that 25 cents a gallon tax.
The small distiller hasn't the money to do this. He is going to be faced with some mighty stiff competition after July 1; 75 cents a gallon in the price of whisky can always make or break a distiller in a highly competitive market such as we have today. I know that the small distillers have talked to our members, and they have told us that it is going to be a tremendous hardship on them if the floor-stock tax is not passed.
Mr. CULLEN. Your 3 minutes are about up.
I am speaking not only for the cooperage industry, the manufacturers of barrels and kegs, but I am also speaking for the stave manufacturer. The stave mills dot the hills of some 8 or 10 States and they employ a type of labor which ordinarily would be on relief, in most cases, and I do not want to see our mills closed, and I do not think any of our members do.
I implore you gentlemen to consider seriously the floor-stock tax on behalf of our industry, as we do not want a forced period of shut-down with a resultant loss to our members.
Mr. Cullen. You can incorporate any further statement which you wish to make in the record, if you desire.
Mr. Buck. May I ask the gentleman a question, Mr. Chairman?
Do you believe that the stave industry will be closed down if this bill is not passed?
Mr. HANKERSON. I do, sir.
In view of the fact that there is now in storage in bonded warehouses about 100 percent more whisky than ever before in the history of the Nation, do you think that the distillers can indefinitely continue to produce at the rate they have been producing during the last 4 years?
Mr. HANKERSON. I do not think I am qualified to answer that.
Mr. CULLEN. Would you like to incorporate any further statement in the record?
Mr. HANKERSON. Yes, sir.
STATEMENT OF PAUL SCHARRENBERG, NATIONAL LEGISLATIVE
REPRESENTATIVE, AMERICAN FEDERATION OF LABOR, WASHINGTON, D. C.
Mr. CULLEN. Give you name to the reporter and tell us whom you represent, Mr. Scharrenberg.
Mr. SCHARRENBERG. My name is Paul Scharrenberg. I am legislative representative of the American Federation of Labor. Mr. CULLEN. How much time do you want? Mr. SCHARRENBERG. Five minutes. Mr. CULLEN. Proceed.
Mr. SCHARRENBERG. Mr. Chairman, I represent the American Federation of Labor, as already stated, and those of its affiliated unions whose members are employed in the liquor industry.
To be specific, I represent James J. Doyle, who is on your calendar, and is president of the Cooper's International Union.
I also speak for William D. McConnell, another gentleman who is present, and who is the president of the Distillery Workers Union,
, Mr. McCORMACK. Mr. Doyle is here now in the room.
Mr. SCHARRENBERG. I have not seen Mr. Doyle at this hearing but he is on your calendar.
Mr. McCORMACK. I saw him.
Mr. SCHARRENBERG. I want to say that this is the first time in my long legislative experience that I am appearing as a witness pleading that more taxes be levied on the goods manufactured by my constituents. However, there are valid reasons in this instance for this plea.
We are very apprehensive that unless House Joint Resolution No. 683 is adopted, many distillers will bottle enough liquor before July 1 to take them through the year.
This would probably result in shutting down these distilleries for the balance of this year, and perhaps for part of next year, because the stock on hand would be sufficient to carry them over for a considerable period, at least.
This will create a most unfortunate and chaotic labor condition for all workers employed in distilleries. Not only those directly employed in the manufacture of liquor, but also coopers, bottlers, and others. For these reasons we most respectfully urge that the new 25-cent tax be applied uniformly on all liquor, including all stock on hand.
Thank you Mr. Chairman.
Mr. Buck. Have you an estimate as to the number of workers that might be affected in that lag period?
Mr. SCHARRENBERG. No; I have not checked up on our records.
Mr. Buck. But you believe that a very considerable number would be laid off?
Mr. SCHARRENBERG. Yes. During recent years, especially during the last year or two, we have organized all distilleries. The coopers have always been organized, and the entire industry is pretty well organized ‘now, therefore, I think a very considerable number of organized workers are involved.
Mr. CULLEN. Mr. O'Neal.
Mr. O'NEAL. Mr. Chairman, I did not know whether you would care to hear the opposition, or whether you want the proponents to continue on through?
Mr. Cullen. We want the proponents now, if we can have them. We want to close this hearing today.
Mr. O'NEAL. We have one or two more witnesses who will testify briefly, and then the others can come and give about a minute's statement.
Mr. CULLEN. Who is next?
STATEMENT OF I. J. ROSBECK, REPRESENTING THE J. G. PIERCE
Mr. CULLEN. Give your name to the stenographer. Mr. ROSBECK. I. J. Rosbeck, representing the J. G. Pierce Co., a wholesale dealer in Boston, Mass.
Mr. CULLEN. How much time do you want?
Mr. ROSBECK. Mr. Chairman and members of the committee and gentlemen, I am here representing the J. G. Pierce Co., an average wholesaler operating in the city of Boston. I say that I am “an average wholesaler," because I do not consider myself a small one, because at the present time we are fortunately operating at a profit.
Neither do I consider myself a large one, because I am not in the position to be independent with any particular party with whom I transact business.
We are just an average wholesaler and in that position I think you would be definitely interested in my story and interpretation of this floor tax.
Our methods and policies of operation have resulted in a steady growth in our business to a point where today, with an increase in business, we require our entire capital and credit for normal business operation.
We are definitely and strongly in favor of the floor-stock tax, for one particular reason, namely, we feel it will allow us to stay in business.
Without a floor-stock tax, we positively could not compete with the few larger wholesalers in our State. When I say "larger wholesalers,” I question if there are 10 out of the list of 88 that can be put in that particular class.
The advantages of their capital and borrowing facilities would allow them to tax-pay an enormous quantity of merchandise, which would place them in an unusual position to undersell us and take away our preferred accounts for possibly a period of 6 to 8 months.
Our own credit has been extended to the limit. It is unfortunate in our State that we have a 90-day credit law pertaining to the liquor industry, which has brought about a situation wherein the limit of