« PreviousContinue »
indicating payment of this tax must be placed upon this whisky within 24 hours after the bottled goods come into their premises. The larger men might be able to hold that in storage, but the smaller men would have to have the amount shipped to their premises, and if they fulfill the spirit of the law in this matter, they would be obliged to place their consumer's tax of $1.04 on the whiskies in their possession. They are responsible to the Department of Revenue at Louisville for the placing of the stamps and for the collecting of this money.
Mr. THOMPSON. $1.04 on a gallon?
Mr. GREEN. Yes; that is the tax imposed by the State, equivalent to a consumer's tax.
The situation is practically the same in Indiana, because they have a tax of $1 per gallon.
Now, the salesmen, of course, are interested in this item also, because if there is a large amount of goods purchased at one time, it naturally disturbs regular routine in making their territories. On the part of the salesmen, I presume they feel that they would not have a steady income as a result of their efforts. They are not too generously rewarded at that, and they would prefer to have a steady income in preference to a large amount at one time, and then make several trips without any particularly large amount of business.
Now, gentlemen, I know that you are pressed for time, and out of respect for your convenience, I have concluded.
Mr. THOMPSON. I would like to ask Mr. Green what, in his opinion, is the average stock in the liquor stores of the country, on a gallonage basis.
Mr. GREEN. On a gallonage basis carried at one time?
Mr. GREEN. With the average dealer, I should assume that he carries at one time an approximate amount of-is that weekly or daily?
Mr. Thompson. The average daily, the number of gallons that would be on hand that this tax would apply to, if enacted into law.
Mr. GREEN. Today, approximately 50 gallons.
Mr. THOMPSON. The only tax in that case would amount to approximately $12.50.
Mr. CULLEN. Are you talking about the wholesaler, or the retailer?
They would in all probability have anywhere from 50 to 75 gallons.
Mr. GREEN. It would not amount to so much, no. It is not so much what the tax would amount to, as the amount of stock that the larger ones would be able to have as a hold-over after the tax went into effect.
Mr. BOEHNE. That is only 200 quarts; you say, that they have on the shelves?
Mr. GREEN. In the State of Kentucky we have a great many smallpackage dealers. The law has recently been changed there so that a
man, after May 30, will not be permitted to have floor space to exceed 100 square feet, and these men have been accustomed to buying in bottles instead of in cases, and the law effective May 30 is such that they will be obliged to buy in cases, although the cases may be assorted bottles.
Mr. THOMPSON. Did you say 100 square feet of floor space?
Mr. THOMPSON. That is not as big as that table over there. Shoe shine parlors are larger than that.
Mr. GREEN. That is the attitude of the lawmakers in Kentucky.
Mr. FULLER. You do not mean to say that they conduct a business that small? That is 10 by 10.
Mr. GREEN. Yes.
Mr. FULLER. Have you any buildings in Louisville that size that people sell whisky out of?
Mr. GREEN. I am a little bit confused on the floor content, but I will not retract it without refreshing my mind on it. Possibly the law applies to unincorporated towns only.
Mr. FULLER. Even though it is wrong, you will stay with it?
Mr. GREEN. I understand that there are some retailers here.' I do not know of any from Kentucky.
Mr. FULLER. You are a distiller yourself?
Mr. GREEN. No, sir. I represent the wholesale liquor dealers. I am the secretary of the Kentucky Wholesale Liquor Dealers’ Association.
Mr. CULLEN. Thank you.
Mr. DUNCAN. Do you have any idea about how much these chain stores carry in their daily stock?
Mr. GREEN. I am unable to give you a fair idea on that, because I do not come in contact with the stores directly.
Mr. Duncan. My reason for asking that is this, that there are hundreds of different kinds of liquors, and the retail dealer in many instances must carry a great number of different brands. Do you think 100 gallons' minimum would be too much to allow for the imposition of a floor tax?
Mr. GREEN. Knowing the difficulties under which some of these men operate, I do not.
Mr. Duncan. The ordinary retail liquor dealer's daily stock would not have to exceed 100 gallons of liquor?
Mr. GREEN. No.
Mr. DUNCAN. And that would not permit the trade to become unbalanced, would it, to permit the dealer to have an exemption of 100 gallons?
Mr. GREEN. I would be more inclined to be liberal with the retailer than otherwise.
Mr. Duncan. Of course, it would have to apply to all of them.
Mr. GREEN. I would be in favor of making a better allowance for the wholesalers, because this industry is going through a period of adjustment. The complaint is made that there are too many wholesalers in the business, and they are not all fortified with capital sufficient to do business on.
In addition to that, there is a certain amount of obsolete brands of whisky that have become obsolete on account of slow moving. The
wholesalers have that class of goods on their shelves, and they are trying and, I suppose, succeeding in selling them now at a loss. If there is an additional loss on account of this tax, why, it makes it that much more difficult.
Mr. DUNCAN. Is it true that there are many kinds of liquor bearing different brands and yet are identically the same kind of liquor and come out of the same barrel originally?
Mr. GREEN. I am inclined to think that that is reasonably correct.
Mr. DUNCAN. Is it not true also that in many instances, particularly in the beginning of the industry, the big distillers went out and bought out the complete outfit of the small distillers and bottled them under such brands as they desired to sell?
Mr. GREEN. I have no means of knowing that they bought the complete outfits. I have reason to believe that men of large capital could buy those whiskies. To what extent they bought them, I do not know.
Mr. Duncan. I understood that some of them would take it out of the same barrel and put different labels on it, identically the same type of whisky, and that they can discontinue or continue a particular brand or flavor. Do you know whether or not that is true?
Mr. GREEN. I think that is reasonably correct, they can. Mr. DUNCAN. And that they do? Mr. GREEN. Of course I would have to stop there. Mr. DUNCAN. All right. Mr. FULLER. Are not the old brands of liquors, in those old distilleries, owned by concerns like the National in your State?
Mr. GREEN. A great many of them are owned by the National. Mr. FULLER. What one is not?
Mr. GREEN. Yellow Stone whisky is a brand of whisky not owned by them. Mr. FULLER. There are mighty few that are not; you know that.
What distilleries in your country were bought up by the people that belong to the big industries? Do you know that?
Mr. GREEN. I know a great many were bought by the great distillers.
Mr. FULLER. Practically all in your State?
Mr. FULLER. I did not say that. I said practically all of them. Did you ever see a list of them?
Mr. GREEN. Yes; I am familiar with the list.
Mr. GREEN. No; I cannot say that it does. There are a great many old brands that are not controlled by the National Distilleries.
Mr. FULLER. How many independent distilleries are there in
Mr. GREEN. I presume that there are 30, or 25.
Mr. FULLER. How many distilleries are there altogether in your State?
Mr. GREEN. Sixty-three or sixty-four.
Mr. FULLER. And, as to those other 30 that you mentioned, some of them are mighty small?
Mr. GREEN. Yes.
Mr. BOEHNE. I do not deny the right of the gentleman from Arkansas to ask any question whatever, but what has that to do with this bill?
Mr. FULLER. I want to show what interest they have in it. There is a whole lot, when it comes to argument there.
Mr. CULLEN. Thank you, Mr. Green.
STATEMENT OF HUGH J. McMACKIN, EXECUTIVE SECRETARY,
MASSACHUSETTS WHOLESALE LIQUOR DEALERS' ASSOCIATION, INC., BOSTON, MASS.
Mr. McMACKIN. Mr. Chairman and gentlemen, my name is Hugh J. McMackin. I am executive secretary of the Massachusetts Wholesale Liquor Dealers' Association, an office that I have held since October of 1933. This association, I might state, was incorporated in 1933, and our membership is composed of some 126 wholesalers out of a possible 200. We have two classes of wholesalers, 100 of which are all alcohol beverage dealers, and 100 of which are wine and beer wholesalers.
The question of the imposition of a floor-stock tax as contained in the bill of Congressman O'Neal has caused our association to call a special meeting, which we did on Tuesday, May 10, at which time the pros and cons of the subject were freely discussed by some 60 members and 12 nonmembers of the association, and after an orderly presentation of the facts, a unanimous vote was taken against the floor-stock tax bill,
Again, on Monday, May 23, Monday of this week, at the Hotel Bradford, in Boston, which was a regular monthly meeting of our association, at that time the association unanimously voted to reaffirm the position it had taken and the vote it had taken at the special meeting against the floor tax which was taken on May 10.
The wholesaler today is required to carry thousands of accounts on a basis of from 30 to 90 days, and to ask the wholesaler to assume the additional floor tax will be the cause of several more of them going out of business and causing further unemployment, and several of our members who hold a franchise on some of the nationally advertised brands are obliged to buy quantities in excess of their normal requirements and have been ordered to increase their sales staff, more for the purpose of quickly moving the merchandise.
Only last week, in Boston, a great many of our wholesalers who had held franchises for a period of 4 years suddenly, within an hour's time, had franchises taken away from them.
What will be the situation when July 1 comes along? We will be caught with a lot of merchandise on hand. They have transferred the franchises to some other wholesalers, and we in Massachusetts are going to be caught with that heavy stock, and, having the franchise taken away from us, the wholesaler on July 1, 1938–
Mr. CULLEN. May I interrupt you there? What do you mean by "taking it away"?
Mr. McMACKIN. Let me explain it in this way to you. You have a franchise to sell some particular distillery's nationally advertised brand. You may not be doing enough volume to satisfy me as a distiller. So I may take it over to Mr. Treadway, and he may give me a better volume than you are.
Do you follow me on that?
Mr. McMackin. It is worked out both ways. All of the larger distilleries are anxious for volume. It is volume that counts with them. That is probably one of the reasons why we have such a tremendous overproduction today.
The wholesaler,.on January 1, 1938, if this floor tax bill becomes a law, will be obliged to add the tax of 25 cents a gallon, or 75 cents a case, and will the manufacturer or distiller do likewise, or will they absorb the floor tax?
Let me illustrate. Wholesaler A has on hand on July 1 5,000 cases of a nationally advertised brand. He would pay a floor tax, on just this one item alone, of $3,750, at the rate of 25 cents a gallon or 75 cents per case, and if this item prior to July 1 sold for $20 a case, the wholesaler after July 1 would have to get $20.75 because of the additional floor-stock tax.
On the other hand, we will say that Mr. Distiller refuses to add the 25 cents per gallon or the 75 cents per case to his selling price after July 1, and in so doing, actually he is reducing the price 75 cents per case.
Therefore, what chance has the average wholesaler to compete under such conditions? We claim that it is unfair, unjust, and un-American in principle to permit such a catastrophe to happen in the wholesale industry in this country.
Certain statements have been broadcast that some of the large distillers would withdraw tremendous quantities prior to July 1, in order to save on this tax. Well, let us look at ihe record and see what happened last month, April 1938. According to a release of May 23 of the Bureau of Internal Revenue, Alcohol Tax Unit, the production of whisky in April, 1938, totaled 8,071,383 gallons, a 57-percent decline from the 19,045,574 gallons produced in April 1937, while the tax paid withdrawals totaled 4,944,898 gallons, a 9-percent drop from the 5,449,404 gallons withdrawn in the same month of last year.
The stock on hand of distilled spirits as of the end of April 1938 totaled 496,000,873 gallons, of which 470,500,046 gallons were whisky; whereas at the end of April 1937 the total stocks were 437,144,050 gallons, of which 421,543,586 were whisky, making an increase this year over last year of 48,956,460 gallons of whisky.
Due to the fact that if any attempt were made by the larger group to withdraw, prior to July 1, the bulk of the withdrawals would be what? It would be young, immature whiskies right off the still; in fact, if might well be said that goods less than 24 hours old would be taken out, and in fairness to the American public, and likewise as a protection to it, they should be prohibited from flooding the American market with such raw immature whiskies.
Mr. BOEHNE. What was that last figure of something like 400,000,000 gallons of whisky?
Mr. McMACKIN. Four hundred and twenty-one million.
Mr. BOEHNE. How much of that would you consider to be 2 years old or less?