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Mr. TREADWAY. Your interest is somewhat different from that of the rectifiers and the wholesale dealers.
Mr. BOYER. Our interests are the same, outside of the fact that the big distillers are able to put pressure on the others.
Mr. TREADWAY. That was not the thought that I had in mind. My idea was that the large distillers have advocated this tax as a matter of fairness to everybody concerned. Now you are taking a different attitude, as representing the package people. It is evident that the two interests are not in any way identical.
Suppose that we put the floor tax on. We will be satisfying the distillers. If you are the representative of the package people, and expressing their sentiments, we will be dissatisfying those people. Is that correct?
Mr. BOYER. Correct.
Mr. TREADWAY. So that one side or the other is not going to be satisfied with whatever action the Congress takes at this time?
Mr. Boyer. Well, no. If you satisfy the distillers, in my mind, as I see it, you are satisfying some of the big distillers that are trying to create a monopoly.
Mr. TREADWAY. That is not a very popular word under certain conditions.
Mr. BOYER. That is a fact, Mr. Treadway.
Mr. TREADWAY. But you think, then, that you are representing the sentiment, the opinion of the ordinary package grocery man throughout New England, and perhaps throughout the country?
Mr. BOYER. I know that I am representing the sentiment of the 300 members of an organization that I am president of.
Mr. TREADWAY. And that is the package store people?
Mr. TREADWAY. So that your organization does not represent to exceed one-third?
Mr. BOYER. About one-third.
Mr. TREADWAY. Do they take the same attitude on this subject that you do?
Mr. Boyer. That I do not know. They are here.
Mr. TREADWAY. You simply do not want to speak for other than the people that you represent, but what is your idea as to the opinion of the members of the other organizations on this subject?
Mr. Boyer. I have phoned men who are in the business, that are not members of our organization in Boston, and they are of the same opinion.
Mr. TREADWAY. Do you think that that would apply in other sections of the State?
Mr. BOYER. To my mind, it should apply to every package store in the country.
Mr. ROBERTSON. You said you think the price of whisky is going down.
Mr. BOYER. Right.
Mr. ROBERTSON. Because we have nearly 500,000,000 gallons in bonded warehouses. What is the current price, for instance, on an old brand, like Old Overholt?
Mr. BOYER. That is about $26 today.
Mr. ROBERTSON. How much a gallon has that come down, in a year's time?
Mr. BOYER. That has come down $2 a gallon. Mr. ROBERTSON. What was the price of Old Overholt in 1916, when rye on the farm was selling for more than it is now?
Mr. Boyer. In 1916 the price on that was, I venture to say, and I saw a price list on it, about $12.
Mr. ROBERTSON. Wasn't it $9, and $12 on Mount Vernon?
Mr. Boyer. It was somewhere around that. I remember seeing an old price list. From $9 to $12.
Mr. ROBERTSON. When farm products were higher than they are now.
Mr. Boyer. At the rate that they are manufacturing whisky today, I will say that anybody that is caught with a heavy stock is going to take a licking, no matter how much tax he saves, and no retailer will load himself up with any stock.
Mr. ROBERTSON. A 4-year-old bonded whisky, like Overholt and Mount Vernon, in 1916 sold from $9 to $12 a case, and that whisky now is selling from $26 to $28 a case?
Mr. Boyer. Right.
Mr. ROBERTSON. And in your opinion it is not going to stay 100 percent higher than it was in 1916?
Mr. Boyer. It is going to go down within the next few months.
STATEMENT OF JOSEPH A. HINES, EXECUTIVE SECRETARY, UNITED
LIQUOR PACKAGE DEALERS OF MASSACHUSETTS, INC.
Mr. Chairman and gentlemen of your honorable committee, my name is Joseph A. Hines of Lynn, Mass. I am executive secretary of the United Liquor Package Dealers of Massachusetts, Inc., and am also a member of a firm that operates a retail package store located in Lynn, Mass., and have been in the retail liquor-store business since repeal. The association which I represent has been in existence since October of 1935. The association has a membership of 300 members, all engaged in the retail package-store business, privately or corporately owned, none of which are chain stores or department stores. In other words, they are all family propositions.
It may be of interest to this honorable committee to know that under the laws of the Commonwealth of Massachusetts, chain liquor stores are prohibited inasmuch as no person or corporation may have more than two licenses in any one city, or a total of three in the entire Commonwealth. It is also a fact that no department stores in Massachusetts have a package-store license.
The membership of the association covers 87 cities and towns, extending from one end of the State to the other end of the Commonwealth, and, as secretary of this organization, I have personally interviewed many of the members to ascertain their position and their reaction to this proposed floor stock tax, and it is the unanimous sentiment that they are strongly opposed to it. It was felt that under the present conditions which are prevalent in every line of business, as well as the package store business, the burden of a floor stock tax would be an unbearable one. Retailers are having a terrible difficulty in meeting their obligations, and to impose this tax at this particular time would be imposing a hardship difficult to carry.
May I be permitted to remind you that the retailer's overhead already is a burdensome one, consisting of license fees, corporate taxes, income taxes, employees, rent, merchandising, advertising, insurance, and others, and to impose this tax at the beginning of the slowest period of the year is encumbeirng an already overloaded industry.
This, gentlemen, is all that I have. I think that the previous speakers have covered the situation amply as far as we as retailers are concerned, and I thank you for this opportunity.
Mr. Buck. Mr. Hines, you are the secretary of the United Liquor Package Dealers of Massachusetts, the same organization that the preceding speaker represented, are you not?
Mr. HINES. Yes, sir.
Mr. Buck. What is the turn-over, or the average daily sales or weekly sales, if you want to figure it that way, of your organization, in terms of distilled liquor?
Mr. Hines. Of the entire organization?
Mr. Buck. Well, no; just one, sir. I thought you said there were not any chain stores in Miassachusetts.
Mr. Hines. That is true. There are not. I said, do you want it of the entire organization?
Mr. Buck. I mean, of your store.
Mr. Buck. What does that represent, in the number of quarts or gallons?
Mr. HINES. I have never checked it to that extent.
Mr. Buck. What do you sell whisky for; $3 a gallon, or $5 a gallon, or what?
Mr. Hines. You mean the retail price?
Mr. Hines. Yes, sir.
Mr. Buck. Now, in order to maintain that 125-gallons-a-week sale, how much distilled liquor do you keep on hand in your store?
Mr. Hines. We carry an inventory of between $7,000 and $8,000.
Mr. McCORMACK. I cannot agree with you that it would be as high as that.
Mr. Hines. It would.
Mr. Buck. Wait a minute. Let us develop that. How much do you pay for it, on an average? What is your average price that you pay for it, per gallon?
Mr. Hines. I figure on a basis of about $3.50 a gallon.
Mr. Buck. And you think now, according to the best of your recollection, that you carry $6,000 worth, and that is 2,000 gallons?
Mr. Hines. That is correct.
Mr. Buck. Let us get down to pints and quarts. How many pints and quarts do you have on hand, ordinarily?
Mr. Hines. Well, that I could not tell you.
Mr. THOMPSON. Do not the Government regulations require that you keep a perpetual inventory?
Mr. HINES. No, sir; not in the State of Massachusetts.
Mr. THOMPSON. I mean the Federal regulations, under the Alcohol Tax Unit.
Mr. HINES. No, sir; not for retailers.
Mr. THOMPSON. How do you inventory your stock? Do you not have to inventory so many pints of Overholt and so many quarts of gin, and so on?
Mr. HINES. Only for our own purpose, but not for the Federal Government or the State, because those taxes are paid by the wholesaler before we get the merchandise. The tax does not come out of us.
Mr. FULLER. You buy them either in pints or half pints or quarts?
Mr. Hines. Right; pints, balf pints, quarts, fifths, gallons, and half gallons. So, to answer the gentleman as to how many half pints we have in the store, that is an impossibility.
Mr. McCORMACK. How far ahead do you stock up? Mr. Hines. We have made it a practice that we never overstock. We figure on getting through with our merchandise, what we purchase, within 30 days, according to the present market. We do not know how the market is going to be. Nobody does. Nobody can foresee what it will be.
Mr. Buck. Your testimony is that you purchased at an average price of $3.50 a gallon?
Mr. Hines. Approximately.
Mr. Buck. And your average sale price is about $8 a gallon? Is that right?
Mr. HINES. Those are retail prices.
Mr. Buck. Do you honestly think that the imposition of a floor tax of 25 cents a gallon to equalize that is going to hurt you people at all?
Mr. Hines. Yes, sir; I think it will.
Mr. Duncan. Mr. Hines, may I ask you this--it may be somewhat speculative. Suppose the floor-stock tax were placed on all the retailers, the wholesalers, and the distributors; you would, of course, increase the price to the retailer of such stocks as you had paid the floor tax on?
Mr. HINES. Well, that is something that we assume we would have to do.
Mr. DUNCAN. You would have to do that, therefore you would have the consuming public educated to the higher price of liquor before the tax under the present revenue act goes into effect on July 1 next?
Mr. HINES. No; I would not say that, because we do not know exactly what attitude is going to be taken by the distillers. If the distillers are going to assume the tax, we cannot increase the tax to the public, because we will actually have to sell the merchandise at the same prices which prevail today.
Mr. DUNCAN. If the retailers and distributors did increase it, then the distilleries, after the tax goes into effect, would be in much better position to increase their price than if the floor-stock tax had not been placed on?
Mr. HINES. That is right.
Mr. McCORMACK. Mr. Hines, you answered one of Mr. Duncan's questions rather interestingly to me. The real point of this thing that concerns you, as I see it—if I am incorrect, I want you to correct me-the real point is that if the floor tax is put on, you have no objection to that, if the distillers will increase their price accordingly?
Mr. HINES. And protect the present stock, which we have at the present time, otherwise we would have a 124-percent loss immediately on the merchandise that we have on our floors.
Mr. McCORMACK. In other words, the distiller pays 25 cents a gallon, you assuming the floor tax imposed July 1 on the stock they have on hand? You pay 25 cents a gallon?
Mr. HINES. Yes, sir.
Mr. McCORMACK. But your status is different. You have already purchased from the distiller.
Mr. HINES. Yes.
Mr. McCORMACK. You are in a position where you have got to pass that on. Is that true?
Mr. HINES. Yes.
Mr. DUNCAN. What you bear, what the wholesalers pay-let me put it this way: You purchase from the wholesalers.
Mr. HINES. Correct.
Mr. DUNCAN. The wholesaler has purchased from the distiller and you purchase from the wholesaler.
Mr. Hines. Correct.
Mr. Duncan. Then somebody goes into your store and buys a quart of whisky, and takes it out to consume it.