The evening times., 1899-05-13
TIE ENQUIRY into
TRUSTS CONTINUED
A Distiller Before the Indus
trial Commission.
Coercive Methods Employed by the
Whisky Combines.
Indepepdeut Dealers Forced Into the
Observation-Disclosures md Output
Effectively Controlled.


mission the investigation Of trusts was
continued. Facts bearing on the methods
Of the whisky monopoly were given.
Charles p. Clark. of Peoria, ILL.,, was the
fitness Prof. jerks, of Cornell Uriversi-
3, led in the examination.
Mr.. Clark stated that he is engaged in
the distilling of alcohol and cologne spirits.
He has been engaged in the business since
1873 In the manufacture of the spirits
corn and malt are used. Corn is the prin-
:ipal factor of the products. The malt is
used for its chemical effects. The residue
Or slop of the material is used for feeding
cattle.
As early as 1S7O-'7l many of the distiil-
srs north of the Ohio River entered into
IN agreement to limit their production.
In November, 1881. the Western Export
Association was formed to limit the out
put and TO assess members in order to
pay the expenses of reporting the surplus
whisky and thus keep up prices.
From this time on there were frequent
pools lasting for short periods each, until
.SS7, when in order to secure more sta
Die combination the sDistillers and Cattle
Feeders Trust formed on the model OF
the Standard Oil Trust, was organized,
$50, 600 600 being issued in the trust GER
ifcates.
In 1880 this trust was organized as
corporation under the name of the Dis
.illing and Cattle Feeding Company, with
4 capital stock of S35, 600, 0G0. Eighty-one
iistilers entered the combination, but
gradually many of the plants were closed,
until finally only twelve were in operation.
The distilleries where manufacturing could
be carried on with the greatest facility
were alone kept in operation.
The new company had taken over from
the trust all distilleries, and cash and
earnings to the amount of So, ,S37,066, and
there still remained in the treasury "a. .9S4
shares as an asset. In the latter part of
January, 1891 this treasury stock was is
sued TO raise money to purchase the Shu-
feldt and Calumet distilleries, the stock
being sold at 10.
Various methods were used to force in
dependent distillers into the combination,
The favorite one being to send statesmen to
known customers of independent distillers
and undersell them. By this means many
distillers were forced into the combina-
tion.
AS soon as the combination was firmly
established the distilled products rose in
price. TTOIu d SeilllS WHICH
covered the expense of distilling and dis
tribution the price was raised until a
profit of about > cents per gallon accrued
% the trust. The old Distilling and Cattle
Feeders Association had a practice Of re-
batting, by which they aimed to hold trade.
The total rebate amounted to cents per
gallon. The rebate certificates were paid
six months after their issue.
In cases where dealer holding these re-
bata had houphi pnndS from
company not affiliated with the trust pay
ment on the certificates was refused.
The stock of the new trust which sue
ceeded the old Distilling and Cattle Feed
ing Company fiuctuated considerably after
the organization of the company. The
witness thought that the trustees specu-
lated in the stock of the company. 1t was
proven in the courts of Illinois that some
Of the money of the company was used by
the trustees as margain on their stocks.
tbs speculation continued from 1880 to
1898. The trust went out of existence in
the latter year.
In November. 1892 four other distiller-
les, making practically all of their import
ant opponents, were bought. The president
explained the purchase to the stockholders
by saying that there had been an added
demand for the goods, and that il was ex
pected the tax on alcohol would be in
creased by Congress. so that larger out
put was desirable. No bonds or stock were
Issued for these distilleries. Instead, the
surplus was used and dividends lessened.
The high price, which had been increased
20 cents a gallon, led to a falling off in
the sales. Congress did not pass at that
time a new tax law, and in January, 1893,
Il was found that the cash on hand was
exhausted and that no money remained to
pay rebates which had been promised to
purchasers 1t was decided to lower prices
is cents gallon. The dividends which had
been regularly paid heretofore were passed
In April. The stock fell shortly from be-
tween 65 and 20 to about 20. Large stores
of goods were on hand; large sums were
due to customers for rebates, and IT was
decided in May to issue sS,000,000 worth of
per cent bonds, mortgaging all of the
plants in order to meet special needs.
In May, 1898, the attorney general of
Illinois brought suit against the company
on the ground that it was Illegal. During
1898. two million and a half of bonds were
issued and placed in escrow to secure re-
bates which had not been paid. A million
dollars forth of bonds was to be used as
collateral in making loans for current ex-
penses. Rebates still remained unpaid. In
September, 1894, committee consisting of
Martin r. Cook, S. NJ. Rice, and others
was organized to protect the interests Of
those who held rebate vouchers
In December, the directors of the COM
pany suggested plans of reorganization;
the treasurer, Mr.. Hobart, suggested an
other. All the plans suggested involved a
decided lessening of the stock. The suit in
Illinois had gone against the company in
the lower court, and was before the su-
preme court. In January 1895, notice was
given that over a third Of all the stock
holders had organized a committee to pro-
tect their interests and secure a change of
management.
January 2S, 1895, holders of l 200 shares
applied for a receiver. The company
through the president consented, and the
president, Mr.. Greenhut and E. P. Law
renee were appointed temporary receivers.
January 30, the stockholders committee
mentioned above secured from the court 4
stay and an order not to turn the property
over to these receivers. February 2, Judge
Grosscup removed Greenhut Che was found
to be 5000 shares short of the company's
stock and appointed Gen. John McNultz
as chief receiver representing the court
and John J. Mitchell, President of the I'LL
nois Trust and Savings Company, to rep
resent the stockholders. Mr.. Lawrence
remained as third receiver.
a committee was appointed consisting in
the main of the same men as the former
stockholders committee, to prepare plans
of reorganization.