Montgomery County sentinel. [volume] (Rockville, Md.) 1855-1974, 1938-06-02
Distillers Back
Federal Warming
On Bond Receipts
Public Cautioned Against Specu-
latiOn In Whiskey Invest
ments In Maryland

A warning has been broadcast
against the speculation by private in
dividuals of bonded whiskey ware
house receipts. This is not a new
admonition, for as early as October,
1884, the Better Business Bureau of
Washington advised DR.. James NJ.
Doran, then superintendent of the
Distillers' Code Authority and now
Director of the Distilled Spirits Insti-
tute, Inc, that the character of
some persons offering these invest
ments caused the Bureau to believe
that they were interested in circum-
venting the protective features of the
Federal Securities Act and the Bu-
reau had requested from DR.. Doran
such facts as "are available to the in
dividual members of the public in con-
sidering the purchase of certificates
as an investment.
In his reply DIR. Doran said: "The
distillers as a group are very much
opposed to the sale to the investing
public of warehouse receipts under
conditions and claims which hold out
prospects of exorbitant and unreason-
able profits. Some of the data in
literature which has been called to
my attention point out the value of
bottled-in-bond whiskey during Pro-
hibition and the present and past
shortage of fully matured bottled-in-
bond Whistles in the United States,
and by very misleading differences ine
dictate that similar prices will be Sc
cured for WHISTLES now purchased on
warehouse receipts.
a'"The bonded warehouse receipt
covering whiskey in bond has been a
well established instrument in COM
mercial use for many years. 1t has
been the practice of many distillers to
deposit these certificates with banks
as collateral for loans, and otherwise
to sell the certificates to rectifers and
wholesale liquor dealers in order to
enable the trade to cover its future
requirements. The cash advances thus
secured have been an important ele-
nlent in the financing of the distilled
spirits industry. However, the distill-
ers are of the opinion that the hold
ing out to the public Of these certifi.
Gates, which may be traded in without
reference to any Internal Revenue
regulation, can only result in substan-
tial losses to individual investors with
consequent reaction against the dis
titled spirits industry.
"While the, sale of warehouse re-
ceipts is free and unrestricted, there
is provision in the Code of Fair
Competition for the Distilled Spirits
Industry, which prevents distiller
from disposing of whiskey in bulk to
persons other than distributors, recti-
fiers, or state dispensaries.
Elsewhere in this issue appears an
advertisement of the Association of
Maryland Distillers and Allied Indus
tries announcing the unanimous en-
dorsement by the Association of
warnings issued by the Federal Alco-
hol Administration Of the United
States Treasury Department against
the purchase, for investment or spec
ulation, by private citizens not con-
nected with the distilled spirits in
dustry, of bonded whiskey warehouse
receipts. The advertisement quotes
the admonition of the Federal Alcohol
Administration that the purchase of
bonded whiskey warehouse receipts
by the general public is Hazardous
business liable to entail losses to
those who purchase such receipts as
All investment.