Business: Rum Rush

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Lamed Horses, Troubles on the Federal front also helped to send leading liquor shares into a deep, dark nose-dive on the New York Stock Exchange last week. First hint had come when a virtual embargo was clamped on liquor imports. It was learned that President Roosevelt had listened sympathetically to a Brain Trust idea of forming a government corporation to handle the entire wholesale liquor business. When the distillers submitted a code of fair competition, they saw it thrown in the wastebasket. Last week they were asked to accept a code, drawn by a special Roosevelt committee, which imposed rigid Federal control on the whole liquor business until Congress could tackle the subject. Provisions :

1 ) A Federal Alcohol Control Administration to rule the industry without benefit of any liquor representatives; 2) no additions to present plant capacity except by a certificate of necessity from the F. A. C. A. and absolute control of production and distribution through a quota system; 3) power to fix prices; 4) an agreement with the Secretary of Agriculture to pay "parity" prices established by him for raw materials. Administration of the separate codes for brewers, importers and distributors, which come up for hearings this week, was also to be placed in the hands of the omnipotent F. A. C. A.

The distillers swarmed into Washington in an uproar. They preferred some sort of Federal Control to the graft of State politics but this was more than they bargained for. And to the distillers who were just getting started, it looked as if the Government had deliberately lamed all their horses. Their chief objection was to the absolute power of F. A. C. A. Particularly obnoxious was the freezing of capacity at the Dec. 5 figure. Nearly every company was either building or rebuilding plants which would not be completed by that date. These unfinished plants the code simply scrapped. On this point, however, the distillers had hopes of softening the Government's views.

What perplexed liquor men was the fact that Prohibition was ridden out of the Constitution on the principle of returning liquor to the states. Yet here was a Democratic Administration doing its utmost to retain complete control in Washington. Observers saw unmistakable signs of Brain Trusting, with distillers given the choice of accepting an arbitrary code or facing the threat of a government sales corporation. No theory of social expediency was advanced in support of Federal liquor control, and observers concluded that it was merely another manifestation of the Brain Trust's passion for centralization. Die-hard Drys were more pleased than they had been all year.

The pre-War liquor business was the whiskey business. In 1913 the U. S. drank 135,000,000 gal. of rye and Bourbon, 5,000,000 gal. of gin, 1,500,000 gal. of Scotch, a trickle of Irish. Rum, wine, brandy, liqueurs cut no figure. The Prohibition liquor business was an alcohol business and liquor consumption rose to at least 200,000,000 gal. a year. No one knows how much the U. S. taste has changed in the era of cocktails, bad Scotch and gin-&-gingenle. That in 1934 the U. S. will drink at least 200,000,000 gal. of something seems certain. That that something will be mostly whiskey is the bet of most of the shrewd gentlemen waiting on the line for the Repeal signal.

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