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only valuable real estate and excellent manufacturing plants, but in addition to these properties there were extremely valuable trade marks also represented by stock. Mr. Curley claimed that this great enterprise differed from many of the other consolidations of industrial enterprises, including the earlier whiskey combination, in not seeking a practical monopoly which would invariably lead to the establishment of new competitive plants. He claimed that these constituent companies had already gone through this phase of monopoly, and since 1899, the time of the organization of the Distilling Company of America, had conducted a business in open competition, free from artificial combinations to control prices, so that the progress which they had made was sound and substantial. He thought that through the large volume of their business and their financial resources they could purchase supplies more advantageously than could individual competitors, and they could likewise distribute their products at minimum cost. All of these advantages combined to increase their profits, thus enabling their companies to make larger returns, while maintaining a low market price for their output.

Soon after the middle of the year 1903, however, came a very decided cut in the price of their product, although there was no corresponding fall in the price of corn. In his annual report for the year ending June 30, 1904, the president called attention to the fact that from the outset of the fiscal year trade conditions in all manufacturing branches were unsettled, and a feeling of apprehension prevailed. The large demand for manufactured products had not been maintained.

He added that, while conditions in the whiskey industry had been in the main satisfactory, this company, the Distillers' Securities Corporation, had not escaped entirely from the general reaction; and they had therefore thought it advisable to pursue a conservative policy respecting output by curtailing to some extent the production of cheaper grades of goods on which the profit is very small, and devoting the bulk of operations to the higher grades. While the total sales were somewhat less than those of the preceding year, the percentage of gross earnings, he said, had been practically maintained. The cut in prices near the middle of the year was followed by a sharp recovery later in the year and in the early part of 1904; but later in 1904 occurred another sharp decline. Apparently there was a break between the Securities Corporation's subsidiary company (the Standard Distilling and Distributing Company) and the independent distillers, which occurred late in September. This resulted in another decided fall in the price of domestic spirits. The cut in price was openly announced and confirmed by an official circular, stating that the lower price would be maintained until further notice.

These cuts in prices and the presence of vigorous competition was announced in somewhat guarded terms in the report of President Curley, at the close of the fiscal year ending June 30, 1905. He claimed that, with the exception of the spirit branch of their business, the one here considered, all the other departments had shown an increase in net profits. The condition of the spirit market, however, accounted for a noteworthy difference in gross receipts for the year, compared with

those of the year preceding, and also for the decrease in net profits. He adds:

"The management some time since determined upon a course which would lead outside spirit distillers to realize that certain well-considered business methods should be pursued by all engaged in that branch. Accordingly, this company has so conducted its spirit department as to result in the adoption of a businesslike and conservative course by distillers. The fact that this company has other avenues of income from these various other branches-an advantage possessed by no other concern-has been a potent factor in this connection. Since May of this year the profits of the spirit department have again become normal, and if they continue as they are-and it is believed they will during the current year-the net profits will show a considerable advance over the figures for the year just closed."

This apparently meant that they had induced their competitors to maintain prices. In order to carry out this policy, and reduce expenses, one of the subsidiary companies, the Standard Distilling and Distributing Company, was dissolved.

The improvement in the conditions noted following May, 1905, appears clearly in the chart in the line illustrating the increase in the price of spirits, and no less notably in that illustrating the margin of profits. From this time on the general policy of the company seems to have been maintained. We note in the year 1906, again in 1908 and thereafter a steadiness of price covering a period of some months, which seems to indicate substantial control of market conditions. The reports of the company showed an increase in profits,

and a slight increase in dividends, and apparently a somewhat stable dividend-paying policy.

Between January, 1908, and October, 1912, the dividends were lowered to 2 per cent. per annum. After that none were paid until July 5, 1916, when a quarterly dividend of per cent. was declared. Apparently the financial condition has been improved somewhat further from the fact that in May, 1916, there was enough accumulated cash so that $2,000,000 worth of bonds was paid out of a total of $14,093,236.06 issued in 1902.

The appearance of the chart since 1906 seems to indicate clearly an increasing influence on the market situation, certainly until 1914, about the time of the outbreak of the European war. The suddenness and extent of the changes in prices and the period during which the prices are held absolutely without change in spite of the variations in the price of corn, are quite similar to those that obtained during the days of the pools before the organization of the old Distillers' and Cattle Feeders' Trust in 1887.

The reports of the Distillers' Securities Corporation for 1915 and 1916 seem to confirm the more secure condition of the company thus indicated. In 1915 the secretary in his report called attention to the change in the conditions after the present management took charge in October, 1913. During the years from 1912-1913, inclusive, the cost of administration had decidedly decreased from more than $310,000 to slightly less than $100,000. The interest charges had decreased to a little more than $331,000, a decrease of more than one-half. The net profit had nearly doubled in the year 1913-1914 and

had again doubled in 1914-1915. In 1916 again the net profit more than doubled. In a similar fashion there has been a steady increase in net quick assets, and the total surplus increased from slightly less than $4,000,000 in 1912-1913 to almost $8,500,000 in 19151916. Besides this excellent showing in the surplus, $2,000,000 outstanding bonds have been paid off as already indicated.

It will be noted by following line C on the chart that in spite of the decided fluctuations the margin remained high until the cut in prices which occurred just before the outbreak of the European war, while there was a steadily increasing price of corn. The profits dropped to a very low point, lower than any since 1898, but they have again recovered until (in November, 1915) the profits were back to their former high level. The combination seems to hold its influence and careful business methods, and to be able to maintain the prices at profitable rates.

Although this general conclusion regarding profits seems to be certain, a study of the red line D, showing the purchasing power of spirits from 1900 to the close of 1914, indicates that since 1907 there has been a tendency similar to that shown in most of the other charts for the purchasing power to decrease when expressed in terms not of money, but of commodities. This tendency, however, is not so marked as in some other cases and does not apply at all during the earlier years. From 1900 through 1901 there was a slight increase in the purchasing power followed by a decrease through 19021903 and 1904, another increase to the highest point in 1907, thereafter a decrease of some 40 points until

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