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This is probably the most exciting untold story in rum. When you read the script, imagine Gregory Peck as Harris Eastman Sawyer.
The committee met at 11 o’clock a. m.
Present: Senators Aldrich (chairman), Burrows, Piatt, Hansbrough, Hale, Daniel, Money, and Taliaferro.
Present, also, Frederick L. Felton, esq., of Boston, Mass.; Dr. Harris E. Sawyer, of Boston, Mass.; John B. Purcell, esq., of Richmond, Va.; Samuel A. Woolner, esq., of Peoria, Ill.; H. J. Kaltenbach, esq., of New York City, N. Y.; Peter J. Hennessy, esq., and others.
(Hon. John W. Yerkes, Commissioner of Internal Revenue, was also present during the latter part of the hearing.)
The committee thereupon proceeded to the consideration of the bill (H. R. 24816) “To amend an act entitled ‘An act for the withdrawal from bond, tax free, of domestic alcohol when rendered unfit for beverage or liquid medicinal uses by mixture with suitable denaturing materials,’ approved June seventh, nineteen hundred and six.”
STATEMENT OF FREDERICK I. FELTON, ESQ., OF BOSTON, MASS.
Mr. Felton. I am a distiller, Mr. Chairman, and have with me my chemist, Doctor Sawyer, who is thoroughly familiar with all the details of this matter. We desire a very simple amendment—that is, we would like the privilege of denaturing at the proof of 150° instead of 180°.
The Chairman. You make rum, I believe?
Mr. Felton. Yes, sir.
The Chairman. You are about the only maker of New England rum that is left, I think.
Mr. Felton. No; there are seven of us.
The Chairman. Are there as many of them as that?
Mr. Felton. There are seven of us left. I am perhaps the largest and the oldest, but there are seven scattered through the country— one in Covington, Ky., one in Portsmouth, N. H., one each in Newburyport, Charlestown, Everett, Somerville, and South Boston, Mass.
Senator Hale. Where is yours; in Newbury port?
Mr. Felton. No; not Newburyport. Mine is in South Boston. The Newburyport distillery is the Caldwell house.
We would like this bill, if possible—as well as all the amendments that are going through, which we do not oppose at all—to take effect upon its passage rather than wait until September, excepting that portion or it—which really requires more time for the Commissioner to make his regulations—In regard to the small distilleries throughout the country.
With your permission I would like now to introduce Doctor Sawyer and let him go into the details of the matter. I notice that the younger members of a business know more about it than the older men, who have laid aside a little bit and have attended less to the details.
STATEMENT OF DR. HARRIS E. SAWYER, OF BOSTON, MASS.
Doctor Sawyer. We are in favor of the passage of the act, but there is one amendment, Mr. Chairman and gentlemen, which we would like to see made. That is the insertion of a clause which will permit the denaturization at any proof that may be desired by the consumer, not lower than 150°.
The Chairman. What is the present limit—180?
Doctor Sawyer. One hundred and eighty. The reason why we ask for the insertion of this provision is that many of our customers, who use our material for industrial purposes, feel that it is a hardship on them to be obliged to use a material that has been redistilled to 180° of proof.
As you will remember, it was brought out in the hearings of this committee last spring that a certain amount of alcohol is used by tobacco manufacturers in the preparation of their leaf. That amount is not especially large in proportion to the amount of tobacco manufactured, but this use of alcohol is an essential feature in the manufacture of many brands, both of smoking and of plug tobacco—that is, both of the loose or granulated tobacco and of the plug tobacco.
Senator Hansbrough. Is it used in the manufacture or other articles than tobacco?
The Chairman. Do you mean to inquire whether rum is used?
Doctor Sawyer. No.
Senator Hansbrough. Only in tobacco?
Doctor Sawyer. Our industrial sale is solely to tobacco manufacturers.
Senator Hansbrough. All right; go ahead.
Doctor Sawyer. The part which the alcohol plays in tobacco factories is threefold. In the first place, it is necessary for the manufacturers to use alcohol in order to carry into solution many gummy materials that are added, for purposes of binding, to tobacco that is to be made into plugs. In the second place, they are obliged to use a considerable amount of alcohol in the lubrication of machinery and in cleansing floors. In the third place, they find that the presence of a certain amount of alcohol during the manufacturing processes tends to prevent the formation of mold on the somewhat moist tobacco leaves. They have been accustomed in the past to buy rum at 100° proof for that purpose; but they can equally well use a spirit at about 150°.
Senator Hansbrouqh. Can they not use it at 100°?
Doctor Sawyer. They would be able to use it at 160°, but it is desirable to hold the degree of proof down within certain limits, for this reason: In our crude molasses alcohol there are certain bodies not alcohol themselves; I will not pretend, even as a chemist, to say what they are, because we simply do not know. Their amount is so small that we are hardly able by chemical analysis to estimate their proportion. They are bodies of a waxy nature—something like cocoa butter, I think, and their bodies are left behind on the leaf when all the alcohol has passed off into the air. Now if we redistill our alcohol from a proof of about 150° up to the proof of 180°, to which proof we are obliged under the existing regulations to distill if we wish to denaturize, we take the wax out absolutely, and thus we despoil the material which we supply the tobacco manufacturers of a constituent which has been shown to have a very distinct value to them; I say again that we do not know what the waxy material is, so that we are unable readily to add anything of the sort to denaturized alcohol. But it keeps the tobacco from drying out, and it makes it smoke sweeter. If, several months after its manufacture, you feel of tobacco that has been treated with our 150° proof alcohol you will find that it balls together better, and that it packs better in a pipe than one that has been prepared with 180° proof spirit.
Furthermore, our crude alcohol carries at 150° a variety of odorous compounds, derived partly from the molasses which is our raw material and partly from chemical changes which take place during fermentation. These bodies are ethereal in character rather than alcoholic, and they impart to our crude spirit a disagreeable rankness which unfits it for drinking, even when it is reduced in proof, until it has been properly matured. Like the wax, they seem to be retained in the tobacco after the alcohol itself has evaporated, and they develop there an agreeable fruity character which fails to appear when a high-proof, purified alcohol is substituted for our crude, medium-proof product. They also resemble the wax in being removed from the crude spirit when we redistill it from the proof of 150° up to 180°.
Now, these fruity odors which develop on the leaf are considered to be very largely responsible for the character of certain brands of smoking tobacco; and while the manufacturers are very anxious to get the benefit of the remitted tax, to which they unquestionably are entitled under the act of June 7, they desire equally to hold the present character of their brands, and they wish, therefore, to be allowed to use the crude spirit, denatured at 150°, rather than the purer alcohol of 180° proof.
We, of course, are equally anxious to be allowed to furnish them the material which is most suitable to their manufacturing processes. We have teen building up this part of our business for the past twentyfive to thirty years and naturally wish to be able to hold it, especially as the consumption of rum as a beverage has been diminishing year by year. Our ability to retain it will depend, of course, upon our ability to supply a spirit of suitable character. We have made a large number of experiments during the past year to find out whether the tobacco manufacturers can, with advantage to themselves, use 180° proof spirit, and we find that undoubtedly it means a loss to them on account of the danger of changing some of the qualities of established brands.
I would like at this point to say that these experiments included tests of finished tobacco to ascertain whether any alcohol is retained therein. I found that practically none is so retained. In one case, the tobacco having been soldered up in tin cans, there were traces of alcohol present in the proportion of about one-half a gallon per ton of tobacco. In samples of plug tobacco no trace of alcohol could be detected.
Senator Hale. Let me ask you a question right there. You have stated what your market is. How does that apply to all these other establishments throughout the country? Are they situated just as you are about their market for their product?
Doctor Sawyer. Do you refer to the grain distillers?
Senator Hale. The rum distillers.
Doctor Sawyer. What we say of ourselves would apply equally to all of them.
Senator Hale. Is their market largely with the tobacco people?
Doctor Sawyer. No; I suppose that we have rather more business with the tobacco manufacturers than the other distillers do, as our business is larger than that of any other rum distiller.
The Chairman. What proportion of your product is sold for drinking purposes?
Doctor Sawyer. About one-third in this country and about one-third abroad. The balance is sold to tobacco manufacturers.
The Chairman. You sell rum abroad, do you?
Doctor Sawyer. Oh, yes; to the extent of a third of a million gallons a year.
Mr. Felton. Almost exactly half of what we produce goes that way.
Senator Hale. Do you think that proportion applies to these other establishments, as you have divided it?
Doctor Sawyer. I have not any means of knowing, sir.
Mr. Felton. I think I can answer that practically correctly. There are only about three, or possibly four, distillers who export any rum whatever. There is one concern which exports nearly as much as we do; one not nearly as much as that and one a very small quantity. The others export nothing at all. Theirs is all used for drinking purposes in this country.
Senator Hale. About what proportion is used for drinking purposes here in this country?
Mr. Felton. About as the doctor said—from 25 to 35 per cent, I should think, of all that is made.
Senator Hale. Not far from a third?
Mr. Felton. Not far from a third. Nearly 50 per cent, by the records of the Internal Revenue Department, is exported to Africa, Constantinople, Japan, Australia, and different places; and that, of course, goes out in bond.
Senator Hale. That is for drinking purposes?
Mr. Felton. That is usually used for drinking purposes, making cordials and the like.
Senator Taliaferro. Then there is not more than about 20 per cent that is used for the tobacco?
Mr. Felton. Yes; from 20 to 25 per cent, the difference, of course, between the 35 per cent used for domestic consumption and the 50 per cent for foreign consumption. These are approximate figures, of course.
Senator Taliaferro. That is a total of 85.
Mr. Felton. And about 25 to 35 per cent for the tobacco.
Senator Taliaferro. That would leave about 15 per cent?
Mr. Felton. Well, it is probably nearer 20 for tobacco. We can not get at accurate figures, of course, but that is as near as we can get at it. We have, perhaps, forty to fifty customers among the tobacco manufacturers who come direct to us; and then we think there are about fifty or sixty others that come to us through large dealers in spirits; and the balance we know nothing about. They probably go to other distillers, and some do not use it at all.
Senator Hansbrough. You do not pay a tax on the alcohol sold to be used in tobacco?
Mr. Felton. We do now. Oh, yes; on every gallon.
Senator Hansbrough. You do now?
Mr. Felton. Certainly; but under the new law if we make that rum 180° proof then the tax will be remitted if we denature the alcohol, as the Department now allows us to do, with a denaturant that the doctor will tell you about. We are already allowed to denature it and sell it to the tobacco people without the tax provided we put it 180° proof; but we want to save these odors the doctor tells about for the tobacco people by not making it at so high a proof.
Senator Hale. That is your main point—you want to use 150° proof instead of 180°?
Mr. Felton. That is our main point; practically, our only point.
The Chairman. On the ground that the tobacco manufacturers can buy it at 150° and could use it to better advantage than if it was 180°?Mr. Felton. It retains the odors they desire.
Senator Hale. The 150° proof would assimilate better with their manufactures than the 180°?
Mr. Felton. It gives them the odors they want.
Doctor Sawyer. And this other quality that I spoke of, the waxy substance.
Senator Hale. Yes.
Doctor Sawyer. The wording of the modification which we would suggest would be something of this sort: We would insert after the words “domestic alcohol” in lines 7 and 8 the words “of not less than one hundred and fifty degrees proof.” That would permit denaturalization down to that point, but not below. We will submit to the committee a little later a draft showing exactly what we desire the first section of the bill to be.
We have felt that there was no reason why we should not be allowed to denature at as low a proof as 150° under the existing law of June 7, 1906. The Revised Statutes specify regarding alcohol as follows:
Sec .”1248. Distilled spirits, spirits, alcohol, and alcoholic spirit, within the true intent and meaning of this act. is that substance known as ethyl alcohol, hydrated oxide of ethyl, or spirit of wine, which is commonly produced by the fermentation of grain, starch, molasses, or sugar, including all dilutions or mixtures of this substance, etc.
According to section 3248 of the Revised Statutes, therefore—and this, so far as I am aware, is the onlv place where alcohol is defined in our law—alcohol is alcohol, regardless of its strength, whether the latter be 150° or 180°. The act of June 7, 1906, reads, in part, as follows:
That from and after January first, nineteen hundred and seven, domestic alcohol of such a degree of proof as may be prescribed by the Commissioner of Internal Revenue may be withdrawn from bond without the payment of Internal-revenue tax for use in the arts and Industries, provided said alcohol shall have been mixed In the presence and under the direction of an authorized Government olficer, after withdrawal from the distillery warehouse, with methyl alcohol or other denaturing material or materials or admixture of the same, suitable to the use for which the alcohol is withdrawn, but which destroys its character as a beverage and renders it unfit for liquid and medicinal purposes.
Therefore we requested permission to denature for our tobacco customers with tobacco extracts at proofs as low as 140° or 150°. The Commissioner has granted the first part of our request, but he says that in his belief he is not authorized under the law to establish so low a limit as 150°. In his opinion, alcohol is a stronger material, in spite of the fact that the wording of section 3248 would lead one to say that any spirit of any strength down to or below 100° of proof is alcohol within the meaning of the law.
What we now want, therefore, is an explicit statement in this bill that we shall be permitted legally to denaturize as low as 150°. The only objection which could be made to our denaturization at that low proof, in my belief, would be one to be based upon the chance of fraud. Now, I do not see how any fraud could possibly arise, because the denaturant which we are going to use is just as efficient at one strength as at another. The manufacturer who had bought alcohol denatured by our process at 180° would be able the moment he received it to add water in his factory to bring it down to any proof at which he wished to use it; and it makes no difference whether that water is added by him after the alcohol comes into his possession or whether it is left in there from the time that it is made by us.
Senator Hale. What is your denaturing agent?
Doctor Sawyer. A mixture of two aniline colors and a certain proportion of nicotine—nicotine being a body of nauseating character, when taken in sufficient doses, and being at the same time a characteristic element of tobacco, so that we are not introducing into the alcohol anything which would not normally be present in the tobacco to which it is added.
Senator Hansbrough. What is the cost of it?
Doctor Sawyer. Of the nicotine?
Senator Hansbrough. No; of your denaturant.
Doctor Sawyer. The cost figures out about 1 cent for every gallon of strong alcohol; about one-half a cent per proof gallon.
Senator Hansbrough. That is a cheap denaturant.
The Chairman. Does the nicotine you use come from tobacco?
Doctor Sawyer. It is extracted from tobacco stems. They extract it in a state of almost chemical purity in some of the Louisville factories where they work up tobacco refuse. We propose to buy it as chemically pure nicotine, add a certain amount of it to the requisite amount of aniline dyes, and then add sufficient water to bring it to a definite strength; and then 1 per cent of that, by volume, is to be added to 100 parts of alcohol.
Senator Hale. Has this denaturing agent, this composite agent which you use, been submitted to the Commissioner of Internal Revenue?
Doctor Sawyer. Yes, sir; and approved by him.
Senator Hale. And approved by him?
Doctor Sawyer. And approved by him and his chemist. Senator Hansbrough. Let me ask you whether that denaturant can be manufactured in unlimited quantities?
Doctor Sawyer. Yes, sir.
Senator Hansbrough. So that it might be used as a general denaturant by everybody?
The Chairman. You could only use it, I suppose, in tobacco manufacture, on account of the nicotine. They could not put that into everything, I imagine.
Senator Hansbrough. You could put it into alcohol that was to be used as an illuminant, or for fuel purposes, because the object is to make it undrinkable.
Doctor Sawyer. It could be used.
Mr. Felton. It would make it decidedly undrinkable.
Senator Hansbrough. That is the cheapest denaturant I have heard of.
Senator Hale. And unsmellable, and everything else.
Mr. Felton. It does not smell very bad.
Senator Hale. It does not?
Mr. Felton. The doctor has a sample here.
Doctor Sawyer. Here is a sample which has been denatured with this material [exhibiting sample of denatured alcohol to the committee].
Mr. Felton. Everything that we desired has been approved by the Commissioner except the one item of proof.
Senator Hansbrough (referring to sample of denatured alcohol). Has that 1 per cent of your denaturing agent in it?
Doctor Sawyer. That has 1 per cent of our denaturant.
Senator Hansbrough. This is the double strength—180°?
Doctor Sawyer. Yes, sir. The object of adding the nicotine is, of course, to make the alcohol undrinkable. We have in what would be an ordinary drink an amount of nicotine that would make a man good and sick, and we put in, in addition to the nicotine, the aniline colors, to warn a man that it is not something that is intended to be drunk.
Senator Hansbrough. Do you not regard that as the cheapest denaturant that is being used or likely to be used?
Doctor Sawyer. I think that is the cheapest, and I think that in many respects it is most nearly an ideal denaturant I think that it is fully as efficient as any of the general denaturants that have been recommended, in spite of the fact that under the regulations as they now exist this is permitted to be used only as a special denaturant where records are kept by the manufacturers of the amounts bought and used.
Senator Hale. All that is regulated by the Commissioner?
Doctor Sawyer. All that is regulated by him, sir.
The Chairman. Is that all? We will have to go ahead, because we have not very much time.
Senator Hale. Yes; I think we understand the gentleman’s position.
Senator Burrows. What do you say about wood alcohol as a denaturant?
Doctor Sawyer. I think myself that wood alcohol is not nearly so efficient a denaturant as this material, because, in my opinion, wood alcohol, when mixed in the proportions called for under the regulations, does not impart nearly the nauseating character to the denaturized alcohol that this proportion of nicotine would. It makes it smell worse; it gives the man who might drink it more warning, perhaps; but the final effect upon the drinker would not be nearly so pronounced as that of our denaturing agent.
The Chairman. We will give you and Mr. Felton a copy of this testimony, and you can extend it or enlarge it as you see fit. Perhaps we had better hear the ether people now. We would like to have the Commissioner here when Mr. Woolner and his friends are heard upon the bill and their objections to it. Perhaps we had better hear the ether people next.