The CHAIRMAN. The United States, as I understand it, does not sell it at all, Judge. It is sold by manufacturers.

Mr. HERSEY. What is there in your amendment that would make it cost less to you?

Mr. CHATFIELD. Very much less supervision. The more detail you dispense with in handling any commodity, the cheaper you can handle it.

Mr. HERSEY. Your objection is that there are too many officials? Mr. CHATFIELD. Too many officials and too many inexperienced officials. If some of the suggestions that have been made in various regulations were adopted our plants would be opened to a lot of unscrupulous people, and we would have no more secret processes and our business methods would be open practically to the public. Now an internal-revenue officer comes into our plant; we show him everything he wants to see. But there are a great many plants in our kind of business particularly that we are very guarded about whom we take through. We are perhaps a little fortunate in that line, because if anybody comes into our building, an inspector, who has not the right to come in, and we do not like his methods, we just turn on a little poison gas-we use it in our business, have to have itand he never comes back. But it is a general, pestiferous interference; and it will always be that way as long as handled by the Prohibition Unit.

Mr. HERSEY. That is because the regulations are necessary in carrying out the law, and I want you to be a little more specific and tell us just what your troubles are. You say one of your troubles is that it should be easier in the matter of inspection, so there would not be so much inspection?

Mr. CHATFIELD. Our position, judge, is just about this: The child who inadvertently, through lack of knowledge, puts its finger on the lot stove immediately acquires so much experience that the old saying is, "The burnt child dreads the fire." The users of alcohol have been in the game for years; they know what it means. They have had enough experience so far with the dual management between the Prohibition Unit and the Bureau of Internal Revenue. I am carrying no brief for or against prohibition; but we want the industrial alcohol business left with the Commissioner of Internal Revenue and his collectors and deputy collectors, who know. And we question if it is good policy for this country to throw away that experience, that machinery that has been built up, and put it over into people's hands who do not know, in whom we have as manufacturers and I speak advisely for the most of my people-I regret to say, no confidence.

This is a new experiment, this dual management in prohibition. I do not know that I will ever live to see it, because I have been in the game a good many years, but something is going to happen sometime in this country. I can not believe that a country with 110,000,000 people is going to stand for the unbusinesslike methods that exist with us to-day.

Mr. HERSEY. Just tell the committee those methods you object to. Mr. CHATFIELD. I object to general supervision.

Mr. HERSEY. General supervision?

Mr. CHATFIELD. Yes. I can not give you any more explicit reason why I believe that than that the child hates the fire.

Mr. HERSEY. There must be some supervision?
Mr. CHATFIELD. Absolutely; we want that.

We welcome all kinds.

of logical and necessary supervision. The men in my business are not afraid of unlawful diversion, and when the diversion takes place we will show the Government why it takes place.

Mr. HERSEY. You understand that I am in favor, as one member of this committee, of giving you all the help I can in legitimate business in the handling of industrial alcohol. I want to know how I can help you.

Mr. CHATFIELD. My suggestion to that will be if you will study the original Cramton bill and then study the amendments we suggested, which in my opinion are right and which we all stand for, if you could go over that carefully before you come to a final vote on the reporting of this bill, I shall be glad to come to Washington any

time

Mr. HERSEY. If you will excuse me. Of course, I shall read the bill. But what I am trying to get out of you now is your opinion on this, your own testimony as to how we can help you, and how we can make it easier for you to deal in the legitimate business of industrial alcohol.

Mr. CHATFIELD. That is just what I want to do, pass a bill that keeps the handling of industrial alcohol in the internal revenue office, under an industrial alcohol commissioner, along the line of these amendments, and separate us, if you will, from the present Prohibition Unit. When anything goes wrong, we will call them in to help us detect it.

The CHAIRMAN. You believe that the present organization which has been built up through these years would be more helpful to the business interests of the country if it were retained in control of this matter of industrial alcohol and its supervision than if a new unit were attempted to be created?

Mr. CHATFIELD. Absolutely. That would cover every trouble we have had. We have had to go to the Commissioner of Internal Revenue and state our case to him, and in every case we have received the necessary permits and what we wanted without any question of any illicit use or anything else, because we have been able to prove to the Commissioner of Internal Revenue that our requests were legitimate and right.

The CHAIRMAN. In other words, you think that the one system has the desire to supervise the business interests of the country, with some regard to permitting them to live and prosper; and that these interests would be prejudiced to some degree if the controlling element were prohibitory regulation?

Mr. CHATFIELD. Absolutely. We have never seen a shop run successfully by a committee of capitalists, one of dual control.

Mr. SUMNERS. I would just like to ask what you pay for alcohol now?

Mr. CHATFIELD. According to the various formulas. There are too many formulas. I should say the price is around 47 to 48 cents. I would sooner have some alcohol producers later answer that question, as they can do so more intelligently than I can. But I should say the price is between 45 and 50 cents a gallon.

Mr. MONTAGUE. Wine gallon?

Mr. CHATFIELD. Wine gallon.

Mr. MONTAGUE. How much is the tax?

Mr. CHATFIELD. Denatured alcohol is all free of tax. It is taxed until denatured, and then the tax is remitted.

Mr. SUMNERS. Do you know what the cost of denaturing is? Mr. CHATFIELD. No. That depends upon the denaturing commodity used. But I know that under some of the formulas if you put the denaturant and the pure alcohol together in the commodityformula 45 for instance and denature that, and try to recover the alcohol you will ruin more denaturant in dollars and cents value that you get for the alcohol. No bootlegger, no illicit man undertakes a business unless it is profitable.

Mr. SUMNERS. When you use this alcohol in the manufacture of your commodities do you have to treat it before you are able to use it, or can you use it as it is?

Mr. CHATFIELD. Many of our users use it just exactly as it comes. But if you attempt to redenature or reclaim and get the alcohol back as potable, the residue and the denaturant which you would destroy would be worth more as a cost unit than the alcohol you would obtain. Mr. SUMNERS. What occasion is there for you undertaking to take the elements of denatured alcohol out of it?

Mr. CHATFIELD. We do not.

Mr. SUMNERS. How does that enter into the discussion of your question?

Mr. CHATFIELD. Because that is to bring out the question of illicit use of alcohol after it is released free of tax denatured.

Mr. SUMNERS. I was not dealing with that. I was just tracing this into its use in manufacturing.

Mr. CHATFIELD. When the goods come to us they are all ready denatured.

Mr. SUMNERS. You can use them just as they come to you?
Mr. CHATFIELD. Absolutely.

Mr. MONTAGUE. The permits now are issued altogether by the Commissioner of Internal Revenue, are they not?

Mr. CHATFIELD. In denaturing warehouses, under his control and the control of the Government. The man who owns a denatured plant can not go into it between the hours of sunset and sunrise, or or whatever hours the revenue officers are not there.

Mr. MONTAGUE. The users of denatured alcohol have to have permits, do they not?

Mr. CHATFIELD. Absolutely.

Mr. MONTAGUE. Those permits are issued now by the Commissioner of Internal Revenue?

Mr. CHATFIELD. Yes; and vizéed by the Prohibition Unit.

Mr. MONTAGUE. Assuming that there are violations by reason of extended permits for denatured alcohol. Do you think that the cure for that would be in dual administration or unified administration; which would be better?

Mr. CHATFIELD. I think it would be better with unified administration of industrial alcohol.

Mr. DYER. Doctor, as I understand it now, alcohol is needed for industrial concerns such as you have advocated, as well as scientific research in universities, hospitals, and so on, which use alcohol, and they obtain it from the internal-revenue officers throughout the country. Is that a fact?

Mr. CHATFIELD. Yes.

Mr. DYER. If this legislation should be enacted into law it would make it necessary to apply to the prohibition-enforcement officials for that same alcohol?

Mr. CHATFIELD. That is as I understand the bill.

Mr. DYER. Your argument, as I get it, is that it would cause an immense delay for the purposes I have indicated, and at the same time throw a new force into the field, under the prohibition office, who are untrained and inexperienced in this legitimate field of industrial alcohol; and that thereby it would cause more delay and injure your business.

Mr. CHATFIELD. Absolutely.

Mr. MICHENER. Yes; but the institutions you are referring to are not objecting to this bill. They favor it, the hospitals and colleges. The people who are objecting here are the industrial-alcohol people, the extract people, Parke, Davis & Co., and Frederick Stearns, and people of that type are not making any serious objections.

Mr. CHATFIELD. I do not know anything about Stearns & Co. Parke, Davis & Co. are not turning their hand either one way or the other in this, but they do not use our kind of alcohol, and they probably do not want competition. It is easy for big concerns like them to keep on under the restrictions. In our business, any man with two or three hundred dollars can go and start in business and compete with us. The attitude of Parke, Davis & Co. on the tariff is well known and various other things they do do not appeal to me at all.

Mr. CROUNSE. Doctor Reese, our next witness, Mr. Chairman, is chemical director of the du Pont interests. He is president of the American Institute of Chemical Engineers, representing, smokeless powder and high explosive industries; artificial leather industries, dye industry, and others.

STATEMENT OF DR. CHARLES L. REESE, CHEMICAL DIRECTOR E. I. du PONT de NEMOURS & CO., WILMINGTON, del.

Doctor REESE. Mr. Chairman. I am not going to make a speech; I am simply coming here to tell you the position of the people I represent and give you some little idea as to the amount of industrial alcohol consumed in certain industries. I am president of the American Institute of Chemical Engineers, and in that way I represent a little over 600 chemical engineers in this country. They are all opposed to this bill, as a body, and their livelihood depends on the chemical industry, which in a very large measure depends on the use of industrial alcohol. I am ex-president and director of the Manufacturing Chemists Association, which is made up of the heavy chemical manufacturers in the country and a great many of the organic chemical manufacturers. I have a list of the officers and members of this association, and I will leave that with the stenographer.

(The list referred to is as follows:)

OFFICERS

President.-Elon H. Hooker, Hooker Electrochemical Co., 25 Pine Street, New York City.

Vice presidents.-C. Wilbur Miller, Davison Chemical Co., Garrett Building, Baltimore, Md.; Dr. M. C. Whitaker, U. S. Industrial Alcohol Co., 110 East Forty-second Street, New York City.

Treasurer. Salmon W. Wilder, Merrimac Chemical Co., 148 State Street, Boston, Mass.

Secretary. John I. Tierney, 540 Woodward Building., Washington, D. C. Executive Committee. Henry Howard, chairman, Grasselli Chemical Co., 1300 Guardian Building, Cleveland, Ohio; Adolph G. Rosengarten, Powers-Weightman-Rosengarten Co., Ninth and Parrish Streets, Philadelphia, Pa.; Lancaster Morgan, General Chemical Co., 40 Rector Street, New York City; Dr. Chas. L. Reese, E. I. du Pont de Nemours & Co., Wilmington, Del.; H. H. Dow, Dow Chemical Co., Midland, Mich.; Robert T. Baldwin, National Aniline & Chemical Co., 40 Rector Street, New York City; William H. Bower, Henry Bower Chemical Manufacturing Co., Gray's Ferry Road and Twenty-ninth Street, Philadelphia, Pa.

MEMBERS

Armour Fertilizer Works, 209 West Jackson Boulevard, Chicago, Ill.

Atlas Powder Co., Wilmington, Del.

The Barrett Company, 40 Rector Street, New York City.

Baugh & Sons Co., 20 South Delaware Avenue, Philadelphia, Pa.

Bower, Henry, Chemical Mfg. Co., Gray's Ferry Road and Twenty-ninth Street, Philadelphia, Pa.

Calco Chemical Co., Bound Brook, N. J.

Carbide & Carbon Chemical Corp., 30 East Forty-second Street, New York City.

B. P. Clapp Ammonia Co., Providence, R. I.

Columbia Chemical Co., Barberton, Ohio.

Commercial Solvents Corp., 17 East Forty-second Street, New York City.

Consolidated Color & Chemical Co., 122 Hudson Street, New York City.
Contact Process Co., P. O. Box 98, Buffalo, N. Y.

Coopers Creek Chemical Co., W. Conshohocken, Pa.

Davison Chemical Co., 1101 Garrett Building, Baltimore, Md.

Detroit Chemical Works, Detroit, Mich.

Diamond Alkali Co., Pittsburgh, Pa.

Dow Chemical Co. (The), Midland, Mich.

E. I. du Pont de Nemours & Co., du Pont Building, Wilmington, Del.
Durex Chemical Co., 320 Fifth Avenue, New York City.

General Chemical Co., 40 Rector Street, New York City.
Grasselli Chemical Co., 1300 Guardian Building, Cleveland, Ohio.
Harshaw, Fuller & Goodwin Co., Hanna Building, Cleveland, Ohio.
Herf & Frerichs Chemical Co., 928 Pierce Building, St. Louis, Mo.
Heller & Merz Co., Hamburg Place, Newark, N. J.
Hercules Powder Co., Wilmington, Del.

Hooker Electrochemical Co., 25 Pine Street, New York City.
Kalbfleisch Corporation (The), 200 Fifth Avenue, New York City.
Klipstein, E. C., & Sons Co., 644 Greenwich Street, New York City.

Krebs Pigment & Chemical Co., Newport, Del.

Lennig, Chas., & Co. (Inc.), 40 North Front Street, Philadelphia, Pa.

Mallinckrodt Chemical Works, 3600 North Second Street, St. Louis, Mo.

Mathieson Alkali Works (The), 25 West Forty-third Street, New York City. Merck & Co., 45 Park Place, New York City.

Merrimac Chemical Co., 148 State Street, Boston, Mass.

Michigan Alkali Co., Ford Building, Detroit, Mich.

Michigan Ammonia Works, Detroit, Mich.

Mutual Chemical Co. of America, 55 John Street, New York City.

National Ammonia Co. (The), Frankford, Philadelphia, Pa.

National Aniline & Chemical Co., 40 Rector Street, New York City.

National Electrolytic Co., Niagara Falls, N. Y.

National Lead Co., 129 York Street, Brooklyn, N. Y.

Naugatuck Chemical Co. (The), Naugatuck, Conn.