Permit Racket

Last week the U. S. liquor business was busy reacquiring a bad name for itself. The San Francisco Board of Health found that much of the spirits sold in that city was "worse than bootleg." Across the continent the New York Board of Health examined sample after sample of legal whiskey, found much of it cut, colored and misbranded, passed an ordinance requiring honest labeling. Meantime in Washington had sprung up a new importing racket which was contributing to the high price and low quality of liquors from abroad.

When liquor was legalized, Federal Alcohol Control Administration was swamped with 1,000 requests for permission to bring in 50,000,000 gal. of foreign wines & spirits. In the peak pre-War years, 12,000,000 gal. had been the annual importation. Accordingly, FACA issued import licenses after drastically reducing all importers' quotas. This action wrought considerably more hardship on legitimate dealers who had applied only for their honest needs than it did on a number of unscrupulous speculators and ex-'leggers who applied for quotas in the names of from one to 30 dummy corporations, with no intention of ever importing a drop. These gentry of late have proceeded to approach legitimate importing houses with excess quota orders and offer to sell them their unused permits at a fancy premium. Since New York is the port through which most imported liquor arrives, FACA wrote to Edward P. Mulrooney, head of the state liquor board, urging an immediate investigation of the practice. FACAdministrator Joseph Choate Jr. dropped his studies on the problem of fixing an import quota for sake long enough to declare:

"The attempt to sell a permit is at least prima facie evidence that when the applicant swore that he needed the stated amounts in his business as an importer, his statement was false. . . . These instances when established will be handed over to the Department of Justice."

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