Category: Law

Legal Customs In Three Sorts Of Brewing Cases

guildhall

 

More law. And why not? Beer is largely a function of law being a rich source of revenue for the crowd and a rich source of discord within the community. And with 178 volumes of court rulings in the English Reports covering the years from 1220 to 1866, there’s likely years’ worth of content to be examined. I am trying to wrap my head around it all. The court dealing with claims of ancient or at least established custom appear as a recurring theme. Two of the hops cases in the post from a couple of weeks ago were about a form of custom, the tithe to be paid to the church by the hop growers in a parish. Local rules. There are other customs to be identified as set out in cases like these:

• In the 1817 case Gard v. Callard [1817] EngR 255; (1817) 6 M & S 69; 105 ER 1169, the following claim was brought to the court in Devon.

… the plaintiff declared upon the custom that all the inhabitants within the borough of Modbury brewing in their houses there any ale or beer for sale, ought to grind at his mills in the parish of Modbury, all the malt used or spent ground by them in their said houses, in the brewing of ale or beer for sale, and to pay him a certain toll for the grinding thereof ; and alleged that the defendant was an inhabitant, &e. and that on the 1st January 1803, and on divers other days between that and the day of exhibiting the bill, he ground at other mills.

See the odd thing? The case is heard fourteen years after the wrong is alleged to have started occurring. The defendant, Callard, had not gotten his malt processed at Gard’s mill in all that time. The fee to be paid for the grinding was ” a toll of six quarts and a pint out of every bag of twenty gallons.” If there are four quarts in a gallon I make the fee 6.5 quarts out of every 80 or 8.125% of the malt. That is a hell of a toll for just milling the malt. No wonder they wanted to go elsewhere. But the toll was upheld. The lord of the manor was to be paid because “doubtless long usage and acquiescence in one uniform payment was cogent evidence that it was reasonable.” Because the internet is wonderful, here is more information on the manorial charter as well as the mills of Modbury. I wonder how much later it was until modernity hit, how long it was before beer was being brought in by train from somewhere else, undermining the manorial toll.

• Another sort of custom was claimed in Bosworth (Chamberlain of London) against Hearne [1791] EngR 130; (1791) Andr 91; 95 ER 312:

…that anno 1663 order was made by the mayor, aldermen and commonalty reciting, that the streets of the said city were much annoyed by brewers carts and drays, and therefore it was ordained thereby, that no brewer, drayman or brewers servants, shall work or be abroad in the streets with any cart or dray from Michaelmas to Lady-Day after one of the clock in the afternoon, or from Lady-Day to Michaelmas after eleven in the morning, upon the pain of forfeiting 20 s. for every time…

I am not sure why the annoyance of the City could be put up with for two hours more from Michaelmas to Lady-Day than in the rest of the year. For those of you who do not know, Lady Day is 25 March while Michaelmas falls on 29 September. The “Lady” is the Virgin Mary and the date on the calendar goes back to before the English Church split away from Roman Catholicism. Like the long standing civic holiday, the City of London’s order of 1663 was upheld as still good law in 1791. The fine for late deliveries was still good local law.

• The next case, Greene versus Cole, is harder to follow but it is laced with references to “custom” and “brew” which in itself qualifies it. The dispute relates to a will. A lot of these cases about breweries relate to a dispute in a will. But this one has a particularly spicy aspect – a charge of waste (perhaps as against the custom of the City of London) as set out in the ruling:

… the said Henry did make waste, sale, and destruction in the said house and messuage, that is to say, by prostrating a brew-house parcel of the said messuage of the price of 1000 [pounds], and taking away and selling the timber and roof thereof; and also by pulling down, pulling oft, and carrying away four ale-tuns fixed to the said brew-house, each of them of the price of 5 [pounds], a copper of brass covered with lead likewise fixed to the said brew-house, of the price of 200 [pounds], a mash-tun likewise fixed to the said brew-house, of the price of 20 [pounds], a pump erected in the said brewhouse, of the price of 5 [pounds], six brewing vessels called coolers made of timber likewise fixed to the said brew-house, each of them of the price of 6 [pounds], a malt-mill with a small millstone belonging to the said mill fixed in the ground in the said brew-house, of the price of 20 [pounds], and a cistern made of a cement called plaster of Paris, and fixed in the ground in the said brew-house, of the price of 10 [pounds], to the disinheriting of the said William, and against the form of the provision in such case provided ; wherefore he says that he is injured, and has damage to the value of 1000 [pounds] and therefore he brings suit…

Short version: the tenant (of a sort) tore down the brewery. The owner (of a sort) got upset. The brewery itself was “commonly called or known by the name or sign of the Flower de Luce” and was on Golding Lane (later Golden Lane) in the parish of St. Giles without Cripplegate, London. [See more about the brewery here.] There are two versions of the case that I see: Greene versus Cole [1845] EngR 97; (1845) 2 Wms Saund 228; 85 ER 1022 as well as Greene versus Cole [1845] EngR 98; (1845) 2 Wms Saund 252; 85 ER 1037. As you can see, the two cases were published in the same year, the second appearing to be a form of appeal. The passage set out above is from the first of the two. The second one explains what is going on a bit better. The first court hearing is before the “hustings,” a court of the city of London, held before the Lord Mayor, the sheriffs and aldermen. It handled matters related to land, common pleas, appeals from sheriffs and probate – or disputes over wills like in this case. Beadles are called in. Jurors are rounded up from the wards around the location of the brewery to advise what they think was going on. The hearing was held in the still standing Guildhall, illustrated above in the 1750s. The custom in this case is all about local municipal process. But the cases are not from 1845. They are from the 20th year of Charlies II, republished to illustrate the point being made in law. As a result, they also illustrate the value and the elements of a brewery from the 1680s. It had a cement cistern. Who knew? Again… neato.

That is enough for today. This ain’t easy reading.

The British Ale Brewery, A Joint Stock Company In 1807

bab1807In 1807, a correspondent who went by the name “The Plain Dealer” wrote a letter to the editor of The Morning Chronicle on the topic of joint stock companies:

SINCE my last letter a number of new projects have been announced to the public, and some of them of great magnitude…. Let us begin with the Breweries. No fewer than five companies have been established, to rescue the public from bad beer at an increased price. This was a most tempting proposal. There was, after the series of unfavourable harvests, which we suffered at the beginning of the new century, an universal complaint against the beer. It was not merely lowered in quality, but composed of substitutes for hops and malt, which were thought to be pernicious; and to add to the evil, it was said to be the practice of all the great brewers, both in town and country, to buy up the leases of ale-houses, so as to deprive the publican of the freedom of going to the best brewery for his liquor. If this statement be true, it was a crying evil; but it was, and is, capable of an easy remedy. It depends entirely on the Magistrates; for if, instead of the reluctance which they now feel at the licensing of new houses, they would make it a rule, whenever a public tap was known to be the property of a brewer, and that bad beer was the consequence, to license a free house, in the immediate neighbourhood; the competition would be renewed, and the people would be served with a wholesome, palatable, and strengthening beverage. We know that the worthy Chief Magistrate of a city in the county of Kent has announced this to be his determination, and the inhabitants have already reason to be grateful to him for his device.

Competition. That was the promise of the joint stock companies. Too much wealth had gravitated into too few hands through the reactionary period after the loss of thirteen of the fifteen American colonies and then the French Revolution. The quality of beer crashed as prices climbed. But this new cure by joint stock companies was not trusted. In the string of letters to the editor in which this one is found, complaints about “sleeping partners” and “middle men” are set out. The sorts of things that people who distrust big faceless corporations floating mid-air in the stock markets still raise today. Yet there was an argument that these were tools to break the monopolies of the fantastically well connected and landed, the means to introduce competition into a status based economy. Competition was a new idea. Distrust hovered.

There is another reason folk were concerned other than the shock of the new. 1720. Ever since 1720, the joint stock idea was cursed. See, from the mid-1500s to 1720 there was a system of chartered companies approved and given blessing by the Crown. The most famous in Canada is the Hudson Bay Company that continues today. In our book Ontario Beer, Jordan and I describe how in the 1670s beer was being brewed in Ontario’s Arctic north by staff of the HBC over-wintering in trading posts set up to supply the firm with furs and other goods from the exotic north. A number of these were set up to encourage trade with lands as far away as Russia and Turkey… and then in the first quarter of the 1700s the South Seas. Careful readers will recall a few days ago when in the 1760 case Hunter v. Sheppard the Court described the hop buying fraudulent scheme in this way: “…trade was at that time very particularly circumstanced, hops being in 1764, like South Sea stock in 1720, or India stock in 1767…” Frauds. Bubbles. Money going in but never a hope of return coming out. The disastrous South Sea Company was the last of these companies to be chartered. And for a hundred years they remained highly suspect.

By the new century, new problems with the economy demanded a return to the concept.Unincorporated and unlisted subscription joint stock companies were forming when large groups of people subscribed into what essentially was a extremely large partnership. Described as “associations of gentlemen” they formed to break the grip of the established and wealthy in the context of the new commercial liberties and the new industrial era. One of these new enterprises was the British Ale Brewery. In an 1809 edition of The Monthly Magazine in the listings of commodity prices, one aspect of the British Ale Brewery is described: you can purchase a share in the firm for a 4 pound premium. Trading in company shares was an innovation and one that caused distrust.

But what was the British Ale Brewery? Apparently, it operated. The formation of the company was described in the 1815 court case Davies v. Hawkins:

…in 1807 a number of persons, about 600, associated together as a company, and made subscriptions, which subscriptions were divided into shares of 50 pounds each, for the purpose of establishing a brewery for ale, &c. under the name of the British Brewery. The subscribers entered into a deed which contained, among others, these provisions: that the shares should be transferable, &c. the purchaser executing the deed, and binding himself to observe the regulations, etc. contained therein; that a committee to be appointed should have power to make rules, orders, and bye-laws, subject to confirmation by a majority of the proprietors at a general meeting; that the conduct of the business of the brewery should be confided to two persons who should be styled brewers, and the trade should be carried on in their names…

The two assigned to act as brewers 1807 were Begbie and Murray. Their British Ale Brewery along with the Golden Lane Brewery were the only two breweries to complete their share subscriptions and enter trading in Britain’s early 1800s stock markets. How did it fair? In the 1808 ruling in Buck v. Buck, counsel for the firm pleaded that the intentions of the brewing enterprise were the purest:

The object of The British Ale Brewery was to carry on a lawful trade in a lawful manner, and to furnish to the public at a cheap rate, and of a good quality, an article of the first necessity It was a public benefit, therefore, instead of a nuisance, and was no more illegal than any other partnership comprehending a great many members.

The court was not moved. It held the business to be outside the law. The brewery was supposedly located in 1810 on Church Street just south of Lambeth Palace in London between Pratt Street and Norfolk Row as shown in that 1818 map up there. Bits of those streets by those names still seem to exist near the Thames. Its twin, the Golden Lane, died off as a joint stock company in 1826. Hmm. In 1808, the same Begbie and Murray appear to take out an insurance policy for the Caledonian Brewery on Church Street in Lambeth. The equipment and the lease for the Caledonian Brewery of Lambeth are auctioned in 1824 and in 1831, one Thomas Begbie testifies before a committee on the state of the brewing trade. By 1844, the law of Britain required all joint stock companies to be incorporated and listed. Whatever happened, the brewery and the era appear to have been wound up by then.

Three 1700s English Court Cases About Hops

hops1700-1

Have you even noticed I particularly like beer related stuff from before 1800. Have you noticed I like beer related stuff related to the law? Imagine then my joy when I came across a searchable database for the English Reports, the law reports series from the Magna Carta in 1215 to the Judicature Act of the 1870s… or so. The first word I put in the database was “hops” and then “hoppes” just like I did when I cam across this early modern print aggregator tool a few months back. Why hops? Something of value worth arguing over, something with a relatively clear entry point into English culture. Plunk it into the English Reports and, right off the top, three court cases pooped up from the second half of the 1700s. A perfect moment to pull out the image I tucked away for just this situation, the mid-1700s hop picking scene “Hop Pickers Outside a Cottage” by George Smith (1714 – 1776). Notice how in the image, the hop polls are brought into the yard and then are picked by hand there. It’s not without relevance.

The first case has the best narrative. In the ruling in Tyers v. Walton T. 1753. 7 Bro. P.C. 18, there is a dispute between Rev. Walton, rector of Mickleham in Surrey and vicar of Dorking, and Mr Tyers who had a certain acreage of hops within those parishes. The dispute arose because the good vicar had the right to be paid a tithe of the hops in all these two parishes. In 1745, Tyers paid the tithe in the form of 20 guineas. from 1746 to 1750, he provided a tenth of the crop after the hops were picked. 1751, however, was a bumper year and great quantities of hops grew upon the 28 acres that Tyers controlled. Tyers got greedy. He offered a maximum of 20 shillings an acre. This was refused. In response, Tyers seems to have cut the bines on every tenth hill, did not pick the hops and told the vicar to gather them himself. The law was not amused. At trial the court held that “that hops ought to be picked and gathered from the binds before they are titheable” meaning, pick ’em then divide out the 1/10th share. At the appeal hearing, the court held “the appellant had not made the least proof that the tithe of hops were ever set out before they were picked from the bind or stem.” Not the sort of thing an appellant like to hear. 1-0 vicar.

In the second case, Hunter v. Sheppard and others 1769 IV Brown 210, there is no vicar. Just a hop merchant and his purchasing agent. London-based James Hunter is described as being “one of the one of the most considerable dealers in hops in England.” His agent, named Rye, worked in the Cantebury area for years had been well known as Hunter’s man. But in 1764… there was another good year with hops bearing top price. Rye set out to make deals as an independent – without telling Hunter or anyone else. The case gets quite involved. There is much unraveling of what each landowner knew, which agent was working for which buyer and what the prices were. The Court took the matter seriously as Hunter’s purchases for that one autumn in just the Canterbury area were worth a total of 30,000 pounds. In current UK currency, that is worth £394,200,000! Money. At trial, Mr Hunter did not win the day. The judge ordered an elaborate sharing of the proceeds among a number of parties. Hunter appealed and at the appeal the Court made a wonderful observation on the nature of Hunter’s business:

The trade was at that time very particularly circumstanced, hops being in 1764, like South Sea stock in 1720, or India stock in 1767, and it required great precaution to deal in them with safety and advantage; in all which cases, the great art is to conceal the real intention; and the appellant being the most considerable dealer in England, was not obliged to let into the secret every man who pleased to speak to him on the subject, whether upon the road or elsewhere.

The panel hearing the appeal was not impressed with Hunter. One is never encouraged in court when being compared to the South Sea Bubble. The Court held Hunter sought to seriously play the Canterbury hops market and “to support these propositions he had entangled himself in a series of contradictions; and the assertions in both the answers were in many respects falsified by the evidence for the respondents.” The word fraud is then used. Too bad for you, Mr. Hunter.

In the final case, Knight v. Halsey 1797 7 T.R. 88, we find ourselves thirty years in the future but back to the question of tithes. Unlike the previous two cases, the interesting thing is not the narrative tale like something of a distant backstory employed by a Victorian novelist to establish why two families in the 1860s hate each other. The interesting thing is the recitation of the law. Knight is described as “the occupier of a certain close in the parish and rectory of Farnham” while Halsey grew hops. The dispute arose in the manner in which the hops were to be picked and divided. The Court considered the 1753 case of Tyers v. Walton discussed above but reached back farther in time to a case called Chitty v. Reeves in the Court of Exchequer, from Michaermas term 1686 brought by Ann Chitty, the widow and executrix of C. Chitty, against Reeves of the parish of Farnham. It quickly gets even better as in that case, the Court relied on even earlier evidence and held:

It fully appearing to the Court that the custom, usage, or practice of paying tithe hops in the parish of Farnham, in the county of Surrey, for above sixty years past, hath been that the impropriator or his lessee hath had for their tithe the tenth row when equal, or else the tenth hill; that the same have been left standing with the hop binds uncut, and that the impropriators, &c. have always had convenient time to come and cut the said binds the hops upon the grounds…

Fabulous. This means that in the 1797 case, the court is relying on a finding of fact based on evidence from the 1620s that people, like those in the painting above, could take their time to gather the hops owed to the church when it suited them. Boom! That is law as good clean fun. The court reviews a heck of a lot of tithe law but keeps coming back to dear widow Chitty from the time of Charles I. It also points out, conversely, that a custom which is against reason cannot prevail and is, accordingly, legally void. We gotta move on. At a time of transition into the next century’s looming industrial era, it is quite extraordinary – and Lord Kenyon, the Chief Justice admits as such when he states “[w]hether tithes be or be not a proper mode of providing for a numerous class of persons of great respectability, the clergy, I will not presume to say…” In the end, Kenyon throws up his hands at all the information before him and, I understand, orders a new trial to get to the bottom of this claim of a long standing custom versus commercial common sense.

Wow. Such drama. The good widow Chitty and the mercenary Mr. Hunter all jump out off the page, all in the name of their share of the value of the hops crop as England is balancing its rural traditional past and its modern commercial future. Neato!

Your Saturday Morning News Not From Boak And Bailey

Six thirty Ay Hem. That’s what you get when you go to bed early on a Friday. After having a nap around supper time. That’s how I think of myself on this sort of Saturday. Okocimiski.

Three elections in a row this week plus, you know, the life of a desk jockey did me in. The first election last Monday in my former tiny jurisdiction of PEI saw my old law school prof get in as Premier. The next on Tuesday in the western Canadian home of the conservative puritans saw a landslide by the socialist hoard. And in the Old Country Thursday the nationalist lefties beat out the unionist pinkos to send the aysmetrical quasi-federation into a dither. The combined effect of many split votes in the last one caused the astounding “great victory of no more votes” – quite an accomplishment. What’s this got to do with beer? Not that much. But I work in governance so am aware that some things do actually matter. What else has been going on?

=> Jim Koch is cashing in some of his shares. Note that his balance of equity seems to be worth around 63.4 million. Sure, it’s a small brewery. Sure it is.

=> In one post, Ron has explained the point of Asheville NC far more clearly than the output of 1,000 subsidized junkets. That he got there via a milk run back country bus was a deft bit of contextualization even if he had to sit on his luggage… no, his actual luggage.

=> It’s been three weeks since beer retailing in Ontario was reformed and absolutely not one thing has actually changed. Classic boondoggling. And no one is complaining. Classic Ontario. Perhaps by 2028 we’ll be allowed to hold our beer bottles with our left hands in public. After all, what really matters is the posing. Like calling something “a game changer”, Toronto has a wee problem calling itself “world class” like the needy kid back in kindergarten who told you his uncle went to space. The phenomenon is described by the term world classy.

=> Go read BB. And then do it again. Where don’t their tentacles reach? It’s like they are becoming a vast industrial complex. [Thankfully, we can trust they did not write “here’s how to unearth the ‘ultimate’ session beer” in that header.] Note: their post on May Day celebrations at Padstow in North Cornwall is one of their best ever.

=> This is funny. In far western British Columbia:

The final report of the B.C. Liquor Policy Review recommends the government consider establishing a quality assurance program for craft beer and artisan-distilled spirits, similar to the VQA, or Vintners Quality Alliance, program — which currently guarantees wines are made in B.C., with 100 per cent B.C. ingredients.

Trouble is no one checked that “local” and “craft” in beer bear scant relationship to wine so… they are left with the same sort of fibs and platitudes we always see – which led to the refreshingly honest admission: “that’s kind of thrown a wrench into the ability to focus on what the next level would be.“

=> Just realized that if I started my own periodical I could name it “Al About Beer.” I would have to work on my ra-ra superlatives so maybe not.

=> Might I suggest unless one is extreeeeemely certain that a surprise beer and brunch pairing for Mother’s Day is only one thing: a quick route to the dog house. Don’t be stupid. Just because the love of your life puts up with your dependency / “hobby” it does not mean she likes it. Not at all.

Saturday. And maybe a stinking hot one as well. It was +25C¹ after deep into dusk last night. That means gardening. Letting more lettuce seed buried. Or drinks in the yard. Might get a bit Okocimiski. Jest Sobota Okocimiska? Może. Or I could just go get a growler. You have to remember that they sell lettuce at the grocery store in July, too, you know. Enjoy your Saturday. 7:45 am. People are starting to get up. Better make coffee.

¹ Disclosure: in Canada in spring there are a few days when you have to still make clear you are talking about +25C and not -25C.

“Selling Beer and Keeping Houses of Rendezvous”

barrie2One of the good things about being in my job is the records one comes across or co-workers with an interest in history share with you. I got this tidbit below in my email last week. That’s from the first document I came across in a larger scanned file called “Tavern Inspectors Records 1849-1853“.

To the Honourable the Municipal Council of the Township of Pittsburgh in Session aforementioned, We the Undersigned Tavern Keepers of the Village of Barriefield humbly and respectfully sheweth – whereas that there are persons residing in the said Village or premises adjoining Selling Beer and Keeping Houses of Rendezvous against the Law and to the great Desparagement of Her Majesty her [maybe “Crown”?] and Dignity seeing that we have to pay to the [?] the sum of Eight pounds with additions whereas these are paying [odd symbol for “zippo”] therefore we humbly beg your Honours will be pleased to look into the prayer of this our petition and dispell all such Houses unless they pay the same apportioned as in the City of Kingston vis [?] and we humbly beg that if such is granted that this shall be [?] for seeing that if such is not stopped we Your Petitioners will not be able to pay the Monies apportioned. But trusting that Your Honours will be pleased to looking into the prayer of this Petition and as In duty bound.

Barriefield is a small village in a largely rural township that was amalgamated into the City of Kingston in 1998. It was originally set up in the War of 1812 as an officer’s residence area associated with nearby Fort Henry. The document seems to be dated from 18 April 1850. It’s title on the back page is blurry and ink blot messy but seems to state Petition of [blah, blob, blur] for Beer Shops. It looks like the Tavern Keepers of Barriefield were not happy with the informal competition. I like the suggested threat, too: shut them down or we will maybe not pay our fees. That is the “zippo” emoticon circa 165 years ago in question up there, by the way. Click on it for a bigger bit of the document. I would also attach the whole file but it’s an 80 page pdf. Oh, what the hell. Have a look. By the way, a notation in the petition states that the matter was referred to the next Session and a bylaw was to be prepared… in case you are keeping track.

The beginning of the well regulated marketplace. What follows in those 80 pages is the licensing of all sorts of establishments in the community over the next few years. Afrirmations that the applicant is an honest, steady and sober man. The Township of Pittsburgh hadn’t been long in existence on the date of that first petition of April 1850. In the emails I was sent, there was also another file with the Minutes of the Midland District Municipal Council, a larger regional jurisdiction that was only abolished in 1849. So, one of the first things the new government has to deal with is the standardizing of licensing of the taverns and beer shops. Maybe it was just the fact of a thirsty British military base down the road. Or maybe it was the need to provide regulation as the Georgian ways of the century’s first have gave way to new Victorian expectations.

The Process Of Reforming Ontario’s Beer Sales

Well, the members of the editorial board of The Globe and Mail are not impressed. At least that is reassuring:

Politicians will be, more than ever, deciding who gets to sell beer and who does not, and which beer, where, when, how and at what price. Competition will still be largely forbidden. But, good news: If you are unhappy about anything, please write to the new Beer Ombudsman. He’s there to listen.

Ah, the Beer Ombudsman. What a silly idea. I eat a lot of toast and sometimes it doesn’t turn out. I want a toast ombud, too. It’ll never happen. But so might any number of bits of the policy… plan… ideas set out in the announcement. We all remember what happened to the LCBO Express stores idea. What exactly did happen yesterday anyway? As the Toronto Sun reported, the Premier put it this way:

“The days of monopoly are done,” Wynne said Thursday. “This is the biggest shake up to the sale of beer in Ontario since we repealed prohibition in this province and that was in 1927.”

Well, not exactly. Ontario never had much of a prohibition and the final centralization of retail stores happened more like in 1940 or so through the actions of Mr. E.P. Taylor in his gathering up of many of small breweries and their wholesale and retail divisions into what would become Carling-O’Keefe, one of Canada’s largest breweries until Moslon snapped it up in the 1980s. And Ontario was never really dry as humourist Stephen Leacock lampooned in his 1917 essay “In Dry Toronto“:

“…will you please tell me what is the meaning of this other crowd of drays coming in the opposite direction? Surely, those are beer barrels, are they not?” “In a sense they are,” admitted Mr. Narrowpath. “That is, they are import beer. It comes in from some other province. It was, I imagine, made in this city (our breweries, sir, are second to none), but the sin of selling it”—here Mr. Narrowpath raised his hat from his head and stood for a moment in a reverential attitude—”rests on the heads of others.”

See, when I was researching and writing the section for from 1900 to 1980 in our cult classic Ontario Beer, I came to see that Ontario went through a number of very intense shifts in its beer retailing rules and restrictions in little over a decade mainly starting in the middle of WWI, even though smaller changes had been coming for decades. What Leacock was lampooning was the situation in the early part of the regulatory temperance experiment in which Ontario brewed at a large scale for export only but then imported beer came in from intra-provincially brewers direct to the drinker through a process of individual purchases and delayed deliveries that – on paper – occurred outside of the province. The law literally allowed that the sin was only in the local sale of local beer.

And even when the rules were tweeked to stop that nonsense, there was still plenty of drinking going on. A Federal Royal Commission did the rounds on the question of tax evasionduring the years of official temperance and found out masses of beer was going out the back door of the “exporting” breweries for local consumption. As we stated in the book, in the spring of 1927, Labatt was implicated in kickbacks to customs officers in testimony before the Federal Royal Commission on Customs and Excise as it took evidence in hearings across Canada. When a shipping clerk called Aikens admitted he sold strong ale in London and vicinity, he explained that he only sold to people that he knew. He was congratulated for having such a host of friends. Labatt did, however, insist to the Commission that it had stopped shipping by camouflaged rail car in 1924 and, unlike most of its competition, had accounted for all taxes due. Such honesty.

All was forgiven as what replaced the process of tight control through regulatory temperance (and its really light ales along with some Ontario wine unless you had a cousin in the distillery in which case you got rye) was a succession of market control systems, laws and agencies which will be continued under the next new system announced this week. Don’t think so? Consider these aspects to the process leading up to the report issued by the Premier’s Advisory Council on Government Assets (the rather gutturally acronymed “PAC-OGA”) yesterday:

1. In the original announcement starting up this project in April 2014 it was stated that “will recommend how to maximize the potential of these government enterprises to ensure that Ontarians receive the value they deserve.” Note recommendation to the Premier is the goal.

2. An interim report is presented by PAC-OGA in November 2014 which explains how stakeholder (but not public) consultation had taken place:

We structured our review in two phases. Phase I, the results of which are included in this report, incorporated detailed reviews of the subject entities, stakeholder consultation and the development of our initial thinking on proposals for the future direction of each company. Phase II will incorporate further discussion and consultation on the proposals. This will further our goal of reaching agreement among the appropriate parties, leading to definitive recommendations to government for consideration in the 2015 Provincial Budget.

Note that discussion and consultation was to occur in Phase II.

3. But when the final report is announced yesterday, a deal has been struck. It even has at page 47 an “execution copy” of a document titled “Modernizing the Distribution of Beer in Ontario Framework of Key Principles” which has been worked out by Brewers Retail Inc. Molson Canada 2005, Labatt Brewing Company Limited, Sleeman Breweries Ltd., the Premier’s Advisory Council on Government Assets and the Ontario Ministry of Finance. It is also more of a transitional agreement than a simple non-binding memo of understanding. At section 10(c) it states that the parties agree to ” to negotiate the New Beer Agreements on terms acceptable to TBS and the Province, with the view to entering into the New Beer Agreements between the relevant parties as soon as possible and in any event before June 30, 2015.” Done deal. Recommendations and consultations finished. Working out the fine print as we speak. We are well on our way.

But to what? We’ll find out sometime in July, I suppose. Sure, the wish list has been published and will likely fall in place roughly as outlined but it is still a control system. The interests of big beer have been protected for at least a decade as have been enhanced revenue streams to the province’s coffers. There is lip service to concepts of “social responsibility” but no explanation of what that really means in this new world. Good reason. It means the same old thing as the same old structure still sits at the heart of the deal. If you have any doubt that that is not the case, that this is somehow a great leap forward for liberty, have a look at page 31 of the final report where it actually states:

The Ontario taxpayer is better off because they enjoy the same low prices as the Quebec taxpayer, but substantially more revenues go to the government.

Let that sink in for a minutes. No public discussion and locked in for a decade or more PLUS the report explains away how Quebec prices are the same as Ontario’s even with their 8,000 outlets because distribution costs are higher. See, Ontario is better off because instead of spending that money on beer delivery truck fleets – and instead of enjoying lower actual retail prices – all that money is scooped up by Ontario’s Ministry of Finance. Wonderful. Surreal but wonderful. What would Leacock have said about this sort of reform?

“To Search For What Is Best For The People Of Ontario”

I am not thrilled. Not really all that moved. The cornerstone of the big beer retail reform announcement that by two years from now there may be 150 grocery store licenses to sell beer to 13,000,000 Ontarians can quickly be boiled down. The reality is that as my town represents 1% of the provinces population that is an average allocation of 1.5 licenses for this city. On average.

If you have a look at the report issued by the Premier’s Advisory Council on Government Assets chaired by Ed Clark you see the other problem. At page 33 we see that licences “will be granted in urban areas”; “will be granted in a manner to ensure a fair representation of privately owned grocers”; and most importantly “will be issued through a competitive process based on the discount off the retail price at which grocers will purchase the beer from the LCBO.” So, there are no rural stores getting anything, it’s an auction that everyone gets a shot at but those with the deepest pockets will win. So most will end up in Toronto and maybe Ottawa because that’s where the best return will be made for the few holders of these licences. I am expecting little local change from the grocery store in initiative. Your grocery list is not “about to get a whole new look.”

But that is only one element of the whole. If you look at that headline up there, it is a quote from the introduction from last November’s interim report from the Advisory Council. It literally smacks of paternalism given there was no real public input in the process – but, despite that, there are still there are other other new initiatives that will create more interesting change. I think I will look at those bit by bit. There is a lot to look at. First, however, I think I am going to look at the process, how we got here – including how historically only the temperance movement from the 1870s to the 1920s triggered actual broad public input in the reform of alcohol sales. That was the only time that our betters were not firmly in control. Those times of referendum after referendum were very unOntarian. Ontarians actually like being controlled by their betters. And that won’t be changing anytime soon from the look of yesterday’s announcement.

Or Is The Oddest Thing Dismissing Common Answers?

Further to last week’s post, it appears now that Ontario has a special cultural strength, dismissing the common and obvious answer before all the facts are even in! Witness:

Wynne says changes are coming to the way beer, wine and spirits are sold once a review is completed of the Liquor Control Board of Ontario and its relationship with the Beer Store and wine retailers. When pressed today for details, the premier flatly dismissed the idea of beer sales in convenience stores, something the previous Liberal government of David Peterson promised in the late 1980s but never delivered.

There you have it. The end of imagination. The limits of review. The most telling thing is that there is nothing more to the story. No explanation of the “why” or “because” or even “what” for that matter. Just a flat no. This is a silly place.

Are The Oddest Things In Ontario The Solutions?

 

Update, Thursday: A rousing 17% of Ontarians want beer in grocery stores. Because we can’t handle what Quebeckers, New Yorkers and those of Michigan can. We must suck.

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That’s a video posted in the Toronto Star the other day summarizing where this Province sits in its own internal debate about the retailing of beer in Ontario.Its attached to a story titled “Time to take ownership of the Beer Store: Cohn” The Star is taking a lead in the discourse and doing an excellent job but as the video displays there are some weird aspects to this issue that might seem odd to those from beyond the borders. When we were writing Ontario Beer the tasks got chopped up and I was assigned primary attention to the years 1900 to 1980 which, as you might guess, were not expected to be the most exciting for the development of good beer in the culture. What I found, however, through the review of law and brewer’s public appearance as much as the family trees of families who owned the brewery was that the community, culture and marketplace in Ontario has a number of abiding characteristics which continue to pop up through the decades and centuries of its relationship with beer:

-> Ontario is very comfortable with state ownership. You will notice in the story as retold an unhappiness that The Beer Store, the sole retailer of about 90% of all sales, is not government owned. Many assume it is. Many would say it should be. Many want more beer variety in the existing government LCBO which sells primarily macro six-packs as well as single bottles of craft brews and imports.

-> Ontario is very comfortable with a controlled market. Amongst those who reject the model of the Beer Store a prominent response being heard is that the small brewers of Ontario ought to be able to replicate the model to create boutique craft beer shops. It appears the idea would be sell Ontario made craft beer to Ontario through shops run by Ontario craft brewers. This appears to be adding a small oligopoly to a tiny oligopoly to defeat the evil forces of oligopoly.

-> Ontario is very comfortable with fairly dull macro beer. Nowhere in this discourse is there a great public outrage at the quality of most of the beer consumed in Ontario. The vast bulk of beer consumed in Ontario is frankly bulk beer. Most people I know who buy beer buy slabs of 24 bottles of lighter fairly flavourless stuff that gives them a mild buzz and cuts the crap out of your mouth when you’ve been physically active. It reminds me a lot of ship’s beer in fact, one of the functional classes of everyday beer that fell out of flavour somewhere between the Georgian and Victorian colonial eras. For many, talking about more interesting beer is like talking about more interesting ketchup.

-> Ontario is very comfortable with fairly not inexpensive beer. For a while there was a trend of “buck a beer” discount products but that’s been gone for the best part of a decade now. No one moved forward to fill the market and Ontario’s beer buyers have found themselves buying beers for $1.50 to over $2.00 a bottle at the shops without much quibbling. No one is looking for a better retail experience and no one really is looking for a price cut. Bulk beer in Ontario is comparable or even a bit higher than craft in nearby northern NY.

These are just themes I see. I didn’t want initially to drill into news articles, blog posts or the details of history to create a mess of links mainly for one reason. Even having studied 400 years of beer culture, law and politics in the place it still surprises me and sometimes leaves me shaking my head. But there are reasons it is like this. Ontario was set up as something of a conservative utopia that reaches back to the 1780s with the resettlement of the Loyalists running from the newly created USA. This lasted until the reforms of the 1840s when we were then introduced to the new trend in temperance. After the flop of Ontario’s version of prohibition ended in 1927, we have had the control system of alcohol retail that we have today. Three forms of restraint. Three eras of doing what one is told. Three eras of being concurrently happy and prosperous, too. It might, given all that, be more reasonable to ask why wouldn’t things be as they are in today’s discussions about retailing beer here. Me? I just want beer in grocery stores and gas stations like people in all the nearby provinces and states enjoy. Not likely going to happen.

I may layer more into this but for now this is the best I have to explain the culture I live in to myself. It’s a bit weird, isn’t it. But in a weird way it also works for most people.

Origins Of Ontario’s Beer Wholesaling Cooperative

Jordan has posted an excellent article this evening on the current state of the sale of beer in Canada’s biggest province, Ontario. Thirteen and half million Ontarians are served their beer through two large entities: (i) The Beer Store which is owned by the big brewers and (ii) the Liquor Control Board of Ontario, a provincial Crown corporation. Sure, you can buy your beer at a microbrewery, you can home brew and you can even still go to a brew-your-own place. But you really buy beer from the big two outlets. Brew-your-own or “U-brew” businesses are good to keep in mind as we think of how to move forward. In our book Ontario Beer, we pointed out that in the mid-1990s, “brew your own beer” businesses held a position comparable to small breweries today until they caught the attention of big beer. At a 1996 Federal hearing on taxation of major Canadian industries, Sandy Morrison, President of the Brewers Association of Canada complained about the lack of any imposition of taxation or regulation on these businesses:

These brew-on-premises outlets now have an 8% share of the British Columbia market and a 3% share in Ontario, which is the largest beer market in Canada. In total, they account for about 10 million dozen-cases of beer a year. The production from these unlicensed, unregulated mini-breweries exceeds that of the micro-breweries across Canada, and certainly in the two provinces concerned.

Brew-on-premises business were full-scale commercial operations that focused on government alcohol tax avoidance. Lost tax revenues in Ontario and BC totaled $69 million according to Morrison. Soon thereafter the law was changed. Regulations as well as taxes were applied. As can be expected, market share collapsed. The interests of the government and big brewing aligned to pressure the young upstarts.

There are echoes of more than the mid-90s in the situation today. The immediate origins of both the LCBO and The Beer Store date to the mid-1920s. After a series of elections and referendums, in 1927 Ontario’s experiment with prohibition ended with the repeal of the Ontario Temperance Act and its replacement with the Liquor Control Act. Along with the new law, the Liquor Control Board was founded. The province was once again drinking full strength booze in their homes – albeit after purchasing their drink at a government controlled store and transporting it in a sealed package. In the same year, Brewers Warehousing Co. Ltd. was founded as a brewers’ distribution collective. The provincial government retained control of the sale of wine and spirits through the LCBO, but beer was retailed by hundreds of mom-and-pop stores. Initially, the brewers were involved only in wholesale operations, jointly warehousing and distributing their product to stores operated by private contractors. In 1940, the brewers bought out the retailers and took over the stores, changing their name to Brewers Retail Inc and, more recently, changing again to The Beer Store.

Another thing was happening at the end of the 1920s. A corporate giant was starting out his career. Starting with next to nothing other than a few years in the financing business, E.P. Taylor had a plan to acquire and merge a large number of regional and local brewers with the goal of controlling half the brewing capacity in the province. Virtually all Ontario’s firms but Labatt and the breweries controlled by the Doran family in the north were his targets. His goals made perfect sense for the times. Breweries were operating at under 25% capacity. They were technological dinosaurs. By 1931, Taylor already controlled 27.5% of all Ontario beer sales. By 1950, he controlled 50% of the provincial beer market compared to 20% for Labatt. His deal making reached beyond Ontario. He shared a correspondence with H. William Molson, president of Quebec’s most famous brewery which dated back to 1932 and, in 1942, Taylor suggested quite an arrangement:

Don’t you think for the duration of the war we should arrange to divide the business in the two provinces in a fixed proportion and cut out most of the waste? I fully realize that your Company is not as extravagant in Ontario as some of the rest of us and you are certainly in an enviable position in that regard. At the same time I think that if you gave leadership to a proposal for pooling the business until after the war, everyone would feel inclined to work something out.

“Waste” was a theme for E.P.Taylor. In September 1939, he spoke to a meeting of the Brewers Warehousing Company. As war had just been declared, the tone was certainly patriotic but it was also entrepreneurial. Taylor argued that the lowest price possible for beer should be established to decrease “wasteful selling expenses” while increasing sales, volume and taxes for the war effort. Profits would also rise. While not the start of the concept of commodity beer and radically controlled distribution, this statement certainly places it at the centre of Ontario’s way forward. When you think of The Beer Store today you need to hear E.P. Taylor’s words from 1939 – “wasteful selling expenses” – ring in your ears. As Jordan put it today:

The Beer Store’s organization is such that it works in your favour if you are a very large company. The fact that your beer can only be sold in predetermined locations and that the organization that runs those locations stocks those stores from centralized warehouses means that you don’t have to pay for delivery, storage or a sales force. It’s a gigantic savings. The large breweries don’t generate profit from owning and running The Beer Store and this is something critics frequently fail to understand. The monopoly is not profitable for the owners because it extracts profit on sales. It is profitable for the owners because it saves a frankly ridiculous amount of money on outlay.

By the late 1950s, E.P. Taylor was arguably the most famous Canadian before Pierre Trudeau came on the scene a few years later. His positive effect on the economy of Ontario and Canada cannot be underestimated. But he stepped away from his role as corporate leader before 1970. In another ten years, loyalty to ale and even Ontario’s beer brands was fading fast. We now live in a marketplace where the best selling beer is Coors Light and The Beer Store is owned by foreign brewing corporations. That all being the case, why retain a distribution model set up in the late 1920s to balance the needs of local brewers with the majority of the population which still had strong preference for temperance principles? None really. None at all. Unless, like in the mid-1990s, the interests of big beer and government revenue are all that matter.