McBain and Maclean

I have been trying to find sources for the way Jay Pomeroy has been described in the whisky literature The previous post mentioned Moss & Hume¹ and Marrus² but I think the most significant source is C. Stewart McBain as interpreted by Charles Maclean.

C. Stewart McBain was the distillery director of Strathisla in 1986 who wrote a short book to commemorate the 200^th anniversary of the distillery³.  As it was only 30 years after Pomeroy’s time, people who then worked in the distillery were alive and could be asked for their memories. Two likely people have their pictures in the book: an 84 year old Alex Phimster and an 86 year old Georgina Smith.

However, and this is a very big however, the account is the view from inside the distillery, in Keith, a long way from London, where Jay Pomeroy was making his deals, selling the stock  and operating in a manner alien to the traditional distillery culture. The scheme to avoid Excess Profits Tax is thus missed and so the overall picture is very misleading. The quotation from the Court of Session ‘by which shares in various Scottish whisky companies were acquired and their stocks of whisky disposed of in a manner  which was calculated not to attract any taxation liability.’ was referring specifically to the Excess Profits Tax not any other duty that might be due on a bottle of whisky. He was not trying to escape all taxation. Also the figure of £111,038 is wrong because it was just one of a number of judgements. When Jay Pomeroy was declared personally bankrupt he actually owed more than £400,000.

Then there are problems with the tone of the writing: “The government dragnet was now closing in however and despite furious efforts by Pomeroy and friends, they were finally brought to justice”, gives the impression of a criminal at bay, especially as there is a conflation of black market dealers with Pomeroy himself. It is understandable that  Pomeroy was not well liked in the distillery but the distaste comes out in the prose and this can lead to misunderstanding.

Also there is no clear chronology. Initially Excess Profits Tax was avoided by selling the stock on, multiple times (this would explain the fictitious companies). But what happened after 1943, when the law was changed, and 1945 when the judgement was made? The distillery continued to run but was there a new pattern?

Nevertheless this book is the closest we have to source material, even if we do have to treat it with circumspection. We know of it mainly because it has been used as a source by Charles Maclean, for a number of his books. Through him its information has filtered down, but in a slightly garbled way.

But first we need the passage in full (it’s only about 680 words):

“Shortly after the outbreak of World War II the government placed severe restrictions the amount of barley to be allocated for distilling purposes and this resulted in a great scarcity off whisky on the free enterprise market and colossal prices on the ‘black market’. The Ministry of Food only gave the whisky firms 25% of the barley they were using in 1939, when they were in full production

A London financier Mr Jay Pomeroy, probably speculating on the black market price system, put out ‘feelers’ into the distilling world and ordered his Scottish contacts to start buying up shares in various firms. This resulted in him becoming a director in several smaller whisky firms and eventually main shareholder and chairman of the board of William Longmore and Company.

His method of transaction was later described in the Court of Session as: ‘by which shares in various Scottish whisky companies were acquired and their stocks of whisky disposed of in a manner  which was calculated not to attract any taxation liability.’

In the case of William Longmore, he made the shareholders an irrefutable offer of £10 for their 10s share. Several of his associates were initiated as directors and in June of 1946 the partnership was converted into a private company, with a share capital of £35,000.

One of the first moves of the new organisation was to cut off supplies to all the local customers or ‘fillers’ as they were called. Bottling was stopped and over a period of a few years most of the whisky was being sent to London firms of whom nobody had ever heard. This is not surprising as the firms were no more than a cubicle with a telephone and a fictitious company name above. Mr Pomeroy had a large room containing several of these cubicles and whenever a telephone rang the girl would answer, reading out the respective name!

Although it was never proved it was believed the whisky was also bottled under a fictitious name and sold on the black market. Production costs at the time were around 16s per gallon whereas retail price on the black market was around £20-25 per gallon.

Although Mr Pomeroy now had a very lucrative business established, the whisky trade took second place in his life, his first love being opera, and amongst his many possessions was the once famous Cambridge Theatre, London. He only once visited the distillery with the astounding instructions to issue customers with pro-forma invoices. Never before in the whisky industry had a customer had to pay for spirits before they were actually filled! When an outraged cashier protested Mr Pomeroy the cool reply was; ‘My dear chap, I may not know much about whisky, but I can tell you one or two things about finance!’

Because the business had come under the control of people who had no interest or connection with he town, ill feeling escalated and customers whose supplies had been cut off complained bitterly. This eventually prompted a full scale government enquiry, the outcome of which led to Mr Pomeroy’s downfall.

The government dragnet was now closing in however and despite furious efforts by Pomeroy and friends, they were finally brought to justice.

The following is a cutting from the Banffshire Herald issue 18 June 1949:

Lord Birnam in the Court of Session has granted a petition at the instance of the Lord-Advocate for compulsory winding up of Messrs Wm. Longmore and Co Ltd., distillers, Milton Distilled, Keith.

The petition follows failure on the part of the company and its associates to make payment of a sum of £111,038 to Commissioners of Inland Revenue, following recent decision of the House of Lords in relation to a claim made by the Commissioners.

Although found guilty of tax evasion what now ensued was a legal battle to reduce the amounts payable. Many did get off with paying smaller sums but not Mr Pomeroy. In order to pay his debts. the government took from him most of his properties, stocks and shares, leaving him a broken and much less affluent man.”

For me this is a leaky narrative. There are things that are implied but not clearly explained, things not fully understood, and a suspicion that is not proven. There is no clear cause and effect and needs to be tidied up and clarified. This is what Charles Maclean tries to do. In 1993 in the Mitchell and Beazley Pocket Guide to Scotch Whisky⁴ he wrote:

“Shortly after the outbreak of the Second World War, a London financier, Jay Pomeroy, bought William Longmore & Co and began sending the entire production of the distillery direct to London. Customs and Excise became suspicious when it was found the companies buying the whiskies were fictitious. Following a government enquiry, Pomeroy was discovered to be selling the whiskies, Strathisla included, under different names throughout the black market. He was charged and found guilty of tax evasion of £111,038.”

The kindest thing that can be said is that in an attempt to provide a clear and compelling narrative he extrapolated further than the source allowed.

He refined this slightly in 1997 for his book ‘Malt Whisky’⁵ but told basically the same story:

In 1940 the company and distillery were bought by a fraudulent financier, Jay Pomeroy, who was convicted in 1949 of evading £111,038 in tax by selling its make under different names on the black market. Two years later it was acquired by James Barclay of Chivas Bros (which itself had been bought by Seagrams in 1949), and the name became Strathisla once more.

It is interesting how Chinese whispers work (even if someone is whispering to himself). Shortly after the outbreak of the Second World War has hardened into 1940, (and this date has been much reproduced), also London financier has become the much more pejorative ‘fraudulent financier’. This phrase that has been frequently repeated.

Latterly the narrative has been softened by replacing fraudulent with shady⁶:

At the time Longmore & Company was wound up, Milton was controlled by a shady London financier named Jay Pomeroy, who had siphoned off large stocks of mature whisky and ‘disposed of them in a manner which was calculated not to attract any taxation liability’, according to the judgement in the Court of Session, that is he sold them on the black market at huge profit, there being a chronic shortage of mature whisky at the time.

Whatever the changes it is still wrong. However we cannot be too harsh because the fault lies with the source. McBain quoted a small part of a newspaper article and gave the wrong impression. If it had been quoted in full it would have shown the claim was for trades in shares and stocks and not black market dealing, and also £111,038 was only part of what was owed.

Lord Birnam in the Court of Session yesterday granted a petition at the instance of the Lord-Advocate for the compulsory winding up of Messrs Wm. Longmore and Co., Ltd., distillers, Milton Distillery, Keith

The petition follows failure on part of the company and its associates to make payment of a sum of £111,083 to the Commissioners of Inland Revenue, following the recent decision of the House of Lords in relation to a claim made by the Commissioners.

The petition stated that the liability of the company to  the Commissioners arose out of two of the transactions entered into in 1941 and 1942 by which shares in various Scottish whisky  companies were acquired and their stocks of whisky disposed of in a manner which was calculated not to attract any taxation liability.

To deal with such schemes Section 24 of the Finance Act 1943 was passed with retrospective effect. In January 1944, the Commissioners made directions under the section in relation the company, which appealed to the special Commissioners of Income Tax and later  to the Court of Session.

In the first direction the company was found jointly and severally liable with certain associates for a sum of £339,342 for a chargeable accounting period ending September 30 1942.

The House of Lords held that the original shareholders were within Section 24 of the Act but remitted the case back to the Special Commissioners to reconsider the liability of the shareholders.

As a result of the remit, the petition went on, it was anticipated that in consequence of the liability of the shareholders being reduced, the liability of the joint and several groups, including the company, would be increased and proceedings to the end were continuing.

In the second direction, the Special Commissioners found the company jointly and severally liable with certain associates for the sum of £123,036 for the chareable accounting period ending September 30, 1943 and that liability was confirmed by the Court of Session.

Payment of the sums due under the directions had not been made.

The company was incorporated in 1880 as a public company. By special resolution in June 1946 it was converted into a private company with a share capital of £35,000.

The latest accounts the company produced were for the year ending September 30 1946. The showed a balance at the debit of the profit and loss account amounting to £3,934, after crediting to the profit and loss account reserves amounting to £31,380 brought forward from the preceding year.

The official liquidator has been appointed.

(This is from the Aberdeen Press and Journal, Saturday June 11 1949. I couldn’t find an online copy of the Banffshire Herald but I am confident its article would have been very similar because the British Newspaper Archive contains 3 such articles in different Scottish papers, all with the same wording. It must have been agency copy)

¹ Moss, Michael S, Hume, John R, and Bruichladdich Distillery. The Making of Scotch Whisky : A History of the Scotch Whisky Distilling Industry. Edinburgh: James & James, 1981.

² Marrus, Michael Robert. Samuel Bronfman: The Life and Times of Seagram’s Mr Sam. Penguin Books Canada, 1991.

³ McBain, C.S. (1986). Strathisla : 200 years of distilling tradition. Scotland: Strathisla Distillery.

⁴ Maclean, Charles. Scotch Whisky / Charles MacLean. New ed. Mitchell Beazley Pocket Guides. London: Reed, 1993.

⁵ Maclean, Charles. Malt Whisky. London: Mitchell Beazley, 1997

⁶ MacLean, Charles. Charles Maclean’s Whiskypedia : A Gazetteer of Scotch Whisky. Revised ed. Edinburgh: Birlinn, 2014.

 

The Pomeroy Posts:

1. An Introduction
2. The Two Jays – how a novel can be used as a lens to compare characters.
3. The Years of Obscurity – the first ¾ of his life.
4. The Glory Years – His  years as an impresario.
5. The Whisky Tax Case – the revenge of the Revenue
6. Sam and Jay – There were some similarities between Sam Bronfman and Jay
7. Chinese Whispers – how the whisky literature has misrepresented Jay Pomeroy
8. McBain and Maclean – A source of some misunderstandings
9. And Finally – at last
10. Kritz not Pomeroy – Mistaken identity?