Saturday, 24 December 2011

How the Scottish "free" trade worked

Just because Scottish brewers physically owned few pubs, doesn't mean that they didn't have many pubs tied to take their beer.

Let's be honest, how many genuinely free houses are there in the UK today? Far fewer than there appear to be. The sort of agreement detailed below - where a publican gets a loan from a brewery on very favourable terms in return for buying their beer - is still around.

This is a report of a court case between a Scottish brewer and a publican about their loan tie agreement:

Glasgow Publican's Claim.
A case, in which a Glasgow publican claims damages from a Musselburgh firm of brewers, was commenced before Lord Robertson, in the Court of Session, Edinburgh, on the 2nd inst. The action is at the instance of Matthias Flood Cahill, publican, residing at 8, Limeside Avenue, Rutherglen, against John Young and Co., Ltd., brewers, Fisherrow, Musselburgh, for £10,000 in respect of loss, injury, and damage sustained by him through alleged breach of contract on the part of the defenders.

The pursuer carries on business at 222, Abercromby Street, and at 134, Dalmarnock Road, both in Glasgow. He states on record that in November, 1930, he entered into an agreement with the defenders whereby the latter agreed to take over an existing loan, and he came under an obligation to purchase his supplies of draught beer from the defenders exclusively. The defenders contracted with him that the beer should be of good quality and should be sold to him on terms at least as favourable as they sold to other publicans.

Between 1930 and July, 1937. he ordered supplies of beer from the defenders. The defenders, he states, in breach of contract supplied him with beer of a specific gravity substantially lower than that contracted for. Immediately after the pursuer began to retail the defenders' beer he received numerous complaints from his customers and the custom in both his shops began to depreciate rapidly. His bar drawings dwindled from £5,303 per annum in 1929-30, to £2,546 in 1936-37. In July, 1937, another firm of brewers took over his loan and his contract with the defenders came to an end.

He states that as a direct result of the defenders' breach of contract the income from both his shops and their goodwill had fallen during the seven years' currency of the contract between the parties.

The defenders on record denied breach of contract, and pleaded that the pursuer was personally barred from claiming damages from them by a composition on June 11, 1937. They further pleaded that the pursuer was not entitled to found on any breach of contract on their part in respect of his own breach of contract, and that in any event the sum sued for was excessive.

They explained that in 1930 they agreed to grant the pursuer a loan of £1,400, and thereafter he gave certain regular orders for beer which the defenders supplied and the order and supply of each consignment constituted a separate contract between the pursuer and the defenders. There was no contract for the supply of beer of any particular quality or gravity.

The gravity or quality of the ale supplied to the pursuer was not guaranteed by the defenders and the beer was invoiced at a net price to suit the circumstances under which the defenders were trading with him. He was under no obligation to purchase his supplies from the defenders as they had refused to supply him except on a cash with order basis. On numerous occasions in letters to the defenders he expressed his gratification at their treatment of him.

Any deficiency in the condition of beer supplied by the pursuer to his customers was due entirely to the condition in which it was served by him, caused by his failure to allow his beer time to settle and his failure to maintain the supply pipes in a proper state. The defenders averred that the pursuer had accordingly failed to fulfil his obligations under the contracts and was not entitled to found on any alleged breach by the defenders.

The pursuer's indebtedness with accrued interest as at May. 1937, amounted to £2,205. On June 11. 1937. the defenders accepted an offer of £1,250 relieving the pursuer of his total indebtedness to them. That composition was a full and final settlement of all claims outstanding between the parties and was entered into by the parties on the footing that no further claims were exigible in respect of past transactions. The pursuer was, therefore, personally barred from insisting in his present claim.

The hearing was adjourned.
"The Brewers' Journal 1938", June 15th 1938, pages 302 - 303.

A small point to begin with. This Glasgow publican made a agreement with a brewer from Fisherrow. That's a town a little to the east of Edinburgh (I actually know that out of my head now - mapping Scottish breweries has really helped my knowledge of Scottish geography). It wasn't even that big or famous a brewery. I mention it as an illustration of Glasgow pubs being supplied by non-local breweries.

It's illuminating to see exactly how these loan tie agreements worked. The brewery leant him £1,400, he bought their beer. Though from the later paragraphs it's clear that it was a bit more complicated than that. I wonder why he needed the money? Even in the good times he was only turning over £5,303. That meant he'd borrowed more than 25% of his annual turnover. Seems like a pretty big loan. Especially in the later years when it amounted to more than 50% of his turnover.

Mr. Cahill couldn't have been a very good payer. Otherwise why would the brewery have insisted that he pay for beer in cash? He certainly wasn't paying off the loan, because after 7 years he owed £2,205. The final deal he got, being let off almost a thousand quid, seems pretty generous. It sounds like he borrowed the money from his new brewery to pay off the £1,250 to the old one. It sounds all a bit like a scam to get free money from brewers.

The arguments from either side about beer quality sound familiar: the publican blames the quality of the beer supplied, the brewery the landlord's incompetence in looking after it.

As the full addresses of the pubs were supplied, I thought I'd look to see if they still exist. The one at 222 Abercombie street apparently does. At least when the Google Maps car drove past. It's called the Treble Two. It doesn't look that bad. Better than in the 1991 photo on this site. There's a pub I wouldn't have entered.

Another interesting bit of info from that site. There's a photo of a dilapidated sign on a side wall of the pub. Advertising Bernard's beer. Could that be who the new brewer was? Bernard's were in Edinburgh, which would have made his new supplier slightly more local than before. But not much. Maybe he'd already burned all the closer breweries.

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