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to the applicant or respondent at his last known address in the records of the Administrator.

(i) A basic permit shall continue in effect until suspended, revoked, or annulled as provided herein, or voluntarily surrendered; except that (1) if leased, sold, or otherwise voluntarily transferred, the permit shall be automatically terminated thereupon, and (2) if transferred by operation of law or if actual or legal control of the permittee is acquired, directly or indirectly, whether by stock-ownership or in any other manner, by any person, then such permit shall be automatically terminated at the expiration of thirty days thereafter: Provided, That if within such thirty-day period application for a new basic permit is made by the transferee or permittee, respectively, then the outstanding basic permit shall continue in effect until such application is finally acted on by the Administrator.

(j) An appeal may be taken by the permittee or applicant for a permit from any order of the Administrator denying an application for, or suspending, revoking, or annulling, a basic permit. Such appeal shall be taken by filing, in the circuit court of appeals of the United States within any circuit wherein such person resides or has his principal place of business, or in the United States Court of Appeals for the District of Columbia, within sixty days after the entry of such order, a written petition praying that the order of the Administrator be modified or set aside in whole or in part. A copy of such petition shall be forthwith served upon the Administrator, or upon any officer designated by him for that purpose, and thereupon the Administrator shall certify and file in the court a transcript of the record upon which the order complained of was entered. Upon the filing of such transcript such court shall have exclusive jurisdiction to affirm, modify, or set aside such order, in whole or in part. No objection to the order of the Administrator shall be considered by the court unless such objection shall have been urged before the Administrator or unless there were reasonable grounds for failure so to do. The finding of the Administrator as to the facts, if supported by substantial evidence, shall be conclusive. If any party shall apply to the court for leave to adduce additional evidence, and shall show to the satisfaction of the court that such additional evidence is material and that there were reasonable grounds for failure to adduce such evidence in the proceeding before the Administrator, the court may order such additional evidence to be taken before the Administrator and to be adduced upon the hearing in such manner and upon such terms and conditions as to the court may seem proper. The Administrator may modify his findings as to the facts by reason of the additional evidence so taken, and he shall file with the court such modified or new findings, which, if supported by substantial evidence, shall be conclusive, and his recommendation, if any, for the modification or setting aside of the original order. The judgment and decree of the court affirming, modifying, or setting aside, in whole or in part, any such order of the Administrator shall be final, subject to review by the Supreme Court of the United States upon certiorari or certification as provided in sections 239 and 240 of the Judicial Code, as amended (U. S. C., title 28, secs. 346 and 347). The commencement of proceedings under this subsection shall not, unless specifically ordered by the court, operate as a stay of the Administrator's order.

UNFAIR COMPETITION AND UNLAWFUL PRACTICES

Sec. 5. It shall be unlawful for any distiller, brewer, rectifier, blender, or other producer, or any importer or wholesaler, of distilled spirits, wine, or malt beverages, or any bottler, or warehouseman and bottler, of distilled spirits, directly or indirectly or through an affiliate:

(a) Exclusive Outlet.—To require, by agreement or otherwise, that any retailer engaged in the sale of distilled spirits, wine, or malt beverages, purchase any such products from such person to the exclusion in whole or in part of distilled spirits, wine, or malt beverages sold or offered for sale by other persons in interstate or foreign commerce, if such requirement is made in the course of interstate or foreign commerce, or if such person engages in such practice to such an extent as substantially to restrain or prevent transactions in interstate or foreign commerce in any such products, or if the actual effect of such requirement is to prevent, deter, hinder, or restrict other persons from selling or offering for sale any such products to such retailer in interstate or foreign commerce; or

(b) “Tied-House.”—To induce through any of the following means, any retailer engaged in the sale of distilled spirits, wine, or malt beverages, to purchase any such products from such person to the exclusion in whole or in part of distilled spirits, wine, or malt beverages sold or offered for sale by other persons in interstate or foreign commerce, if such inducement is made in the course of inter

state or foreign commerce, or if such person engages in the practice of using such means, or any of them, to such an extent as substantially to restrain or prevent transactions in interstate or foreign commerce in any such products, or if the actual effect of such inducement is to prevent, deter, hinder, or restrict other persons from selling or offering for sale any such products to such retailer in interstate or foreign commerce: (1) By acquiring or holding (after the expiration of any existing license) any interest in any license with respect to the premises of the retailer; or (2) by acquiring any interest in any premises of the retailer; or (3) by furnishing, giving, renting, lending, or selling to the retailer, any equipment, fixtures, signs, supplies, money, or other thing of value, except advertising specialties; or (4) by paying or crediting the retailer for any advertising, display, or distribution service; or (5) by guaranteeing any loan or the repayment of any financial obligation of the retailer; or (6) by extending to the retailer credit for a period in excess of the credit period usual and customary to the industry for the particular class of transactions, as ascertained by the Administrator and prescribed by regulations by him; or

(c) Commercial Bribery.---To induce through any of the following means, any trade buyer engaged in the sale of distilled spirits, wine, or malt beverages, to purchase any such products from such person to the exclusion in whole or in part of distilled spirits, wine, or malt beverages sold or offered for sale by other persons in interstate or foreign commerce, if such inducement is made in the course of interstate or foreign commerce, or if such person engages in the practice of using such means, or any of them, to such an extent as substantially to restrain or prevent transactions in interstate or foreign commerce in any such products, or if the actual effect of such inducement is to prevent, deter, hinder, or restrict other persons from selling or offering for sale any such products to such trade buyer in interstate or foreign commerce: (1) By commercial bribery; or (2) by offering or giving any bonus, premium, or compensation to any officer, or employee, or representative of the trade buyer; or

(d) Consignment Sales.-To sell, offer for sale, or contract to sell to any trade buyer engaged in the sale of distilled spirits, wine, or malt beverages, any such products on consignment or conditionally or with the privilege of return

or on any basis otherwise than a bona fide sale, if such person makes such sale, offer, or contract in the course of interstate or foreign commerce, or if such person engages in such practice to such an extent as substantially to restrain or prevent transactions in interstate or foreign commerce in any such products, or if the actual effect of such sale, offer, or contract is to prevent, deter, hinder, or restrict other persons from selling or offering for sale any such products to such trade buyer in interstate or foreign commerce; or

(e) Labeling.–To sell or ship or deliver for sale or shipment, or otherwise introduce in interstate or foreign commerce, or to receive therein, or to remove from customs custody for consumption, any distilled spirits, wine, or malt beyerages in bottles, unless such products are bottled, packaged, and labeled in conformity with such regulations, to be prescribed by the Administrator, with respect to packaging, marking, branding, and labeling and size and fill of container (1) as will prohibit deception of the consumer with respect to such products or the quantity thereof and as will prohibit, irrespective of falsity, such statements relating to age, manufacturing processes, analyses, guarantees, and scientific or irrelevant matters as the Administrator finds to be likely to mislead the consumer; (2) as will provide the consumer with adequate information as to the identity and quality of the products, the alcoholic content thereof (except in case of wines, and except that statements of, or statements likely to be considered as statements of, alcoholic content of malt beverages are hereby prohibited unless required by State law), the net contents of the package, and the manufacturer or bottler or importer of the product; (3) as will require an accurate statement, in the case of distilled spirits produced by blending or rectification if neutral spirits have been used in the production thereof, informing the consumer of the percentage of neurtal spirits so used and of the name of the commodity from which such neutral spirits have been distilled; and (4) as will prohibit statements on the label that are disparaging of a competitor's products or are false, misleading, obscene, or indecent; including regulations requiring, at time of release from customs custody, certificates issued by foreign governments covering origin, age, and identity of imported products. No person shall remove from Government custody after purchase at any Government sale any distilled spirits, wine, or malt beverages in bottles to be held for sale, until such bottles are packaged, marked, branded, and labeled in conformity with the requirements of this subsection. It shall be unlawful for any person to alter, mutilate, destroy, obliterate, or remove any mark, brand, or label upon distilled spirits, wine, or

malt beverages held for sale in interstate or foreign commerce or after shipment therein, except as authorized by Federal law or except pursuant to regulations of the Administrator authorizing relabeling for purposes of compliance with the requirements of this subsection. In order to prevent the sale or shipment or other introduction of distilled spirits, wine, or malt beverages in interstate or foreign commerce, if bottled, packaged, or labeled in violation of the requirements of this section, no bottler, or importer of distilled spirits, wine, or malt beverages, shall, after such date as the Administrator fixes as the earliest practicable date for the application of the provisions of this subsection to any class of such persons (but not later than January 1, 1936, and only after 30 days' public notice), bottle or remove from customs custody for consumption distilled spirits, wine, or malt beverages, respectively, unless the bottler or importer, upon application to the Administrator, has obtained and has in his possession a certificate of label approval covering the distilled spirits, wine, or malt beverages, issued by the Administrator in such manner and form as he shall by regulations prescribe: Provided, That any such bottler shall be exempt from the requirement of this section if the bottler, upon application to the Administrator, shows to the satisfaction of the Administrator that the distilled spirits, wine, or malt beverages to be bottled by the applicant are not to be sold, or offered for sale, or shipped or delivered for shipment, or otherwise introduced, in interstate or foreign commerce. Officers of internal revenue and customs are authorized and directed to withhold the release of such products from the bottling plant or customs custody unless such certificates have been obtained, or unless the application of the bottler for exemption has been granted by the Administrator; or

(f) Unfair Name. To sell or ship or deliver for sale or shipment, or otherwise introduce in interstate or foreign commerce, or to receive therein, or to remove from customs custody for consumption, any distilled spirits, wine, or malt beverages, under a trade or brand name which the Administrator has found is the name of any individual or organization, if the Administrator has also found that the use of such name is unfair because it is intended or is likely falsely to lead the consumer to believe that the product has the indorsement of or is made or used by such individual or organization; or

(g) Advertising.-To publish or disseminate or cause to be published or disseminated by radio broadcast, or in any newspaper, periodicals, or other publication or by any sign or outdoor advertisement or any other printed or graphic matter, any advertisement of distilled spirits, wine, or malt beverages, if such advertisement is in, or is calculated to induce sales in, interstate or foreign commerce, or is disseminated by mail, unless such advertisement is in conformity with such regulations, to be prescribed by the Administrator, (1) as will prevent deception of the consumer with respect to the products advertised and as will prohibit, irrespective of falsity, such statements relating to age, manufacturing processes, analyses, guarantees, and scientific or irrelevant matters as the Administrator finds to be likely to mislead the consumer; (2) as will provide the consumer with adequate information as to the identity and quality of the products advertised, the alcoholic content thereof (except in case of wines and except that statements of, or statements likely to be considered as statements of alcoholic content of malt beverages are prohibited), net contents of the package, and the person responsible for the advertisement; (3) as will require an accurate statement, in the case of distilled spirits produced by blending or rectification if neutral spirits have been used in the production thereof, informing the consumer of the percentage of neutral spirits so used and of the name of the commodity from which such neutral spirits have been distilled; (4) as will prohibit statements that are disparaging of a competitor's products or are false, misleading, obscene, or indecent; (5) as will prevent the use of any trade or brand name with respect to which a finding has been made by the Administrator under subsection (f) that the use of such name is unfair; and (6) as will prevent statements inconsistent with any statement on the labeling of the products advertised. This subsection shall not apply to outdoor advertising in place on the date of the enactment of this Act.

PENALTIES SEC. 6. The District Courts of the United States, the Supreme Court of the District of Columbia, and the United States Court for any Territory, of the District where the offense is committed or threatened or of which the offender is an inhabitant or has his principal place of business, are hereby vested with jurisdiction of any suit brought by the Attorney General in the name of the United States, to prevent and restrain violations of any of the provisions of this Act.

Any person violating any of the provisions of sections 3 or 5 shall be guilty of a misdemeanor and upon conviction thereof be fined not more than $1,000 for each offense. Subject to the approval of the Attorney General, the Administrator is authorized, prior to commencement of court proceedings with respect to any violation of this Act, to compromise the liability arising with respect to such violation (1) upon payment of a sum not in excess of $500 for each offense, to be collected by the Administrator and to be paid into the Treasury as miscellaneous receipts, and (2) in case of repetitious violations and in order to avoid multiplicity of criminal proceedings, upon agreement to a stipulation that the United States may, on its own motion upon five days' notice to the violator, cause a consent decree to be entered by any court of competent jurisdiction enjoining the repetition of such violation.

Sec. 7. The Federal Alcohol Control Administration established by Executive order under the provisions of Title I of the National Industrial Recovery Act is hereby abolished. All papers, records, and property of such Federal Alcohol Control Administration are hereby transferred to the Administrator.

MISCELLANEOUS

Sec. 8. (a) As used in this Act

(1) The term “Administrator" means the head of the Federal Alcohol Control Administration.

(2) The term “United States” means the several States and Territories and the District of Columbia; the term “State" includes a Territory and the District of Columbia; and the term “Territory” means Alaska, Hawaii, and Puerto Rico.

(3) The term “interstate or foreign commerce" means commerce between any State and any place outside thereof, or commerce within any Territory or the District of Columbia, or between points within the same State but through any place outside thereof.

(4) The term “person" means individual, partnership, joint stock company, business trust, association, corporation, or other form of business enterprise, including a receiver, trustee, or liquidating agent.

(5) The term “affiliate” means any one of two or more persons if one of such persons has actual or legal control, directly or indirectly, whether by stock ownership or otherwise, of the other or others of such persons; and any one of two or more persons subject to common control, actual or legal, directly or indirectly, whether by stock ownership or otherwise.

(6) The term “distilled spirits means ethyl alcohol, hydrated oxide of ethyl, spirits of wine, whiskey, rum, brandy, gin, and other distilled spirits, including all dilutions and mixtures thereof, for nonindustrial use.

(7) The term “wine" means (1) wine as defined in section 610 and section 617 of the Revenue Act of 1918 (U. S. C., title 26, secs. 441 and 444) as now in force or hereafter amended, and (2) other alcoholic beverages not so defined, but made in the manner of wine, including sparkling and carbonated wine, wine made from condensed grape must, wine made from other agricultural products than the juice of sound-, ripe grapes, imitation wine, compounds sold as wine, vermouth, cider, perry and sake; in each instance only if containing not less than 7 per centum and not more than 24 per centum of alcohol by volume, and if for nonindustrial use.

(8) The term “malt beverage” means a beverage made by the alcoholic fermentation of an infusion or decoction, or combination of both, in potable brewing water, of malted barley with hops, or their parts, or their products, and with or without other malted cereals, and with or without the addition of unmalted or prepared cereals, other carbohydrates or products prepared therefrom, and with or without the addition of carbon dioxide, and with or without other wholesome products suitable for human food consumption.

(9) The term “bottle” means any container, irrespective of the material from which made, for use for the sale of distilled spirits, wine, or malt bever

ages at retail. (b) The right to amend or repeal the provisions of this Act is expressly reserved.

(c) If any provision of this Act, or the application of such provision to any person or circumstance, is held invalid, the remainder of the Act and the application of such provision to persons or circumstances other than those as to which it is held invalid, shall not be affected thereby.

(d) This Act may be cited as the “Federal Alcohol Control Act."

The CHAIRMAN. The committee will be in order. The meeting tonight is for the purpose of holding hearings on H. R. 8539, the bill to further protect the revenue derived from distilled spirits, wine, and malt beverages, to regulate interstate and foreign commerce, and enforce the postal laws with respect thereto, to enforce the twentyfirst amendment, and for other purposes. At this point the bill will be inserted in the record.

The first witness on the calendar tonight is Hon. Joseph H. Choate, of the Federal Alcohol Control Administration.

STATEMENT OF HON. JOSEPH H. CHOATE, JR., FEDERAL ALCOHOL

CONTROL ADMINISTRATION

Mr. CHOATE. Gentlemen, I think perhaps in view of the fact that more of the committee may come in later, I ought to open with some comparatively unimportant details, before I discuss the general principles which I think are involved here.

In the first place, taking the first section of the bill, which imposes an additional occupation tax of $10 on every member of each of the industries, it seems to me that that is open to one or two objections, not fatal objections, not matters of absolute substance, but which I think ought to be called to your attention.

In the first place, it is a flat tax, imposing the same burden upon the enormous producer and upon the smallest member of the smallest industry.

In the second place, if it is intended by this tax to raise the necessary revenue for the maintenance of the office in question, the proposed commission, the tax will be inadequate. There are about 16,000 persons engaged in the industry-between 16,000 and 17,000—so that this tax of $10 a piece would raise only between $160,000 and $170,000.

Now, while the Federal Alcohol Control Administration, administering the codes, was carried on with the utmost possible economy, and while the $500,000 originally allotted to it to carry it through from December 1, 1933, when it was constituted, until Congress could, as it was expected, in the next session, 3 months later, set up a successor-while that $500,000 has lasted us to the present day, and we are still, after a year and 7 months, running on that same sum, it is perfectly apparent that to do the work contemplated by this bill efficiently would probably cost not less than $500,000 to $600,000 a year, so that if this tax is intended to raise the necessary revenue for that, it is insufficient.

Mr. CROWTHER. Would you raise any of the taxes? Do you suggest the grading of the taxes?

Mr. CHOATE. We have thought of that with great care, and we found no possible way in which a graded tax could be laid, which would be any more satisfactory than the flat one, and furthermore, I know and it is an opinion that I have expressed very often, that this industry is taxed pretty heavily as it is, and that, as this proposed regulatory measure is really for the good of the public at large, it would not be abnormal or unnatural for the public at large to carry the burden, here, of the taxes not laid upon the special industry.

Another small detail which I might perhaps mention at this time is that in the section in which the permit system is imposed upon the brewers, the provision is made to take effect 60 days after the act

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