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Mr. CHOATE. I should think so, without great difficulty, although I agree with you that when the State engages in the business, it is a private business and is subject to regulation, if anybody wants to regulate it.

I forgot to say one thing. I think that in enacting this bill in whatever form it takes, it would be wise to change the name of the organization. The Federal Alcohol Control Administration has out a very large number of publications and rulings, and one thing and another, under the name, the Federal Alcohol Control Administration. If you set up a new body on a different basis, half the people affected by these publications and these rules and regulations and rulings will be confused as to whether it is the old or new body that has spoken; so I would recommend that if you call it the Federal Alcohol Commission, or something of that kind, merely to distinguish one from the other, although I regard it as extremely important that the new body should have continuity with the old, so that there may not be again, as there would have to be in the case of a transfer, a formative period during which the industries would suffer what they suffered under our period of education during the first 6 months or a year, when we were finding out what it was all about.

The CHAIRMAN. You would substitute some other term for the term "Administration"?

Mr. CHOATE. Yes.

Mr. HILL. May I ask, Mr. Choate, how would you effectuate that continuity you talk about?

Mr. CHOATE. I would do it very much as it is done in this bill, with the one suggestion that I make that if the present body be not abolished until the first administrator under the new law was actually in office, that he would then be able, under this bill as it is now drafted, to take over the staff as is, he would also, under this bill, take over all the chattels of the existing body, so that there would be complete continuity there.

The CHAIRMAN. We thank you.

Are there any other witnesses here, either from the Federal Control Administration or from the Treasury, who desire to be heard tonight? If not, this will close the testimony for the Treasury, or the Alcohol Administration, unless the Secretary of the Treasury himself wants to be heard, in which case, of course, we will pe pleased to hear him at any time, and we adjourn, now, until 7:30 tomorrow evening, when we hope to complete these hearings, if possible.

(Whereupon, the hour of 10:40 p. m. having arrived, the further hearings relative to H. R. 8539 were adjourned until 7:30 p.m., tomorrow, Thursday, June 20, 1935.)

FEDERAL ALCOHOL CONTROL ACT

THURSDAY, JUNE 20, 1935

HOUSE OF REPRESENTATIVES,
WAYS AND MEANS COMMITTEE,
Washington, D. C.

The committee met at 7:30 p. m., Hon. Robert L. Doughton (chairman) presiding.

The CHAIRMAN. The committee will please come to order. We will continue the hearing on H. R. 8539. The first witness tonight will be George P. McCabe. We will start out with a limitation of 10 minutes.

STATEMENT OF GEORGE P. MCCABE, GENERAL COUNSEL, AMERICAN BREWERS ASSOCIATION

Mr. CULLEN. Mr. Chairman, if I may be permitted to say so, I think the witnesses should be allowed to proceed with their statements without interruption by the committee members or anybody else, until they have finished, and then they can answer questions.

The CHAIRMAN. Without objection, we will proceed with that understanding.

Mr. MCCABE. Mr. Chairman and gentlemen of the committee, Mr. Beneman and myself asked for time tonight. When the consideration of the introduction of the bill and the hearing thereon came before the brewers in session in Chicago, a committee was appointed representing 469 brewers, and that committee met today and decided that we would like to have the time that is allotted taken by two brewers, Mr. Nicholson, of New York, and Mr. Bruckman, of Cincinnati. So that Mr. Beneman and myself yield our time to those gentlemen, and we would like to have you hear Mr. Nicholson first. STATEMENT OF JAMES R. NICHOLSON, REPRESENTING RUPPERT BREWERY, NEW YORK CITY

Mr. NICHOLSON. Mr. Chairman and gentlemen of the committee, this committee that I am speaking for here tonight represents 75 percent of the brewers of the country, in point of numbers, and easily over 90 percent of the brewery capacity and the sales of the country. That large percentage of the industry was represented in the mass meeting at Chicago last Tuesday, called for the purpose of endeavoring to preserve for the industry some of the great benefits which have accrued to us from the operation of the code for the brewing industry. While it was in session information was received relative to the details of the bill that you now have under consideration. When that

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information was presented and considered, that mass meeting voted unanimously that this committee that is with me here tonight be created and be authorized to proceed to Washington to seek an opportunity to appear before you gentlemen and in their name to enter a protest against some of the provisions of this bill.

We appear here in that representative capacity, and representing practically all of the brewers of the country, and possibly every one of the brewers of the country, at least a larger percentage of the industry than was ever represented on any occasion in the history of the industry. We appear here in that representative capacity to urge upon you the elimination from this bill of the permit provision under which a brewer would find it necessary to secure a Federal permit granted by an agency of the Federal Government before he could engage in business, and that provision of the bill which would attempt to write into the Federal statutes fixed and inflexible trade practice provisions.

We object, gentlemen, to the permit provision as a matter of principle, and because we believe that the imposition of such a system upon the members of our industry is unnecessary. The brewing industry was one of the first to adopt a voluntary code under the provisions of N. R. A., and the cooperation that we found it possible to give the F. A. C. A. was indeed most gratifying.

Much was accomplished under the operations of the code for the brewing industry during its life. We desire to preserve all the benefits that we possibly can that accrued to us from that act. We believe that they can be preserved voluntarily and by State cooperation.

This great mass meeting, to which I have referred, representing such a large percentage of the industry, met for that purpose and it adopted unanimously a resolution advocating and urging the adoption by State groups of voluntary trade-practice agreements and the preservation of those agreements.

Gentlemen, the brewing industry is practically entirely an intrastate operation. Any infraction of a trade-practice regulation in the brewing industry is intrastate in character. There cannot be interstate violations because of the nature of our business. We therefore feel that the preservation of fair-trade practices is best assured under State cooperation.

In this connection I might say that the fullest measure of observation of the provisions of the code was found in those localities where there was the best voluntary cooperation. That compared most favorably with those sections where there was not voluntary cooperation, and attempts were made to enforce those provisions by drastic

measures.

In this connection, you will be interested in knowing, I am sure, that at a recent meeting of the brewers of the State of New York, 60 out of 69 of the brewers of that State met and voluntarily adopted an agreement of fair-trade practices and set up penalties for violation thereof, which we feel can be easily enforced because of their voluntary character.

The brewers of the State of New Jersey have taken similar action. We feel that in every State in which there is any number of brewers similar action can be taken. Experience has shown us,

gentlemen, that we cannot anticipate, we cannot tell, just what character of trade-practice provisions will be found equitable and maintainable. During the 2 years that the code for the brewing industry was in existence, it was necessary repeatedly to amend and reamend those trade-practice provisions. We feel that it is unreasonable, then, to assume that Congress can now adopt fixed and unchangeable trade-practice regulations that will be equitable and maintainable. Let me remind you gentlemen that under the provisions of this act, as it now reads, a large business representing an investment of millions of dollars is involved, which has always satisfactorily observed all fair-trade practice regulations, and which can, because of the decision of one man, be destroyed entirely for a minor offense. Let me remind you that as a result of such a minor offense on the part of perhaps a minor employee of a large brewer, a similar result could follow and thousands of workmen be thrown out of employment.

It may also be called to your attention that the brewing process is a continuing process. Even a short interruption, a short suspension of business, might result in great loss in material, goods in process, and finished goods, because of the perishable character of the products which we produce.

Gentlemen, we represent practically all of the brewers of the country. They feel that much can be accomplished along the line of your desires. They desire, in fact, to accomplish the same things that you desire, and that you have attempted and believe that you can accomplish by this act. They feel, however, gentlemen, that those things can be better accomplished by voluntary cooperation. on their part. We are working on that. We feel confident of success. We ask you to permit us to work out our problem along this line voluntarily, and because voluntarily we believe successfully. The CHAIRMAN. We thank you.

Mr. BOEHNE. I want to ask just one question. I was not here during the entire time of your testimony but is it not a fact that every State of the Union regulates the beer industry within its own State? Mr. NICHOLSON. That is true.

Mr. KNUTSON. Congress has declared 3.2 beer nonintoxicating in 1933. Why should the brewing industry be regulated any more than other soft drinks, because 3.2 beer, under the act of Congress, is a soft drink?

Mr. NICHOLSON. It is possible that some brewers might produce some with a little higher alcoholic content. There are very few restrictions as to that.

Mr. KNUTSON. Not enough to do any damage, I guess.

The CHAIRMAN. Mr. McCabe, who is next?

Mr. MCCABE. Mr. Chairman, our second witness is Mr. John C. Bruckmann.

STATEMENT OF PAUL ESSELBORN, BREWER, CINCINNATI, OHIO

Mr. ESSELBORN. I am speaking for Mr. Bruckmann and have his statement, which he gave to me before he left Washington late this afternoon.

Mr. VINSON. Is this his statement?

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