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erence to the unfair use of names, labeling, and so forth, in the statute, you are going to be compelled every 6 months to amend this statute. This is a new industry and it is in a state of constant flux. The procedure and the practices in the industry have not become stabilized, as it were. But you seek to freeze the practices, and I think it should be more flexible. The matter should be left more to rules and regulations after notice to those interested, to be promulgated by the Administrator.
I wish to think you, gentlemen. I would like to have the opportunity of revising and extending my remarks,
The CHAIRMAN. You have that permission.
Mr. McCORMACK. On the question of freezing the practices, do you not think it is better when starting out to have the statuté pretty well incorporate the intentions of the Congress, rather than to leave it to rules and regulations?
Mr. CELLER. I tried to put in the record so you could see them the many and diverse changes that were made by the F. A. C. A., very properly and very wisely, but there was
a constant change made necessary by the ever-changing conditions. That is going to continue for probably the next 5 years.
Mr. McCORMACK. What effect is that going to have on the businessmen? You know some people think that everybody in the liquor business is conducting an unlawful business. I do not. What about him? He is making a capital investment, and he does it under rule and regulation. Then another rule and regulation comes along and destroys his capital investment. What about that man!
I know you look at these things pretty well the same way that I do. If we have a good administrator and he goes along such a course that business knows what to expect, then you are protecting business.
Mr. CELLER. We must be careful as to whom we select as administrator.
Mr. MOCORMACK. That is all we can depend on in any human agency, is the type and character of men that are selected.
Mr. CELLER. If you are going to keep it in the Treasury Department, you have another check upon it, the Secretary of the Treasury. If you are going to leave it where the original bill put it, an independent commission of five, then you would have all sorts of checks and balances, so that you would not have arbitrary action under those circumstances. You would have checks and balances no matter what you do. I think that is the proper thing to do.
Mr. McCORMACK. Do you think that whoever the administrator or board is, they should investigate the question of temperance in the rules and regulations!
Mr. CELLER. No. I said a moment ago that should not be the case. That would not be if you left it to regulation and got the proper man. I do not think Mr. Choate, who has been an able administrator, would do that.
Mr. McCORMACK. Mr. Choate is a very fine man, but we are all human. When you leave too much to rules and regulations you are making this a Government of men and not laws.
Mr. CELLER. I think until we know which way the business turns, as it were, until we know more about it, until it gets out of its staté of flux-then I would agree with you; otherwise not.
Mr. McCORMACK. I think the opposite would be true. You had better have the prescribed standards in the bill. Then as experience shows and as stabilization comes you can make the rules and regulations more flexible, because there will not be that necessity for constant change. That would be my reaction.
Mr. Vinson. Mr. Celler, if I understood you correctly, you could not call to mind any instance where you took the appeal from the order of an administrator or commission to the Circuit Court of Appeals.
Mr. CELLER. I say the way you have a permit system under conditions like those which would obtain under this bili.
Mr. VINSON. I thought you said that you could not recall it.
I want to call your attention to the Securities and Exchange Act which we passed the last Congress. We followed this identical rule, appealing from the order to the circuit court of appeals. I believe you took issue with the language in the bill, that “the finding of the Commission as to facts unsupported by substantial evidence, shall be conclusive and you could not call to mind
Mr. CELLER. I could not recall that.
Mr. VINSON. Any instance where that provision had been written into the law.
Mr. CELLER. That is right.
Mr. VINSON. I would like to call your attention to the fact that within that same act passed last March, the Securities and Exchange Act, that identical language is found, and it is based upon the Interstate Commerce Act of 1887.
Mr. CELLER. We should not repeat the mistake, sir.
Mr. VINSON. I know, but that mistake has been on the books since 1887 in the Interstate Commerce Act, where in case of an appeal the finding of fact on the part of the Commission is held to be conclusive in the court.
Mr. CELLER. You would not find it in the Volstead Act, which is a very drastic act. I think we should not repeat the mistake, sir.
Thank you, Mr. Chairman.
The CHAIRMAN. Thank you, Mr. Celler, for your appearance and the testimony you have given the committee.
Congressman O'Malley will be recognized for 10 minutes. STATEMENT OF HON. THOMAS O'MALLEY, A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF WISCONSIN Mr. O'MALLEY. Mr. Chairman and gentlemen of the committee:
I will try to be as brief as I can, because I know that through your courtesy I have been able to precede some of the witnesses that were on the list.
I am particularly desirous of protesting against the inclusion of malt beverages in this bill, which means the brewers. I cannot see any reason why the brewing industry should be included in this particular bill. So far, our past experience has shown that they have operated very satisfactorily without any permit system and without a great deal of red tape to which the distillers, rectifiers, and wholesalers in the liquor industry have been subjected.
I know from experience in my own State that about the quickest way to get a nervous break-down and go to the hospital has been to
try to engage in the liquor business in the last 2 years and keep up with the regulations and their changes. A lot of regulations make it difficult for an honest man to make any money in the liquor business.
Somebody suggested that they included breweries in here to protect them. I do not know what they are going to protect them from by putting them under this regulation. In my particular district there are a great number of breweries. There are some small breweries, and there are some large ones. There is no protection that I think they need. Possibly one of the things that they like best is the reduction of the taxes so that more beer would be sold and more people could be employed. I know that brewing employs more people than the liquor industry.
Another thing that came to my attention in this bill is the suspen. sion of the civil-service laws and the Classification Act of 1923. Is this going to be a political set-up that we are going to create in this bill? If it is going to be political you will have probably the same sort of scandals that you had before prohibition.
I would like to see particularly, as regards the employees, having them amenable to the Civil Service Act, with the Administrator not having the power to fix the salaries of the employees at anything at which he may see fit to set them. This Congress ought to fix the salaries of any new bureau or any new division of a bureau that it creates.
Now, I come over to section 4, which provides who shall be entitled to a basic permit. That is a carry-over from the F. A. C. A., and is possibly one of the reasons why my State has not been able to get any distilling permits to amount to anything.
It says here that any person who on May 25 held a basic permit automatically gets one.
Then in section 2, subsection (b), it says that the Administrator can deny a permit to any particular person by reason of his inability to meet qualifications as to business experience, financial standing, or trade connections which might show that he is not likely to commence operations.
That is a negative proposition. It leaves it directly up to one man to decide whether you have the right trade connections and maybe the right political pull to give you a permit, or maybe the right amount of money to assure going on for at least a year .
I faced this situation in trying to get a permit in my State for a cooperative organization started in my State under its State laws, that for 2 years I have been unable to get a cooperative distillery permit for an organization of farmers who want to go into the business, who raise the grain, and who want to hire somebody to make whisky and sell it at a great deal lower price than it is being sold now. We have been unable to get a permit, because probably, those farmers have not the business experience that would entitle them to get into the liquor business.
I would like to see a positive declaration in this law that we are writing as to what qualifications a man must have to get a permit, or a corporation or a group, and then we will know where we are going when we want to get a permit. I cannot see any reason why we should not tell those applicants for permits right in the law just what conditions they have to meet.
It seems to me that this particular provision makes it an absolute 1-man dictatorship, and I do not think this Congress should consent to any such thing in passing a bill to control the liquor industry.
Mr. Chairman, to save time, there is one more thing I wanted to bring up, and that is that here in this bill we provide that when an applicant for a permit is turned down he has no appeal, but when a permit is revoked he does have an appeal. I see here that they have a hearing, if their application is turned down, by the very same people or the very same administrator who had first refused them a permit, and I see nothing that says that they can go any further.
Mr. VINSON. Look at line 12 on page 11, beginning with line 9. You overlooked that, I believe.
Mr. O'MALLEY. Does that provide for an appeal upon denial of a permit?
Mr. Vinson. Yes. I am certain you just inadvertently overlooked it.
Mr. O'MALLEY. In the circuit court of appeals?
Mr. O'MALLEY. I believe, like Mr. Celler, that that appeal should be possible right in the district court. This appeal privilege, as you state, was overlooked by me, since it is in another section. It is badly needed and may help to overrule some of the discriminatory denials people of my State have experienced.
Mr. CULLEN. The right of appeal is left.
Mr. McCORMACK. I think that is taken care of, Mr. O'Malley. The right of appeal is there.
Mr. OʻMALLEY. The two particular objections I have to this bill are that it includes the breweries I think from what I have heard that we have some hopes of getting that out of the bill. I understood that Mr. Choate himself says that they have got along all right without being included under a permit plan the last 2 years.
The other thing is that I would like to see for the benefit of those who want to get into the liquor business that have not been able to employ high-priced lawyers, who want to know and have to know in crder to have their applications passed on what their qualifications shall be to get into that business, that they should be able to know it from the law itself that this Congress passes.
Mr. FULLER. What is your reason for saying that the brewers should not be included when the distillers are, since they are both engaged in the manufacture and production of spirits that are intoxicating?
Mr. O'MALLEY. That is very debatable. I do not think beer is intoxicating. I have never been able to hold enough to find out whether it was intoxicating.
Mr. McCORMACK. I think you just made the best argument; it is not intoxicating.
Mr. O'MALLEY. It is not intoxicating. I do not see why they should be included. This is supposedly a bill to protect them from something, but I do not know what they are being protected from.
Mr. REED. Did Mr. Choate state for the record that he did not think it necessary for the brewers to come in?
Mr. OʻMALLEY. I understood that yesterday in his testimony. I was not here, but I had my secretary here.
Mr. REED. I did not hear that.
The CHAIRMAN. The record will show.
Mr. O'Malley. I understood that Mr. Choate said they had operated satisfactorily for the last 2 years without any particular permit system.
Mr. REED. Mr. Choate is here. He can answer.
Mr. CHOATE. Do I understand that the gentleman wanted to ask me a question?
Mr. Reed. I just wanted to have you answer that question.
Mr. CHOATE. I would say that it is by no means as easy to enforce the codes in the case of brewers where we had no permit system as in the case of those who are subject to permits. I think the brewers, on the whole, behaved tolerably well. I think we were making progress when the decision came along:
Mr. Reed. Let us get the record straight.
Mr. O'MALLEY. May I ask Mr. Choate if the reason for putting the brewers under this permit system is to get a code system such as we had in the N. R. A. and have it enforceable by the Government !
Mr. CHOATE. You will have to ask the committee why the brewers are put under the code system.
Mr. OʻMALLEY. That is what I am trying to find out.
Mr. Vinson. Based upon your pleasant experience with the Federal Alcohol Control Administration, Congressman, in regard to your effort to get a permit, do you favor a separate, independent agency for this authority or do you favor placing it in the Treasury?
Mr. O'MALLEY. I favor placing it in the Treasury Department, insofar as we can place it there, as it was before prohibition, and that we get rid of a lot of red tape and cockeyed regulations that this business has been subject to, and then possibly we can get liquor down to a reasonable price, and we can have the small man be able to get into the business as well as the great aggregations of wealth that now absolutely monopolize the liquor business as a result of the operations of the F. AC. A. the last 2 years.
The CHAIRMAN. Thank you for your appearance and the information you have given the committee.
Mr. O'MALLEY. Thank you.
The CHAIRMAN. The next witness is H. P. Somerville, chairman national legislative committee, American Hotel Association.
Give your name, address, and the capacity in which you appear.
Mr. KOCHENDERFER. Mr. Chairman, I am Willard M. Kochenderfer, executive secretary of the Hotel Association of Washington, D. C. Mr. Somerville is not able to be present, and he has asked me to read his brief.
The CHAIRMAN. Why can you not just file that statement if you are going to read it? We would all read it. Would that be satisfactory! Mr. KOCHENDERFER. That would be satisfactory; yes. (The statement of H. P. Somerville follows:)
WASHINGTON, D. C., June 19, 1935.
HEARING BY WAYS AND MEANS COMMITTEE IN REFERENCE TO H. R. 8539 As chairman of the legislative committee of the American Hotel Association, I respectfully urge, on behalf of the hotels of the United States, that provisions be included in the Federal Alcohol Control Administration liquor-control bill to enable license holders to purchase and sell liquor in bulk.