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CONTENTS

Statements of -

Alprin, Morris O., representing the Wholesale Wine and Spirits Pago

Merchants Association of New York...

80

Celler, Hon. Emanuel, a Representative in Congress from the State
of New York..

88

Choate, Hon. Joseph H., Jr., Federal Alcohol Control Administration. 8, 58

Coleman, Frank A., president, National Wholesale Wine and Liquor

Dealers Association...

65

Eppley, George E., member Ohio State Liquor Board.

54
Esselborn, Paul, brewer, Cincinnati, Ohio.-

63
Flynn, Michael J., representing the Labor National Committee for
Modification and Repeal.-

107
Graves, Harold N., Assistant to the Secretary of the Treasury

29
Greenhut, Eugene, Chairman, Committee of the National Civic Fed-
eration of New York.

104

Hankerson, F. P., representing the National Legislative Committee

of the Cooperage Industry

99

Johnston, A. Sidney, president, Associated Cooperage Industries of

America

73

Lipsett, Charles H., publisher, American Wine and Liquor Journal - 103, 132

McCabe, George P., general counsel, American Brewers Association., 61

McMackin, Hugh J., secretary, National Wholesale Wine and

Liquor Dealers Association..

120

Mellott, Arthur J., Deputy Commissioner, Bureau of Internal Rev-
Nicholson, James R., representing Ruppert Brewery, New York City. 61
O'Connor, A. D., former supervisor, Code Authority for the Whole-
sale Beer Distributors

116

O'Malley, Hon. Thomas, & Representative in Congress from the

State of Wisconsin...

95

Briefs:

Caskey, Fred A., general counsel, League of Distilled Spirits Recti-

fiers, Inc.

113

Doran, Dr. J. M., administrator, Distilled Spirits Institute.

109

Hester, C. M., attorney, Treasury Department.

132

Lourie, Harry L., representing the Association of Alcoholic Beverage

Importers

111

Somerville, H. P., representing the American Hotel Association.

98

enue.

FEDERAL ALCOHOL CONTROL ACT

WEDNESDAY, JUNE 19, 1935

HOUSE OF REPRESENTATIVES,
COMMITTEE ON WAYS AND MEANS,

Washington, D. C. The committee met, pursuant to call, at 7:30 p. m., in the committee room, New House Office Building, Hon. Robert L. Doughton (chairman) presiding.

(The committee had under consideration H. R. 8539, which bill is as follows:)

(H. R. 8539, 74th Cong., Ist sess.) A BILL To further protect the revenue derived from distilled spirits, wind, and malt beverages, to regu

late interstate and foreign commerce and enforce the postal laws with respect thereto, to enforce the Twenty-first Amendment, and for other purposes

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That (a) there shall be levied, assembled, collected, and paid annual occupational taxes at the rates provided in subsection (b) by the following persons for the privilege of carrying on any of the following businesses:

(1) Importers importing into the United States distilled spirits, wine, or malt beverages;

(2) Persons engaged in selling, or shipping for sale, in interstate or foreign commerce distilled spirits, wine, or malt beverages imported into the United States;

(3) Distillers of distilled spirits, producers of wine, and producers' of malt beverages;

(4) Rectifiers and blenders of distilled spirits or wine;

(5) Persons engaged in the business of purchasing for resale at wholesale distilled spirits, wine, or malt beverages; and

(6) Any other person not included in the foregoing, wh the holder of a basic permit issued under this Act and is engaged in any business covered by such permit.

(b) Such tax shall be at the rate of $10 per annum and shall be in addition to any other occupational tax imposed on such person. In the case of any person subject to an occupational tax under any law of the United States, the tax imposed by this section shall be levied, assessed, collected, and paid in the same manner, at the same time, and subject to the same provisions of law (including penalties) as such other tax. In the case of a person who is not subject to any occupational tax under any law of the United States the tax imposed by this section shall be levied, assessed, collected, and paid in the same manner, at the same time, and subject to the same provisions of law (including penalties) as the tax imposed by Paragraph “First” of Section 3244 of the Revised Statutes, as amended (relating to the tax on brewers).

Sec. 2. (a) There is hereby created the Federal Alcohol Control Administration as a division in the Treasury Department.

(b) The Administration shall be headed by an Administrator who shall be appointed by the President by and with the advice and consent of the Senate. The Administrator shall for his services receive compensation at the rate of $10,000 per annum, payable monthly, together with actual and necessary traveling and subsistence expenses while engaged in the exercise of his powers and duties

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outside the District of Columbia. No person shall be eligible to appointment, or continue in office, as Administrator if he is engaged or financially interested in, or is an officer or director of or employed by a corporation engaged in, the production or sale or other distribution of alcoholic beverages, or the financing thereof.

(c) The Administrator shall, with the approval of the Secretary of the Treasury, but without regard to the Civil Service laws and the Classification Act of 1923, as amended, appoint and fix the compensation and duties of such officers and employees as he deems necessary to carry out his powers and duties.

(d) The Administrator is authorized and directed to prescribe such rules and regulations as may be necessary to carry out his powers and duties. All rules and regulations prescribed by the Administrator shall be subject to the approval of the Secretary of the Treasury.

(e) Appropriations to carry out powers and duties of the Administrator shall be available for expenditure, among other purposes, for personal services and rent in the District of Columbia and elsewhere, expenses for travel and subsistence, for law books, books of reference, magazines, periodicals, and newspapers, for contract stenographic reporting services, for subscriptions for library services, for purchase of samples for analsyis or use as evidence, and for holding conferences of State and Federal liquor-control officials.

(f) The Administrator may, with the consent of the department or agency affected, utilize the services of any department or other agency of the Government to the extent necessary to carry out his powers and duties, and he may authorize officers and employees thereof to act as his agents.

(g) The provisions, including penalties, of sections 9 and 10 of the Federal Trade Commission Act, as now or hereafter amended, shall be applicable to the jurisdiction, powers, and duties of the administrator, and to any person (whether or not a corporation) subject to the provisions of laws administered by the Administrator.

(h) The Administrator is authorized to require, in such manner and form as he shall prescribe, such reports as are necessary to carry out his powers and duties.

UNLAWFUL BUSINESSES WITHOUT PERMIT

Sec. 3. In order effectively to regulate interstate and foreign commerce in distilled spirits, wine, and malt beverages, to enforce the Twenty-first Amendment, and to protect the revenue and enforce the postal laws with respect to distilled spirits, wine, and malt beverages:

(a) It shall be unlawful, except pursuant to a basic permit issued under this Act by the Administrator

(1) to engage in the business of importing into the United States distilled spirits, wine, or malt beverages, or

(2) for any person so engaged to sell, offer or deliver for sale, contract to sell, or ship, in interstate or foreign commerce, directly or indirectly or

through an affiliate, distilled spirits, wine, or malt beverages so imported. This subsection shall take effect sixty days after the date of the enactment of this Act.

(b) It shall be unlawful, except pursuant to a basic permit issued under this Act by the Administrator

(1) to engage in the business of distilling distilled spirits, producing wine, producing malt beverages, rectifying or blending distilled spirits or wine, or bottling, or warehousing and bottling, distilled spirits, or

(2) for any person so engaged to sell, offer or deliver for sale, contract to sell, or ship, in interstate or foreign commerce, directly or indirectly or through an affiliate, distilled spirits, wine, or malt beverages to distilled, produced, rectified, blended, or bottled, or warehoused and bottled. This subsection shall take effect sixty days after the date of the enactment of this Act.

(c) It shall be unlawful, except pursuant to a basic permit issued under this Act by the Administrator

(1) to engage in the business of purchasing for resale at wholesale distilled spirits, wine, or malt beverages, or

(2) for any person so engaged to receive or to sell, offer or deliver for sale, contract to sell, or ship, in interstate or foreign commerce, directly or indirectly or through an affiliate, distilled spirits, wine, or malt beverages so purchased. This subsection shall take effect January 1, 1936.

PERMITS

SEC. 4. (a) The following persons shall, on application therefor, be entitled to a basic permit:

(1) Any person who, on May 25, 1935, held a basic permit as distiller, rectifier, wine producer, brewer, or importer issued by an agency of the Federal Government.

(2) Any other person unless the Administrator finds (A) that such person (or in case of a corporation, any of its officers, directors, or principal stockholders) has, within five years prior to date of application, been convicted of a felony under Federal or State law; or (B) that such person is, by reason of his business experience, financial standing, or trade connections, not likely to commence operations within a reasonable period or to maintain such operations in conformity with Federal law; or (C) that the operations proposed to be conducted by such person are in violation of the law of the State in which they are to be conducted.

(b) If upon examination of any application for a basic permit the Administrator has reason to believe that the applicant is not entitled to such permit, he shall notify the applicant thereof and, upon request by the applicant, afford him due notice and opportunity for hearing on the application. If the Administrator, after affording such notice and opportunity for hearing, finds that the applicant is not entitled to a basic permit hereunder, he shall by order deny the application.

(c) The Administrator shall prescribe the manner and form of all applications for basic permits (including the facts to be set forth therein) and the form of all basic permits, and shall specify in any basic permit the authority conferred by the permit and the conditions thereof in accordance with the provisions of this Act. To the extent deemed necessary by the Administrator for the efficient administration of this Act, separate applications and permits shall be required by the Administrator with respect to distilled spirits, wine, and malt beverages, and the various classes thereof, and with respect to the various classes of persons entitled to permits hereunder. The issuance of a basic permit under this Act shall not operate to deprive the United States of its remedy for any violation of law.

(d) A basic permit shall be conditioned upon compliance with the requirements of section 5 (relating to unlawful practices), with the Twenty-first Amendment and laws relating to the enforcement thereof, and with all other Federal laws relating to distilled spirits, wine, and malt beverages, including taxes with respect thereto.

(e) Each basic permit shall contain a condition that no officer or director of the permittee shall at any time act as an officer or director of any other corporation, joint-stock company, business trust, or association which is engaged in the business of producing, importing, rectifying or blending, bottling, warehousing, or selling at wholesale or retail, distilled spirits, wine, or malt beverages. This subsection shall not apply to permittees of the class described in paragraph (1) of subsection (a) of this section until after six months after the date of the enactment of this Act.

(f) No basic permit issued under this Act shall contain any condition prohibiting, nor shall any rule, regulation, or order, issued under this or any other Act of Congress, prohibit, the use or sale of any barrel, cask, or keg, if made of wood and if of one or more wine gallons capacity, as a container in which to store, transport, or sell, or from which to sell, any distilled spirits, wine, or malt beverages. This subsection shall not apply to any condition in any basic permit issued under this Act or any rule, regulation, or order issued in connection therewith to the extent that such condition applies in a State in which the use or sale of any such barrel, cask, or keg is prohibited by the law of such State.

(g) A basic permit shall by order of the Administrator, after due notice and opportunity for hearing to the permittee, (1) be revoked, or suspended for such period as the Administrator deems appropriate, if the Administrator finds that the permittee has violated any of the conditions thereof, provided that for a first violation of the conditions thereof the permit shall be subject to suspension only; or (2) be revoked if the Administrator finds that the permittee has not engaged in the operations authorized by the permit for a period of more than one year; or (3) be annulled if the Administrator finds that the permit was procured through fraud, or misrepresentation, or concealment of material fact.

(h) Orders of the Administrator with respect to any denial of application, suspension, revocation, annulment, or other proceedings, shall be served (1) in person by any officer or employee of the Administration designated by the Administrator or any internal revenue or customs officer authorized by the Administrator for the purpose, or (2) by mailing the order by registered mail, addressed

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