Is not

more of it that is sold, the more that is distilled, and the more that is sold, the more money that the Federal Government makes. that true?

Mr. EPPLEY. That is true. Has it ever come to your attention that if that liquor tax were lowered, the price of liquor would be proportionately lowered at the same time?

Mr. FULLER. I thought so, but it would not be in proportion, as it is selling now.

Mr. EPPLEY. That is right.

Mr. FULLER. And as you are selling it in your State.

Mr. EPPLEY. We have a wonderful system out there, Congressman. Mr. FULLER. Yes, you are making a lot of money out of it, too, are you not?

Mr. EPPLEY. That money is used for what we think is a very ideal purpose.

Mr. FULLER. Well, answer my question. You are making a good deal of money out of it, are you not?

Mr. EPPLEY. Yes, sir. We made over $7,000,000 last year, in about 9 months.

Mr. VINSON. How many gallons of liquor did you sell in 9 months? Mr. EPPLEY. I am not a statistician, Congressman. I just do not know, off-hand.

Mr. VINSON. Well, you can certainly take $7,000,000, profit, and apply that to the number of gallons of liquor that you sold. What I wanted was simply a mathematical calculation as to what profit per gallon Ohio was making.

Mr. EPPLEY. Let me answer that by saying we have a $1 a gallon tax. When I say $7,000,000, I should have said that about half of that was obtained from permit fees.

Mr. VINSON. Why does not Ohio reduce her $1 a gallon tax?

Mr. EPPLEY. Why does not the Federal Government reduce the $2 a gallon tax?

Mr. VINSON. No, the gentleman was complaining about the Federal Government tax, and I submit, while this is not a court of equity, the old equitable maximum would apply that, "He who comes into equity should come with clean hands." I say that with kindness.

Mr. EPPLEY. I understand that, Congressman, entirely.
The CHAIRMAN. We thank you.

Mr. VINSON. Mr. Chairman, would it be asking too much just at this point, for Mr. Choate to make a statement of his views in regard to the State control board?

Mr. CHOATE. You referred to the statement in regard to what, Mr. Vinson?

Mr. VINSON. The testimony of the witness as to exempting a State liquor board from the operation of this statute.

Mr. CHOATE. I see really no serious objection to exempting them, if they want to be exempted. I think they ought to be under the regulations, both of the statute and of the regulations imposed under the statute, but I think the permit, in the case of the State, would offer no substantial additional means of enforcement. If a State wants to violate the rules, I think they will violate them. I do not expect the State to want to violate them.

Mr. VINSON. So far as you are concerned, then, and so far as it applies to the permit, the statute might exempt State agencies, such as the State Liquor Board of Ohio?

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,