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CONCLUSION

It is respectfully submitted that legislative practice and the decisions of the courts establish the constitutionality of the proposed legislation for these reasons:

1. The bill is intended to deny the facilities of the Federal Government to commercial advertising of alcoholic beverages.

2. The purpose of commercial advertising is the promotion of sales of such beverages.

3. The Supreme Court has repeatedly held that the sale of intoxicating liquor is not one of the inherent rights of citizenship guaranteed either by the fifth or the fourteenth amendinents to the Constitution.

4. The twenty-first amendment to the Constitution nas placed intoxicating liquors in interstate commerce in a different category from any other commodity.

5. Since the bill relates to a business which is subject to the fullest measure of regulation or prohibition in the interests of the public welfare, the denial of the use of the federally controlled facilities of interstate transportation, the radio, and the mails for the promotion of the sale of such commodity does not deny any right of free speech or free press guaranteed by the first amendment to the Constitution.

6. It is settled that the liquor traffic may be prohibited entirely without violating any constitutional right. The exercise of a lesser power of regulation of methods by which liquors may be sold clearly does not impinge upon any constitutional right.

EDWARD B. DUNFORD,

Attorney for Anti-Saloon League of America. Mr. Johnson. Then I want to make sure that the sheaf of correspondence which has heretofore been directed to this committee from the Interstate Commerce Commission and the Attorney General and the Federal Trade Commission is in the record.

I will file a copy now, and if it is not already in the record, it certainly should be, because it was directed and prepared for that purpose.

Senator REED. Yes, we always ask the various departments of Government for their opinion on a bill of this character. That may be included in the record. (The correspondence referred to is as follows:)

REPORTS OF GOVERNMENT AGENCIES ON S. 265

INTERSTATE COMMERCE COMMISSION,

Washington, January 24, 1947. Hon. WALLACE H. WHITE, Jr., Chairman, Committee on Interstate and Foreign Commerce,

United States Senate, Washington, D. C. MY DEAR CHAIRMAN WHITE : Mr. Jarrett's letter of January 18, addressed to the Chairman of the Commission and requesting comments on S. 265, introduced by Senator Capper, "To prohibit the transportation in interstate coinmerce of advertisements of alcoholic beverages, and for other purposes," has been referred to our legislative committee. After careful consideration by that committee I am authorized to submit the following comments in its behalf :

S. 265 is identical in wording with S. 599 (79th Cong., 1st sess.). The question whether from the standpoint of social welfare advertisements of alcoholic beverages should be barred from interstate movement is not related to the jurisdiction of this Commission, and we are therefore unable to express a helpful opinion with respect to the merits of this legislative proposal. Section 3, however, is of some interest to us. It reads as follows:

“It shall be unlawful for any common carrier or for any private carrier for hire to transport from any state or Territory or the District of Columbia to any other State or Territory or the District of Columbia any newspaper, periodical, news reel, photographic film, or record for mechanical reproduction advertising alcoholic beverages or containing the solicitation of an order for alcoholic beverages.”

In the classification of carriers in the Interstate Commerce Act the term "private carrier for hire" is not used. It seems probable that as here used the term is a misnomer for "contract carrier.”

Although carriers could not be held liable for violations of such an act unless they knowingly transported liquor advertisements, they might be put to a considerable burden in trying to avoid any possible charge of a violation. The tendency might be for some to refuse to accept any shipments of magazines, picture films, etc., rather than risk such a charge. In other instances where Congress has prohibited movement of certain articles in interstate commerce the act has been made expressly inapplicable to carrier. For example, in the legislation involving inisbranded woolen goods the following provision was included (15 U. S. C. 68a) :

"This section shall not apply to any common carrier or contract carrier in respect to a wool product shipped or delivered for shipment in commerce in the ordinary course of business."

We respectfully suggest that a provision similar to this, amended to include any freight forwarder, be substituted for section 3 in the event that your committee should decide to report S. 265. Respectfully submitted.

WALTER M. W. SPLAWN,
Chairman, Legislative Committee,

CHARLES D. MAHAFFIE,
JOHN L. ROGERS.

OFFICE OF THE ATTORNEY GENERAL,

Washington, D. C., April 3, 1947. Hon. WALLACE H. WHITE, Jr., Chairman, Committee on Interstate and Foreign Commerce,

United States Senate, Washington, D. C. MY DEAR SEN ATOR: This is in response to your request for my views concerning a bill (S. 265) to prohibit the transportation in interstate commerce of advertisements of alcoholic beverages.

The bill would ban interstate transportation of advertising matter relating to alcoholic beverages. It proposes to make it a criminal offense for persons engaged in the sale of alcoholic beverages or for any publisher of a newspaper or periodical or for a carrier to transport or cause to be transported in interstate commerce any newspaper, periodical, newsreel, photographie film, or record for mechanical reproduction, advertising alcoholic beverages or containing the solicitation of an order for such beverages. Radio broadcasting of such advertising and solicitations would be prohibited. The mailing of any letter, postal card, circular, or pamphlet containing any such advertisement or solicitation into any State wherein it is unlawful to advertise or solicit orders for alcoholic beverages would also be made illegal.

This legislation would have far-reaching implications and a serious effect on newspapers and periodicals. The law which would prohibit the advertising of alcoholic beverages, a legitimate commodity in most States, would, in effect, require all newspapers and periodicals with interstate circulation to reject all such advertising.

Sections 2, 3, and 4 of the legislation present a serious question of interpretation as to whether they are intended to be limited to transportation of advertisements from one State or Territory of the United States to another, without affecting advertisements introduced into the United States from foreign countries. If this is the intention, it would place foreign liquor manufacturers and dealers in a favorable position as compared with manufacturers and dealers in the United States.

Whether in the light of the foregoing considerations the bill should receive favorable action is a question of legislative policy for the consideration of the Congress.

I have been advised by the Director of the Bureau of the Budget that there is no objection to the submission of this report. Sincerely yours,

Tom C. CLARK, Attorney General.

FEDERAL COMMUNICATIONS COMMISSION,

Washington 25, D. C. January 21, 1947. HON. WALLACE H. WHITE, Jr., Chairman, Committee on Interstate and Foreign Commerce,

United States Senate, Washington, D. O. DEAR SENATOR WHITE: In a letter, dated January 18, 1947, Mr. Edward Jarrett, clerk of the Senate Committee on Interstate and Foreign Commerce, has submitted to me for comment a copy of a bill, S. 265, Eightieth Congress, first session,

As set out in its title, the general purpose of S. 265 is to prohibit the transportation in interstate commerce of advertisements of alcoholic beverages. Section 4 of the bill provides that it shall be unlawful to broadcast by means of any radio station, or to permit the broadcasting of any advertisement of alcoholic beverages or the solicitation of an order for alcoholic beverages. Section 7 of the bill prescribes criminal penalties for violation of the prohibitions of the bill.

This bill presents questions of national policy with respect to the advertising of alcoholic beverages and will not affect any existing functions of the Commission. Sincerely yours,

CHARLES R. DENNY, Chairman.

OFFICE OF THE POSTMASTER GENERAL,

Washington 25, D. C., March 6, 1947. Hon. WALLACE H. WHITE, Jr., Chairman, Committee on Interstate and Foreign Commerce,

United States Senate, Washington 25, D. O. DEAR SENATOR : Further reference is made to your letter of January 18, 1947, requesting a report upon S. 265, a bill to prohibit the transportation in interstate commerce of advertisements of alcoholic beverages, and for other purposes.

This bill appears to involve matters of general public policy for determination by the Congress.

Since there is a demand for advertising space at the present time, it is doubtful that postal revenues would be reduced by the provisions of this bill. Later, as shortages are overcome, the prohibition of liquor advertising might cause a slight reduction in postal revenues from second-class matter. In any event, it is not believed that the enactment of this bill would affect more than 1 percent of such revenues, or from $250,000 to $300,000 per year. Definite figures on the percentage of advertising space devoted to liquor advertisements are not immediately available. Some increases in the administrative expenses of the Department also would result from the enactment of the measure.

This Department has been advised by the Bureau of the Budget that there would be no objection to the submission of this report to the committee. Sincerely yours.

J. M. DONALDSON, Acting Postmaster General.

FEDERAL TRADE COMMISSION,

Washington 25, D. C., May 6, 1947. HON. WALLACE H. WHITE, Jr., Chairman, Committee on Interstate and Foreign Commerce,

United States Senate, Washington, D. O. MY DEAR MR. CHAIRMAN: In response to a letter from your committee, dated April 14, 1947, relative to S. 265, Eightieth Congress, first session, a bill to prohibit the transportation in interstate commerce of advertisements of alcoholic beverages, and for other purposes, there is submitted herewith, in tripli. cate, the report of our general counsel,

Pursuant to regulations, this report was submitted to the Bureau of the Budget on April 22, and in a letter of May 5, 1947, the Commission was informed by the Budget that there would be no objection to the submission of this report to the committee. The report is dated April 18, 1947.

By direction of the Commission.
With kind personal regards, I am
Yours sincerely,

GARLAND S. FERGUSON, Chairman.

MEMORANDUM FOR THE COMMISSION

Re S. 265, Eightieth Congress, a bill to prohibit the transportation in interstate

commerce of advertisements of alcoholic beverages, and for other purposes

By letter, dated April 14, 1947, the clerk of the Senate Committee on Interstate and Foreign Commerce, acting by direction of the chairman of the committee, referred to the Commission, for comment, a copy of the above bill. The bill is designed to prohibit the transportation in interstate commerce of any newspaper, periodical, news reel, photographic film, or record for mechanical reproduction advertising alcoholic beverages, and any letter, postal card, circular, or pamphlet containing any such advertisement if directed to a place in any State or Territory at which the advertising of alcoholic beverages is unlawful.

The bill S. 265, Eightieth Congress, is identical with the bill S. 599, Seventyninth Congress, upon which a report has heretofore been submitted. In that report the conclusion was reached that there is no legal or constitutional objection to the enactment of the bill, and this is still my opinion. In that report, too, it was suggested that an act designed to prevent the transmission of advertisements for intoxicating liquors through the channels of interstate commerce, might well contain a preamble declaring the public policy that Congress desires to promulgate, based on the exercise of its power to protect the health, morals, and social welfare of the public, and this suggestion is also here reiterated.

I am attaching, for the information of the committee, a copy of the previous report on the bill S. 599, Seventy-ninth Congress. Respectfully submitted.

W. T. KELLEY, General Counsel. APRIL 18, 1947.

MEMORANDUM FOR THE COMMISSION Re S. 599, Serenty-ninth Congress, first session, February 22, 1945 (Senator

Capper), a bill to prohibit the transportation in interstate commerce of advertisements of alcoholic beverages, and for other purposes

Pursuant to the direction of the Commission, the following is submitted by way of comment on the above bill, referred to the Commission by Senator Wheeler, chairman of the Senate Committee on Interstate Commerce.

S. bill 599, above referred to, is identical with S. 575, Seventy-sixth Congress, and S. 1369, Seventy-fifth Congress, upon which reports have heretofore been made. In the report on S. 1369, consideration was given to the power of Congress to pass legislation of this character, in the exercise of its power to regulate interstate commerce, of its power over the mails, and in connection with the question as to whether or not such an act violates the constitutional provision guaranteeing freedom of the press. The general conclusion reached was that Congress had the requisite power to pass such an act and that it would not violate constitutional guaranties. This opinion is adhered to. However, there have been some subsequent decisions relating to this subject which will be considered briefly.

The Twenty-first amendment to the Federal Constitution repeals the Eighteenth amendment, and provides also that "the transportation or importation into any State, Territory, or possession of the United States for delivery or use therein of intoxicating liquors, in violation of the laws thereof, is hereby prohibited." The Eighteenth amendment prohibited the manufacture and sale or transportation of intoxicating liquors within, the importation thereof into, or the exportation thereof from the United States and all Territories subject to the jurisdiction thereof, for beverage purposes. Congress and the several States were given concurrent power to enforce the article by appropriate legislation.

Intoxicating liquors have always been held by the courts to be a commodity of such a nature as to be peculiarly subject to regulation under the police power of the States. However, since the repeal of the eighteenth amendment, it is my opinion that Congress, under prevailing decisions, lacks the power to prohibit outright the transportation of intoxicating liquors in the channels of interstate commerce. Such prohibition, it seems to me, would run counter to the public policy laid down in the twenty-first amendment, repealing the eighteenth. However, that is not to say that Congress has been shorn of all power of regulation over intoxicating liquors.

By the terms of the twenty-first amendment the power to prohibit the manufacture and sale of intoxicating liquors is vested in the respective States and interstate traffic in such liquors is restricted to their transportation into States which do not by law limit or prohibit their importation.

The courts in some very recent cases have had occasion to construe the twentyfirst amendment in connection with State laws restricting or prohibiting the importation of liquor, which were challenged as discriminatory or as violative of the commerce clause of the Constitution.

In Indianapolis Brewing Co., Inc. v. the Liquor Control Commission of the State of Michigan and Joseph S. Finch & Co., et al, decided January 3, 1939, the Supreme Court held that since the twenty-first amendment the right of a State to prohibit or regulate the importation of intoxicating liquors is not limited by the commerce clause of the Federal Constitution, and that discrimination between domestic, and imported intoxicating liquors or between imported intoxicatmg liquors is not prohibited by the equal protection clause. These cases also reaffim the well-settled doctrine that a State has substantive power to prevent the sale of intoxicating liquors within its borders.

In State Board v. Young's Market Co. (299 U. S. 59), the Court said that "the words used (in the twenty-first amendment) are apt to conser upon the State the power to forbid all importations which do not comply with the conditions it prescribes." It was said further that the twenty-first amendment permits the various States to place direct burdens on interstate commerce in intoxicating liquors.

There can be no question that the twenty-first amendment has narrowed the general power of Congress, existing before the amendment, of regulating interstate commerce in intoxicating liquors. But this limitation merely deprives Congress of the right to insist that the channels of interstate commerce in these products be kept open into all States and to require states to permit the importation of such liquors if their public policy forbids it. It is not believed this restriction of the Federal power to regulate such interstate commerce can be considered to be an extinguishment of that power.

In State Board v. Young, supra, it was urged that if the Court should sustain the validity of the state law it "would involve a declaration that the amendment has, in respect to liquor, freed the States from all restrictions upon the police power to be found in other provisions of the Constitution.” The Court said, significantly, that the question for decision required no such generalization.

There is nothing in the twenty-first amendment which indicates that under its terms the Federal Government was deprived of its preexisting constitutional right to regulate interstate commerce in intoxicating liquors, in spite of the evident purpose to turn over to the States the right to impose conditions upon or to prohibit the importation of such liquors into their respective jurisdictions. The question involved here is not whether Congress can prohibit the transportation of the liquor itself in interstate commerce, but whether it can prohibit the transmission of advertisements for such liquor into all States.

In United States v. Frankfort Distilleries, Inc., Supreme Court of the United States 523-530, (October term 1944) producers, wholesalers and retailers of alcoholic beverages were indicted in a Federal district court for restraining commerce in violation of the Sherman Act by combining and conspiring to raise, fix, and stabilize retail mark-ups and margins of profit. Respondents pleaded nolo contendre to one count of the indictment. On these pleas they were adjudged guilty by the district court and fined. The circuit court of appeals reversed on the ground that the indictment failed to show that the conspiracy charged was in restraint of interstate commerce. The Supreme Court reversing the judgment of the circuit court of appeals and affirming that of the district court, speaking through Mr. Justice Black, said:

"Respondents were properly convicted, unless as they argue, their conduct is not covered by the Sherman Act, either because the price fixing applied only to retail sales which were wholly intrastate, or because the State's power to control the liquor traffic within its boundaries makes the Sherman Act inapplicable.

These two questions thus posed relate to the extent of the Sherman Act's application to trade restraints, resulting from actions which take place within a State. In resolving them, there is an obvious distinction to be drawn between a course of conduct wholly within a State and conduct which is an inseparable element of a larger program dependent for its success upon activity which affects commerec between the States. It is true that this Court has on occasion determined that local conduct could be insulated from the operation of the antitrust laws on the basis of the purely local aims of a combination, insofar as those aims were not

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