The fact is that there is no choice. Practically all of our publications today are deluged with liquor advertising. The bill before the committee today does not restrict any individual liberties. It does not take from anyone the right to do as he pleases, to drink or to refuse to drink as he wishes. It does remove a growing source of bad influence which is hindering the characters of thousands of our children. It is leading them to drink and it is leading them to believe that the public statement of false and erroneous fact is something which is to be condoned. When my small sons leaf through a magazine and ask me questions about certain statements that they read, in truthfulness I have to tell them that those statements are lies of varying shades and degrees, and so they learn that grown men are being dishonest in a world which, I have been trying to tell them, is based on mutual honesty. I have a great deal of difficulty in explaining this disgraceful situation to my sons, and I hope that this committee will take action in order that people in general and especially young impressionable children will not be subjected to the misleading propaganda. Bishop HAMMAKER. Mr. Chairman, I would like to present now an outstanding churchman and citizen of Indiana, the Honorable T. Morton McDonald. STATEMENT OF T. MORTON MCDONALD, ATTORNEY AT LAW., PRINCETON, IND. Mr. McDONALD. Mr. Chairman, and members of the committee, as Bishop Hammaker did not say, I am simply a country lawyer in from Indiana. I happen to be a Methodist layman, and when I have a job I try to work at it. I came here at the request of the members of my church, the First Methodist Church of Princeton, Ind., the Ministerial Association of Princeton, Ind., and the Methodists of the Evansville district, Indiana conference of the Methodist Church. For years, or course, the excessive use of alcoholic beverages has been accounted an evil. In an effort to overcome that evil, we tried the eighteenth amendment. People were not satisfied with that. They claimed that the evil, instead of being remedied by the eighteenth amendment, was being fostered. And one of the promises, an outstanding one, which was made to us by those who were advocating repeal, was that if the eighteenth amendment were repealed, temperance would be promoted. Now, then, despite this promise, the liquor interests since repeal have waged one of the most intensive advertising campaigns the world has ever seen. Of course, there is only one reason, one objective for advertising. That is an increase in the number of sales and an increase in the number of consumers or users of the product advertised. And in the subject under consideration, successful advertising can never bring about either the moderation or the temperance to which the advocates to repeal so loudly and voluntarily pledged themselves. This advertising is particularly objectionable, as has already been pointed out, because of its alluring character, calculated to appeal to the young and unsophisticated, and to the unwary, and also because of its failure to disclose the perils and the evil effects which ordinarily follow the use of alcoholic beverages. I might say in passing that I certainly envy Senator Taylor, the splendid way in which he presented these features, or at least one of the features of these objections. Fundamentally, liquor advertising differs from every other kind in that it fails to suggest, but on the contrary actively suppresses, any reference to its "finished product." Liquor users are never pictured as "drunks," as "flophouse" residents, as prostitutes, denizens of houses of ill-fame, and the like, but they are always pictured as beautiful ladies, handsome men, kindly old gentlemen, all people of refinement, and all perfectly attired, amid luxurious surroundings. And they are never pictured the way they are after indulging even moderately. You never even see so much as a silly grin or a leer on the countenance of one of these pictured users of intoxicating liquor. And there is never any indication in the advertisements of the kind of language that people use who are under the influence of intoxicants; some of the language, for instance, that you hear when you are traveling on trains, in the traveling saloons, where there is nowhere else to stay while your birth is being made up, on the part of men and women indulging in alcohol. Many of these advertisements are deliberately calculated to mislead and deceive. Now, in the face of thousands of broken homes, due to the use of intoxicating liquors, in the face of thousands of neglected children, children neglected because one or both parents are addicted to the use of alcoholic liquors, we see advertisements in which beer is held out as something by which to keep the home together. And while we read on one page of the newspaper about a young person killing a drunken father or drunken mother because of some act of brutality toward the rest of the family, we find in some other part of the paper an advertisement, advertising that beer is something which promotes harmony and good feeling in the home. Then, as has already been referred to, there is the appeal to the natural desire on the part of young people to appear smart. They want to do the smart thing. They want to amount to something. And according to liquor advertisements, they can never be smart or amount to anything at all, socially or otherwise, unless they indulge in the use of alcohol. Senator REED. Mr. McDonald, the committee has limited the witnesses to 5 minutes. Would you like to file the rest of your statement! Mr. McDONALD. I would like to submit a statement entitled "Companies Catering to the Formation of Habit," contained in Thomson & McKinnon's monthly digest for the month of May, appearing on page 7 of that publication. Senator REED. Have you indicated what you desire to have included as a part of your statement? Mr. McDONALD. I have. Senator REED. That will be received. (The information referred to is as follows:) COMPANIES CATERING TO THE FORMATION OF HABIT SOME OF THE CHARACTERISTICS OF SHARES OF GUM, SOFT DRINKS, TOBACCO, SNUFF, WHISKY, AND BEER COMPANIES DISCUSSED Investments in the shares of gum, soft drinks, tobacco, snuff, whisky, and beer companies, to a large extent are investments in "habits." Whether or not these habits are vices is not primarily a matter for the consideration of the economist or the security analyst. There is a demand for such things and well-managed corporations can realize profits and pay dividends by supplying them. Net earnings for industry groups A habit is more easily acquired than broken, so there is a tendency for the markets of habit companies to increase. The consumption of cigarettes has increased about 61 percent since 1941, and the consumption of tobacco has increased from 2.21 pounds per capita in 1926 to about 6.62 pounds per capita in 1946. The apparent average annual per capita consumption of whisky increased from about half a gallon in 1934 to 1.22 gallons in 1945. The consumption of fermented malt liquors (beer) in the United States increased from about 20,000,000 barrels in 1933 to about 81,500,000 barrels in 1945. The production of carbonated beverages (soft drinks) has shown an almost uninterrupted annual increase, the gain between 1914 and 1939 being almost sevenfold. Since 1939 the trend has been disturbed by a shortage of sugar. Chewing-gum consumption increased almost fivefold between 1914 and 1939. Snuff consumption on a per capita basis has been practically steady at between 0.28 and 0.32 pounds per capita since 1925. INVESTOR PREJUDICE VERSUS GROWTH There are many investors who have religious, moral, or ethical prejudices against investments in habit companies, particularly investments in the liquor industry. These prejudices limit the market for such securities and often cause them to sell on a higher yield and lower price-earnings ratio basis than stocks regarding which similar objections do not exist. At the same time, stocks of this type, because of the nature of human habits, usually are investments in companies possessing a high-growth factor. ADVERTISING IMPORTANT Most of the companies which exploit human habits are highly dependent on skillful advertising, not only for the maintenance and growth of their markets, but also in their competition for trade position. For this reason a very large part of the gross profit margin usually is expended for advertising, and great stress is placed upon advertising technique. The manufacturing costs of all the habit companies are exceedingly small, usually less than 5 cents per dollar of sales gross. All of these industries are highly mechanized and most of them have low raw-material costs. The exception in the matter of material costs is found in the tobacco com- These high raw-material costs in late years have led to a considerable increase Under ordinary conditions, when sugar is cheap, the cost of making a bottle WHISKY COSTS By far the greater part of the price of a bottle of whisky, or a pack of ciga- The whisky companies recently have been fortunate in that they have been This brief discussion about these industries is presented without recommenda- ! Based on present annual rate or on dividend payments for latest 12-month period. 1.92 1.87 2.16 10 5.96 3.69 3.73 764. 2 2.59 3.71 3.87 6.9 5.39 4.30 4.25 464.5 2 For year 1945. Senator REED. Call your next witness, please. Bishop HAMMAKER. Mr. Chairman, as you know, I happen to represent a group of more than 8,000,000 churchmen. But I am now going to call upon a man who, as associate general secretary, represents a far greater group of Christians, the associate general secretary of the Federal Council of Churches of Christ in America, the largest organized group of Christian citizens of this country. I want to present Rev. Dr. Roswell P. Barnes. STATEMENT OF DR. ROSWELL P. BARNES, ASSOCIATE GENERAL SECRETARY, FEDERAL COUNCIL OF THE CHURCHES OF CHRIST IN AMERICA, NEW YORK, N. Y. Dr. BARNES. I am Roswell P. Barnes, 297 Fourth Avenue, New York 10, N. Y. Mr. Chairman, I appear as the associate general secretary of the Federal Council of the Churches of Christ in America, to report the position of the council with reference to the question of liquor advertising. The official position of the council is set forth in a statement adopted at its biennial meeting in Seattle, in December 1946. It is not a position adopted with special reference to S. 265, which has not been considered by the council. It does, however, set forth certain principles which it believes to be generally held by the overwhelming majority of its constituency, which is comprised of 25 national denominations with a combined membership of some 27,000,000 persons. The statement is one of a series on operating principles for social control and reads as follows: Regulation of advertising of alcoholic beverages.—We deplore the effect which the advertising of alcoholic beverages is destined to have, especially upon the mind of youth, through its unwarranted and false claims, which go beyond public presentation of brand names, common to all advertising, and which aim to invest the use of alcohol with prestige and desirability. This calls for regulatory practices which, if not voluntarily put into effect by advertising agents, should be imposed by appropriate organs of government. It was definitely recognized by the council that such measures as the control of liquor advertising are not final steps but that they can be of assistance in dealing with the social problems of alcohol at the level of public policy. The council does not presume any special competence with regard to the most effective and appropriate legislative measures for dealing with this matter. I would, therefore, disclaim both authorization and competence to discuss technical details with regard to the provisions of this bill. This council does recognize, however, a responsibility for pointing out the moral implications of the prevailing practices of liquor advertising and their consequences in the lives of our people. The council regards it, therefore, appropriate to press upon legislators their responsibility for devising effective and appropriate means of control. It should be observed that our present practices constitute an embarrassment to our Canadian neighbors to the north. I recently received from an official of the United Church of Canada a clipping of the book cover of a well-known periodical, published in the United |