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some of these organizations, I recall seeing from one such organization a memorandum that pointed out, under section 101 of the Internal Revenue Code, that organization would lose its tax-exempt status if a substantial part of its activities is the influencing of legislation.

Senator ROBERTSON. If they register as a lobbyist and you adopt the theory which I understand Mr. Kaufman advocates, that if they do any of it at all, it is a principal activity, they then lose their taxexempt status.

Professor ZELLER. Now, Senator, this is one of the questions which I have on a separate sheet called "open matters.”

Senator ROBERTSON. That is an open matter?

Professor ZELLER. As far as I am concerned, and it is something for the Senate to decide, for the Congress to decide, whether they want to continue to say to these organizations: "You are engaged in very worth-while work, and we know that one of your activities is the influencing of legislation; however, we think your purposes are worthy and we believe that your tax-exempt status should be continued."

Senator ROBERTSON. I recall very distinctly when Mr. Morgenthau proposed to put a social-security tax on preachers, a good many preachers came before the Ways and Means Committee and said they didn't think that Congress, if there is going to be separation of church and state in this country, had a right to tax preachers. Do you think they have the right to come before Congress and say that?

Professor ZELLER. Do they have the right?

Senator ROBERTSON. Do they have the right to come before Congress and say that?

Professor ZELLER. For the purpose of influencing legislation?
Senator ROBERTSON. Yes.
Professor ZELLER. Yes, I certainly do think they have the right.

Senator ROBERTSON. And they have to register as lobbyists to do it?

Professor ZELLER. There you might want to make an exception. I can very well see how you might defend an exception there because of the nature of their work, the recognition that they are engaged in influencing legislation as they have every right to do. In connection with certain types of legislation they have a valuable contribution to make.

Senator ROBERTSON. In the case of a bill to appropriate Federal money for public schools, should we permit the Catholics to come before congressional committees and say: "We want this to include parochial schools because we are going to send our children to parochial Mchool and not to public schools and we don't want to be taxed for an inutitution that we will not get the benefit of,” should they be heard?

I'rolesmor ZELLER. I think all groups in a democracy, Catholic, l'rotestant, Jews, have the right to be heard. It is for the Congress to decide

Mentor ROPERTSON [interposing). I know, but do you want them to register as lobbyists?

Professor ZELLER. Well, I don't see anything wrong—you see, Sena

Mumtor ROBERTSON (interposing). I know, but whether it is wrong or not, I am just asking you what you want to do.

I'rofessor LxLLER. Yes, I think they should register.

Senator ROBERTSON. If they do, they have got to under this law, report to Congress, all of their receipts and disbursements, and you want all the churches to do that?

Professor ZELLER. As a matter of fact, some church groups do. There are some registered now. I recall that a Presbyterian group registered. There are some that have registered.

Senator ROBERTSON. Section 601 of the internal revenue law provides that the Secretary of the Treasury can call on any and all of these tax-exempt corporations to make annual reports of their receipts and disbursements, to see what they are doing. You are familiar with that?

Professor ZELLER. Yes; I recall that.

Senator ROBERTSON. And you remember Mr. Morgenthau made frequent requests upon the National Association of Manufacturers and the Chamber of Commerce-he never got around to calling on any labor union to do that, but it is all in the law-you want that duplicated when they come to Congress?

Professor ZELLER. I think all groups should be treated equally in enforcement of the law, but I think that Congress may continue to provide tax exemption. I think it would be perfectly proper to say that these church groups, these philanthropic groups have a right to attempt to influence legislation. I do not attach a stigma to lobbying. Lobbying is a legitimate activity of all groups in a democracy. In the public mind, lobbying is still associated with back alley tactics that were so prevalent half a century or more ago, particularly at the State level in a number of States.

Senator ROBERTSON. Are you aware of the fact that the ethics of the District Bar Association prohibit any member of the District bar from engaging in lobbying?

Professor ZELLER. I think they should be educated, sir, and their minds changed. There is nothing wrong about lobbying. I think they have the wrong concept.

Senator ROBERTSON. But the question is, What is lobbying? The rules of the bar association say that a member of the bar can come before a committee as an attorney and present the law and the facts and deductions from the law and the facts, but he cannot do any underhand work. What do you call “lobbying?”

Professor ZELLER. What I call lobbying—there is good lobbying and there is bad lobbying-influencing legislation, not merely by coming to the Capitol, but through campaigns to educate-if you want to put "educate" in quotation marks that is all right with me to educate the public. I see nothing wrong with lobbying. I think it is a mistake on the part of a bar association to attach a stigma to lobbying.

Senator ROBERTSON. Did you read the Senate Committee Report No. 1400, Seventy-ninth Congress?

Professor ZELLER. Yes; I think I have a copy with me.
Senator ROBERTSON. Now, listen to this language:

Itreferring to the Lobbying Act, does not apply to organizations organized for other purposes, whose attempts to influence legislation are merely incidental to the purposes for which they are formed.

Now, you want to change that, don't you?

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Professor ZELLER. I might call your attention, sir, to the fact that while that appears as one of the exemptions-incidentally, that was language taken over from the old debates in Congress back in 1936-I would like to call your attention to the statement in that same report on page 27: "The title applies chiefly to three distinct classes of socalled lobbyists; first, those who do not visit the Capitol but initiate propaganda from all over the country in the form of letters and telegrams, many of which have been based entirely upon misinformation as to facts. This class of persons and organizations will be required under the title not to restrict or curtail their activities in any respect, but merely to disclose the sources of their collections and the methods by which they are disbursed."

Then the second class to whom the law applies are "those who are employed to come to the Capitol under the false impression that they exert some powerful influence over the Members of Congress

Then there is a third class "of entirely honest and respectable representatives of business, professional, and philanthropic organizations who come to Washington openly and frankly to express their views for or against legislation, many of whom serve a useful and perfectly legitimate purpose in expressing the views and interpretations of their employers with respect to legislation which concerns them. They will likewise be required to register and state their compensation and the sources of their employment."

Senator ROBERTSON. Do you want Congress to amend the definition of a lobbyist so that if a member of the District Bar Association registers as a lobbyist he won't be subject to disbarment proceedings?

Professor ZELLER. No; I think you must go back to the District Bar Association first, Senator. There are lawyers registered at the present time, many of them.

Senator ROBERTSON. Under what we thought was the meaning of the act, yes, but you contend in this brief you have submitted to us that we do not have enough law on the subject; that we must go much further. I just want to know if you want to go to the point where, under your definition, if he registers as a lobbyist, he will be subject to disbarment.

Professor ZELLER. I should like to repeat, sir, that there is something wrong in the understanding of the term "lobbyist.” The Bar must be using it as a term that involves underhanded, illegitimate, questionable practices, and that is not my definition of lobbying.

Senator ROBERTSON. Do you really think that there is just a little skulduggery in all lobbying?

Professor ZELLER. I would not say it was just in lobbying. There are so many other human activities. I would not confine it just to lobbying.

Senator McCLELLAN. I think before we legislate much further I think we have already gone too far—we should not legislate further until we can agree on what lobbying is.

Professor ZELLER. I think that is very important, sir. I think it is very important that you know just what you want to cover in the legislation.

Senator ROBERTSON. Let me ask you a concrete question. Let us assume a lawyer in Washington for many years has been the legal representative of a firm in New England on a regular retainer, attend

ing to its business, and most of his work has had nothing whatever to do with legislation, but all of a sudden up comes a bill that will affect his client and that lawyer appears before a committee to present, as the recognized legal representative of this manufacturing company, its viewpoint on how that legislation is going to affect it; does that become a principal activity of that lawyer?

Professor ZELLER. I should like to say, Senator, that under section 308, that gentleman does not have to register because those who appear before committees of Congress are exempted from the provisions of the act. He would not have to register at all. If you look at section 308, Senator, you will see that those who appear before committees of Congress are not required to register.

But in answer to the other part of your question, if it is not just one of his activities—let us assume he is not before a committee, that he is influencing legislation in other ways, it seems to me that he can register under the law and state, as so many are now doing—if you will look at Form B, you will see that lawyer after lawyer will indicate-or whoever the registrant is——that only a small portion-not more than 10 percent of his time, is devoted to influencing legislation.

Senator ROBERTSON. It is your opinion that the majority of those who come before committees have not registered?

Professor ZELLER. Not before committees, sir, because they do not have to register if they come before a committee of Congress.

Senator ROBERTSON. Well, then, let us say that they not only come before committees but that they are advocating legislation, and maybe they go to see their own Senators, as my colleague suggests, and then the representative of the Department of Justice, who testified before us says that we have not put the proper interpretation on the meaning of the word "principal”-how are they going to know where they stand, what they have a right to do and what they will be subject to heavy fine or imprisonment for doing, if they fail to register?

Professor ZELLER. My dear sir, my answer to that would be, first, I believe there are many ambiguous statements in title III. I think it is a badly drafted section of the Legislative Reorganization Act. I think one reason why it was badly drafted was because there were not sufficient witnesses at the hearings, so that the Congressmen themselves didn't know just what they wanted to cover in the lobbying bill. Now, I know the Reorganization bill was a very long bill, with many, many controversial sections in it, and so more time was given to discussing them than the lobbying title. I think it is very important to hold hearings just as you gentlemen are doing now, to find out how far you want to go.

Senator ROBERTSON. I am asking you how far you want to go? Do you want us to go so far that we take from business organizations like NAM, chambers of commerce and the like their present taxexempt status?

Professor ZELLER. Well, I am not passing judgment upon the taxexempt part because you can handle that at the same time that you are asking them to register. There is no incompatibility. You will have to change the internal revenue law to say, if you consider these organizations as organizations engaged in influencing legislation with other worth-while purposes, that they are entitled to enjoy a taxexempt status. I don't see that it is inconsistent. It would mean

that the revenue Code would have to be changed—there is no question about that. That is a matter of policy for the Congress to decide.

Shall I go on?

The CHAIRMAN. Yes, if Senator Robertson has concluded his questioning for the time being. You may proceed.

Professor ZELLER. Recommendation 2. That the words "principally” and “principal” now appearing in section 307 be deleted and the lobbying act be made applicable to all organizations that now expend a specific sum (for example, at least $1,000 for any one quarter of the year) in influencing public opinion or the agencies of government directly or indirectly in the passage or defeat of any legislation by the Congress of the United States. While it cannot be denied that organizations such as labor, chambers of commerce, trade associations, farm groups, and so forth, do perform major services not directly related to influencing legislation, however, such legislative activities as they do engage in, even for limited periods, may be of tremendous, even vital, importance to the existence of these organizations. It is difficult, even at times impossible, to separate the so-called nonlegislative from the legislative expenses of an organization.

For example, I looked at recent annual reports of the American Federation of Labor. Now, I believe their total expenditures for the year ending August 31, 1946, were over $2,000,000. Their total expenditures were listed in the annual report, yet the amount under legislative expenses and salaries was about 16 or 17 thousand dollars. We know that the American Federation of Labor devotes a good deal of its time to influencing legislation—they are very much concerned with legislation. It is difficult to separate one from the other.

Senator ROBERTSON. On your statement there, $819,000

Professor ZELLER. That was specially earmarked, and so they registered. That was not included in the annual expenditures.

I looked at the report for the year ending August 31, 1947, and there I noticed total expenditures for that year of $5,000,000. I looked for this figure $800,000. That represented the amount of money spent by the A. F. of L. in its campaign to defeat the Taft-Hartley law, and it was not listed. That was earmarked for this special purpose. They did not list that among their ordinary expenditures.

Senator ROBERTSON. Have you made a very careful examination of everything that has been listed and have you included in your statement everything that the public records show?

Professor ZELLER. For which organization, sir?
Senator ROBERTSON. All of them. You have them listed.

Professor ZELLER. I looked at a great number of them, sir, and tried to get a sampling of groups in different categories, business groups, labor groups, Government employee groups, veterans' groups, and

Senator ROBERTSON. This list, then, on page 1 of your statement is just a sample?

Professor ZELLER. That is all. I believe I made that clear to the gentlemen before you came in. It is not a complete list. It is what I thought would be representative, a good sample.

Therefore, the act should require a statement of the total budget of these organizations broken down into broad categories of expenditures with a listing specifically of all items of expenditures labeled "legislative.” The names and addresses of contributors of $500 or

so on.

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