If this is as you say, the Corporation Counsel says it is unnecessary, the ABC Board says it is unnecessary, why not leave it to the Commissioners then to determine this dispute administratively as between the administrative offices?

The Police Department said they need it. The other agencies say it is a waste of time. Why not leave it to the Commissioners instead of our making that determination?

Mr. SCHULBERG. Mr. Chairman, I would say this. I would like very much to agree with you.

But unfortunately-and that is one of the reasons why we urge this Board be made independent and be able to make its own rules and regulations.

I don't believe that the Commissioners of the District of Columbia are too cognizant of what the liquor industry is all about.

They have very many other duties that are thrust upon them, and they are removed, they are remote.

Mr. MULTER. If the Congress should go along with you and make this Board independent, then you wouldn't have that problem any

more.

do.

Then you believe that the Board would revoke this regulation?

Mr. SCHULBERG. It might. I can't speak for what the Board might

But I think that a board that would be more responsive to the public-because after all, sir, the public, as far as the public is concerned, the public believes that the ABC Board makes the rules, the regulations, enforces them and administers them.

They don't know that sitting on a pedestal in the District Building is another group that listens to many agencies and attempts to regulate an industry about which it has very little connection.

I think it would be in the public interest to let the Board, the ABC Board I am talking about now, which is after all charged with enforcing the law, and which is looked upon by the public for enforcement of the law, to have the right to regulate.

I think it would be more responsive to the public and to the public interest.

Mr. MULTER. I am in agreement with you on that score. That is why I put it in the bill.

Mr. SCHULBERG. If I might, sir, I know that we could keep going on, but I think the record is pretty replete. I think it has been kicked around pretty well, and I think the answers are here in last year's record, and that is part of this year's record.

So I would not like to belabor it further, if it is all right with you. Mr. MULTER. Suppose you go to the next point, unless there are other questions on that point.

Mr. SCHWENGEL. Getting back to these 500,000 man-hours which you say

Mr. SCHULBERG. I was speaking from the best of my recollection. It is in the record, Mr. Schwengel.

Mr. SCHWENGEL. To put the stamp on there?

Mr. SCHULBERG. Yes, sir.

Mr. SCHWENGEL. It sounds like a

Mr. SCHULBERG. When you think of the number of cases that are involved, sir, it is not one or two cases. It is thousands, hundreds of thousands of cases. You have got to open them up and bang them.

Mr. SCHWENGEL. You have around 600 outlets, you say?

Mr. SCHULBERG. There are 388 package stores and approximately 600 taverns, so to speak, hotels.

Mr. SCHWENGEL. You get more than that. You have got pretty close to a thousand.

Mr. SCHULBERG. Yes, but, of course, I only represent the package

stores.

Mr. SCHWENGEL. I understand.

Mr. SCHULBERG. There are 388 of those.

Mr. SCHWENGEL. Then, considering the total man-hours spent in the operation of this, it is a pretty small percent of the time then really, isn't it, that they are on the job?

Mr. SCHULBERG. Let me put it to you this way

Mr. SCHWENGEL. That would be less than 10 percent of the time the employees on the job that have to stamp it.

Mr. SCHULBERG. But it is 10 percent of wasted time.

Mr. SCHWENGEL. This is your interpretation. I am trying to break this down into the percentage of time.

Mr. SCHULBERG. If I might, I will figure it out for you.

If I might, I will be glad to submit a further statement to the record, but I don't want to belabor this thing because I know the House has to get into session and I know there are other witnesses who want to be heard.

Mr. SCHWENGEL. All right.

Mr. SCHULBERG. Since my statement is in the record, I do say this. We support the overall bill, but we do have a suggestion, eight suggested changes, and I think I should call that to your attention. Rather than read them from my statement, they refer to sales by manufacturers and wholesalers directly to consumers of beer and light wine.

We feel that that is unfair, and that that privilege to keep within the concept of the intended distributor system for alcoholic beverages in the District of Columbia we believe that the retailer alone should have the privilege of selling to the consumer.

Why should a manufacturer or a wholesaler of beer or wine be given a monopoly over the brand he distributes and then be allowed to compete with the retailers who are dependent on him for their supply, especially in a license system that sets up various categories of sellers? The retailer pays a $1,250 annual license fee. He may not sell to the suppliers' customer, that is another retailer. He may not even exchange merchandise with such retailer.

Why should the supplier therefore be allowed to sell to the retailers' customers?

The change requested will cure an inequity that is fair and reasonable.

The association also supports the existing definition of a solicitor's license as contained in the current statute, and asks that it be substituted for the language in H.R. 2036.

Now my statement here is the same statement that I made last year. It is in the record.

If you want me to, I will repeat it, but I think in the interest of time it shouldn't be necessary.

By the same token we say in line with the foregoing we recommend that page 20, line 4, section 11 (5) be stricken for the same reasons.

That has to do with the wholesaler's Class C, which is along the lines of our statement last year.

Mr. MULTER. Presently the statute prohibits giving of gifts and discounts and the like by wholesalers to retail stores.

It also prohibits giving credit beyond a certain limited amount, is that right?

Mr. SCHULBERG. No; that is not completely correct.

It prohibits the giving of gifts except to an amount of $10 as approved by the ABC Board.

There is no restriction on the amount of credit that a wholesaler might extend to a retailer.

Mr. MULTER. How about terms?

Mr. SCHULBERG. When you speak of credit, I am assuming you mean

terms.

Mr. MULTER. Yes.

Mr. SCHULBERG. Under our present law the retailer must pay within 45 days.

Mr. MULTER. That is what I had in mind.

Mr. SCHULBERG. And then can go on another period of 30 days in which he can only purchase for cash.

If at the end of the total 75-day period he has not completely liquidated his obligation, he may not purchase, not even for cash.

Mr. MULTER. Presently, when a retailer in the District licensed by the District is dealing with a distributor or wholesaler licensed within the District, the ABC Board can go to either source to determine whether or not those provisions of law and regulation are being complied with?

Mr. SCHULBERG. That is right.

Mr. McLTER. What has the ABC Board to do, then, with the wholesaler or distributor who is represented by a solicitor, and the wholesaler or distributor is not licensed within the District?

How can the ABC Board get information from the source other than the retailer?

Mr. SCHULBERG. He can't get it except from the retailers here through his canceled check, that is the only way he can get it.

Mr. MULTER. There is a double check so far as the licensed wholesaler and distributor?

Mr. SCHULBERG. That could be, yes.

Mr. MULTER. And if the solicitor is going to represeent an unlicensed wholesaler or distributor, then there is no double check. There is no double source for the check.

Shouldn't that be cured?

Mr. SCHULBERG. I can recognize the problem, but you do have a means of checking through the canceled check.

Mr. MULTER. That is one source. I want the ABC Board to have two sources of checking with the wholesaler or distributor as well as the retailer.

This is the law and regulation in every other district, isn't it? The wholesaler and distributor in order to do business through a solicitor or a salesman in the State must be licensed to do business there; isn't that so?

Mr. SCHULBERG. Yes.

Mr. MULTER. The District of Columbia is the only jurisdiction where you have an outsider who may sell through a solicitor without the outsider being licensed; isn't that so?

Mr. SCHULBERG. As you state it, that is so.

Mr. MULTER. This will require a nominal license fee and require them to be licensed.

We subject them to the jurisdiction of the District of Columbia without in any way interfering with the right to come in here and sell private brands or to solicit and come in and sell private brands.

We don't interfere with the competition in any way except the outsider must then submit to the same jurisdiction of the ABC Board that is now required of the local wholesaler or distributor who is licensed here; isn't that so?

Mr. SCHULBERG. You make a strong point, but I would again urge that the language of the solicitor section be left as it is.

Mr. MULTER. I can see your point. I am trying to reach not the solicitor. I am trying to reach the fellow he represents, and bring him within the jurisdiction of the ABC Board in the District, the same as everybody else is who is licensed to do business here.

The solicitor is subject to the jurisdiction, but his boss or the man he is selling for is not submitted to our jurisdiction.

Mr. SCHULBERG. I think you have a valid point there, sir.
Mr. MULTER. That is all I have been seeking to do.

Mr. SCHULBERG. But I think you should leave the solicitor section alone.

If I might continue.

Mr. MULTER. Yes; please.

Mr. SCHULBERG. Another suggestion that we urge is on page 27, line 14, after the word "license," and this is new, sir, add "class A or B," the words "class A or B."

We believe that this additional clarification of language is absolutely necessary because the language of this section as originally drafted would bar a retail licensee from holding shares of stock in, for instance, the Hilton Corp. or the Sheraton Corp., both of which operate hotels which have District alcoholic beverage licenses.

We believe that the intent was to limit the ownership of all premises licensed and established with one outlet in keeping with the original concept developed during debates and hearings on the legislation which eventually legalized the sale of alcoholic beverages in the District of Columbia.

We believe this would provide for the individual control of licensed premises which such legislation would tend to establish.

We strongly urge the addition of these few words.

The next suggestion we had to offer was on page 26, line 27, strike section 37.

The citizen's committee has recommended that adequate laws exist to control false advertising.

We concur with this conclusion.

The subject matter of section 37 which relates to false advertising is presently covered by the District of Columbia Code sections 22, 14, 11, 12, and 13, and by the Alcoholic Beverage Control Regulation, section 2107.

We are forced to the conclusion that section 37 of the proposed bill would be redundant and does not require.

We would, however, strongly urge that the U.S. attorney and the Alcoholic Beverage Control Board charged with enforcing the regulation referred to begin to enforce same, something which has too long been neglected.

Mr. MULTER. Why do you omit any reference there to the Federal Trade Commission?

Don't they also have jurisdiction in that sphere of activity?
Shouldn't they be doing something with reference to this?

Mr. SCHULBERG. But they don't do anything about it either. have that further on in my statement, sir. It is part of the record, so I felt I didn't have to read it.

The next change we suggest: Page 65, line 6, strike the entire line and add (c).

The language we urge is—

A markup to cover in part the cost of doing business, which markup in the absence of proof of a lesser cost shall be 6 per centum of the total cost at the retail outlet.

We admit quite frankly we could live with the original language of section 38, to wit, "A markup to cover the cost of doing business. We are mindful of Judge Loevinger's testimony, on H.R. 9808, in his capacity as Assistant Attorney General, in charge of the Antitrust Division of the Department of Justice, in which he stated his department believes laws should be as general as possible.

But we feel that using the 6-percent figure, which is certain and definite, would tend toward easier administration, rather than the general phrase "cost of doing business" which would vary from store

to store.

This concludes the suggested changes we have to offer.

Mr. MULTER. On that point, can we combine the two suggestions and use the general language, markup to cover the cost of doing business, and then the markup of 6 percent being the presumptive cost of doing business, so if a man has more or less he can show more or less and come in and show the ABC Board that he is still within the law.

Mr. SCHULBERG. Mr. Chairman, I believe the bill already does that, because it states that if you can show that your cost of doing business is less, you have a right to use a smaller percentage.

In other words, this is not a price fixing bill in any way.

Mr. MULTER. In other words, the bill does, in its present language, give that flexibility.

Mr. SCHULBERG. Yes, sir.

Mr. MULTER. So that you don't interfere with the competition of the more efficient as against the less efficient?

Mr. SCHULBERG. That is right, sir.

May I go on?

Mr. MULTER. Please.

Mr. SCHULBERG. I have listed here also seven additional things that this bill does for the first time. It is in my statement. I suppose it isn't necessary to read it for the record.

Would you want me to read it or leave it go?

Mr. MULTER. It is in the record as part of your statement?

Mr. SCHULBERG. Yes. Of course, it would break the continuity.

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