Maybe I will read it.

For the first time, the bill provides for the following:

(a) Public hearings, with due notice thereof, before regulations can be made, altered, or revoked.

(b) Criterion for location of package stores.

(c) Recognition of the distress caused by urban renewal, highway construction, and so forth, and providing for relocation privileges. (d) Increasing display allowances, which are presently based on a 1934 cost or display materials.

(e) Mindful of embassy bootlegging scandals, tightening up beverage acquisitions by embassies.

(f) Restricting liquor imports into the District of Columbia by individuals, in conformity with the requirements of most of the States. (g) Providing for appeals to the courts from decisions of the Board of Commissioners.

We heartily endorse the provisions of the bill so providing.

But, in addition to the aforementioned changes, H.R. 2036 also contains two additional new features, upon which we would like to

comment.

The language of section 4, page 7, and section 7, page 10, which makes the Alcoholic Beverage Control Board an independent agency of the District of Columbia, and gives it the powers to make all rules and regulations governing the alcoholic beverage industry, is a step which would place the local control laws in line with practically all of the jurisdictions throughout the Nation.

As far as the public is concerned, it is to the Alcoholic Beverage Control Board that it looks to for regulation of the local beverage industry.

Yet, under existing law, the Alcoholic Beverage Control Board does not make any regulations concerning the industry it is supposed to control.

That power is presently vested in the Board of Commissioners. Should there be a feeling that the Alcoholic Beverage Control Board might thus be considered a power unto itself, it should be noted that appointment to the Board is to be made by the Commissioners, provision for removal of a member of such Board on proper charges are provided for, appeals from its decisions can be taken to the Commissioners and the courts, all under the appropriate sections of H.R. 2036.

As we look over the organizational setups of the various States, in no jurisdiction do we find the Governor of any State, who would be the equivalent of our Board of Commissioners here, making the rules and regulations for the liquor authority.

In practically every State, the legislature has enacted a broad legislative program for the control of the sale of alcholic beverages, and empowered a board or liquor authority to make rules and regulations within the confines of the enacted legislation.

We compliment the author of the instant bill for so providing this change for the District of Columbia, because we feel that it will result in a Board more directly responsive to the public interest. will provide for better control, and will also free the Commissioners to devote more time to the more pressing problems of crime, urban renewal, and public welfare.

Before I go into another feature of this, I must comment on the letter sent by the Board of Commissioners to Mr. McMillan, and which was read by the Corporation Counsel at the hearing the other day.

If anything proves my point just made, I think that their letter does.

I know in there they say that the bill is detrimental to the industry. I assure you, sir, that they have never, no one in the District Building has ever asked the industry about our feelings concerning this bill, and how they can come up with a statement, an absolute statement that this bill is detrimental to the industry, I don't know. They also say in the conclusion of their statement-and while I apparently don't have it—

Mr. MULTER. Are you looking for the June 7, 1963 report?

Mr. SCHULBERG. Yes, signed by Mr. Tobriner to Mr. McMillan, if I could see it for a minute.

Mr. MULTER. Yes.

Mr. SCHULBERG. In the next to the final paragraph, I quote the Commissioners saying this:

Notwithstanding that such enactment might improve the existing Alcoholic Beverage Control Act in certain respects.

The gist, of course, of their entire communication is that they were opposed to the bill.

Mr. MULTER. Despite the fact that the Corporation Counsel has indicated that the basic law needs amendment, despite the fact the ABC Board indicates the basic law needs amendment, despite the fact that any number of suggestions have been made as to amendment of the statute and some by the Commissioners themselves you still say we don't need the bill?

We

Mr. SCHULBERG. That is what they say and I have never seen such a wishy-washy statement in my years of experience in the Capitol. Frankly, Mr. Chairman, I don't mind people opposing us. recognize that there are two sides to practically every question that we have, but I wish they would take a stand where you could admire people.

Mr. MULTER. I don't expect anybody to agree with my viewpoint as to what legislation should provide either, but I do think if anybody comes forward and says we have a basic statute that needs amendment and comes forward with specific suggestions, they ought not then to come along and say don't enact the bill containing these proposed amendments.

Mr. SCHULBERG. That has me somewhat puzzled.

Mr. MULTER. I can understand them saying don't enact anything except these amendments, but I can't understand them saying don't enact this bill even though it has good amendments to the law.

Mr. SCHULBERG. If I might, I would like to talk somewhat about making sales at cost and below.

My statement, of course, is replete with incidents, but I would like to take this up now.

Mr. MULTER. Has the practice that was pointed out as being a bad practice during the course of the last hearings, and I think you submitted various advertisements and copies of advertisements to be made a part of the record, has that continued?

Mr. SCHULBERG. Yes, sir.

Mr. MULTER. The same type of advertising has continued?

Mr. SCHULBERG. Yes, sir.

Mr. MULTER. Has it been corrected in any way?

Mr. SCHULBERG. No, sir.

Mr. MULTER. The identical type of advertising that was made part of the record at that time is still being used?

Mr. SCHULBERG. Yes, sir.

Mr. MULTER. As a medium of advertising by some of the retailers in the District?

Mr. SCHULBERG. Yes, sir.

I have here two charts, and I would like to put this in the record. This practice continues unabated with devastating effects in our industry. Here are a series of advertisements of recent vintage which have appeared in the District of Columbia newspapers. They speak for themselves-All the items listed are at cost or below.

These are not one-shot sales. Nor, in many cases, are they on a few selected products; they are across the board. They are consistent, they are frequent.

How can these operators do it, how can they survive, at seemingly a profitless operation?

Well, I can only suggest the following:

(a) They have a blind, reckless determination to destroy competition, especially those less financially secure than themselves; (b) It is not unheard of in our total business community that suppliers have favored certain outlets with special allowances so that these outlets have a profit in advance and thus can sell at their ostensible cost, to the detriment of their competitors; (c) They use these advertised items for loss-leaders and switch the consumer to long-profit, inferior products.

We need the relief provided by section 38.

Let me show you some of these ads. Here is an ad that says:
Quality and lowest prices every hour, every day, every month.

The prices listed are cost or below.

We suggest you phone others and find out how teriffic our prices areand then we come to the name of the store.

Mr. MULTER. Have you tested any of these or have any of your people tested by proposed sales any of the advertising of these items? Mr. SCHULBERG. Oh, yes.

Mr. MULTER. Were you able to buy them at those prices in those stores?

Mr. SCHULBERG. Some of us came out with our arms full. In some cases you could but in many cases the immediate switch was put on to get you to buy another item which was, of course, a long profit item to the retailer.

Here is another ad:

Buyers beware. Are you paying more for quarts, ounce-for-ounce, than you are for fifths? Some people buy full quarts instead of fifths. "Tain't neces

sarily so.

And then:

We guarantee the lowest prices in the eity.

Here is another one says he has got it. I dont' know who has it. Mr. MULTER. Are the prices the same for those two items? Were they contemporary ads? Did they appear at about the same time? Mr. SCHULBERG. They were about the same time. I actually haven't compared. I would assume that they would probably be the same. But this ad again

Mr. MULTER. Are these private brands or standard brands?
Mr. SCHULBERG. There are all national brands.

In other words, this is the lifeline of the small independent store. He only sells national brands. These people use it mostly for bait, to bring them in, but you will find it very difficult to walk out with that product.

Mr. MULTER. And in those ads the prices are below cost to the retailer?

Mr. SCHULBERG. Either below or at the cost, the known cost.

Now in some cases-and I have said this in my statement, and perhaps it is like a belief in the Almighty Being, I believe in God, I know he is there but I can't prove it.

By the same token in those cases where you can buy this item at cost, I know in my heart that he has got his profit in advance. He has been subsidized some place, because I don't care who the person is.

It is basic economics, you have got to make a profit in order to stay in business. You have got to pay your rent, your license fees, your taxes, your help, and you have got to have money to take home to put bread on your own table.

Mr. MULTER. Have any of these advertisers gone into bankruptcy? Mr. SCHULBERG. Not these advertisers, no.

Mr. MULTER. Have there been any bankruptcies in the District of Columbia of retail liquor licenses?

Mr. SCHULBERG. Yes, sir, I believe we had two last year, and this year we had one suicide, just 2 weeks ago.

Mr. MULTER. Did any of those three participate in this kind of advertising?

Mr. SCHULBERG. No. I think they were forced to the wall by this type of advertising.

Now here is a man who indicates to you that every store in Washington is a robber because "Buyers beware."

If you don't buy at cost you are being robbed. I think that is the most unethical type of advertising, but nothing was ever done about it by anybody.

Mr. MULTER. Have there been complaints on these advertisements made to the ABC Board?

Mr. SCHULBERG. Yes, indeed.

Mr. MULTER. We were told by Mr. Tyson that there were two informal conferences with two of these advertisers, in which they looked into the question of whether there was cooperative or joint buying. Were you or your association or any of your members invited into any of those hearings?

Mr. SCHULBERG. No, sir; not to my knowledge.

Mr. MULTER. Were you or any members of your association or representatives of your association invited by the ABC Board to come in with evidence to justify your complaints in connection with this advertising?

Mr. SCHULBERG. We have submitted various advertising which has appeared in the daily press, to the ABC Board.

Unfortunately, again, as I have been informed, I don't know of my own knowledge, the Corporation Counsel, which is again another remote agency, the Board does not have its own attorneys has told them that they have no jurisdiction practically to do anything about this. That is one of the reasons why we need it in the law, or else en forcement by the U.S. attorney.

Mr. MULTER. And what about complaints there? Have you made complaints to the U.S. attorney's office?

Mr. SCHULBERG. No, sir; we never have. We have gone to the authority which controls our industry.

We have gone to the Federal Trade Commission. The Federal Trade Commission has said this is a local problem and should be solved locally. They don't want to get into it. They say, "We have technical jurisdiction perhaps because it is a Federal area," but we feel that this is a local situation and should be solved at the local level. Mr. MULTER. Incidentally, I would like the record to show that I made inquiry of the Federal Trade Commission with reference to the matter and they also said that this is a matter for the local ABC Board, not for them.

Mr. SCHULBERG. Here is a corner ad where the prices are quite below cost, a store downtown.

Here is one, this is not a sale:

This is our everyday price first cut-rate liquor store.

I don't know how they got it. Here they tie it in with the horse races "cash in on the daily double."

Mr. MULTER. What is the daily double? You buy one bottle and get another bottle?

Mr. SCHULBERG (reading).

Buy two nationally famous brands, save more than twice as much. That is what it says.

Daily double No. 1. Buy Old Crow regular $3.30 plus Antique, which is regularly $3.28, and buy them both for $6.25.

Now the $3.30 price and the $3.28 price I am informed were both the known cost at that time, and he is selling them at $6.25 combined, much below cost.

And, of course, with various other national brands.

Mr. MULTER. Isn't there some regulation against tie-in sales?

Mr. SCHULBERG. Well, you can also buy it individually. He has I think something in there, but, of course, if you buy the daily double you get a better break, or at least you are supposed to, if you can buy the daily double.

Mr. MULTER. If you leave those advertisements

"Call 'Num

Mr. SCHULBERG. This is almost like a bookmaker's ad. ber' for your daily double specials" and the name of the liquor store. I mean, I think that we should have some ethics, some degree of respectability. We are attempting to impress the public that we are a legitimate law-abiding industry. I think we are.

Mr. MULTER. As a matter of fact, the newspapers could go a long way toward cleaning up this situation and getting dignified advertising if they just undertook to do a little censoring of these ads as they have a right to do.