The changing credit systems in our economy have now encompassed our industry to a very great extent. The "credit card" business has become a major factor in our sales and is absorbing 5 to 7 percent of each charged sale. This is much too high and most if not all profit from the sale. Furthermore, this 5 to 7 percent of sales is money lost to our city since the credit card companies are located elsewhere.

The restaurants in the District of Columbia would like the privilege of charging liquor by the drink to their customers whom they decide are good credit risks.

We feel this change in the law will not produce any detrimental effect upon our industry or the public.

We request that a bill, suitably drawn, should be placed before Congress for passage, to help alleviate this discrimination in our business.

We feel that if a man can charge his drink merely because he paid $5 to become a member of a credit card club, then another man who does not wish to become a member of the credit club should have the same privilege without having to keep a deposit at each restaurant where he may want to have a cocktail before luncheon or dinner. Also a restaurant which may not be a member of a credit card system should be able to extend credit to his customers.

A class E license is issued only to a pharmacy or prescription druggist.

A BILL To amend section 35 of the District of Columbia Alcoholic Beverage Control Act to permit the holders of a retailer's license, class C or class E, to sell alcoholic beverages on credit

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the first sentence of section 35 of the District of Columbia Alcoholic Beverage Control Act (D.C. Code, sec. 25-133) is amended by inserting "class C or" immediately before "class E."

Mr. MULTER. This committee will meet again next Wednesday to hear any witnesses who desire to be heard orally.

Is there any other witness who wants to file a statement now, instead of coming in next week?

If not, we will stand in recess until 10 o'clock on Wednesday of next week.

(Whereupon, at 11:56 a.m., the subcommittee adjourned, to reconvene at 10 a.m., Wednesday, June 19, 1963.)

TO REVISE THE DISTRICT OF COLUMBIA ALCOHOLIC

BEVERAGE CONTROL ACT

WEDNESDAY, JUNE 19, 1963

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE No. 3 OF THE

COMMITTEE ON THE DISTRICT OF COLUMBIA,

Washington, D.C.

The subcommittee met, pursuant to recess, at 10:10 a.m., in room 445-A, Cannon Office Building, Hon. Abraham J. Multer (chairman of the subcommittee) presiding.

Present: Representatives Multer, Broyhill of Virginia, Springer, Nelsen, and Schwengel.

Also present: James T. Clark, committee clerk; Leonard Hilder, investigator; and Don Tubridy, minority clerk.

Mr. MULTER. The hearing will please be in order.

I understand that several other members are on the way over, but for the sake of saving time, we will get underway now.

Our first witness this morning will be Mr. Tyson, James G. Tyson. Will you come forward, please, sir.

STATEMENT OF JAMES G. TYSON, MEMBER, ALCOHOLIC BEVERAGE CONTROL BOARD, DISTRICT OF COLUMBIA

Mr. MULTER. We are pleased to have you with us this morning, Mr. Tyson.

Mr. TYSON. Thank you, Mr. Chairman.

Mr. MULTER. Sit down and make yourself comfortable, sir. You may proceed as you desire, Mr. Tyson. You may make a formal statement or file a statement and summarize it, as you please.

Mr. TYSON. Mr. Chairman. as you must realize, this is my first appearance before any committee of the Congress. I have not been authorized to come hereby the Commissioners and I take it that I am here on my own personal being.

Mr. MULTER. Well, Mr. Tyson, we do appreciate that there is some difference of opinion between the ABC Board of the District and the District Commissioners, and we are not going to embarrass you by asking you to take the position that may cause any difficulty between you and the Commissioners which under existing law are your superiors. We did ask that Mr. Weakly, as Chairman of the Board, appear here.

We understand he is still out of town. We did ask Mr. Kneipp to advise the Commissioners that we would like to have made a part of our records the full report as filed by the ABC Board with the Commissioners. We know there are some differences. We know that the

Commissioners did not recommend all that the ABC Board recommended. This committee is entitled to have the views of all of those who are most closely concerned with the administration of this act and then we will make the decision as to what the law should be.

I think we do have to have the guidance of all, even though there may be some difference of opinion, and to any extent that you feel that you should give it as your personal opinion rather than Board opinion or Government opinion, you are privileged to do so.

Mr. TYSON. Well, this whole statement of mine is my personal opinion.

Mr. Chairman, and members of the committee, my name is James G. Tyson, member of the Alcoholic Beverage Control Board of the District of Columbia, and its Acting Chairman, during the absence of our Chairman, Frank E. Weakly, while he is on leave.

The Alcoholic Beverage Control Board of the District of Columbia has for report, H.R. 2036, 88th Congress, a bill to revise the District of Columbia Alcoholic Beverage Control Act.

As a Board administering and enforcing the act to control the sale, and service, among other things, of alcoholic beverages, we believe that certain changes in or clarifications of the alcoholic beverage control law have become necessary to cope with present-day methods and to eliminate some provisions of the original bill that have become obsolete or otherwise so inflexible as to become practically

unen forcible.

We believe, also, that some new provisions of the act are necessary if there is to be practical control of alcoholic beverages, licensees, and dispositions within the District of Columbia.. In reviewing H.R. 2036, we believe that some of the changes in the new act as written to revise the existing act should not be included, but firmly believe that others do, in fact, improve the bill; and finally, that others may or may not, according to viewpoint.

We have endeavored to consider the major aspects of the legislation as affects that public interest and control as we see it, and submit these statements in accordance therewith:

I begin with sections 4 and 7 of the act-and inadvertently the secretary has not put the pages of the act in; pages 7 and 10, et seq., especially in relationship to the independency of the Board.

I believe that in the hearings before Subcommittee No. 4 of the Committee of the District of Columbia, House of Representatives, 87th Congress, 2d session, under dates of March 22 through 27, on H.R. 9808, that our Chairman, on page 158 in the report of the hearings, in answer to a question by the chairman of this committee, Mr. Multer, to wit:

Should it (referring to the ABC Board) be an independent Board, or would it embarrass you to say whether or not it should continue to be subject to the District Commissioners?

This answer was given by Mr. Weakly:

I would prefer to see it a statutory board like it was before the reorganization. You have asked me for my personal view.

And immediately following, indicated:

I think the Board would function more effectively in that situation.

With that statement each member of the Board personally agrees.

It must be kept in mind that from the beginning only the Board of Commissioners were authorized to prescribe such rules and regulations not inconsistent with the act as they deemed necessary to carry out the provisions thereof, and to control and regulate the manufacture, sale, keeping for sale, offer for sale, solicitations of orders for sale, importation, exportation, and transportation of alcoholic beverages in the District of Columbia for the protection of public health, comfort, safety, and morals; and further, the Commissioners has specific authority to make rules and regulations for the issuance, transfer, and revocation of licenses, et cetera.

I do not believe our chairman intended to convey to the committee that the ABC Board make its own rules and regulations, for such is hardly the function of the ABC Board, by whatever name in any State in this country, and this, of course, is off the record

(Discussion off the record.)

Mr. TYSON (continuing). The very nature of a board of alcoholic control presupposes, I believe, as a governmental function, it be subject to whatever governing board, the State constitution, or other authority provides.

The ABC Board ceased to be a statutory board under the Reorganization Plan No. 5 of 1952, in which in section 2 of said plan, the offices and agency, including the office of the head of the agency was abolished. Apparently at that time, there was an extraordinary number of agencies among which the business of the District government was scattered, and I quote President Truman in his message to the Congress of the United States:

Many District agencies are almost completely autonomous and uncontrolled. Among these aegncies are about 50 boards or commissions, a considerable number of which are not even subject to budgetary control by the Board of Commissioners or the Congress; they have their own funds and operate with permanently appropriated receipts. While the Board of Commissioners is nominally the executive head of the District government, its authority over agencies, ranges from complete control to virtually no control.

A few District agencies were excluded from the operation of the plan, to wit: the judicial agencies, the National Guard, the Board of Library Trustees, the Board of Education, the Zoning Board, the Recreation Board, and the Public Utilities Commission.

Under Reorganization Order No. 35, G.F. 25-100, C.O. 302, 853/14, June 16, 1953, the ABC Board was established under the direction and control of a Commissioner, identical with the Board that was disposed of by Reorganization Plan No. 5; which apparently supports the proposition that the ABC Board should not have been included in the reorganization plan but should have been one of those exempted as set out herein.

Over the years of its existence, therefore, the Commissioners have had authority and jurisdiction over the ABC Board, as was necessary and proper. It is believed that the Board could function better as a statutory board as originally created.

The Board, after further study, is frankly a little confused as to subsection 5 of section 11, appearing on page 20 entitled "Wholesaler's License Class C"-and this is off the record

(Discussion off the record.)

Mr. TYSON (Continuing). And while the section itself describes the wholesaler's license class C, the Board wonders whether the act means

that such a license is a voluntary application or is mandatory and required before outsiders--manufacturers, vintners, bottlers, et ceteracan do business in the District of Columbia, and if so, how does it affect permits issued to retailers under section 23(a) of the proposed revised act, and set out on page 46, and also in Public Law 87-238, 87th Congress, H.R. 256, September 14, 1961, under section 23(c) (2). It appears that the wholesaler's license class C might not be effective as proposed and requires further study.

I certainly realize that is a brash statement on my part-and that is off the record.

In that vein and under 12 of section 11, page 25, it is not clear whether the bill is intended to preclude solicitors from representing other than a single wholesale licensee class C or that a solicitor may represent many such licensees, providing, of course, the fee of $100 for each such license is paid, and further whether said solicitor is precluded from representing manufacturers, and so forth, outside the District who do not apply for any reason for the wholesaler's license class C as proposed.

Under section 14 re corporations doing business as licensees in the District of Columbia under the ABC Act; the Board is required to ascertain whether the principal officers and directors of a corporation which has made application for a license are "of good moral character and generally fit for the trust to be in [them] reposed.'

This is essential, however, very often for reasons best known to itself, the corporation, for various reasons, during the license year, changes its principal officers, directors, and/or stockholders.

This is done quite often without any knowledge on the part of the Board, even though the policy of the Board is to the effect that the Board be notified of any change of officers or directors.

The Board believes it is necessary for good administration to require by the act itself that notification to the Board within the limited time of not more than 10 days for such change, and further that the responsibilities of the original officers be maintained until the Board shall have had ample opportunity to inquire in the proposed change of officers, directors, or stockholders, to ascertain whether they, too, conform with the directive under section 14, and are also of good moral character and generally fit for the trust to be in them reposed. The Board is in receipt of the report of the President of the Board of Commissioners, Mr. Walter Tobriner, of June 7, 1963, and recommends unanimously the adoption of the recommendation set out on page 6, titled "E" of that report. The only exception being that each corporation be given 10 business days instead of 5 to file its minutes reflecting the proposed changes, so that it will read as follows:

Each corporation licensed under the authority of this act shall, within 10 business days from the date on which there is any change in its officers and directors, notify the Board in writing of such change. Such written notification shall state the name and address of the new officer or director and the name of the officer or director replaced by the new officer or director, if any. Each new officer or director shall be subject to a determination by the Board that he is of good moral character and generally fit for the trust to be in him reposed.

This, in the main, concludes the statement, and gives to this committee the revised thinking of the Board on the matters set out herein. I shall be glad to answer personally any questions as fully as I can, that the committee may ask relative to this bill.