Mr. MULTER. Mr. Tyson, I compliment you upon the fine statement. I don't think anything that was said was brash or out of order. We welcome your frank views and your suggestions.

Now, have you submitted to us the report that you made to the Commissioners?

Mr. TYSON. Yes. It is part of the report.
It is part of the report. I think it is on the

Mr. MULTER. Is that document dated April 16, 1963 ?

Mr. TYSON. I believe it is, sir.

Mr. MULTER. Entitled "Memorandum to Chester H. Gray, Corporation Counsel."

Mr. TYSON. I think that is right.

Mr. MULTER. And that expresses the views of the Board as forwarded to the Commissioners in response to their request for the Board's views on this bill H.R. 2036.

Mr. TYSON. That is right, sir, except as I indicated in the beginning statement here made before you.

Mr. MULTER. Yes. And then we have a similar memorandum dated May 13, 1963, on H.R. 684.

Mr. TYSON. Right.

Mr. MULTER. Both will be made a part of the record at this point. (The memorandums referred to follow :)

MAY 13, 1963. Memorandum to: Chester H. Gray, Corporation Counsel, District of Columbia. From: Alcoholic Beverage Control Board, District of Columbia. Subject: H.R. 684, to amend the District of Columbia Alcoholic Beverage Control Act to prohibit false advertising in the District of Columbia relating to alcoholic beverages (CCL 3A/88 RFK: hs, Mar. 25, 1963).

The members of the Board have reviewed H.R. 684, and are in favor of its passage as drafted.

FRANK E. WEAKLY, Chairman.

APRIL 16, 1963.

Memorandum to: Chester H. Gray, Corporation Counsel, District of Columbia. From: Alcoholic Beverage Control Board.

Subject: H.R. 2036, to revise the District of Columbia Alcoholic Beverage Control Act (your reference: CCL 3C/88 RFK :hs, March 25, 1963).

As requested, the Board has studied the bill with care and makes the following comments.

Since the present bill contains a number of changes previously reviewed and commented upon in H.R. 9808, 87th Congress, the Board's views will be confined to items that are either new or contain changes from previous bills presented.

It may be assumed that the Board either favors or at least does not object to the bill as drawn except as follows:

(1) The basic change in H.R. 2036 is the creation of the Alcoholic Beverage Control Board as an independent agency (see sec. 4, p. 7, line 23). This proposal did not originate with, nor has it at any time been discussed with the Board either directly or indirectly. It provides a status which exists in most of the States. If it is adopted by the Government, the Board will continue to function faithfully with the rules established as in the past. It is believed the Alcoholic Beverage Control Board as now constituted should take no position either for or against it.

(2) Page 8, line 5: Should not the word "Imposed" read "Reposed"?

(3) Page 20, paragraph 5: "Wholesalers License, Class C." This is new and the Board favors it.

(4) Page 64, line 19: page 65, line 7: page 66, line 21: Each of the above references deal with sales at less than cost. The Board believes that the elimination of all such sales would provide more orderly merchandising of alcoholic beverages in the District of Columbia and contribute substantially to section 38 (a), line 9, page 64, as therein set out.

(5) Page 68, line 16: "* * * or by one retailer to another retailer for the purpose of accommodation." The Board is opposed to the inclusion of this procedure, principally because of the difficulty in enforcement.

I think that just about covers the situation. We will be glad to discuss with your office at any time, if desired, any of the matters referred to in this report, or any others pertaining to the adoption of H.R. 2036.

FRANK E. WEAKLY, Chairman.

Mr. MULTER. Have you had an opportunity to read the testimony of the last session of this subcommittee?

Mr. TYSON. No, I haven't sir. But I understood from Mr. Kneipp that you wanted to ask some questions.

Mr. MULTER. We asked him to convey to you our request that you submit to us your views, the Board's views, with reference to various matters that were presented at that time. Did he

Mr. TYSON. He indicated that you wanted the number of prosecutions or violations involving alleged false or misleading advertising. The question of substantial as against reasonable in the amount of food to dispense with. New officers, and fortunately that was included in the report, new officers of corporations and subpenas outside the District, which is not part of the bill.

Mr. MULTER. Would you care to make any comment about the mileage limitation in the bill as to subpenaing of witnesses? Is that 25mile provision sufficient or insufficient?

Mr. TYSON. Twenty-five miles is entirely sufficient. The majority of cases we have, citations we have in the District, involve youngsters primarily who live in the very nearby areas, nearly all within 25 miles, within actually 5 miles of the District borders. And I think that 25 miles would be entirely appropriate.

Mr. MULTER. Now, I notice that you refer to this requirement that officers and directors give notice and your Board be given an opportunity to inquire into their competence, honesty, integrity, and so forth. I raised the question last time as to why you do not also include stockholders.

Mr. TYSON. Well, in most cases, Mr. Chairman, except in big concerns like the Pennsylvania Railroad, Seaboard Airline, Hilton Hotels, or other big hotels, in our 10-year examination of the officers of the corporation, the question is asked, who owns the stock? They are under oath when these statements are taken and if there is any question about ownership of the stock, it is answered at that time.

Mr. MULTER. The question goes not to whether or not you get the information. There isn't any doubt that you get the information. But having the information, unless the law provides that you may revoke or suspend a license or refuse to grant an application because a stockholder does not meet your tests of propriety, integrity, and the like, as you apply them also to officers and directors, you would have no right to take the position, that you are not going to issue a license, or that you are going to revoke or suspend.

Don't we also have to put into the statute that you have these same rights as to a licensee when you find the stockholder is not a proper person?

Mr. TYSON. I think it should be part of the act itself. We unfortunately won't act on it unless the stockholders are made right. We do that on our own without any authority.

Mr. MULTER. Well, now, if that is the fact, and I think it should be, and as a matter of fact, I think in every one of the 50 States where they have ABC Acts, an application will be denied if the stockholder does not meet all the same tests required of the director and officer.

Now, shouldn't you then also be informed of any changes of stockholders so that you can then take the same position in the event of change of ownership of stock? Certainly if a wholesaler or distributor or distillery has no right to own a retail license, and it should subsequently acquire the stock of that retail licensee, you should know about it and revoke the license.

Am I not right?

Mr. TYSON. You are entirely right, sir.

Mr. MULTER. And the same should happen if the stock should pass into-if some of the stock should pass in to the hands of a racketeer or a known felon. You should also have that right there too. Don't we have to write that into the statute to give you that power?

Mr. TYSON. I think you do, sir, so that the Board can be absolutely right in its decisions that it makes.

Mr. MULTER. Now, am I not right that in every one of the States where we have an Alcoholic Beverage Control Act the ABC Board is completely independent and autonomous except for the District of Columbia?

Mr. TYSON. Let me answer it this way, sir, if I may. I think you are right. As a matter of fact, I know you are right in many States that I looked into the question on. However, in those States we have an entirely different type of board than we have in the District of Columbia.

They have police powers. They can confiscate automobiles. They can make arrests. And they can do many things that here in the District of Columbia we cannot do except through the police and through the other enforcement officers-marshals and so forth.

In that regard we are somewhat different from ABC Boards in most of the States. You see, when the Congress originally created this act, it probably had in mind that the police, that the Corporation Counsel, which is in effect the attorney general in a State, all came under the supervision of the Commissioners, and I suppose that is the reason why the rules and regulations were granted to the Commissioners rather than to the Board itself, and besides that, in the District of Columbia there was no requirement that Board members be lawyers or persons fully acquainted with laws, legislation, and that sort of thing.

Mr. MULTER. What is the position of the individual members of your Board, giving us again your individual viewpoint, with reference to false advertising in the District?

Mr. TYSON. False advertising?

Mr. MULTER. False and misleading advertising.

Mr. TYSON. I think-I know the Commissioners have been advised. I think it is 964-I am not quite sure of the number-that the Board believes it should be made part of the act, notwithstanding the fact that under regulation 2107 we have somewhat similar provisions.

I think it would be much stronger-well, it would be much stronger. Mr. MULTER. What about the situation of the so-called loss leader? What is the view of the members of the Board, their personal view,

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yours and those of your colleagues, if you care to state it, with reference to loss leaders?

Mr. TYSON. Well, loss leaders, Mr. Chairman, are, insofar as this Board is concerned and this act is concerned, a terrible challenge.

We certainly know that we have no right to control prices, and I wonder what we could do other than to say that the theory of loss leaders is bad. I just wonder what else we could do under the act as it is written now.

Mr. MULTER. I notice that in February of this year South Carolina joined the long list of States which prohibit the sale at less than cost of liquor, and there they incorporated a formula into the regulation so that it would eliminate to the extent possible the arguments as to what is selling less than cost.

What is your feeling with reference to that in the District? Could we write into the basic statute some provision against selling liquor at less than cost?

Mr. TYSON. I think the Chairman has indicated to the Board that he is in favor of it. I think the members of the Board are in favor of it because we do not believe that it will stifle competition.

We believe also that the act as it is now written safeguards persons who are challenged by legitimate competition by allowing them to meet the competition of lawful prices. I believe it is a good thing, although I admit that the Commissioners do not feel the same way I feel about it.

Mr. MULTER. You refer to the fact that wholesalers' licenses as set forth-wholesalers license C as set forth in the statute-not in the statute, in the proposed bill, may give you some difficulty. You are in agreement, I take it, that all persons selling alcoholic beverages in the District, all companies or firms, in the District or out of the District, should be licensed.

Mr. TYSON. Yes. But I want to qualify that. The question comes to my mind, Who is doing business in the District of Columbia? For instance, the law now and the law as you propose, permits or allows the Board to issue permits to retailers who may buy wines in France or any brand that is not registered or under the name of a wholesaler here in the District of Columbia.

We believe that this permit system is a good system. We believe that while it is unusual in that the District of Columbia solely in its application of such provision-we believe that if you require everybody that does business in the District of Columbia to take out a wholesaler's license, class C, that that will effectually do away with the permit system. And we don't believe that that should be allowed. Other than that, we are in full accord.

Mr. MULTER. Every other jurisdiction does require all persons trafficking in alcoholic beverages, companies, firms, no matter on what level, to be licensed.

Mr. TYSON. I believe that is so, sir.

Mr. MULTER. Now, you indicate that the present language in the bill gives you some difficulty in interpretation. Will you help the committee by giving us your suggestion as to-not at this moment, but give it some thought and consult with the Corporation Counsel and anybody else you wish to, your colleagues, and give us your best thinking on what the language should be in this statute if we are to

continue in the bill and try to enact the principle that we are talking about, yet give you the language under which you can properly operate. Mr. TYSON. I am certain

Mr. MULTER. We will appreciate it if you will do that.

Mr. TYSON. I certainly will be glad to do it, sir.

Mr. MULTER. Now, I think you indicated that Mr. Kneipp passed on to you the committee's request with reference to what prosecutions, if any, or the number of prosecutions, if any, that have been brought on account of false advertising, misleading advertising. Do you have that record available?

Mr. TYSON. There is no such record, sir.

Mr. MULTER. You mean there were no such prosecutions?

Mr TYSON. From the time-I haven't studied the time prior to when I came to the Board, a little over 5 years ago, but what we try to do, Mr. Chairman, is to call in persons where there appears to be some question whether or not the advertising fringes on false or misleading. We call them into the office and see if we can get the matter straightened out.

In every instance I believe this has been done.

Mr. MULTER. How many such instances have there been since you have been a member of the Board?

Mr. TYSON. I can think of no more than four or five.

Mr. MULTER. Have there been any instances of prosecutions or informal conversations such as you referred to with licensees involving price fixing?

Mr. TYSON. Not to my knowledge, sir.

Mr. MULTER. Has there been any with reference to the so-called joint advertising?

Mr. TYSON. Yes. We have called them in to inquire whether or not this is a joint advertising proposition or whether it is actually a joint buying proposition, and we have been advised that it is a joint advertising proposition and to the satisfaction of the Board.

Mr. MULTER. How many such instances were there?

Mr. TYSON. I think two.

Mr. SPRINGER. Mr. Chairman, could she read that back? I was listening but didn't get the import of the question.

(A portion of the record was read by the reporter.)

Mr. MULTER. Can you state for the record the names of the firms or groups involved by group name or otherwise?

Mr. TYSON. I am recalling now from memory, Mr. Chairman. I hope I am right. I think the Thrifty group was one. And I believe Mr. Bindeman's group was another. I can't remember the name

offhand.

Mr. SPRINGER. What is the last name?

Mr. MULTER. Bindeman is the name of the attorney for the Retail Licensees Association.

And your inquiry there was to determine whether or not they were buying jointly in violation of the statute.

Mr. TYSON. Whether they were in fact joined together for the purpose of joint advertising or was it actually a joint buying concern, and we were satisfied that they were a joint advertising.

Mr. MULTER. In other words, the point of your inquiry was that if they were all advertising the same brand at the same price, it involved