When it's time to sit back and relax

What makes a glass of beer taste so good?

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up on your reading-talk a little-and
sip a mellow glass of beer.

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Beer Belongs-Enjoy It!

AMERICA'S BEVERAGE OF MODERATION

Mr. SPRINGER. Would you state to the committee, so that the committee can get an outline of what the 1st amendment and the 5th amendment and the 21st amendments are?

Mr. CROWDER. Yes. The first amendment guarantees the right of freedom of speech and of the press. We rely on that.

We rely on the fifth amendment's guaranty of due process of law. We rely on the 21st amendment which returns the control of the alcoholic beverage industry to the States.

Mr. SPRINGER. Let us take the 21st amendment. We would be in substantial agreement, I take it-and I want to find out what we agree on first before I go any further-that by returning the control of

liquor to the States that they are the only ones who can regulate with reference to intoxicating liquors, is that true?

Mr. CROWDER. We would agree, yes, that the States are the only ones who can regulate the alcoholic beverage industry, the manufacture and sale.

Mr. SPRINGER. Would you say that the States themselves—we will say the State of Maryland-can regulate the advertising of liquor? Mr. CROWDER. The State of Maryland can regulate the advertising of liquor.

Mr. SPRINGER. There is no question about that, is there?

Mr. CROWDER. I would say that the questions might arise, in our mind, if your question were further amplified, but as a general proposition, we agree with that.

Mr. SPRINGER. They would have the right to cut out all advertising with reference to liquor, would they not, if they so saw fit?

Mr. CROWDER. A State has plenary power to regulate the manufacture and sale of alcoholic beverages within the State.

Mr. SPRINGER. Mr. Reporter, will you read that question back? (Question read by reporter.)

Mr. CROWDER. Within the State, that is correct under the 21st amendment.

Mr. SPRINGER. Would you feel that the State of Maryland by passing a law prohibiting the advertising of merchandise such as is contained within the Siler bill is an infringement of the first amendment?

Mr. CROWDER. There might be some first amendment question but I would doubt it seriously because of the Supreme Court's recognition of the plenary power in the States to regulate the industry within the State.

Mr. SPRINGER. Would it be an infringement of the fifth amendment? Mr. CROWDER. The answer would be the same.

Mr. SPRINGER. We are then reduced to whether or not it would be an infringement of the 21st amendment, are we not?

Mr. CROWDER. Within the State. You are speaking of the power of the State.

Mr. SPRINGER. Within the State.

Mr. CROWDER. Yes, sir.

Mr. SPRINGER. Are you familiar with the case of the U. S. v. Frankfurt, decided in the October 1944 session of the Supreme Court? Mr. CROWDER. Yes, sir, I am.

Mr. SPRINGER. What do you think the effect of that opinion is? Mr. CROWDER. The effect of that opinion is that if you have a Federal statute of general applicability—that is, applying across the board-it can be applicable to the alcoholic beverage industry within a State only to the extent that it does not conflict with the policy of the State.

Mr. SPRINGER. I want to quote you this sentence in this decision: Granting the State's full authority to determine the conditions upon which liquor can come into its territory and what will be done with it after it gets there, it does not follow from that fact that the United States is wholly without power to regulate the conduct of those who engage in interstate trade outside the jurisdiction of Colorado.

Mr. CROWDER. Yes, sir, I am familiar with that.

Mr. SPRINGER. In this particular instance, would not that regulate the conduct of people outside of State boundaries?

Mr. CROWDER. Would what not regulate?

Mr. SPRINGER. Would not we have power by Federal statute to regulate those who conducted their business outside the State of Maryland?

Mr. CROWDER. Oh, no. You would not have such powers because the States individually-we are speaking now of a statute applying to the alcoholic beverage industry-have the plenary power to make such regulations.

Mr. SPRINGER. Do you feel that under this decision that in order to keep the Federal Government from regulating in the State of Maryland that the State of Maryland would have to prohibit advertising or allow advertising of alcohol?

Mr. CROWDER. In order for the Federal Government under a statute of general applicability-perhaps I could clarify our position to this extent: We believe that no Federal statute regulating advertising could be valid unless it were a statute of general applicability applying to all industries. If such a statute were passed, it would be applicable to the alcoholic beverage industry within any given State only to the extent that a State had similar law, or a clearly defined similar policy.

Mr. SPRINGER. As an example, suppose the Congress passed the Siler law and the President signed it, would it not be true that it would be applicable unless the State saw fit to overcome the law?

Mr. CROWDER. No, sir. If the Siler bill were passed in its present form, in our opinion it would be unconstitutional from the very start. If it were amended before passage to become a statute of general applicability applying to all industries, then the problem which you raise would be involved.

Mr. SPRINGER. You drew the distinction of general applicability. What do you mean by that?

Mr. CROWDER. The distinction is that a statute of general applicability, applying to all industries, is one thing. A statute regulating the alcoholic beverage industry is another. We think that is clear from the reports of the congressional committees which framed the joint resolution, which became the 21st amendment.

We think that has been confirmed by the Congress since the 21st amendment.

Mr. SPRINGER. You are using the words "general applicability," which I have not heard before.

Mr. CROWDER. The case which you cite is a case involving a statute of general applicability. No case involving the question of a statute specifically directed to the alcoholic beverage industry has been before the Supreme Court since the repeal of the 18th amendment.

Mr. SPRINGER. I am willing to concede that. My understanding of general applicability, as you are using it, would be that it applies generally to the entire liquor industry. That is my understanding of general applicability. I take it from what you said that you are saying that this must be a general applicability which must apply to all business.

Mr. CROWDER. We think that is clear: yes, sir.

Mr. SPRINGER. Actually the Sherman antitrust law does not apply to all business.

Mr. CROWDER. It is a statute applicable to virtually all businesses.

Mr. SPRINGER. You are using the word "virtually." It is not applicable to all business.

Mr. CROWDER. There may be certain limited exceptions to the Sherman Antitrust Act, but certainly I think you must admit it is a statute of general applicability. Business, in general, is subject to it.

Mr. SPRINGER. I do not understand applicability to mean anything except that it must fall with due process upon all people covered by the act. That would be all people engaged in the manufacture and sale of alcoholic liquors.

Mr. CROWDER. Mr. Springer, when we speak of general applicability in this connection we do not have in mind the question of discrimination presented by the fifth amendment.

Mr. SPRINGER. Let me quote:

Of course if a State chooses not to exercise the power given it by the 21st amendment and to continue to treat intoxicating liquors like other articles, the operation of the commerce clause continues.

If the State chose not to exercise the power here to prohibit advertising, then would it not be our right to then regulate this by passage of this kind of a law?

Mr. CROWDER. The point which you raise right there, Mr. Springer, is clarified very well in Justice Frankfurter's concurring opinion which follows.

Mr. SPRINGER. I was of the opinion that Justice Frankfurter's opinion rather clarified the situation in my mind.

Mr. CROWDER. The point is clarified in his opinion.

Mr. SPRINGER. I just read from his opinion. I read from the concurring opinion of Justice Frankfurter in this last statement.

Mr. CROWDER. Would you read a little further, sir, where we have quoted from it in our opinion here, where he says:

The question in this case, as I see it, is whether in fact the policy of Colorado sanctions such an arrangement as the indictment charges. Such a policy may be expressed either formally by legislation or by implied permission.

Mr. SPRINGER. What do you think the State of Maryland does at the present time?

Mr. CROWDER. They have a policy clearly sanctioning the advertising of alcoholic beverages, so far as I know.

Mr. SPRINGER. In the present case here, of United States versus Frankfort Distillers, a law was passed, was it not, in fact, which allowed retailers in the State of Colorado to fix prices?

Mr. CROWDER. The court in that case found a very distinct policy of Colorado in opposition to the very acts which the Sherman Antitrust Act enjoined, I believe.

Mr. SPRINGER. In this case, did not the attorney general of Colorado file an amicus curiae statement in which he said that the State of Colorado did regulate this matter?

Mr. CROWDER. I believe it is pointed out in Justice Frankfurter's opinion that the attorney general of Colorado brought to the Supreme Court no evidence of a policy in the State of Colorado favoring the acts which the Sherman Act enjoined.

Mr. SPRINGER. It is your opinion, then, that the decision of the Supreme Court is opposite to what I found with reference to the power of the Federal Government to regulate with reference to the matters not covered by State law? Am I right on that? I just want to be sure I understand you.

Mr. CROWDER. We certainly do not believe that that opinion stands for the proposition that you have just stated. We believe it stands for the proposition that a Federal law of general applicability would be applicable within a State only to the extent that it was in accord with a well-defined State policy.

Mr. SPRINGER. Mr. Chairman I believe that is all.

Mr. WILLIAMS (presiding). Are there any more questions?
Mr. Flynt?

Mr. FLYNT. Yes; I have 1 or 2 questions.

Mr. Hester, you or Mr. Crowder can answer this.

Mr. HESTER. Is this a constitutional legal question?

Mr. FLYNT. Yes, sir. It is reasonably contitutional.

Do you recall that during the years which immediately preceded the enactment of the 21st amendment that a great many promises were made by the brewing industry and the distilling industry that if the 18th amendment were repealed and the 21st amendment took its place that those 2 industries would do everything in their power to keep liquor and beer out of dry States and dry counties?

Mr. HESTER. I do not recall any such promises.
What is your question? Are you trying to say-

Mr. FLYNT. I will get the reporter to read the question.
(Question read by reporter.)

Mr. HESTER. Leave liquor out. If you confine your question to the brewing industry, my answer to that is that there is no brewer or distributor selling any beer in dry areas today. Were you implying that they could legally sell liquor in dry areas? I still do not understand what you are driving at.

Mr. FLYNT. I thought I made my question as clear as the English language could make it.

I will try to make it a little clearer by prefacing what I am going to ask in a short question by saying this: As a high-school student and a university freshman in the post- and years preceding the ratification of the 21st amendment that I read and heard on the radio both express and implied promises presumably issued by representatives of the distilling industry and the brewing interests to the effect that they did not want to sell any of their products in any State which outlawed them.

Mr. HESTER. That is correct. They do not do it today.

Mr. FLYNT. The second section of the 21st amendment reads this way:

The transportation or importation into any State, Territory, or possession of the United States for delivery or use therein of intoxicating liquors, in violation of the law thereof, is hereby prohibited.

In my opinion, if section 2a had not been included in the 21st amendment, the 21st amendment would have failed of ratification.

It is my opinion that both the distilling industry and the brewing industry have broken faith with the American people in that they have taken no positive steps and no affirmative steps whatsoever to see that Congress carries out its promises to the States that wanted to stay dry.

Now I am coming to the question. Do you think that a series of advertising campaigns, whether by television, by radio, by magazines, by newspapers, or any other of the many media of advertising, which