that he is not a person prohibited by this Act from receiving a firearm in interstate or foreign commerce; and (3) that there are not provisions of law, regulations, or ordinances applicable to the locality to which the handgun or firearm will be shipped, which would be violated by such person's receipt or possession of the handgun or firearm. It shall be unlawful for any person to cause to be transmitted by United States mail, or to cause to be transported in interstate or foreign commerce such a sworn statement which contains any false statement as to any material fact for the purpose of obtaining a handgun or such a firearm" (lines 16-24, p. 5, and lines 1-14, p. 6, of the bill).

This subsection is apparently designed to implement proposed subsection (k) as well as State and local laws restricting the receipt and possession of handguns and national act weapons.

As to the implementation of subsection (k), subsection (1) requires manufacturers and dealers to obtain affidavits from purchasers stating the information designated which includes a statement that the recipient is over 18 years of age. On the basis of such an affidavit, the manufacturer or dealer fills an order and ships the weapons ordered by a common or contract carrier. The carrier has some assurance that the addressee is not under 18 years of age which gives him some assistance in complying with subsection (k).

Section 2(c) of the act makes it unlawful for any licensed dealer or manufacturer to ship any firearm to any person other than a licensed dealer or manufacturer in any State the laws of which require a permit for the purchase of the firearm. Even though a person complying with section 2(c) is exempt from the provisions of this subsection, we believe that it nevertheless indirectly implements that section. The affiant must state that the law of the locality to which the firearm is shipped will not be violated by the receipt or possession of the weapon. This, in our opinion, will serve as a deterrent to persons violating local laws by receiving mail-order shipments of firearms. Making it unlawful to make a false statement in this regard will also aid in the enforcement of local laws governing the receipt and possession of such weapons.

Incidentally, the requirement that the affidavit include a statement that the purchaser of the firearm is not prohibited by the act from receiving the weapon in interstate commerce will emphasize that certain persons are restricted from receiving firearms in interstate or foreign commerce. This could result in manufacturers, dealers, and the general public becoming more familiar with the act. Such a result could certainly aid in the enforcement of the firearms laws. Section 3 of the bill

"Section 3 of the Federal Firearms Act is amended to read as follows:

"SEC. 3. (a) Any manufacturer or dealer desiring a license to transport, ship, or receive firearms in interstate or foreign commerce shall file an application for such license with the Secretary, in such form and containing such information as the Secretary shall by regulation prescribe. Each such applicant shall be required to pay a fee for obtaining such license as follows: "(1) If a manufacturer of firearms, a fee of $50 per annum ;

"(2) If a dealer (other than a pawnbroker) in firearms, a fee of $10 per

annum; or

"(3) If a pawnbroker, a fee of $50 per annum" (lines 17-25, p. 6, and lines 1-3, p. 7, of the bill).

This amendment would increase the existing license fee for manufacturers (which includes importers) from $25 to $50 per annum. It is estimated that there are approximately 175 manufacturers' licenses issued annually under the act. Since this increase represents only a rather nominal sum of money, the question as to whether the fee should be increased is more a matter of regulatory policy than of revenue.

The existing license fee for dealers is $1 per annum, and it is estimated that there are some 60,000 dealers licensed annually under the act. Although it is difficult to accurately allocate and determine the costs involved, there is no question that the existing dealer license fee represents only a fraction of the cost of processing an application and issuing a license. Increasing the dealer's license fee to $10 per annum would adequately cover processing costs.

The matter of placing pawnbroker dealers in a special category with a license fee of $50 per annum primarily involves a matter of policy. The Treasury Department has no specific information as to the number of pawnbrokers who deal in firearms since they are presently classed as "dealers."

It is understood that the proposed increase in license fees was discussed by the representatives of the Senate Subcommittee on Juvenile Delinquency with

representatives of manufacturers and dealers, and that no substantial objections were voiced by the manufacturers' and dealers' representatives to the proposed increases in fees.

We believe that it could be reasonably expected that the gun dealers in general would favor the higher fee for pawnbrokers, and that the pawnbrokers would oppose this change.

The Treasury Department favors the adoption of this amendment (particularly the increase in the fee for dealers) since it is felt that every license fee should be adequate to cover the cost of processing an application and issuing the license.

The increased fees would produce between $500,000 and $600,000 per annum in revenue if the existing number of licensees continue in business.

Section 3 of the bill also amends subsection (b) of section 3 of the act to read as follows:

"(b) Upon filing by a qualified applicant of a proper application and the payment of the prescribed fee, the Secretary shall issue to such applicant the license applied for, which shall, subject to the provisions of this Act, entitle the licensee to transport, ship, and receive firearms in interstate or foreign commerce during the period stated in the license. Except that, no license shall be issued pursuant to this Act (1) to any applicant who is under twenty-one years of age; or (2) to any applicant, if the applicant (including, in the case of a corporation, partnership, or association, any individual possessing directly or indirectly, the power to direct or cause the direction of the management and policies of the corporation, partnership, or association) is prohibited by the provisions of this Act from transporting, shipping, or receiving firearms in interstate or foreign commerce" (lines 4-18, p. 7, of the bill).

This subsection, as it now appears in the act, authorizes the issuance of a license to an applicant upon payment of the fee prescribed. The license authorizes the licensee to engage in the business of shipping and receiving firearms and ammunition in interstate or foreign commerce during the term of the license unless it is revoked or suspended. In addition, the present subsection contains a proviso that no license shall be issued to anyone who has been convicted of a violation of the act within the past 2 years.

Subsection (c) of section 3 of the present act provides for the suspension or revocation of a license only where the licensee is convicted of a violation of the act. That subsection also provides that the clerk of the court shall notify the Secretary of any conviction of a violation of the act, that the licensee may post a bond and continue business under his license until his conviction becomes final, at which time the license is revoked, and that if no bond is posted in the case of a conviction for such a violation, the license shall be suspended until final disposition of the case.

It may be noted that the present act precludes the shipment or receipt in interstate or foreign commerce by "any person" who is a fugitive from justice or is under indictment for, or has been convicted of, a crime punishable by imprisonment for a term exceeding 1 year. These prohibitions have been construed to apply to licensees under the act. In addition, no license is issued to any person proscribed from shipping or receiving firearms in interstate or foreign commerce. These constructions of the act are enunciated in the regulations promulgated under the act (26 CFR, pt. 177). Subsection (b) of the act amended as proposed by section 3 of the bill would similarly apply these prohibitions to the issuance of licenses and to licensees.

Generally, subsection (b) of section 3 of the act, as proposed in this bill, would combine and clarify subsections (b) and (c) of section 3 of the present act. The proposed subsection would provide for the issuance of a license after payment of the prescribed fee if the applicant is (1) 21 years of age or older and (2) is not prohibited from transporting, shipping, or receiving firearms in interstate or foreign commerce by the provisions of the act. As to the latter condition, the applicant includes, in the case of a corporation, partnership, or association, any individual possessing, directly or indirectly, power of control over any such entity. Hence, this subsection would specifically provide that licenses would not be issued to anyone, including persons controlling corporations, etc., under indictment for, or convicted of, any felony.

In the past, individuals convicted of a felony have formed corporations to continue in the firearms business. Such practice is not, in our opinion, in accord with the purpose of the licensing provisions of the act. This proposed subsection would provide a tool to cope with this problem in that it would specifically prohibit the issuance of a license to an applicant, including, in the case of a corpo

ration, partnership, or association, any individual controlling, directly or indirectly, such an entity. Such a tool, in our view, would materially aid in the enforcement of the act.

It appears that a comma was omitted in line 14, page 7, of the bill. It is suggested that a comma be placed after the word "possessing" in that line.

Section 3 of the bill next amends subsection (c) of section 3 of the act to read as follows:

"(c) The provisions of section 2 (d), (e), and (f) of this Act shall not apply in the case of a licensed manufacturer or licensed dealer who is under indictment for a crime punishable by imprisonment for a term exceeding one year, provided that such manufacturer or dealer gives notice to the Secretary by registered or certified mail of his indictment within thirty days of the date of the indictment. A licensed manufacturer or licensed dealer who has given notice of his indictment to the Secretary, as provided in this subsection, may continue operations pursuant to his existing license during the terms of such indictment, and until any conviction pursuant to the indictment becomes final, whereupon he shall be fully subject to all provisions of this Act and operations pursuant to such license shall be discontinued" (lines 19-25, p. 7, and lines 1-7, p. 8, of the bill).

In the present act, subsection (c) of section 3, provides for the suspension and revocation of licenses, as previously stated, in those cases involving a violation of the act. In the scheme incorporated in that section, a person convicted of such a violation can continue business until final disposition of the case after furnishing a $1,000 bond.

The subsection proposed in the bill would broaden the coverage of the present subsection. This is done first by specifically exempting manufacturers and dealers indicted for a felony violation, who give notice of such indictment by registered mail, from the provisions of subsections (d), (e), and (f) of the act until any conviction under the indictment becomes final, at which time such a person would be subject to all provisions of the act. This would clarify and simplify certain of the licensing provisions of the act, i.e., the provisions of the subsection would be applicable to all felonies rather than violations of the act; the requirement for posting a bond (which we feel is useless in that no measure of damages could be established as a basis of recovery under the bond) would be replaced by a requirement for written notification of an indictment and would specifically provide that when a conviction of a licensee becomes final, he would be subject to all provisions of the act.

The requirements of this proposed subsection, we believe, will incorporate a self-administering scheme in the act which will effectively control licensees. Under the subsection, a licensee indicted for a felony is required to give written notice within 30 days of such indictment to continue business under the license. This eliminates the bond, as explained above, and the requirement that clerks of court notify the Secretary of convictions and violations of the act and yet does not require the Internal Revenue Service to obtain such information from Federal, State, and local courts, which would be a formidable burden.

In addition, the scheme is equitable in that it allows licensees to continue business until final conviction.

The scheme disposes of administrative problems involved in suspensions and revocations of licenses by prohibiting any licensee finally convicted of a felony from continuing operations under his license.

Finally, section 3 of the bill would amend subsection (d) of section 3 of the act to read as follows:

"(d) Each licensed manufacturer and licensed dealer shall maintain such permanent records of production, importation, shipment, and other disposal of firearms as the Secretary may by regulation prescribe" (lines 8-11, p. 8, of the bill).

This proposal would specifically include manufacturers required to keep records (the subsection now refers only to dealers) and add a requirement for keeping records of production. It would also eliminate all requirements as to records pertaining to ammunition. At the present time, the regulations require manufacturers to keep records, including records of production.

Section 4 of the bill

"SEC. 4. Section 4 of the Federal Firearms Act is amended to read as follows: "SEC. 904. EXEMPTIONS.-(a) The provisions of this act shall not apply with respect to the transportation, shipment, receipt, or importation of any firearms sold or shipped to, or issued for the use of (1) the United States or any department, independent establishment, or agency thereof; (2) any State, or possession, or the District of Columbia, or any department, independent establishment,

agency, or any political subdivision thereof; (3) any duly commissioned officer or agent of the United States, a State, or possession or the District of Columbia, or any political subdivision thereof; (4) to any bank, public carrier, express, or armored truck company organized and operating in good faith for the transportation of money and valuables, which is granted an exemption by the Secretary; (5) to any research laboratory designated as such by the Secretary; or (6) to the transportation, shipment, or receipt of antique or unserviceable firearms (other than a "firearm" as defined in section 5848 (1) of the Internal Revenue Code of 1954) possessed and held as a curio or museum piece'" (lines 14-24, p. 8, and lines 1-8, p. 9, of the bill).

Section 4 as it now appears in the act is not divided into two subsections as proposed in this section of the bill. However, the two subsections proposed here generally contain all of the provisions of the present section.

The present section covers ammunition. For reasons previously stated, ammunition is taken from the coverage of the act and any reference thereto would be deleted from this subsection.

The present section refers to "Territory." infra, makes no reference to such an area.

This subsection, as explained

Under the present section, transactions involving all antique or unserviceable firearms held as curios or museum pieces are exempt from the coverage of the act. This proposed subsection excludes those transactions involving only antique or unserviceable firearms which do not come within the purview of the National Firearms Act from the coverage of the Federal act. Tightening the exemption in this respect would, for example, keep felons from collecting unserviceable submachineguns. In this regard, we know of one case in which a notorious criminal acquired submachineguns which he contended he held merely as collector's items. Since the submachineguns were classified as unserviceable, he alleged that they were exempt from the controls imposed by both the National Firearms Act and the Federal Firearms Act. Under such an interpretation, a known criminal with a record for reactivating unserviceable submachineguns (incidentally, this is easily accomplished with many so-called unserviceable firearms) would not be clearly precluded from acquiring these weapons through interstate or foreign commerce and possessing them. Under this proposed subsection, such a problem could be favorably resolved.

This section of the bill would erroneously designate section 4 of the act as section 904, the number given to section 4 of the act in title 15 of the United States Code. It is suggested that this section of the act be designated as section 4.

This section 4 of the bill would also add a subsection (b) to section 4 of the act to read as follows:

"(b) Nothing contained in this Act shall be construed to prevent shipments of firearms to institutions, organizations, or persons to whom firearms may be lawfully delivered by the Secretary of Defense or his delegate, nor to prevent the receipt or transportation of such firearms by their lawful possessors while they are engaged in military training or in competitions" (lines 9-15, p. 9, of the bill).

This proposal would merely change the format of section 4 as it now appears in the act by incorporating the final proviso in the present section into this subsection. In doing this, the term "Secretary of War" is properly changed to "Secretary of Defense".

Section 5 (a) of the bill

"(a) Subsection (b) of section 5 of the Federal Firearms Act is amended by striking out the words 'or ammunition'." (lines 16-18, p. 9 of the bill).

Since ammunition will be removed from the coverage of the act, it would be deleted from subsection (b) of section 5 of the act by this amendment. Section 5(b) of the bill

"(b) Subsection (b) of section 5 of said Act is further amended by striking out the words 'title 26' where they first appear and inserting in lieu thereof the words 'the Internal Revenue Code of 1954', and by striking out the words 'section 2733 of title 26' and inserting in lieu thereof the words 'section 5848 of said Code.'" (lines 19-24, p. 9 of the bill).

This amendment would merely substitute the citation in the Internal Revenue Code of 1954 containing the definition of "firearm," as that term is used in the National Firearms Act, for the citation of such definition in the Internal Revenue Code of 1939.

Section 6 of the bill

"SEC. 6. The amendments made by this Act shall become effective on the first day of the second month beginning after the date of enactment of this Act."

This effective date statement could, we believe, cause some temporary problems in the administration of the act. Section 3 of this bill would amend section 3 (a) of the act. Those amendments include one which would increase the licensing fees imposed by the act. Each license under the act is issued for a term of 1 year from the date of issuance. If the bill is enacted, this proposed effective date statement does not make it clear that the more than 60,000 persons who hold licenses on the effective date of the bill would not be required to pay prorated license fees at the new rate or to obtain new licenses. Problems evolving from this may, in our opinion, be avoided by striking the period at the end of section 6 of the bill and inserting in lieu thereof a colon, and by adding the following statement:

"Except, that section 3 (a) of the Federal Firearms Act, as amended by section 3 of this Act, shall not apply to any manufacturer or dealer licensed under the Federal Firearms Act on the effective date of this Act until the expiration of the license held by such manufacturer or dealer on such effective date."

Section 7 of the bill

"SEC. 7. The Federal Firearms Act is amended by adding at the end thereof the following new section:

"SEC. 10. Nothing in this Act shall be construed as modifying or affecting the requirements of section 414 of the Mutual Security Act of 1954, as amended, with respect to the manufacture, exportation, and importation of arms, ammunition, and implements of war'" (lines 4-10, p. 10, of the bill).

This amendment is self-explanatory. The Treasury Department has no objection to adding this proposed section to the Federal Firearms Act.

Other bills

Three bills amending the Federal Firearms Act have been introduced in the House of Representatives. Two, H.R. 8081 (88th Cong., 1st sess.) and H.R. 8174 (88th Cong. 1st sess.), are identical to S. 1975. The other, H.R. 8004 (88th Cong., 1st sess.), is very similar to this Senate bill.

GENERAL COUNSEL, TREASURY DEPARTMENT, Washington, December 2, 1963.

Hon. WARREN G. MAGNUSON,

Chairman, Committee on Commerce,

U.S. Senate,

Washington, D.C.

DEAR MR. CHAIRMAN: This is in response to your request for the views of the Treasury Department concerning the amendments which the Honorable Thomas J. Dodd offered on November 27, 1963 (see vol. 109, Congressional Record No. 193, dated November 27, 1963, p. 21765) with respect to S. 1975 (88th Cong., 1st sess.).

In our letter to you dated November 14, 1963, the Treasury Department expressed the view that the amendments to the Federal Firearms Act (ch. 18, title 15, United States Code, 52 Stat. 1250) proposed by S. 1975 are in the public interest and would effect needed improvements in that act without impingement upon the individual rights of any citizen.

Our views in regard to an identical bill (H.R. 8176, 88th Cong., 1st sess.) were forwarded to Hon. Wilbur D. Mills, chairman, Committee on Ways and Means, House of Representatives, Washington, D.C., on November 14, 1963. Those views followed the views expressed to you with regard to S. 1975.

We are of the view that the amendments proposed by Senator Dodd to his bill, S. 1975, are consistent with the purposes of the original objectives of the bill and are supported by the evidence offered at the hearings which led to the introduction of that bill. We favor the enactment of S. 1975 as amended by the changes offered by Senator Dodd.

In substance, there are two principal changes effected by the proposed amendments to the bill. Those objectives were outlined by Senator Dodd in his statement to the Senate on November 27, 1963, in offering the amendments (see vol. 109, Congressional Record No. 193, dated November 27, 1963, p. 21765). First, the restriction pertaining to mail-order transactions in handguns and gangstertype weapons would be extended to "all firearms regardless of size, shape, or description." Second, that provision relating to an affidavit by a mail-order