STATEMENT OF GEORGE LINK, JR., GENERAL COUNSEL, AMERICAN ASSOCIATION OF ADVERTISING AGENCIES Mr. Chairman and members of the committee, my name is George Link, Jr. I am a principal in the law firm of McKercher & Link, 17 John Street, New York, general counsel to the American Association of Advertising Agencies. I appear on behalf of the American Association of Advertising Agencies, the national organization of the advertising agency business, made up of 325 advertising agencies which operate some 585 offices and handle a substantial share of the national advertising volume. Mr. Chairman, we have asked to appear here today at the request of our. board of directors and on the recommendation of our AAAA committee on Government, public and educator relations. We wish to register our strong opposition to the Siler bill (H. R. 4627) because we believe that it would discriminate against the use of advertising as a legitimate and necessary form of selling in our economy. It is a historic principle in the United States that any product or service which is lawful under United States law to be sold should have the right to use the force of advertising, so long as this advertising conforms to the laws and regulations. To deny the right to advertise a lawful product is a breach of that important principle. It is damaging to the lawful industry concerned, and to advertising as a selling activity in our economy. If one group of lawful products were to be absolutely prohibited by Congress from being advertised-if advertising is to be made the pretext for efforts at prohibition-we submit that a dangerous and unwise precedent would be established. We believe that your committee has no desire to set this dangerous and unwise precedent. We believe, also, that effective regulations for the advertising of alcoholic beverages already exist. Federal regulations prohibit, in any advertisement for an alcoholic beverage: Any statement that is false or misleading in any material particular; that is disparaging of a competitor's product; that is obscene or indecent; that relates to analyses, standards or tests which are likely to mislead the consumer; that relates to any guaranty which is likely to mislead the consumer; that implies production or bottling under Government supervision; that is inconsistent with the labeling; that refers to purity or therapeutic effects, if such statement is untrue in any particular or tends to create a misleading impression, etc. Moreover, it seems to us that most advertisers—including those in the alcoholic beverage industry-have shown very careful regard for the regulations which exist. According to the last annual report of the Federal Trade Commission-for the 12 months ending April 30, 1954 the FTC examined a total of 678,163 advertisements. Of this number 26,919-or about 4.3 percent--were set aside as questionable. It is my best judgment that not more than 1,500 of these advertisements required anything more than a preliminary investigation and inquiry—which is approximately 0.22 percent of the grand total of advertisements examined. This is a splendid showing. It is a record that any industry can be proud of. You may want to know that the members of our association have set a standard for advertising copy in a voluntary copy code, which is part of our standards of practice and which has also been endorsed by the Association of National Advertisers and the Advertising Federation of America. The copy code asserts that "an advertising agency should not recommend, and should discourage any advertiser from using, any advertising of an untruthful, indecent, or otherwise objectionable character," and it specifically disapproves a number of copy practices. The code is subscribed to by every agency elected to four-A membership, and we promote it in every way that we properly can under the antitrust laws. Our association cooperated with Congress in the writing of the WheelerLea amendment to the Federal Trade Commission Act, 1938, through suggestions based on our standards of practice, our copy code, and the experience of our members. We have recognized, further, that there is still a small but persistent amount of objectionable advertising which is outside the scope of regulatory bodies, and which is responsible for some public criticism and hence harmful to all advertising. Accordingly, 10 years ago, the AAAA adopted a plan to try to discourage even advertising deemed in bad taste or objectionable for any other reason. The plan is known as our monthly interchange of opinion on objectionable advertising. Under it, agencies are invited to report to us each month any advertising which they consider objectionable. Acting as intermediary, we notify the agency which originated the advertising that a complaint has been received. No pressure is or can be brought to bear, of course, under the antitrust laws. But in many cases, this simple low-pressure registering of views has brought improvement. You may want to know how many complaints have been received on alcoholic beverage advertising, under the interchange, from our advertising agency people. In the calendar year 1955, a total of 91 advertisements were criticized. But none of these was for alcoholic beverage advertising. This contrasts with 14 criticisms of alcoholic beverage advertising registered in 1953 and 10 criticisms in 1954. We believe that this drop to zero in the number of complaints indicates that the interchange low pressure as it is-is having a beneficial effect, also that it indicates the effectiveness of present Government regulations and the industry's voluntary self-regulation. Advertising people have also been among the leaders in helping to found and support organizations for the protection of the public such as the local better business bureaus and the National Better Business Bureau. You are no doubt familiar with the bureaus' work. They anticipate complaints against bad advertising and they help to deal with such complaints. Out of 5,800 individual advertisements studied some years ago by the National Association of Better Business Bureaus under a grant by our association, only 80 or less than 2 percent—were in any way objectionable. Besides the four A's, advertising media have their own voluntary codes to encourage high standards in advertising. These include the Associated Business Publications, the Newspaper Advertising Executives Association, the copy advisory committee of the Magazine Advertising Bureau, the Outdoor Advertising Association of America, and the National Association of Radio and Television Broadcasters. Now in view of these facts, it seems to us that advertising is performing according to high standards and that it does not deserve to be singled out-among all the forms of selling-for unfair and discriminatory restriction. If H. R. 4627 were enacted, it would provide an entering wedge for groups which seek other discriminatory measures and which would use advertising as their pretext. To do this would place a great burden on the beneficial use of advertising in our economic system. There is no longer any question in this country of our ability to produce. The problem today is how to move the vast output of our farms, mines, fisheries, and industrial plants through the channels of trade to consumers. By the use of machines, our production of goods and services has been multiplied. Advertising multiplies selling messages and appeals. Hence advertising has the greatest opportunity-and the greatest responsibility—for moving goods fast enough and in large enough quantities to keep our economy running. We believe that Congress will want to protect the right of any lawful product to use the force of advertising, and we believe that Congress will not want to subject this right to the dangerous precedent of prohibition or unfair and discriminatory restriction. The American Association of Advertising Agencies believes that H. R. 4627 would be unsound public policy then, for the following reasons: First, there is no evidence of violation on any scale of the many Federal laws and regulations which already exist to govern such advertising. Second, there is no evidence that any majority of the public objects to such advertising, other than the organized minorities which have regularly presented prohibition bills-similar to the Langer bill-before the Congress. Third, it would penalize rather than encourage the alcoholic beverage industry and advertising businesses in their honest and continuing work at voluntary self-regulation; and it would discourage other industries in their similar efforts. Fourth, it would set a dangerous and unwise precedent by discriminating against a lawful industry and against advertising as a form of selling. It would encourage other groups to seek other discriminatory measures against the advertising of other lawful products. Fifth, it would be a needless breach of a fundamental principle, that any product which is lawful under the United States law to be sold may be legally advertised. Holding to this principle and protecting the right to advertise is vital to the national welfare, we believe. For business needs every encouragement to find customers, to maintain a high level of employment, and to make possible a constantly rising standard of living. We have appeared before committees of the Congress from time to time to oppose similar proposals, and we appreciate this opportunity to appear again. But we hope it may be time that these unsound proposals are conclusively answered. The American Association of Advertising Agencies recommends that H. R. 4627 does not merit your committee's favorable report. Hon J. PERCY PRIEST, CHAMBER OF COMMERCE OF THE UNITED States, Chairman, Interstate and Foreign Commerce Committee, DEAR MR. PRIEST: The Chamber of Commerce of the United States is opposed to the passage of H. R. 4627, because we believe there should be no governmental prohibition of advertising of products or services for purposes for which they may be lawfully used. The prohibition contemplated on the transportation in interstate commerce of advertisements of alcoholic beverages would set a precedent which could lead later to restrictions on the distribution of other lawful and legitimate goods. Advertising is an integral part of modern business operations. It plays an essential part in selling. It is the most effective and economical means of mass communication available to industry, business, and the public. Advertising has been recognized as the institution of abundance-the key process in maintaining a high living standard through a mass-market, massdistribution, mass-production economy. Since it plays such a vital role in our way of life, it should be kept free of unnecessary restrictions. In determining your committee's course of action, we trust that the members will weigh carefully the serious drawbacks outlined above which are inherent in this type of legislation. We would appreciate it if you would make this letter a part of the record of your hearings. Cordially yours, CLARENCE R. MILES. STATEMENT OF ABE MCGREGOR GOFF, THE SOLICITOR FOR THE POST OFFICE DEPARTMENT Mr. Chairman, I wish to thank the committee for this opportunity to present the views of the Post Office Department on the bill by Congressman Siler, H. R. 4627 to prohibit the transportation in interstate commerce of advertisements of alcoholic beverages, and for other purposes. Mr. Chairman, I wish to make it clear that while the Post Office Department must, in good faith, take a position in opposition to this measure, because of the difficulties of enforcement that would result, the Department does not, in any way, nor do I personally, take a position against the perfectly understandable desire of the people of various communities to keep such advertisements out of their communities. The Department has reported on this bill, and I respectfully request permission, Mr. Chairman, to insert the Department's report of May 6, 1955, in the record of hearings on H. R. 4627 at this point. Mr. Chairman, so far as the Post Office Department is concerned, the enactment of H. R. 4627 would re-create a situation that was tried once before for a period of 16 years, and which was discontinued by Congress. In 1917 the so-called Reed amendment was added as section 5 of the Post Office Department's appropriation act for the fiscal year 1918. This section which appears at page 1069 of volume 39, United States Statutes at Large, reads as follows: "SEC. 5. That no letter, postal card, circular, newspaper, pamphlet, or publication of any kind containing any advertisement of spirituous, vinous, malted, fermented, or other intoxicating liquors of any kind, or containing a solicitation of an order or orders for said liquors, or any of them, shall be deposited in or carried by the mails of the United States, or be delivered by any postmaster or letter carrier, when addressed or directed to any person, firm, corporation, or association, or other addressee, at any place or point in any State or Territory of the United States at which it is by the law in force in the State or Territory at that time unlawful to advertise or solicit orders for such liquors, or any of them, respectively. "If the publisher of any newspaper or other publication or the agent of such publisher, or if any dealer in such liquors or his agent, shall knowingly deposit or cause to be deposited, or shall knowingly send or cause to be sent, anything to be conveyed or delivered by mail in violation of the provisions of this section, or shall knowingly deliver or cause to be delivered by mail anything herein forbidden to be carried by mail, shall be fined not more than $1,000 or imprisoned not more than six months, or both; and for any subsequent offense shall be imprisoned not more than one year. Any person violating any provision of this section may be tried and punished, either in the district in which the unlawful matter or publication was mailed or to which it was carried by mail for delivery, according to direction thereon, or in which it was caused to be delivered by mail to the person to whom it was addressed. Whoever shall order, purchase, or cause intoxicating liquors to be transported in interstate commerce, except for scientific, sacramental, medicinal, and mechanical purposes, into any State or Territory the laws of which State or Territory prohibit the manufacture or sale therein of intoxicating liquors for beverage purposes shall be punished as aforesaid: Provided, That nothing herein shall authorize the shipment of liquor into any State contrary to the laws of such State: Provided further, That the Postmaster General is hereby authorized and directed to make public from time to time in suitable bulletins or public notices the names of States in which it is unlawful to advertise or solicit orders for such liquors." This law was amended five times during the period it was in effect. Finally, the 73d Congress repealed the first paragraph by the act of March 22, 1933 (48 Stat. 16), and in the 74th Congress, the second paragraph, as amended, was also repealed (sec. 9 of the act of June 25, 1936, 49 Stat., pp. 1928-1930). The following statement by Senator Clark during the debate on H. R. 6131 (p. 330 of volume 78, pt. 1, Congressional Record, 73d Congress, 2d sess.), which was enacted as the act of March 22, 1933, might be of interest to this committee: "Mr. CLARK. Mr. President, the amendment which I have just offered is designed to repeal a portion of what was known as the Reed amendment to the Post Office appropriation bill of 1917. That amendment consisted of two parts. The first part prohibited the sending by mail or express into any dry State of any periodical or newspaper containing advertisements of spirituous liquors. The second portion of the Reed amendment prohibited the shipment into a dry State of any beer or spirituous liquors. "The first part of it is now working a great hardship on a great many newspapers, and is not serving any useful public purpose whatever. I do not think it will be gainsaid that, as a fundamental proposition, advertising of liquor does not increase the gross sale or gross consumption of liquor. It may change the distribution between various firms that are manufacturing liquor, but certainly nobody begins to drink liquor because he reads an advertisement of it in a newspaper. "As it operates at present, some newpapers are compelled to get out as many as 5 or 6 different editions in order to conform to the various laws of different States into which they are sent. Under the present law magazines are going out constantly with great blank spaces where advertising has been left out. "I do not believe any purpose whatever is to be served by maintaining that portion of the amendment on the statute books. The amendment as drawn retains in the statute of the prohibition against shipment of liquor into dry territory." The preparation of the bulletin issued under the March 3, 1917, act, required a careful survey of the liquor laws of every State, county, and municipality in the United States to determine the exact territory in the sev eral States affected by the act. A 34-page pamphlet was necessary to list the area, which extended over 35 States. Surveys of the State and local laws were necessary thereafter to note changes. The list was maintained in a current status by subsequent publications. One veteran attorney on my staff was in the office while the prior law was in effect and remembers distinctly how it worked in actual operation. He reports that the law imposed a tremendous burden on the Solicitor's Office; that intolerable delays and confusion developed; that newspapers and magazines were delayed; and that the office was stacked with complaints and requests for rulings. Postmasters were constantly in hot water as each mailing had to be sorted, not only as to destination but as to whether, under the directives, it could be delivered. Attorneys and clerical force in the Solicitor's Office were so burdened with answering correspondence and preparing rulings that work on important fraud and obscenity matters was impeded. Supporters of the law insisted that even the mention of bars in hotel advertisements or of the serving of liquor in magazine advertisements of passenger steamship companies made newspapers and magazines nonmailable. There was an unending demand for precise legal rulings. Other advertisers suffered because the receipt of their advertisements was delayed or prevented. He says the prior law proved impracticable and almost impossible of enforcement. The Post Office Department renews its opposition to the enactment of H. R. 4627. The Bureau of the Budget has advised that there would be no objection to the presentation of this statement to the committee. STATEMENT OF DAVID H. STEPHENS, CHIEF POSTAL INSPECTOR Mr. Chairman, I wish to thank the committee for this opportunity to comment on the bill by Congressman Siler, H. R. 4627, to prohibit the transportation in interstate commerce of advertisements of alcoholic beverages, and for other purposes. As Mr. Goff has explained, our position on this bill relates only to the practical problems which would involve the postal establishment in the event of enactment of the bill. The postal establishment today is confronted with various legislative controls, each of which, however essential, poses definite operational problems. The prohibitions preclude the acceptance of fraudulent and obscene matter; the mailing of explosives, poisons, matter tending to incite riots or espionage, and the distribution of foreign propaganda. The enforcement of these laws requires a vast amount of time and effort on the part of postal employees, in the handling and rehandling of all mails from the time of deposit to delivery through 38,000 post offices serving the United States. The effective enforcement of each mail prohibition must at all times be designed in such manner that the expeditious handling of legitimate mailings Iwill not be interrupted. While the public holds us to a high degree of effectiveness in keeping the mails free of objectionable matter, it at the same time is equally and properly demanding that legitimate mail service will not be impaired. It is fortunate that, so far, the restrictions apply uniformly to mail deposited in and addressed for delivery at all areas. It is the considered opinion that enforcement of H. R. 4627 would impose a serious burden on the postal establishment. It is felt this position will be better understood when it is considered that a half million postal employees would be responsible for two difficult determinations: (1) Responsibility for determining in the course of handling of millions of pieces of mail whether a particular piece of mail would be in violation of the subject act. This determination frequently would require legal opinions in various borderline cases, which can be anticipated. (2) Employees would be required to know whether or not each individual piece of questioned mail would be acceptable if addressed for delivery in a particular State, and sometimes a particular county of a State. The same screening would be involved in the forwarding of mail from one address to another. The enormity of this problem is best understood when it is considered that many thousands of pieces of mail frequently are dispatched at one time, and if satisfactory service is to be realized, it must be rapidly processed for onward dispatch. |