possible to trace him through a stamp tax or special fee as you would the gamblers who were set back upon their heels by a recent Congress and which caught that fraternity in a crossfire between central and local government jurisdictions.

Bootlegging was but a so-so pursuit between the date of repeal in 1933 till the time the Congress upped its tax to $10.50. That additional levy was just enough to bring the illicit distiller out of hiding. It is true, moonshining never did vanish as an industry but neither did it ever get out of hand to the point that is became the problem it is today.

Today, wildcat distilling is big business. Fifty-thousand gallon stills are being set up. Five-thousand gallon stills are just run of the mill. Without regard to capacity, here is the recent 5-year record for seizure of such stills by the Federal Government only, the State and local governments probably accounting for as many more of all sizes and shapes.

This is an average of more than 9,000 a year, with the prospect that this year, the figure will reach 11,000.

But even this is not the whole picture. There were some men killed in line of duty and some were injured, thereby increasing the cost to the Government of enforcement of this $10.50 tax.

Nothing is changing the drinking habits of this Nation faster than this $10.50 tax. I believe most of us know that the public is fast drawing the line on how much it will accept in the form of taxation whether it be income, movie admissions, liquor, entertainment in general or any other excise taxes. It still will be months before relief can be had by those who purchase licensed beverages. As matters stand, it appears that the only thing necessary in this regard is to take no action which would prolong the $10.50 tax. I am not too sure that a return even to the $9 level would bring the indicated relief now that the public has begun to form new habits and now that the bootlegger and moonshiner are enjoying prosperity at the expense of everyone. It may well be that $6 a gallon will be the correct solution to rehabilitate this industry and to encourage the creation and maintenance of jobs in the industry. The latter of course is one of their prime interests.

There may be other taxed articles in commerce which cost the consumer considerably more in taxes than the true price of the commodity, but the licensed beverages that the men and women engaged in supplying the legal trade in this respect appear to be getting just about as rough treatment as it is possible to hand them. This is why we are here now to protest what we must describe as a punitive tax. If Congress did not see this far ahead, perhaps even now it is not too late to try to repair some of the damage and attempt to rehabilitate this industry. Reference is made from time to time to "sick industries." This is one for fair.

STATEMENT BY DISTILLERY, RECTIFYING AND WINE WORKERS' INTERNATIONAL UNION OF AMERICA, BALTIMORE, MD.

Gentlemen, my name is Sylvester Calabro of Baltimore, Md. I represent Joseph O'Neil, president of the Distillery, Rectifying and Wine Workers' International Union, American Federation of Labor, representing more than 90 percent of the workers in the distilling industry. We, the workers in this industry, are very much interested in having excise taxes on liquor reduced since due to curtailment in sales, many workers have been laid off and others have been working part time.

In the Maryland district, a number of plants have been shut down and for 2 years haven't operated. To mention a few, Frank Wight, Park & Tilford, James Finch Cedarhurst, National Distiller, No. 1 plant, United, etc. The same story can be told of other sections. This situation has also had its effect on sister

industries, cooperage, glass, labels, cartons, and other materials used by the distillers. It has also resulted in less income tax paid to the Government by these workers whose incomes have been curtailed.

It is not within my province to try and present any data or statistics; others more qualified will do that, but the workers' conception of taxes is that the higher they are, the less sales, and the less sales, the lower income to them and also to the Government.

Gentlemen, if you, and through you, Congress, can see its way to reduce the excise tax on liquor, and if the reduction is passed on to the consumer, then in the opinion of the workers I represent, there will not be as much financial incentive for the bootlegger to keep on in business. The bootlegger exists because of the high taxes which the legitimate distiller has to pay and that he does not. The bootlegger works hand in hand with some tavern owners who have no respect for the law; no one knows how many of these there are. When you consider how many dispensers of liquor are over the Nation and how many inspectors would be required to properly inspect these places, it can easily be seen that the job would be tremendously expensive to be done properly. If the bootlegger has to be put out of business, he not only must be hit at the source but also at the distribution point.

Yesterday, in the Baltimore Sun, this item appeared: "Truck Weigher Finds 585 Gallons of Whisky." Then it goes on to state how a routine inspection of a truck at a weighing station near Woodbridge, Va., turned up 585 gallons of corn whisky in half-gallon cans. The truck was coming from North Carolina. The question is, "Where was it being taken to?"

Here was a loss to the Government of over $6,000 in taxes. This liquor, if it would have reached its destination, would have meant that much less legitimate whisky would have been sold, affecting the income of the Government, workers in the liquor industry, and also sister industries.

We, the Distillery, Rectifying, and Wine Workers' International Union of America, A. F. of L., and its workers, plead with you to study the existing situation and reduce the tax to a just level.

The CHAIRMAN. The committee will stand adjourned.
(The following material was submitted for the record:)

UNITED PAPERWORKERS OF AMERICA,
Washington 5, D. C., August 11, 1953.

Reference: Taxes on alcoholic beverages.

HOUSE OF REPRESENTATIVES,

Ways and Means Committee,

Washington, D. C.

GENTLEMEN: The United, Paperworkers of America, CIO, represents some 50,000 workers in the paper, paperboard, and paper-converting industry of the United States. Our organization discovered long ago that the interests of these members are directly affected by conditions and employment in correlated industries. For this reason we have developed a program of mutual interest and cooperation with other organizations and industries because of these interrelated problems. Our concern with the alcoholic beverage industry is an outstanding example.

The products of many paper companies manufactured by thousands of paper workers are consumed by the beverage industry. Many tons of paper and paperboard converted into labels, display cartons, bottle and can carriers, corrugated cartons, fiber cases, and packing are used by the legitimate beverage industry every day. Statistics are no doubt available on the extent of this annual consumption of paper products but we believe it sufficient to say that it is a significant factor in employment, wages, and profits of the American paper industry.

For these reasons we join with other interested parties in requesting consideration of the tax problem of the alcoholic beverage industry and the workers of that industry and the paper industry who are thereby affected. Prohibitive taxes which encourage consumption of illegally produced alcoholic beverages will in the long run benefit no one in legitimate industry. Bootleggers use no labels, cartons, cases, or other products of the paper industry or its related industries, nor are their products produced under wages and conditions tending to support the American standard of living as established in legal industry. Briefly, and in conclusion, we request that the committee give careful consideration to the impact of excessive alcoholic beverage taxes on the prosperity

of the paper industry and other industries directly related to the beverage industry as well as to the welfare of the thousands of workers also directly affected by this question.

On behalf of the

UNITED PAPERWORKERS OF AMERICA, CIO,
HARRY D. SAYRE, President.

Hon. DANIEL A. REED,

ARIZONA RETAIL LIQUOR DEALERS ASSOCIATION, INC.,

Phoenix, Ariz., March 14, 1953.

Chairman, House Ways and Means Committee,

House Office Building, Washington, D. C.

DEAR CONGRESSMAN REED: Realizing that a good portion of your time is taken up in reading and answering the huge mass of correspondence you receive each day, the undersigned is appreciative of this fact, having just completed four terms in the Arizona State Legislature, therefore, I will state my case as briefly as possible but beg your indulgence and thoughtful consideration of the contents hereof.

Unfortunately Arizona does not have a representative on the House Ways and Means Committee who could more adequately present these facts to you, so the enclosed copy of a resolution passed at our annual convention last year, which seems apropo at this time, is being sent along with this letter to each member of the committee.

Today I join millions of Americans who feel that the Federal excise tax on distiller spirits is exorbitant and unrealistic. This tax has reached a detrimental level to all concerned; it failed, according to revenue figures, to produce more revenue for the Federal Government although it was raised to $10.50 per gallon on November 1, 1951.

According to the above-mentioned revenue figures for 1952, the Fderal Government gained $30 million as a result of the last $1.50 per gallon tax increase, while losing approximately $50 million in other revenues from the liquor industry, as a result in the loss of consumption of legal liquor. State governments lost another $33 million for the same reason. And even so, this is not the whole story, because there are more than 400 other industries which supply goods and services to the alcoholic beverage industry, which paid lower taxes as a result of the loss in legal sales. It is easy to see that this tax has reached a point of diminishing returns.

There is another dangerous condition arising as a result of this exorbitant tax, and that is the skyrocketing of moonshining and bootlegging. This trend toward the return of the evils of prohibition is alarming and dangerous. If Congress permits this tax to remain as it is today, so high that the bootlegger operates at an advantage, and that the legal manufacturer, distributor, and retailer must try to compete with him with a $10.50 plus State taxes per gallon handicap, then our entire social structure will change, and we will again be enduring the evils of prohibition. Moonshining today is big business. The 20,400 stills seized in 1951 had a producing capacity of 715,000 gallons per day. If these stills operated at full capacity for 1 day, the Federal Government would lose $7.5 million, not to mention how much the States would lose. These huge stills would not have been constructed unless there was a market for their products; the market for this moonshine is created by the consumer of alcoholic beverages who can no longer pay the price of legal liquor.

Today when a consumer purchases a bottle of legal liquor for $4.27, he is paying $2.38 in taxes and $1.89 for the product. It is amazing that 90 percent of the increase in the price of legal liquor since 1939 has been taxes. Taxes on distilled spirits have not increased 200 or 300 percent since repeal, but have increased 854 percent. If the taxes on any other industry had been increased this much you would have destroyed that industry, and I predict that you will destroy the legal liquor industry and drive its consumer to the bootlegger if you retain the present tax on distilled spirits.

Alcoholic beverages are the largest industrial source of revenue to the Federal Government, but when a tax gets so high that it brings about crime and lawlessness-when it gets so high that it defeats its own purpose by bringing down revenues instead of pushing them up when it gets so high that it threatens to kill the goose that is laying the golden egg-then it has gotten out of hand, and has defeated the economic and social objectives of repeal.

Arizona, while a product of the old West, is considered to have a model and extremely effective liquor code, very ably enforced by our State department of liquor licenses and control, and a system of industry self-policing through the guidance of our organization which officially represents the 2,200 legal retail establishments in the State.

I sincerely hope that you will see fit to lend your support to a reduction in the Federal excise tax in the interest of good government and a continuation of our society as we enjoy it-minus the moonshiner and bootlegger.

Sincerely yours,

AL. LINDSEY, Executive Secretary.

ARIZONA RETAII. LIQUOR DEALERS ASSOCIATION, INC., FIFTEENTH ANNUAL CONVENTION, KINGMAN, ARK., OCTOBER 7, 8, AND 9, 1952

RESOLUTION

Whereas excessive taxes in general tend to weaken and undermine the economy of this Nation and impair its ability to meet the economic demands which this country would be called upon to meet in the event that it should ever be forced into an all-out war; and

Whereas excessive taxes on distilled spirits specifically are contrary to the public welfare in stimulating the growth of moonshining and bootlegging, producing less revenue for the Federal Government by diverting sales to illegal and untaxpaid production, thereby also depriving the individual States of revenue which would otherwise be derived from the sale of legally produced and taxpaid distilled spirits; and

Whereas excessive taxes on distilled spirits are negating the purposes and social gains of repeal, and are once again threatening the various systems of legal control of manufacture, distribution, and sales; and

Whereas the diversion of sales to illegal and untaxpaid moonshine is a serious threat to the capital investments and livelihood of thousands of small-business men, licensed to distribute legal, taxpaid alcoholic beverages: Now, therefore, be it

Resolved, That the members of the Arizona Retail Liquor Dealers Association, Inc., in convention at Kingman, Ariz., on October 9, hereby request that Congress reduce the demonstrably excessive excise taxes on distilled spirits to a $6 per proof gallon rate, and also authorize the employment of additional agents to combat the increasing menace of illegal manufacture; and it is further

Resolved, That the Secretary is authorized and directed to send a copy of this resolution to each incumbent in the United States Senate and House of Representatives from this State, and to the candidates who are running for such office.

Passed unanimously, October 9, 1952.

ARIZONA RETAIL LIQUOR DEALERS ASSOCIATION, INC.,

FRANCIS AMES, President.

GORDON EVANS, Chairman,
FRANK B. ALVIDREZ,

WILLIAM B. STEPHENS,
W. H. CLEMENTS,

AL. LINDSEY,

Resolutions Committee.

Hon. DANIEL A. REED,

Chairman, Ways and Means Committee,

REPEAL ASSOCIATES, INC., Washington 6, D. C., July 28, 1953.

House of Representatives, Washington, D. C.

SIR: This letter is addressed to you in my capacity as president of Repeal Associates, Inc., a nationwide membership organization of citizens who are interested in furthering proper control of the sale and use of alcoholic beverages, and who are opposed to prohibition.

Although I can speak officially for only those who are members of this organization, I feel that a very great many of the millions of citizens who use beverages containing alcohol, as well as many who do not drink such beverages at all, would endorse the representations which I shall make herein. I invite your consideration of these points:

1. The present excise-tax rates on alcoholic beverages are not normal ones. They are wartime levies. Prior to World War II the tax rates were $4 per gallon on distilled spirits, and $6 per barrel on beer.

2. After the entry of the United States into World War II, the tax rates were increased to $6 per gallon on distilled spirits, and $7 per barrel on beer; these increases effective November 1, 1942. This was the first wartime increase. 3. On April 1, 1944, the second wartime increase became effective. This made the tax rate on distilled spirits $9 per gallon, and on beer $8 per barrel. Written into the Revenue Act of 1943 which made these increases was the stipulation that the tax increases therein imposed were to come to an end 6 months after the end of the war. That did not happen.

4. The latest tax increases might be termed wartime levies also. These became effective November 1, 1951, and made the tax on distilled spirits $10.50 per gallon, and on beer $9 per barrel.

5. One consequence of the high tax rates existing at present is that there has been a very considerable increase in the amount of illicit distilling.

Records of still seizures by the ATTU and the liquor-control administrations of the various States provide ample evidence of this fact.

6. Citizens and public officials alike are disturbed by the constantly increasing volume of illegal liquor manufacture and sale, as well as by the harmful and tragic results of the use of poisonous liquor by many who feel themselves unable to afford the higher price of legal liquor. These conditions are painfully reminiscent of those which maintained during the years of national prohibition, and many are coming to feel that now we have prohibition by taxation.

7. Many of the citizens who worked to bring about the repeal of the national prohibition amendment, and who voted for its repeal when the opportunity came, did so largely because they were disturbed and distressed by the growth of a large lawless and criminal element which was amassing such wealth and becoming so deeply entrenched as to constitute a grave danger to our national welfare and safety. Corruption became widespread, and contempt for all laws followed as a consequence of contempt for the prohibition laws.

8. These same citizens, as well as many others, see with grave apprehension the growing illicit-liquor business throughout our land, stimulated into being and fostered into a position of power by the very great profits realizable from the illicit-liquor trade.

9. Citizens who looked to the Congress for relief from the corruption, crime, and defiance of law by the murderous criminal organizations which flourished all over the country upon the enormous profits made in the bootleg liquor traffic during the years the prohibition amendment was in force, and who were answered by the Congress through referral of the repeal amendment, are now looking to the present Congress for relief from conditions existing and threatening in consequence of the large profits once again possible because of the high taxes imposed upon alcoholic beverages.

10. Speaking for the citizens who are members of Repeal Associates, and voicing a request which I feel assured would be endorsed by countless thousands of citizens all over the country who are interested in having a legal, controled alcoholic-beverage industry, it is respectfully requested that your committee approve the reduction of the excise-tax rates on beverages containing alcohol to the rates which existed prior to the increases which became effective on April 1, 1944.

When a great majority of the American voters at the polls expressed their wishes for repeal of national prohibition, in order to put an end to the great volume of illegal traffic in alcoholic beverages carried on by powerfully entrenched criminal gangs, and to establish instead legal and orderly control of the liquor industry, the responsibility for such control was placed, by the repeal amendment, directly with the State and local authorities. Any action by the Federal Government which increases the difficulties of State and local control, as high Federal excise taxes unquestionably do, tends to prevent the fulfillment of the wishes of the people as they have indicated those wishes by their votes. One other general fact I would call to your attention. That is that every penny collected as a tax on alcoholic beverages is paid by the consumers. In the past, when increases in these taxes were under consideration, some Members of Congress who favored the proposed increases stated that the tax collections would not come from the pockets of the average citizens-the consumersbut from the distillers and the brewers. There is not shred of justification for such a point of view.

Sincerely yours,

C. L. CHAPIN, President.