To show how this operates, take the fish pond that gives out merchandise. We are not talking about slot machines that return any money. It gives out merchandise and let us say a doll or a toy panda or a blanket.

Actually that item will retail in that locality for $2. The concession operator because he will buy 100 or maybe 300 gross of those during the season, he will buy them like any jobber would, and buy them for $1. I am just giving comparative figures. When somebody plays that game for 10 cents, they get something that retails for $2 and it costs the concession man $1.

There is a profit or a spread which we say is a merchandising profit, and in every case where the State has a sales tax we have to pay the sales tax on the exact number of dolls and blankets that have been given out during the week at the fair.

We are charged that sales tax. That is because that is a sale. Out of that extra dollar the American Legion and the fair board and the police force get their share. The carnival owner who transports this around for 30 weeks through mud, snow, and ice and it is no easy job, and I will say that any so-called syndicate man wouldn't stand that gaff for 30 weeks-he might put in a machine and let it run, but he wouldn't push it around for the season. He gets a share of that.

The concession operator also gets what profit he has, and if he has a bad rainy week, he makes nothing. He does get a profit. Usually it is himself and his wife that are operating this. They go along for 30 weeks and if they make $100 a week for those 30 weeks they are making very good money. They pay income tax on the amount of money that they make. So I want to pont that out, it is no $2,000,000,000 syndicate sitting back collecting money and getting in shovelsful. It is hard honest work.

Mr. DOLLIVER. May I make an inquiry at this point?

Were you here the other day when the representative of the Federal Trade Commission testified about the unfair trade practices with respect to merchandise that is sold?

Mr. BYE. I was not.

Mr. DOLLIVER. I wonder if your industry has ever fallen afoul of the regulations of the Federal Trade Commission with respect to the uses of such things as punchboards or so on?

Mr. BYE. We do not operate punchboards.

Mr. DOLLIVER. Have your various industries which you represent ever had any run-in with the Federal Trade Commission?

Mr. BYE. Never to my knowledge or to the knowledge of my clients, they have never been approached on the subject.

Mr. DOLLIVER. There was a basis for unfair trade practice and I am not talking about a criminal prosecution.

Mr. BYE. There never has been any such thing.

Mr. DOLLIVER. That is all, thank you.

Mr. BYE. In that kind of an operation, the 10 cents that the public pays for the amusement is split as I have explained so many ways between the fair board and the Legion and the operator that there isn't any money left there to influence legislation that we understand was one of the reasons for this so-called slot machine law.

We would like to confine this to slot machines, but since I have been at these hearings we have covered toy machines that Santa Claus

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brought to the children and I think every communication I have received from the committee has called it a slot-machine law.

If you would say "slot-machine law" we would have no objection, and 100,000,000 people would be able to patronize these fairs.

Of these concession operators who do the actual work, more than 50 percent of them are veterans. There is a logical reason for that and incidentally there are over 50,000 of these men so employed each year. Over 50 percent are veterans and there is a logical reason. Prior to the war they all work outdoors, and they are healthy and they were in nonessential industry and they were drafted. They have come back now and they want to continue to operate their profession.

Mr. HARRIS. Mr. Chairman, I don't like to interrupt but that is a roll call and we will have to go. I wonder if Mr. Bye could have permission to include his statement.

Mr. BECKWORTH. That has already been done.

Mr. HARRIS. And ask that he file any additional statement that he would like in connection with his own statement and permit three or four questions before we adjourn.

Mr. BECKWORTH. I think that that would be good procedure.

Mr. BYE. If I might just close, all I had were a few telegrams here. Incidentally, the fact was published in the Billboard magazine, which is the outdoor show magazine, that I was going to attend this meeting.

I have here close to 100 telegrams from people I don't know, so I certainly do not solicit them, that came to the Mayflower Hotel, and if you may just bear with me a minute.

Mr. BECKWORTH. You expect to leave those communications, including the letters of course, with the clerk so that the committee may have them available to examine.

Mr. BYE. May I read a few of the wires?

Mr. HARRIS. We are not going to be able to ask any questions if that is permitted.

Mr. BYE. I would be glad to come back tomorrow morning.

Mr. BECKWORTH. You may read one or two of the wires and I think we still would have a chance to ask a question or two.

Mr. BYE. It is just a summing up. One of them reads:

This is my only

I wish to send you my strongest objection to Senate bill. income and the income of many others who work with me and it would certainly place us in a terrible situation if this bill is passed.

That is from Atlanta, Ga., William Meyers.

Business now looks like a felony to transport concessions which during the war was upheld and lauded as a moral uplift. Please fight the bill. During the war show people were praised highly for their work and now they are about to be felons. Fight 3557. Disabled ex-soldiers. Do not draw pensions.

you.

Mr. BECKWORTH. That is three of them and now Mr. Harris wants to ask you a question or two. I am not sure we can accommodate Mr. BYE. May I place these particular telegrams in the record? Mr. BECKWORTH. Without objection, they may be placed in the record if they are not too lengthy. We may desire to examine them, but I would think in the main we can place most of them in the record.

The reason it is necessary to ask a question or two is, it may not be possible for you to appear again tomorrow from the standpoint of the time of the committee.

Mr. HARRIS. I do not want to restrain the witness from making any statement, and so I would prefer, if he prefers, to go ahead.

Mr. BECKWORTH. You may proceed now if you desire.

Mr. HARRIS. What I wanted to point out, I assume that you are quite familiar with the operation of State fairs where these concessions are given and various activities where the people go for amusement purposes as well as for educational and other reasons.

Mr. BYE. Yes, sir.

Mr. HARRIS. Now, you take a State fair, for instance. Generally that is supported by appropriations by the State legislature.

Mr. BYE. Yes, sir.

Mr. HARRIS. However, is it recognized that it is necessary to have additional funds in order to make that fair a success?

Mr. BYE. Yes, sir; and I might answer that in the State of Illinois, where I come from, it was either last year or the year before they had a deficit of over $60,000, and the particular carnival that had the midway at that fair turned in over $50,000 to the fair, but it still had a deficit of $60,000.

Mr. HARRIS. Where does the fair get the additional income generally to take care of the expenses in the operation?

Mr. BYE. The biggest source of revenue is from the midway, the carnival, that is the largest source. There is the sale of exhibit space, and I am talking about the largest individual source. There is the sale of exhibit space to the various exhibitors, and they charge so much per front foot or so much per square foot, and that revenue is turned in.

The local restaurant man will be allowed to put an eating concéssion in and he is charged so much, and that goes into the fund.

Mr. HARRIS. In other words, a substantial part of this additional fund comes from concessions of various kinds.

Mr. BYE. That is correct.

Mr. HARRIS. And the largest revenue then derived comes from such as carnival concessions and so on?

Mr. BYE. Concessions, rides, and shows.

Mr. HARRIS. What about the gate receipts?

Mr. BYE. That is another source that goes into the fund for the operation of the fair.

Mr. HARRIS. Is that usually substantial or not?

Mr. BYE. Yes; it is; I forgot that.

Mr. HARRIS. Would you say that that was the most substantia) revenue?

Mr. BYE. At fairs that charge admission, yes; there are quite a few fairs that do not charge any admission, and some they charge what admission they can and then they give out hundreds of thousands of free tickets.

Mr. HARRIS. In my own State of Arkansas, we have the State fair every year, and like in your State and other States, it has become the most outstanding event for the promotion of livestock and the livestock program.

Now, 1,000 people go through the gate every day during the week or 10 days of that fair. What would be your estimate, if you are able to give it, of the decline in revenue or the number of people that attend the State fair and livestock show if the concessions and carnivals and so forth were not permitted to operate there?

Mr. BYE. I would have to answer that as being a guess; I don't know there would be any way of substantiating it, except for this, that I have talked with fair managers of different State fairs and county fairs, and they feel that there probably would be a 20- to 25-percent reduction. They have found that there are approximately that many people who come for the amusement end of it.

Now, it is true they go through the exhibits at the same time and hundreds of those that go to the exhibits never set foot on the midway, but they do feel that a figure of that kind would be a fair estimate which I acknowledged is a guess.

Mr. HARRIS. Is it generally recognized throughout the country that by these carnivals and all of those things that go with it, with all of the flare and dramatics and entertainment and amusement they have there, that that does attract people to that show which if they attend, most people will get something out of it by going through the exhibits.

Mr. BYE. It surely does. I might add as far as the fairs are concerned, the carnival and the midway bring entertainment and amusement to people who attend that fair, that is probably their only chance of such kind of amusement.

Mr. HARRIS. And if this definition as it is proposed here is allowed to stand, then it would be your belief as a lawyer it could very well prevent such operations, and consequently would have a very great deterrent effect on the livestock shows throughout the Nation.

Mr. BYE. It would have a financial effect, and I would not say as to the exhibit. They could still exhibit but it would have a very bad effect on the financial outcome of the fairs.

Mr. HARRIS. To have a successful livestock show they have got to give premiums for the best type of stock and that runs up into the thousands and thousands of dollars.

Mr. BYE. It would seriously affect that.

Mr. HARRIS. If they don't have the revenue from some source or another to pay for that, it couldn't be, could it?

Mr. BYE. No.

Mr. HARRIS. And then that effect would be that the man who has a herd of white faced cattle wouldn't be so interested in getting them ready for such a wonderful exhibit that he hopes that all of the people will be able to come and see.

Mr. BYE. Absolutely.

Mr. HARRIS. Do you have any suggestions with reference to amendatory language?

Mr. BYE. Yes, I have covered that in my statement and it is very simple. Of course as far as we are concerned, we are not slot machine people.

Mr. BECKWORTH. Mr. Bye, in that connection was reference to what Mr. Harris has just said, have you actually prepared an amendment that you feel would appropriately exempt this group of people you

have in mind?

Mr. BYE. Yes, and it is contained on page 8 and 9 of the statement. Simply it is this: To use the identical wording of the second portion of the description in the revenue act, and then to add to that what the Department put in their analysis of the Senate bill which I recite and quote verbatim. They felt that the word "the element of chance," in that definition might let in some other kind of machines, slot

machines and they said it should be "any," and so my suggestion is to use that wording, and substitute "any" for "the," and that would do it, and also add "or any parts thereof," if they would want that.

Mr. BECKWORTH. I think in view of the very interesting discussion you have given it might be well to place the amendment you have in mind at the beginning of your statement so that those who don't have a chance to read all of that definitely if they desire to refer to your statement could find it with ease.

Mr. BYE. May I have permission to file a supplement?

Mr. BECKWORTH. I know the committee will be interested in this problem, it is obvious that the interest is very general about what Mr. Harris has said here. That is true all over the country with reference to our fairs and carnivals.

Mr. BYE. Gentlemen, there are 100,000,000 people in the course of the year that go to these things.

Mr. HARRIS. I would like Mr. Bye to file such an amendment as proposed for consideration, because I notice here in his statement he merely gives an analysis of the provisions of the bill, in section 1. That takes in, I believe, language that would be unnecessary.

Mr. BYE. Í did that with malice aforethought. We are not in any way connected with the slot-machine business and I thought it might be presumptuous on my part to attempt to tell the committee how or what bill to write that would govern the slot-machine business.

Mr. HARRIS. The committee is not trying to embarrass you or anyone else and I think that you have a perfect right to submit any language in the way of a proposal.

Mr. BYE. I will be very glad to do so.

Mr. BECKWORTH. And make it as specific as you can as to where you would place the amendment to take care of your specific problem. Mr. BYE. Will I have a little time on that?

Mr. BECKWORTH. It should be done relatively soon, as soon as you can. The committee does appreciate what you have told them. Mr. BYE. I am sorry, that the time ran out and I certainly appreciate your hearing me thus far.

Mr. BECKWORTH. And as soon as you can prepare that language, do so.

Mr. BYE. I will have it over today.

(The following matter was later submitted by Mr. Bye :)

DIGEST OF SOME OF THE APPROXIMATELY 100 TELEGRAMS AND LETTERS RECEIVED BY HERBERT W. BYE, ATTORNEY FOR CLIENTS ENGAGED IN THE OUTDOOR SHOW BUSINESS, REQUESTING HIM TO VOICE THEIR OBJECTIONS TO THE PASSAGE OF SENATE BILL 3357 AND H. R. 6736, AS WRITTEN

W. T. Broxton, Montgomery, Ala.

Disastrous blow at free enterprise. Loss of revenue to fairs and fraternal organizations.

Eddie Moran, Southern Valley Shows, Pine Bluff, Ark.

Twenty-four semitrailer and truck units playing 18 county fairs put out of business-500 people unemployed.

Pat Bales, Searcy, Ark.

Unfair to labor.

Harry W. Hennies, Hot Springs, Ark.

Ruinous to outdoor business.

trous to State and county fairs.

Should apply only to slot machines. Disas