Mr. HESELTON. Five percent of what, did you say? Mr. HESELTON. Five percent of 1,700 might be affected? Mr. HESELTON. Now wait a minute. You can say whatever you want to after I am through. Is it not a fact that what you might call the legitimate slot machines, those things that vend Coco-Cola and coffee and numerous other food articles, packages, clothing, perhaps, or merchandise, are on the increase? Mr. JONES. I believe so. Mr. HESELTON. Is that not a vigorous business? Mr. HESELTON. Have you given any attention to the possibility that your company might be just as well off or perhaps better off if it were devoting itself to exploring the possibility of going into that kind of business, rather than insisting on remaining in this type of business? Mr. JONES. We have made a coin-operated beverage vendor. We recently sold the business, primarily because there were too many parts involved that we could not manufacture, such as the large sheetmetal cabinet; so that it was not a profitable operation, because of the number of parts we were required to purchase from outside suppliers. Mr. HESELTON. It is a profitable operation for any other manufacturer, is it not? Mr. JONES. Yes, sir. Mr. HESELTON. And it could be on your part if you chose to go into that field, could it not? Mr. JONES. Yes; we could enter that field. Mr. HESELTON. Do you not think that is much more worth while than it is to insist that you have to participate in this activity that so many States of the Union have frowned upon? Mr. JONES. We are not insisting, sir. We are simply presenting our reasons for our position. Mr. HESELTON. As a matter of fact, this gloomy picture that you portrayed here of how these good people, and I am not reflecting upon them or upon you, might be thrown out of their work is just so much nonsense, is it not? You would not permit your business to go to the wall if this bill became law. You would turn yourself to other legitimate types of slot-machine manufacture and keep these people in employment. Mr. JONES. I do not know what we assuredly could. And I wanted to mention in that connection that all of our employees are affected to the extent that the interpretation of this law and the vagueness and broadness of the language might well affect all of the products manufactured, including the bowling games. Mr. HESELTON. Confine yourself to the bill introduced by Mr. Preston, which certainly is not vague. If that became law, do you think your company would go out of existence? Mr. JONES. Not necessarily. Mr. HESELTON. The language is: That whoever shall knowingly transport or cause to be transported in interstate and foreign commerce any machine, apparatus, mechanical device, or any parts thereof, designed or adapted for the playing of any game of chance for money or other thing of value * * * Do you think that would throw you out of business? Mr. JONES. Not necessarily. Mr. HESELTON. You really do not believe there is any danger at all, do you? Mr. JONES. I was speaking in particular of S. 3357, sir. Mr. HESELTON. All right. But addressing yourself to the other bill, you do not have any worry about your continued profitable existence as a manufacturer in this field, do you? Mr. JONES. I think we have some worry. Mr. HESELTON. Very slight; is that right? Mr. JONES. Perhaps slight. I wouldn't be able to measure it at this time. Mr. HESELTON. That is all. Mr. SULLIVAN. One or two more questions, Mr. Chairman. You are here representing the American Coin Machine Manufacturers Association? Mr. JONES. Do you represent anybody else here? Mr. JONES. No, sir, not at this hearing. I have been asked questions pertaining to the company that I work for, but I am appearing here, and so stated in my request to appear here, for the American Coin Machine Manufacturers Association. Mr. SULLIVAN. There is no one else you are representing that you have not told us about? Mr. JONES. That is correct. Mr. SULLIVAN. That is all, Mr. Chairman. Mr. BECKWORTH. I was interested this morning in your stating that the amount of business your association does is far greater than the other association or institute which has been mentioned. Could you give us a comparison in dollars, for example, as to the amount your association's members do as compared to the others? Mr. JONES. No; I could not. I don't know the sales of our members. We have never compiled statistics, and I certainly do not know the sales of the members of the other association. Mr. BECKWORTH. Would it be a fact you do not want to divulge if I asked you how much the annual sales of your company are? Mr. JONES. No, sir. Approximately $10,000,000, on all products. Mr. BECKWORTH. And your company, of course, is one of the largest of these? Mr. JONES. Yes, sir. Mr. BECKWORTH. One other question. Do any of these companies you have listed manufacture only what is known as the slot machine, or one-armed bandit? Mr. JONES. No, sir; I don't believe any of the companies manufacture solely that equipment. Mr. BECKWORTH. This additional question: Do any of these companies have such a relationship with their dealers that it enables them to get a percentage of what a machine makes over a period of years? Mr. JONES. No, sir; they do not. Their machines are sold by the manufacturer and sold outright. Mr. BECKWORTH. One of your console machines sells for $250. What would you estimate the amount of profit there is for your company in that $250? Mr. JONES. The console machines are more expensive; the $250 that I was speaking of referred to slot machines. I might say that I cannot state what our margin of profit is. Mr. BECKWORTH. On console machines? Mr. JONES. On any of the equipment. I am not familiar with that phase. I believe, generally, it is a normal manufacturing profit. Mr. BECKWORTH. Would you say generally the profit on what we term the genuine gambling machines is higher percentagewise than on the pinball machines? Mr. JONES. The profit to the manufacturer? Mr. BECKWORTH. Yes. Mr. JONES. No, sir; I would say that it is approximately the same. Mr. BECKWORTH. Mr. Bennett? Mr. BENNETT. Just one other question in that connection. You stated to Mr. Heselton, I believe, that 5 percent of your employees are engaged in working on gambling devices, that is, the slot-machine part of your business. Mr. JONES. Yes, sir. I thought that from the percentage of our sales. I was speaking then only of the company that I work for. Mr. BENNETT. Could you give us an idea of the approximately percentage of the total volume of your business that the slot machine takes? Mr. JONES. The company that I am with? Mr. BENNETT. Yes. You said 5 percent of your employees. Mr. JONES. That was the basis that I figured; 5 percent of the employees. I would say it is about 5 percent of the sales. Mr. BENNETT. A very, very small part of your whole business, is it not? Mr. JONES. Of my particular company, yes, sir. Mr. BECKWORTH. Thank you, Mr. Jones. Mr. JONES. Thank you. Mr. BECKWORTH. The next witness we have is Mr. Raymond H. Schultz, attorney for Mills Industries, Inc. Mr. Schultz, we have no disposition to rush you. However, we do have several other witnesses, and because this is the last scheduled day we would like for you to be as brief as you can, considering what you want to say. STATEMENT OF RAYMOND H. SCHULTZ, ATTORNEY, ON BEHALF OF MILLS INDUSTRIES, INC., CHICAGO, ILL. Mr. SCHULTZ. Mr. Chairman and members of the committee, in order to do that, I will stay very close to my text. I think I will come well within my allotted time, and I welcome any questions that you may wish to ask. The other time will be taken in the asking and the answering of any questions you gentlemen may have. I can stay here from now on. Mr. BECKWORTH. You may proceed. Mr. SCHULTZ. My name is Raymond H. Schultz. I reside at 5555 Sheridan Road, Chicago, Ill. I ask your indulgence in appearing before you, because of the illness of Mr. A. E. Tregenza, the executive vice president of Mills Industries of Chicago, Ill., who so desired to make his personal plea to you. I might say to you gentlemen that Mr. Tregenca was with us until last Friday night, but he is now in the Henrotin Hospital in Chicago, and that is the reason he is not appearing personally. I am an attorney with offices in Chicago and a member of the law firm of Schultz, Krinsley, Voorheis & Hedberg. From 1942 until the end of 1947 my firm did special legal work for Mills Industries principally in matters of Federal taxation. In connection with a petition filed by the company in December 1947 for a plan of arrangement pursuant to chapter XI of the Bankruptcy Act, my firm was appointed by the United States District Court for the Northern District of Illinois as one of the counsel for the debtor in possession. Since the confirmation of the plan of arrangement on October 3, 1949, my firm has acted as general counsel for the company. And that word "general" means exactly what it says: that Mills Industries has a legal department, and when it has specialized matters it sends them to our office. You will see the importance of that when I give you the products that are made by Mills Industries. Mr. A. E. Tregenza, who desired to appear before you but is prevented by that unfortunate illness, was appointed by the United States district court on April 8, 1948, to assume the active management of Mills Industries, and he was shortly thereafter elected to his present position as its executive vice president. The employment of Mr. Tregenza was the result of his approval for the position by the banks and other creditors of Mills Industries. The plan of arrangement now in effect specifically provides for his retention in the management. Mills Industries has been in business in Chicago for more than 50 years and prior to 1947 had an uninterrupted history of successful operation. It now manufactures vending machines for such drinks as Coca-Cola, Pepsi-Cola and orange juice. It also manufactures commercial ice cream freezers and hardening cabinets, condensers for various types of cooling apparatus, ice-making machines, vending machines for candy, gum, and other merchandise and various types of slot machines. In prior years it manufactured coin-operated music and moving-picture machines and the sono vision machine used so extensively by the armed forces for the amusement and education of hospitalized service men. At the height of production, it has employed more than 2,700 men and women. It presently has in excess of 1,200 employees, many of whom own their own homes or rent them in the immediate vicinity of the factory. All of the products or facilities of the plant were turned to the production of war materials immediately upon the entry of our country into World War II. And I might say that it was that company that developed the method of putting the band on the 40-millimeter shell, for directing purposes, which cut the time of production by 50 percent and greatly reduced the amount of material used. The man who did that work received the Diamond Medal for it. After the end of the war the company reconverted to civilian production and found in 1947 that increased cost of producing its products required substantial changes in its production. The excessive costs and excessive inventories exhausted its cash resources and it was required to seek the aid of the Federal court for a plan of arrangement under chapter XI of the Bankruptcy Act. And may I say that the Federal court was fully cognizant of every article we made. Although its unsecured indebtedness was in excess of $3,000,000, its creditors approved a plan of arrangement whereby they received 20 percent of their respective claims in cash, and notes for the remaining 80 percent payable over a period of 4 years. The first of such notes will be due on August 15, 1950. In order that the company meet this first obligation, it is essential that it continue to manufacture the products presently being produced. I have gone into the history of the company in order that you may know fully the importance of this matter to Mills Industries. Further, I am anxious that there be no confusion as to the fact that I am appearing as a representative of a company which will be affected by the enactment of the legislation proposed in both Senate bill 3357 and House bill 6736. After following this matter during the hearings before your committee I wish that I might speak to you as just a plain ordinary citizen interested as much as any one of you in the better things for our country. This country has been more than wonderful to me in that it has afforded to me opportunity after opportunity for the attainment of all the good things every poor boy has longed for and set his heart upon. I have thought, at least until I have heard certain testimony here, that I have been an average good citizen. I volunteered and served in the First World War, have been intensely interested in the preservation of our form of government and have, I am sure, opposed not only false ideas fostered by foreign governments but have opposed any idea when once I have become convinced that opposition to it would actually mean a better country in which to live in peace and contentment. However, here is the other side of my record: (1) I have played slot machines which return money, from time to time but in my whole life have not used more than $75 for that purpose; purpose; (2) I have been to and bet on horse races probably 25 times in my life; (3) From time to time and often I have attended State fairs, county fairs, American Legion carnivals, volunteer firemen's carnivals, Elk and Moose carnivals and have used every sort of device from a common ticket on an automobile to a paddle wheel, to racing turtles for the purpose partially, at least, of getting some article of value by chance, but mostly for the purpose of helping to make the fair or carnival a success because I knew the purpose for which funds were being raised. Having at times won a Kewpie doll or a like item, I have wondered if I did get a thing of either artistic or any other value. (4) I have played pinball games many times where prizes were given and when they were not. In most instances I have had a side bet with some friends, maybe for as much as 10 cents. I might say that last week I watched eight men standing around such a table in the Shoreham Building right here in Washington doing the same thing; (5) I have at times used a punch board, a push card or a chance book in hope of winning an elusive $5 prize at church affairs; (6) I have played black jack, and shot craps both when in the Army and out of service; (7) I have played poker, bridge, and gin rummy in clubs, in my own home and in the homes of my friends. |