This is a demonstration that the people continue to use the boards because they want to use them. There is nothing to fool them. Everything is open and simple. The people are competent to make the simple decision whether or not they want to buy a bar of candy or some other article of merchandise by using the board or without using it. They have had over 40 years' experience with the boards and they are still using them. If their experience in the use of them were unsatisfactory to them, they would naturally stop using them.

The Commission's representative who made the statements also said:

It is my understanding from the investigations made by the Commission in connection with the Keppel case when that was being investigated, that practically every State, if not all of them, even Nevada, had some kind of antigambling provision either in some law or in their constitution; but I do not know that a majority of the States make it illegal to dispose of and distribute merchandise through the means of punchboards or pull tabs or other lottery devices in aid of local sale. I doubt whether most of the Sttaes have a law against it, or at least that it is being enforced as to that (Transcript, p. 174).

* * * It might be that they would have a law preventing money payments as the result of the use of punchboards or push cards and that would not be applicable to a punchboard that was used to draw trade and give the lucky person a set of dishes, or something like that.

Transcript, p. 174

If the use of punchboards in the various States were of serious concern to the people, this situation would not exist. If their use were really bad, or if the people's experience with them were unsatisfactory to them, they would demand specific legislation against them or that existing laws be enforced. Demand for boards would decrease and fewer would be shipped into the State. The boards go into the State only as fast as the people use them up.

II. Federal court decisions afford no basis for this legislation, and the Federal Trade Commission's assumption of jurisdiction over interstate shipment of boards as an unfair method of competition has not been passed upon by the Supreme Court

The Commissioner's representative cited Federal Trade Commission v. Keppel, (291 U. S. 304). That case did not deal with punchboards at all. The Keppel concern manufactured and shipped in interstate commerce receptacles containing pieces of candy, some of which had colored centers. The purchaser of a piece of candy with a colored center would have the right to a prize. That is known as the breakand-take method. The Keppel concern also supplied pieces of candy with wrappers around them. In those wrappers, concealed from view, were slips of paper stating the price of the piece of candy in the wrapper. The buyer did not know until he took off the wrapper what kind of a piece of candy he was getting or what price he would have to pay for it. The price might turn out to be 1 cent, or 2 cents, or 3 cents, or some other price. This was known as the pick-anddraw method. The candy consisted of penny goods, usually sold to children. Note that the element of chance was manufactured into some of the pieces and could be removed only by remaking them, and that the element of chance was wrapped into the other pieces and could be removed only by rewrapping them. That candy with the element of chance put into it in that way moved in interstate commerce. The retailer sold it in accordance with the chance method

manufactured into it as to some pieces and wrapped into it as to others. The Supreme Court decided that case against Keppel because the method exploited consumers. The Court said:

It is true that the statute does not authorize regulations which has no purpose other than that of relieving merchants from troublesome competition or of censoring the morals of businessmen, but here the competitive method is shown to exploit consumers

* * *

(FTC v. Keppel, 291 U. S. 304, 313.)

It should be noted that the exploiting factor was inherent in the goods, having been manufactured into them and having been wrapped into them and being inseparable from them except by remanufacturing or rewrapping. That is what moved in interstate commerce.

The Keppel decision follows Federal Trade Commission v. Winsted Hosiery Company, (258 U. S. 483), cited by the Court, wherein it appeared that the manufacturer had sold in interstate commerce misbranded and falsely labeled goods which served to deceive the buyers including the retailer's customers. In the Winsted case the exploiting factor was inherent in the goods when they moved in interstate commerce. In both cases there was an exploiting factor inherent in the goods whereby the consumers were exploited. It was on that that the decisions were based, and it was that which made the Winsted decision a precedent for the Keppel decision.

In the Keppel case the Supreme Court also said:

We do not intimate * * * that the Commission may prohibit every un ethical competitive practice regardless of its particular character or consequences. (FTC v. Keppel, 291, U. S. 304, 314).

The Supreme Court has not yet passed upon the question of the Commissioner's jurisdiction to prohibit the interstate shipment of a device alone which may be used locally to sell merchandise by means of lot or chance. That question was presented to the Circuit Court of Appeals for the Sixth Circuit in the case of Charles A. Brewer & Sons v. Federal Trade Commission (158 Fed. (2) 74) decided December 5, 1946, in which that court sustained an order of the Commission forbidding the interstate shipment of punchboards in which the sale of merchandise was not involved. It is understood that by the time the Commission issued its order, the Brewer company was practically out of business and no appeal was taken to the Supreme Court, so that the highest Court has not passed on the question of the Commission's jurisdiction to bar punchboards, as such, from interstate commerce. The Brewer decision discussed a number of other decisions of the several circuit courts of appeals and the conflict between the third circuit in the case of Scientific Manufacturing Co. v. Federal Trade Commission (124 Fed. (2) 640) and the seventh circuit court in Modernistic Candies, Inc. v. Federal Trade Commission (145 Fed. (2d) 454). In the Brewer case the circuit court of appeals referred to the decision of the Court of Appeals for the Second Circuit in Deer v. Federal Trade Commission (152 Fed. (2d) 65), in which that circuit affirmed an order of the Commission restraining the use of bingo paraphernalia.

It is fair to say that the decisions generally of both the Supreme Court and the other Federal courts are based primarily on the sale of merchandise through a method involving lot or chance, and it remains to be seen whether the Supreme Court will sustain the Com

mission in barring from interstate transportation a device susceptible of being used for the purpose of selling merchandise through lot or chance where the manufacturer of the device is not selling, nor interested in the sale of merchandise other than the board.

III. The Congress has consistently refused to enact any such law as that here proposed

The Congress has on numerous occasions determined that it should not enact any bill on the subject dealt with in S. 3357 and H. R. 6736, evidently feeling that it should leave the subject to the States and municipalities.

From May 1919 to January 1941, the Congress had before it many bills on the subject covered by S. 3357 and H. R. 6736. On one occasion one House passed such a bill, and on another occasion the other House passed one. Extended hearings were held on some of these bills. Most of them ended in the committees. They were as follows: Sixty-sixth Congress-S. 1541, Senator Sheppard. To bar gambling devices and lottery paraphernalia from the mails.

H. R. 1195, Representative Randall. To enable the Postmaster General to forbid payment of money orders in connection with exclusion from the mails of fraudulent gambling devices and lottery paraphernalia.

Sixty-eighth Congress-H. R. 6071, Representative Purnell. To prohibit importation and interstate transportation of gambling or chance slot machines or automatic vending machines or devices connected with chance devices.

Sixty-ninth Congress-H. R. 3935, Representative Purnell. Reintroduction of above.

H. R. 4004, Representative Dyer. To punish the unlawful transportation in interstate commerce or through the mails of gambling machines and fraudulent devices.

Seventieth Congress-H. R. 387, Representative Dyer. Reintroduction of above.

Seventy-first Congress-S. 2751, Senator Sheppard. Reintroduction of above.

H. R. 2408, Representative Dyer. Reintroduction of above.

Seventy-second Congress-S. 182, Senator Sheppard. Reintroduc

tion of above.

H. R. 353, Representative LaGuardia. To provide penalties for use of the mails for gambling devices and lottery paraphernalia.

H. R. 7537, Representative LaGuardia. Reintroduction of above. S. 2570, Senator Sheppard. Reintroduction of above.

Seventy-third Congress S. 3076, Senator Copeland. Denying transportation in interstate commerce and transmission through the mails of gambling devices.

S. 2559, Senator Reynolds. Providing against transportation in interstate commerce and use of the mails to gambling devices and lottery paraphernalia.

Seventy-fourth Congress-S. 6, Senator Copeland. Reintroduction of above.

Seventy-fifth Congress-H. R. 4796, Representative Sachs. To amend the criminal code to prohibit the importation and interstate transmission of gambling devices.

Seventy-sixth Congress-H. R. 7464, Representative Geyer. To prohibit the transportation and receipt of gambling devices in interState and foreign commerce.

Since these hearings began, there has been another interesting development. The committee has been reminded (by Mr. Schultz) that Congress itself, in the 1942 revenue act, deliberately exempted from the $100 tax on gaming devices and placed in the $10 amusement tax class the 1 cent gum ball slot machine which a formal ruling had held was a gaming device. It did this as a matter of that same policy with which the committee is here dealing. The House Ways and Means Committee now is proposing to entirely eliminate all tax on these machines, used by children and held to involve gambling. The precedent of excepting certain innocent devices already has been established and it manifestly would be unfair and inconsistent to incluude punchboards but exclude a recognized gambling device in this proposed legislation.

IV. The Attorney General, in 1937, wrote an opinion to the effect that Federal legislation forbidding transportation of gambling devices is of doubtful wisdom

Attorney General Homer Cummings, after careful consideration, advised against such legislation. On February 7, 1937, the above listed H. R. 4796 was submitted to him, and on April 21, 1937, he advised against its enactment in the following letter, to which I call the committee's particular attention:

Hon. HATTON W. SUMNERS,

Chairman, Committee on the Judiciary,

DEPARTMENT OF JUSTICE,

House of Representatives, Washington, D. C.

April 21, 1937.

MY DEAR MR. CHAIRMAN: I have your letter of February 7, requesting my views concerning the bill (H. R. 4796) to prohibit the importation and interstate transportation of gambling devices.

Section 237 of the Crinminal Code (35 Stat. 1136; U. S. C., title 18, sec. 387) penalizes the importation and interstate transportation or receipt of lottery tickets or any advertisement thereof.

The bill under consideration proposes to amend this section so as to include within its prohibitions all gambling devices, defined in the bill as "any article, device, or thing so constructed as to have for its principal and primary use the risk of money or property by lot or chance or any unfair, dishonest, or cheating gambling article, device, or thing." The definition is somewhat broad and indefinite, so that it may prove to be difficult to determine what articles would come within its scope. It might raise a doubt, for example, as to whether playing cards or dice would be within its prohibitions.

Moreover, as a matter of general policy it appears highly doubtful whether the Federal Government should undertake to legislate on the subject of transportation of gambling devices, instead of leaving the matter to State and local regulation.

I am informed by the Acting Director of the Bureau of the Budget that this legislation is in conflict with the program of the President.

Sincerely yours,

HOMER CUMMINGS,
Attorney General.

The reasons stated in that letter, Mr. Chairman, are applicable to the bills here proposed.

V. The proposed legislation contravenes fundamental principles of Federal jurisdiction while all experience points to the superior abilities of local authorities to meet the case

It is to be noted that the proposed legislation would be against: (1) The fundamental principles established by the founders of our Government;

(2) The policy heretofore determined and applied by Congress to the subject now before it;

(3) The recommendation adverse to such legislation made by Attorney General Cummings;

(4) The recommendation, adverse to including punchboards in the bill in question, made by the present Attorney General, whose staff drew the bill, and who would have the task of enforcement.

Administration would require a large police force, numerous additional lawyers, and would load the Federal courts with cases of a kind which belong in police courts, taking a large amount of time which the judges need for other and more important work, to borrow a phrase from the Federal Trade Commission representative. Recollection of the Volstead Act experience gives a good idea of what the practical situation would be. The expense would be enormous.

Inclusion of punchboards would "give a Federal agency pervasive control over myriads of local businesses in matters heretofore traditionally left to local custom or local law." These apt words were written by Mr. Justice Frankfurter in the last paragraph of the Supreme Court's decision in Federal Trade Commission v. Bunte Brothers, Inc. (312 U. S. 349).

If Congress should exclude the boards from interstate commerce, that would not stop their use. Boards could be made within a given State and be sold only there, and thus never enter interstate commerce. The people could keep on using them if they want to.

Even the local legislative bodies experience difficulty in determining the desire of the people on legislation upon the subject. The experience of Portland, Oreg., is an illustration.

Ordinance No. 69220 of Portland, Oreg., enacted by the city council February 18, 1937, made it unlawful to keep or use any device by which money or other thing of value may be staked or played upon chance, or to use or permit to be used any device or thing whereby any person may be induced to believe that money or thing of, or representing, value may be received as a result of the contest of skill between the person and such device or thing. Under referendum, the ordinance was submitted to a vote of the people at the election held May 20, 1938. The people defeated the ordinance by the following vote: Yes, 28,287; no, 40,614.

The council members, elected by the people, naturally thought they were doing what the people wanted; but they misjudged what the people wanted. Legislators, coming from numerous States, remote from Portland, meeting in Washington, and never in touch with the people of Portland would manifestly not be qualified to legislate for the people of Portland respecting a thing of local concern. That is why our system of government provides that the local things shall be dealt with by local representatives of the people. That is why the police power was reserved to the States and the people thereof.