GAMBLING DEVICES

FRIDAY, MAY 5, 1950

HOUSE OF REPRESENTATIVES,

COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE,

Washington, D. C.

The committee met, pursuant to adjournment, at 10 a. m., in room 1334, New House Office Building, Hon. Lindley Beckworth, presiding. Mr. BECKWORTH. The committee will please come to order.

The first witness we shall have this morning will be Mr. Herbert B. Jones, of the American Coin Machine Manufactures Association, of Chicago. Mr. Jones.

STATEMENT OF HERBERT B. JONES, PRESIDENT, AMERICAN COIN MACHINE MANUFACTURERS ASSOCIATION, CHICAGO, ILL.

Mr. JONES. Mr. Chairman and members of the committee, my name is Herbert B. Jones, 2640 Belmont Avenue, Chicago. I am vice president of Lion Manufacturing Corp., a manufacturer of coin-operated devices, but I am appearing herein my capacity as president of the American Coin Machine Manufacturers Association.

For the purpose of further identification, I might say I was formerly a director and treasurer of Coin Machine Institute, the organization that appeared here day before yesterday.

The members of our association manufacture coin-operated amusement, vending, music, and service equipment and in the first category of amusement equipment are included pinball games, shuffleboard, bowling games, target games, and also the games commonly known as slot machines, and the electrically operated version commonly known as consoles.

The members of our association ship their products to the various parts of the United States and in foreign commerce.

The question of foreign commerce was raised here the other day. I might say that one of our members reported to me that during the past year his company shipped slot machines to the following countries: Arabia, Austria, Bermuda, Dutch Guinea, England, Greenland, Guam, and the Hawaiian Islands-which, of course, are American territory-Hong Kong, Labrador, Mexico, Netherlands West Indies, Newfoundland, and Guatemala.

Our opposition to the proposed legislation is, of course, based among other things on economic reasons. Our very existence as manufacturers and the jobs of the many thousands of people whom we employ in our factories are suddenly and after long years, and without warning, threatened by this legislation; and I hope that in view of the direct and immediate effect of this legislation on our fate as

manufacturers and on the jobs of our employees, I might ask your indulgence to comment on what we believe will be the certain consequences of this legislation if enacted into law.

The consequence, of course, that received the greatest publicity in the newspapers in connection with the Attorney General's conference in February was the destruction of the so-called national crime syndicate. This, however, has somewhat receded into the background, particularly since Attorney General McGrath testified before a Senate committee that he could not honestly say that his office possesses any evidence of the existence of any such national crime syndicate, and I can also say to the best of my knowledge no such syndicate exists in relation to coin-operated devices; and I say this in the full confidence that the investigations now authorized by Senate Resolution 202, the purpose of which in part is to determine the necessity of any such legislation, will show that no such crime syndicate exists in connection with coin-operated devices.

And certainly we cannot believe that the purpose of this legislation is to discourage gambling, in view of the fact, as Mr. Plaine, of the Attorney General's office, testified here, that after due deliberation and consideration many forms of gambling were purposely omitted from the scope of this legislation.

As Mr. Plaine explained here last week, the background of this legislation was the conference that was held in this city in February. I feel that it is hardly necessary to point out that this conference was by no means a representative body. It is true that the mayors of a considerable number of cities were present and I assume officials of all of the states. Certainly absent, however, were the mayors, selectmen, and other officials of many thousands of cities, towns, villages, and counties throughout the United States whose law-enforcement officers are now charged with incompetence and I say they are charged with incompetence by this conference, because the gentleman who appeared before this conference, at least, insofar as it was reported in the newspapers and later before a Senate committee, were emphatic in their statements that although gambling was not a problem within their particular jurisdictions, it was a serious problem everywhere else, and although they enforced the law very strictly in their jurisdictions, the officers everywere else in the United States certainly required Uncle Sam's assistance.

Gentlemen, at the risk perhaps of sounding somewhat old-fashioned, we can only suggest that a clamor of this kind for the Federal Government to inject itself into the enforcement of local laws is certainly a departure from the traditional political concept of this country-that the Federal Government should not be injected into local matters, particularly those having to do with the customs and habits and manners and morals of the people and in view of the fact that many of the States have enacted legislation licensing and legalizing these devices, and I am speaking now of slot machines, suggesting at least these devices are not an evil in and of themselves, but only when so defined by law; and in view of the fact that in many States with antigambling statutes on the books, various communities, municipalities, actually quite contrary to the State law-legalize and license and permit the operation of these devices as a source of revenue; and in view of the fact that throughout this country probably millions of

people, very decent and respectible people, have long looked on these devices as amusement, affording a few moments of recreation and relaxation, and at the same time providing funds for many worthy causes, we feel that the question can sincerely be asked: Is it fitting that the Federal Government should now inject itself into these local matters? I am sure that you will recall that on April 27, when Mr. Preston testified here, it was emphatically stated that the local authorities can and do enforce the law when such is the will of the people, and examples were cited, such as Mr. Preston's own district in which the law is strictly enforced and other examples were cited of communities such as the State of Florida and certain municipalities in the State of Idaho, which in times past have legalized these devices, presumably at the will of the people, and have at a later time delegalized them, again presumably at the will of the people, and for all we know may again in the future, and again presumably at the will of the people, legalize these devices again.

And I might observe that the Federal Government does now provide an effective assistance to local law enforcement authorities, and I refer to United States Code Annotated, 3275, which provides for a list of special taxpayers for public inspection:

(a) In collector's office.-Each collector shall, under regulations of the Commissioner, place and keep conspicuously in his office, for public inspection, an alphabetical list of the names of all persons who shall have paid special taxes within his district, and shall state thereon the time, place, and business for which such special taxes have been paid, and upon application of any prosecuting officer of any State, county, or municipality, he shall furnish a certified copy thereof, as of public record, for which a fee of $1 for each 100 words or fraction thereof in the copy or copies so requested, may be charged.

The $100 tax on coin-operated gambling devices is, of course, a special tax and the payer of these taxes can be identified through the provision of this United States Code Annotated, 3275.

My point is that the Federal Government offers this cooperation to local authorities who wish to know and discover where devices of this kind may be operated. Of course, as a matter of actual practice, there is no mystery as to where these devices are operated. They cannot be operated profitably unless considerable numbers of people are aware of their existence.

At this time, gentlemen, I feel constrained to suggest that the committee should not be unduly influenced by the fact that this proposed legislation has the approval of Coin Machine Institute, which has represented itself as the official association of this industry.

You will recall that Mr. Ruttenberg, of Coin Machine Institute, testified here that his association has among its members 400 distributors and operators of these devices.

I submit that 400 is a rather meager minority of the 15,000 distributors and operators of these devices throughout the United States. Mr. Ruttenberg also indicated that the membership roll of manufacturers is enlarged by the inclusion of such companies as the General Electric Co. and Yale & Towne Manufacturing Co. I am sure that neither of these companies or the other large corporations, which are suppliers to the members of that association and suppliers to us, particularly concerned one way or another with this legislation.

are

Specifically the Coin Machine Institute is not competent to speak for the members of the association of which I have the honor of being

president nor for our customers. Actually Coin Machine Institute is an association of a handful of manufacturers who have now endorsed and approved this legislation provided only that Uncle Sam will kindly permit them to continue to ship their product, but run their competitors out of business. And that in this connection I will call to your attention that in a letter to Senator Johnson, chairman of the Senate Committee on Interstate and Foreign Commerce, Coin Machine Institute stated that

We have accumulated probably more material on slot machines than any other agency in the United States. We are fully prepared to place all this information, including the intricate set-up of what we call the slot-machine network, in the hands of the subcommittee under any circumstances which the committee may desire.

The Senate committee did not avail itself of this opportunity to examine this evidence.

Mr. HARRIS. Who made that statement?

Mr. JONES. Coin Machine Institute made that statement in a letter to Senator Johnson, which is attached to Senate Report 1482, the Senate committee report, on S. 3357.

The statement was made in a letter signed by Mr. John Pickering, director of public relations.

I submit that perhaps this committee in the task of determining whether legislation of this kind is desirable may wish to examine this evidence, if it exists.

Gentlemen, we believe that if this legislation is enacted into the law we must expect at least some, and probably all, of the following consequences:

First, it will of course greatly curtail the use of all manner of mechanical devices in which, upon the payment of money and operation of any element of chance, the patron may receive anything of value; and especially, I might say, the devices that are used by the people who cannot afford to go to Nevada for amusement of this kind, and thus the veteran in his American Legion headquarters, and mem bers of fraternal organizations enjoying an evening of fellowship with his brothers, and indeed the country bumpkin mentioned by Mr. Preston, are to be denied by Federal law these pleasures; and gentlemen, I quote Mr. Preston certainly not in any spirit of agreement that people who go to county fairs or carnivals are lacking in prudence or intelligence; not with any spirit of malice toward Mr. Preston, who is certainly a sincere, industrious, and zealous man; but simply to suggest the line of thought that so often lies behind legislative proposals of this kind, namely, that the average American does not have wit enough to spend his own money prudently and intelligently; but must be protected by a benevolent and paternalistic and in this case centralized Government against the temptation that may cross his path, and, gentlemen, although I am not an attorney, I am well aware that it is entirely within the province of the legislatures of the several States to enact what might be called antitemptation legislation.

However, I submit that there is a vast difference, and I think it was pointed out in this room last week, that there is a vast difference between such legislation being enacted and enforced by people close to us back home-there is a vast difference between that and giving

to the great powers of Federal Government authority over the morals and conscience of the people.

Second, the use of all types of mechanical paddle wheels, mechanical bingo, and keeno and similar devices used by charitable and fraternal organizations for raising of funds will have to be discontinued, because they fall under the ban. Thus such organizations as the American Legion, the Disabled War Veterans and other veterans' organizations; the volunteer firemen's associations throughout the country; the fraternal orders, such as the Moose, the Elks, the Knights of Columbus and the churches that customarily use these devices for raising money for worthy causes, will be deprived of this source of revenue. The boys' clubs, the girls' clubs, sponsored by the Legion and similar organizations and preaching the gospel of Americanism; the baseball teams and other civic enterprises the swimming pool that was mentioned in this room last week-the many civic and charitable enterprises; the institutions for the crippled and underprivileged; the assistance to the wives and widows and children of deceased and injured veterans, and the many little extra comforts that are supplied to disabled veterans and to hospitalized veterans through funds raised by means of these machines will be desperately curtailed, if not completely eliminated.

Many businesses long engaged in the manufacture of these devices in an honorable and businesslike manner without any association with syndicates or racketeers of any kind, will be forced out of business. Many related businesses, such as the suppliers of our raw material and parts and their employees, and the many thousands-approximately 15,0000-distributers and operators of these devices, together with their mechanics, servicemen, and employees, will be certainly affected by the legislation.

The result will be a very definite increase in unemployment, which we understand is already becoming a national problem. Very specifically many thousands of people would become unemployed by the enactment of this legislation; and the question is, if these people are put out of work, will the general welfare of the country improve?

We feel that, as this act cannot stop or decrease the natural inclination of people to play these devices to amuse themselves with these devices the resentment which will be aroused among people who are compelled to give up amusements which they have always considered harmless, will bring back upon this country all of the conditions and evils of the prohibition days.

We might say in this connection that, if this legislation is enacted into law, we must certainly expect that the manufacture and the operation of these devices will fall into the hands of the same type of unscrupulous persons who took over the manufacture and distribution of alcoholic beverages during the era of prohibition; and at the same time the legislation will provide an alibi and excuse to local authorities who may, for one reason or another, wish to avoid accounting to their constituents for any lack of enforcement.

It will place them in an excellent position to pass the buck to the Federal Government.

All in all, we believe it will stimulate further criticism of the Federal Government's use of the interstate commerce clause of the Constitution to legislate on morals and manners, which invariably_breeds disrespect for law, when people cannot understand how, by Federal