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 arrangeinent 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.

Still I don't feel convicted of being an evil citizen nor do I feel that way about my friends. At least I can say I have never been arrested even for a traffic violation.

The primary purpose for the foregoing statement is to assure you that while my remarks hereafter must be charged to one who is in the capacity of a special pleader, they are the remarks I would make if I were privileged to be here as just an ordinary citizen.

Any such legislation as is now proposed should not be passed until you and each of you is convinced that it will accomplish the purpose of making this a better country for all of its citizens.

A calm analysis of what has been presented before both the Senate and this committee is wholly devoid of any proof that such a purpose will be attained by any legislation which is now before you. It has been stated over and over again that this legislation stems from a demand of law-enforcement officers of many cities and States. I offer no greater proof that the law-enforcement officers who have urged this legislation are inefficient than the words of several of the members of this committee to the effect that they, when enforcement officers, found no insurmountable difliculty in enforcing the laws of their States or cities and controlling the evils depicted. Had they come pleading only for assistance in doing their local job, I venture scant attention would have been paid to them. They came with these claims:

(1) A national syndicate fostering crime exists in this country which makes ineffective the attempted enforcement of local law; and

(2) A Federal law drawn according to their wishes will eliminate the element which makes local enforcement impossible and is a necessary aid in the enforcement of local laws.

It appears that the Members of the Senate assumed the premises of the proposers so completely that they didn't even bother to give anyone interested in opposition an opportunity to appear, but passed Senate bill 3357 with almost unprecedented speed. May I say now that I am grateful that such has not happened before this body. However, Mr. Kefauver's resolution which has the worthy purpose to investigate the entire gambling and racketeering situation in order that proper and adequate legislation shall be enacted if such proves necessary and in the best interest of all of the people, has had no such speedy action.

What has happened to the basis for the proposed legislation? Slowly the proponents have abandoned the first charge that there is a national syndicate which controls gambling and crime until on last Friday the representative of the Department of Justice admitted in so many words that the sole purpose of the bill is to aid the respective States in enforcing the laws of the respective States. It, therefore, must be to help officers perform the duties assumed by them in their local communities which certain gentlemen on this com mittee were fully able to do without such aid.

Much doubt has been exhibited by the members of this committee as to the propriety of the legislation, as offered. Many a pertinent question has been asked as to the damage and hardship to legitimate business which may and must follow if such legislation is passed. You have heard the proponents arguing, often feebly, that the language of the proposed legislation must be incorporated in the bill to make it

effective. They have told you that it is the language demanded by those local officials who met with the Attorney General to discuss the problem. Surely, there can be no one on this committee, who has heard the questions propounded and answers made, satisfied that the language will produce a proper or effective law or will accomplish any worth-while purpose without bringing on far greater evils.

The proponents have finally admitted that the language is unsatisfactory but not one suggestion of satisfactory language has come from a proponent. There have been suggestions by members of the committee of language broader in scope-language more definite-language more restricted than that proposed. No situation could exist which demonstrates so ably the unsoundness of any legislation under such circumstances. The language used in the bill passed by the Senate is so broad and uncertain in its application that no one can tell what hardship will be placed on legitimate business and upon the public generally. Broader and more definite legislation may or may not be advisable but surely there is no evidence before this committee which will give the answer.

I submit as my opinion that broader and more definite language will not eliminate any evil comparable to the damage to legitimate business and to the belief of the general public that their morals and pleasures shall not be regulated by law unless such is of paramount importance to the best interests of all of the people. However, again, I say there is no evidence before this committee which gives the answer.

It has appeared from certain statements made before the committee members that restricted language which would affect only the socalled one-arm bandit would be satisfactory. What evidence is there before this committee that if every such machine in this country were eliminated, the evil effects of gambling would be gone? There are so many other forms of gambling rampant in this country that such action would not bring the result which the legislation is supposed to accomplish. Such a law would be like attempting to make prohibition effective by passing a law outlawing the production and shipping of only bonded rye, leaving all other alcoholic beverages available.

I have heard statements made here about children playing machines which were referred to as "one-armed bandits." It is my conviction that few if any such machines are operated by children. It is the punch board, the push card, the raffle, the mechanical machine which gives out merchandise prizes, the paddle wheel and the many like devices so extensively used at fairs, carnivals, bazaars, and special days conducted on behalf of State, county, and civic organizations, posts of the American Legion, and other veteran groups, volunteer firemen's organizations, religious groups, lodges, and other similar organizations, which are at times available to children. A law covering only the so-called one-armed bandit would do practically nothing to eliminate the contacts which children have with gambling devices.

And if you gentlemen are following my text, I wish you would stop here for a moment, because I do have an insertion.

And while we are talking about the protection of children, let us look into some existing legislation. The question has been discussed in the hearings as to whether or not the definition used in the Revenue Act would not be the proper definition for the proposed legislation. One of your committee aptly asked Mr. Ruttenberg whether or not

the Revenue Department had any trouble administering the law in respect to gambling devices. Mr. Ruttenberg assured you that such was not so. Having had some experience in Federal tax work, I was amazed at the statement, since from my experience I know of no section or part of the Federal tax law which has not caused some trouble in its administration. I am sure that Mr. Ruttenberg is an able and ethical lawyer and one who would not knowingly be anything but wholly frank. However, my curiosity was sufficiently aroused to make a quick check. Maybe Mr. Ruttenberg was technically right on the individual question; maybe, because of the speed with which this legislation has descended upon us, he, like myself, has had little time for deep research, and maybe we don't interpret things just the same way.

I have no definite proof that the Internal Revenue Department, as such, has had trouble, but I am still suspicious. However, a reading of the law and just one ruling shows that Congress has had its problems.

The 1942 act not only increased the tax on the devices being discussed but changed the existing definitions and created a most amazing exception. The tax on clause (1) items was increased from $5 to $10, and the tax on clause (2) items was increased from $50 to $100. The definition for clause (1) items contained in the act before the amendment read:

As used in this part, the term "coin-operated amusement device" means (1) so-called pinball and other similar amusement machines, operated by means of the insertion of a coin, token, or similar object.

Certainly this language kept "pinball machines" from falling within clause (2), and they, whether gambling devices or not, had the benefit of the $5 tax. As amended, the definition for clause (1) items, which is now the law, reads as follows:

As used in this part, the term "coin-operated amusement and gaming devices” means (1) any amusement or music machine operated by means of the insertion of a coin, token, or similar object.

You, of course, noticed the absence in the definition of the words "so-called pinball." Certainly this change removed the assurance that a pinball device was excluded from the consideration of clause (2). It either puts such devices in clause (2), or left it to the determination of the Commissioner of Internal Revenue as to whether they were gambling devices or not.

When consideration is given to this situation, I think you will agree with me that my suspicion that the Internal Revenue Department has had no trouble administering the law has some foundation. I wish that Mr. Valaer, the head of the Miscellaneous Tax Unit, could testify before you on this point. But that is not the only important point. The Miscellaneous Tax Unit issued a formal ruling under the definition of clause (2) items, which is most interesting.

First, let us look at the definition of clause (2) items as set forth in the law prior to 1942, which was not changed.

As used in this part, the term "coin-operated amusement and gaming devices" means (2) so-called slot machines which operate by means of the insertion of a coin, token, or similar object and which, by application of the element of chance, may deliver, or entitle the person playing or operating the machine to receive cash, premium, merchandise, or tokens.