Mr. DOLLIVER. I yield to Mr. Wolverton.

Mr. WOLVERTON. Do you manufacture machines with a set return for the operator?

Mr. JONES. Yes, sir.

Mr. WOLVERTON. What percentage?

Mr. JONES. About 80 percent. We manufacture machines that will pay 75 percent, and we manufacture some that will pay up to 80 percent.

Mr. WOLVERTON. Do you determine that or does your prospective customer make it a specification?

Mr. JONES. We determine that in the construction of the machine and the customer, however, indicates that.

Mr. WOLVERTON. Suppose as a customer I wanted to be a bit philanthropic and I would return 95 percent, and so suggested to you, then you would make that machine.

Mr. JONES. You would indicate that type of machine.

Mr. WOLVERTON. Then you would manufacture it that way.
Mr. JONES. That is right.

Mr. WOLVERTON. So that you manufacture according to specifications.

Mr. JONES. That is right, but it is not manufactured so that the operator can then again change it.

Mr. WOLVERTON. In other words, it is a custom made proposition with you, is it not?

Mr. JONES. By and large our production is assembly line production and not custom made. There is no great range of requirements in the trade.

Mr. WOLVERTON. The witness yesterday in his creed, as he called it, set forth that it was a sure profit maker. Do you know any other business, legitimate or illegitimate, where the manufacturer can guarantee a profit to the operator?

Mr. JONES. I submit that Mr. Jennings' statement, of course, is the exuberance of advertising, and if a machine is placed in a location which is not patronized by people, I am quite sure that even Mr. Jennings could not guarantee a profit.

Mr. WOLVERTON. I do not know why he cannot when you fix what the return is to be.

Mr. JONES. Not unless the machine is patronized. That is the only assurance of profit, if the machine is patronized, and that holds true in all business, and I would say regardless of Mr. Jennings' statement that you cannot be sure of profit in this industry unless you place your machines where they are patronized.

Mr. WOLVERTON. Could you give me an estimate as to the number of slot machines or one-armed bandit machines that are in operation in the United States?

Mr. JONES. No, sir, outside of the Federal Government figures of approximately 70,000 which paid the $100 tax.

Mr. WOLVERTON. You mean only 70,000 now in the entire United States?

Mr. JONES. I have no idea, sir.

Mr. WOLVERTON. You say that the figures of the Internal Revenue shows 70,000.

Mr. JONES. That is the only figure that I know of.

Mr. WOLVERTON. I would like to ask the question on a different basis and get your viewpoint. From the standpoint of good citizenship, how do you justify the manufacture of machines that are from the very beginning expected to violate laws in different States?

Mr. JONES. Well, they do not violate the law in many States.

Mr. WOLVERTON. All right. We won't quibble over how many States. The testimony here has been that there are 43 States in which machines of this kind are illegal. How do you as a citizen of the United States of America justify yourself in manufacturing a product that contemplates violation of law?

Mr. JONES. There is a public demand for it, sir, and that is the only comment that I can make.

Mr. WOLVERTON. I am asking you from the standpoint of good citizenship, how do you justify it?

Mr. JONES. We justify it solely on the ground that there is a demand for these products, and we ship them.

Mr. WOLVERTON. And your idea of citizenship is that it is good citizenship to answer a demand, whether the States have declared it illegal or not?

Mr. JONES. We ship to local wholesalers in the States, who are known and whose establishments are open, and we take the position that they are conversant with the local laws and situations, and we are not expected to go beyond that.

Mr. WOLVERTON. Then you are not interested in maintaining the laws of this Nation of ours sufficiently to ascertain whether you are a party to a violation of law or not.

Mr. JONES. I really do not believe we are a party to violation of the law.

Mr. WOLVERTON. That is a strange viewpoint, in my opinion, to take, to just close your eyes to the fact that everyone knows that it is a violation in many of our States, as many as 43 of our States, and yet you for the sake of profit will manufacture a machine that you know will violate the laws of that State, and then say that is not evidence of poor citizenship. How do you answer that question?

Mr. JONES. I will answer it as I have answered it, sir, that we know also as a matter of fact that these devices have been accepted by the public for 50 years, in many communities are operated under license, although the State law prohibits them, and they are operated by municipalities and are accepted by the people.

Mr. WOLVERTON. Do you think the laws of the United States as passed by Congress should be respected?

Mr. JONES. Yes, sir; I do.

Mr. WOLVERTON. Do you think the laws of a State, as duly adopted by its representatives which declares a matter to be illegal should be respected?

Mr. JONES. Yes, sir; I do.

Mr. WOLVERTON. Then on what basis do you justify assisting those who would violate the laws of those States?

Mr. JONES. On the basis that there is such a thing as nonobservance of laws by local custom, and this prevails

Mr. WOLVERTON. I am speaking of the basic law of a State that declares it illegal. How do you as a good citizen justify yourself in assisting lawbreakers in that State?.

Mr. JONES. Only on that basis, that the nonobservance of the laws in many fields other than gambling is often a matter of the local temper of the people.

Mr. WOLVERTON. I hope no considerable number of citizens of the United States ever get imbued with the idea that you have expressed here today, that regardless of laws that you have a right to make possible the violation of law. There is a situation here that surprises me, when a manufacturer will come before a committee of Congress that is seeking to act in response to a request that has been made by law-enforcement officers of different States, and openly say, "That may be all true as to the law, but if they do not want to enforce it, we are not going to help them, and the people who want to violate it can violate it." That to my mind is not basically good citizenship. Mr. HESELTON. Have you a list of the membership of your association with you?

Mr. JONES. Yes, sir; I have.

Mr. HESELTON. Will you submit that?

Mr. JONES. It is not in a very formal state. I can before the end of the day give you that. I have the list, but I do not have the addresses, and I have it for my own reference. I can file that with the committee. Mr. HESELTON. Will you send that to the clerk of the committee? Mr. JONES. Yes, sir; I will.

Mr. BECKWORTH. Mr. Jones, we have a roll call that we are going to have to answer.

Mr. HARRIS. Mr. Chairman, before you go, I believe the record should show that there are a number of our colleagues in the House interested in this problem, and they have appeared here before the committee and been present before the committee from time to time. I notice my colleague, Representative McCarthy, was here yesterday, and we have Mr. Hébert from Louisiana, and others. I believe that in an appropriate place the record should show the interest of our colleagues in the bill.

Mr. BECKWORTH. That is a good suggestion. Probably some of the others will have questions to ask, and since we have a good many witnesses who have not been heard, and who will want to be heard, and since the work of the committee is heavy at this time, I think that we shall adjourn until 2 this afternoon, and you may be back here with us at 2 o'clock.

Mr. JONES. This afternoon, yes, sir.

Mr. BECKWORTH. Thank you very much.

(At 11:20 a. m., a recess was taken until 2 p. m., the same day.)

AFTER RECESS

Mr. BECKWORTH. The committee will come to order.
Mr. Jones is on the witness stand.

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

Mr. JONES. I have a list of the membership of the American Coin Machine Manufacturers Association that was requested. I ask leave to file it with the clerk.

Mr. BECKWORTH. You may do so.

(The list referred to follows:)

MEMBERS OF THE AMERICAN COIN MACHINE MANUFACTURERS ASSOCIATION, 231 S.
LASALLE ST., CHICAGO, ILL.

Bally Manufacturing Co., sales division of Lion Manufacturing Corp., Chicago, Ill.
Bell-O-Matic Corp., sales division of Mills Industries, Inc., Chicago, Ill.
Buckley Manufacturing Co., Chicago, Ill.

H. C. Evans Co., Chicago, Ill.

O. D. Jennings & Co., Chicago, Ill.

J. H. Keeney & Co., Inc., Chicago, Ill.
Universal Industries, Inc., Chicago, Ill.

A. B. T. Manufacturing Corp., Chicago, Ill.

Mills Industries, Inc., Chicago, Ill.

R. C. Walters Manufacturing Co., Kansas City, Mo.
Groetchen Tool & Manufacturing Corp., Chicago, Ill.
Watling Manufacturing Co., Chicago, Ill.

Mr. BECKWORTH. Mr. Jones, about how many slot machines as such are manufactured by these companies annually, as distinguished from the many kinds of machines otherwise?

Mr. JONES. I must confess I cannot give that information. I do not know it. Our association has never been set up to obtain the production figures of the member manufacturers.

Mr. BECKWORTH. How many machines of all kind does your company manufacture annually?

Mr. JONES. Our company manufactures approximately 3,000 of the console-type machine annually. Right now we are manufacturing a shuffle bowling game, and perhaps have a production of 25,000 or 30,000 in the year, we hope; pinball games, we perhaps manufacture an average of around 10,000-10,000 or 12,000 a year. We do not manufacture any of the others.

Mr. BECKWORTH. Ten or twelve thousand pinball machines you manufacture?

Mr. JONES. Yes, sir.

Mr. BECKWORTH. How many pinball machines do you estimate are manufactured annually?

Mr. JONES. I could hardly estimate that, sir.

Mr. BECKWORTH. What does the average pinball machine your company manufactures sell for?

Mr. JONES. The list price of our pinball games is $645. That is the list price. The distributor receives a discount of about 35 percent off of that.

Mr. BECKWORTH. What is the average price of your console machine?

Mr. JONES. Our console machine, the list price is $795.

Mr. BECKWORTH. If I understood your testimony correctly, your company does not manufacture what we call slot machines.

Mr. JONES. Not what is commonly known as a slot machine; no, sir. Mr. BECKWORTH. But it does manufacture machines that pay out money?

Mr. JONES. Yes, sir: the consoles.

Mr. BENNETT. Describe that machine. What is it like?

Mr. JONES. A console machine of the type we manufacture is housed in a wooden cabinet, quite elaborate. It uses the three wheels that are commonly used in the slot machine. It has a scoreboard on the back. Mr. BENNETT. What kind of coin does it take?

Mr. JONES. Nickels, dimes, or quarters; that is, an individual machine will take either a nickel or it will be a quarter machine or a dime machine.

Mr. BENNETT. Do you report the sales of that type of machine to the Government, the Treasury Department, or any Federal agency? Mr. JONES. Yes, sir; in the normal course of our business, we report. Mr. BENNETT. You mean income-tax return?

Mr. JONES. Income tax; yes, sir.

Mr. BENNETT. You do not get a license, a license is not required for the sale of these?

Mr. JONES. No, sir.

Mr. BENNETT. The Treasury Department puts a tax on the user. Mr. JONES. That is correct.

Mr. BENNETT. The passage of this bill, would it put your company out of business?

Mr. JONES. I would not say that it would put us out of business. It would seriously affect us, and of course I am speaking here today not on behalf of my company, but as president of the association, which includes concerns whose production is primarily slot machines. Mr. BENNETT. You could not ship these gambling devices throughState lines. You would be pretty well sewed up, if you could not, would you not?

Mr. JONES. Yes, sir.

Mr. BENNETT. Do you represent an association or do you represent some company that makes these machines?

Mr. JONES. I am appearing here as a representative of the association.

Mr. BENNETT. Are you in one of these firms yourself?

Mr. JONES. Yes, sir; I am.

Mr. BENNETT. What is the name of your firm?

Mr. JONES. Lion Manufacturing Corp.

Mr. BENNETT. Where is it located?

Mr. JONES. In Chicago.

Mr. BENNETT. Is that the firm that makes these devices you were just talking about?

Mr. JONES. We make consoles. We also make pinball games, and the new shuffle bowling type of game, and we have made vending

machines.

Mr. BENNETT. Would you care to state how much of your business is done interstate, outside of the State of Illinois?

Mr. JONES. I do not have figures on that, sir.

I would say that

perhaps 75 to 80 percent is outside of the State of Illinois.

I must go on record that that is a guess of the best of my estimate. 1 was not prepared for that question, and I do not have an exact statistical answer.

Mr. BENNETT. I was just asking for an approximate figure.

Would you think that same figure would generally apply to other manufacturers of similar devices?

Mr. JONES. I should think approximately.

Mr. BENNETT. The prohibition of shipping one of those gambling devices in commerce then would destroy 75 percent of your business? Mr. JONES. To the extent that any products would be defined as coming within the definition of this law, yes, sir.

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