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THE NATIONAL PROHIBITION LAW

HEARINGS  before the  SUBCOMMITTEE OF THE COMMITTEE ON THE JUDICIARY UNITED STATES SENATE - SIXTY-NINTH CONGRESS

April 5 to 24, 1926

TESTIMONY OF GEN. LINCOLN C. ANDREWS, ASSISTANT SECRETARY IN CHARGE OF CUSTOMS, COAST GUARD, AND PROHIBITION, DEPARTMENT OF THE TREASURY, WASHINGTON, D. C.

Mr. CODMAN. You were kind enough to provide me with a statement with regard to the employees separated from the Prohibition Unit for cause from the beginning of prohibition up to February 1, 1926, inclusive, and is that the statement?

Assistant Secretary ANDREWS. Yes.

Mr. CODMAN. That is the carbon copy of the statement submitted?

Assistant Secretary ANDREWS. Yes.

Mr. CODMAN. I am going to offer this as an exhibit and I should like to have it back for use.

Senator MEANS. It may be marked "Exhibit D.

(The paper referred to by the witness was marked "Exhibit D" by the reporter.)

Mr. CODMAN. From this tabulation, which I hold in my hand, it appears from the time when the Prohibition Unit was established until February 1, 1926, 875 officers had been separated from the unit for various reasons; that is correct, is it not?

Assistant Secretary ANDREWS. Yes, sir.

Senator REED of Missouri. When you say "separated," do you mean discharged or resigned or both?

Mr. CODMAN. I was going to find out What the Secretary meant by separated" exactly.

Senator REED of Missouri. All right.

Mr. CODMAN. Because that is the word used in this paper, and if the secretary will state to me what is meant by the word "separated" we will go into details.

Assistant Secretary ANDREWS. That includes those that have resigned, as I understand it.

Mr. JONES. Resigned for cause?

Assistant Secretary ANDREWS. Yes; resigned for cause.

Mr. CODMAN. Separated for delinquency or misconduct?

Assistant Secretary ANDREWS. Yes.

Senator REED. That is to say, you mean they were discharged or resigned for cause, that is, for some misconduct on their own part?

Mr. JONES. That is correct.

Mr. CODMAN. Now, to make that a little more specific, I find here that 20 were discharged for a false statement on an application; of those 6 were prohibition enforcement officers and 1 clerk, who was discharged for the same thing. Will you tell us, briefly, Mr. Secretary what is a false statement on an application?

Assistant Secretary ANDREWS. Well, the application form contains

questions requiring answers as to their experience, history, and so on. A man might state, for example, " I have never served a jail sentence," and after we get him in the service we find out that he has.

Senator REED of Missouri. Do you find that true sometimes, General?

Assistant Secretary ANDREWS. This is all past history to me, Mr. Senator, that is the reason I referred to Mr. Jones. I presume that is true. I believe I have seen papers to that effect.

Mr. CODMAN. Well, I asked the question because it was not quite clear to me whether it meant application for admission into the unit or application of some other kind.

Assistant Secretary ANDREWS. Application for admission.

Mr. CODMAN. That is all I wanted to know. Now, 121 enforcement officers and 2 clerks were separated from the for extortion or bribery or soliciting money. Do you know personally about any of those particular cases?

Assistant Secretary ANDREWS. No, but I know in general that this is not an unusual situation; in fact, we consistently receive reports to that effect.

Mr. CODMAN. I do not mean to go into that. I wanted to know if you know personally about an one of these particular cases where men had been separated or discharged for extortion, bribery, or soliciting money?

Assistant Secretary ANDREWS. No, I do not; not that I could recall.

Senator REED of Missouri. How many were there?

Mr. CODMAN. There were 121.

And you do not know whether any of those happened during this last year or within this last six months?

Assistant Secretary ANDREWS. I presume there have been.

Mr. CODMAN. You presume there have been?

Assistant Secretary ANDREWS. Yes.

Mr. CODMAN. In other words, this record is not necessarily confined to the earlier years?

Assistant Secretary ANDREWS. No; I did not mean to imply that it did not come right up to date.

Mr. CODMAN. Then we find that 80 prohibition enforcement officers have been discharged for falsification of their expense accounts. Do you know anything in detail about that type of offense?

Assistant Secretary ANDREWS. No, Mr. Codman. I think the director knows more about those details than I do.

Mr. CODMAN. You get reports of these matters, do you not, Mr. Secretary?

Assistant Secretary ANDREWS. Do you mean personally?

Mr. CODMAN. Yes.

Assistant Secretary ANDREWS. I have never read one of them.

Mr. CODMAN. You never read any of the reports in regard to men who have been separated from the service?

Assistant Secretary ANDREWS. No, sir; I have not. I have been trying to do constructive work, and if I may speak frankly, not to complain, but I have had all of the details of customs as well as the Coast Guard and this Prohibition Unit to reorganize, and I have not been able to go into that kind of detail.

Mr. CODMAN. I am not trying to imply that you do not have plenty to do, Mr. Secretary. Who should I have to summon, Mr. Secretary?

Assistant Secretary ANDREWS. Mr. Jones can probably give you more detail if you want to go into that detail, he can probably give you it, and I know he will be glad to do it.

Mr. CODMAN. I will call upon him later, if necessary.

Assistant Secretary ANDREWS. Yes; if you want to analyze the details.

Mr. CODMAN. I will go through it lightly with you and then we will try to analyze it more thoroughly later.

Assistant Secretary ANDREWS. I thank you.

Mr. CODMAN. I find that 61 officers, 8 clerks, and 1 attorney have been separated from the service for collusion and conspiracy. Do you know anything about the type of collusion and conspiracy which is indicated by that?

Assistant Secretary ANDREWS. I think so, in general terms, yes.

Mr. CODMAN. Well, will you state it in general terms? I want to know what type of collusion and conspiracy that those men indulge in.

Assistant Secretary ANDREWS. In the early days of prohibition the first and natural source of supply for the bootlegger was illegal withdrawal of whisky from the warehouses.

Mr. CODMAN. Yes.

Assistant Secretary ANDREWS. Government agents were in collusion to bring that about.

Mr. CODMAN. There has been a great deal of that, has there not?

Assistant Secretary ANDREWS. Well, not recently; this was in the old time.

Mr. CODMAN. How can you tell there has not been recently?

Assistant Secretary ANDREWS. Well, the whisky was then pretty well disseminated in the normal distilleries throughout the country, and it has been concentrated since then by our Government into the 30 concentration warehouses, where it is under much more careful control. It is under constant governmental control.

Mr. CODMAN. Well, of course, I recognize that anything that is under governmental control should be absolutely safe; but the only question is, with the temptations to which these men are necessarily subjected, I am not quite sure it is actually perfectly safe, and it was on that line I rather thought you might give me a little information. Is it, as a matter of fact? Have you any assurance that merely because the liquor is in a Government warehouse that those Government officials in charge of the warehouses can not be corrupted and that the liquor can not be taken away and the containers left and filled up with water. Have we any assurance that those things do not happen?

Assistant Secretary ANDREWS. Yes, we have the assurance of inspection to see that they have not happened. For example, I just completed an inspection of a warehouse in Kentucky, where I had wonderful information that there had been a withdrawal, an illegitimate withdrawal and found every barrel intact, and not one, gallon missing. A possibility exists, of course, for corruption always. I do not need to answer that question.

Senator HARRELD. As a matter of fact, now, you have concentrated this supply of liquor in thirty-some warehouses?

Assistant Secretary ANDREWS. Yes, sir; 30.

Senator HARRELD. How many were there at the beginning of the operation of this law?

Assistant Secretary ANDREWS. There were over 500 distilleries.

Senator HARRELD. Each one had its own warehouse?

Assistant Secretary ANDREWS. I think so, did it not, Mr. Jones?

Mr. JONES. Formerly they did. When national prohibition became effective, there was a little over 300.

Senator REED of Missouri. Yes; and you very speedily concentrated those, and then there has been a second concentration.

Prohibition Director JONES. We concentrated shortly after the concentration act was approved by Congress, as speedily as possible.

Senator REED of Missouri. When was that act approved?

Prohibition Director JONES. In 1923.

Senator REED of Missouri. Was it before that or after that that the Jack Daniels distillery was looted in St. Louis?

Prohibition Director JONES. I think that was looted after the act was passed by Congress.

Senator REED of Missouri. How many hundred gallons of liquor were taken out of that?

Prohibition Director JONES. I could not tell you that, Senator, from memory.

Senator REED of Missouri. There was a great deal taken?

Prohibition Director JONES. Yes.

Senator REED of Missouri. And a lot of men sent to the penitentiary over it?

Prohibition Director JONES. Yes, sir.

Senator HARRELD. When were these consolidations made, if you can tell us, into the fewer number of warehouses?

Prohibition Director JONES. About three years ago, that is my recollection; I found that condition existing---

Senator HARRELD (interposing). Have there been any further consolidations since you went into office?

Assistant Secretary ANDREWS. No, sir.

Senator WALSH. Have there been any prosecutions since you have been in office for corruption in releasing liquor from bonded warehouses?

Assistant Secretary ANDREWS. Not for anything that occurred before my time. I think one of the prosecutions had to do with the release of whisky that was conducted after I came in office, a case out in Ohio.

Senator WALSH. That is, the alleged release occurred afterwards.

Assistant Secretary ANDREWS. No, the release occurred before my time.

Senator WALSH. But the prosecution---

Assistant Secretary ANDREWS (interposing). But the prosecution was finished after my time, but that was conducted entirely by the Department of Justice, and I did not go into it.

Senator REED of Missouri. Is there not another case that has just
been started where there fire about 100 or 120 men indicted?

Assistant Secretary ANDREWS. Yes, Sir; I know about that, generally.

Senator REED of Missouri. That was a Federal case.

Assistant Secretary ANDREWS. It was an industrial alcohol case.

Senator REED of Missouri. The diversion of alcohol?

Assistant Secretary ANDREWS. Yes, sir.

Senator REED of Missouri. What was the quantity diverted?

Assistant Secretary ANDREWS. Well, it was not the quantity diverted, that has not been so much a matter of discussion, it was just getting a few concrete cases, to determine the business and the men engaged in it. There was no thought of quantity; it was to get a concrete case of diversion and get after the men.

Senator REED of Missouri. Certainly, General, that is all right; I am not criticizing at all. I want you to understand that I am just trying to get the facts.

Assistant Secretary ANDREWS. I do not know what the quantity was.

Senator REED of Missouri. Is not there a charge in that case that there was a conspiracy involving a vast number of men and involving a vast quantity of alcohol?

Assistant Secretary ANDREWS. I think not, sir; if there is I am mistaken.

Senator REED of Missouri. I wish you would examine it.

Assistant Secretary ANDREWS. I will examine it.

Senator REED of Missouri. I do not mean the charge in the indictment, but the facts back of it, whether the facts back of this case are not that the Government has information that there has been vast quantities diverted?

Assistant Secretary ANDREWS. Yes, sir.

Senator WALSH. Will you explain the difference between diversion from the bonded warehouses and diversion of industrial alcohol?

Assistant Secretary ANDREWS. Just as soon as alcohol is released for industrial purposes it is denatured by a special formula, depending on the industrial use to which it is to be put. Well, that goes out into the market to be sold to permittees.

Senator WALSH. Denatured?

Assistant Secretary ANDREWS. Denatured; but before prohibition it was denatured at the distillery. As a result of prohibition there grew up the 30 special denaturing plants, which, frankly, I feel are nothing more or less than bootlegging organizations, because they give opportunity for diversion. There seems to be no economic necessity whatever for a special denaturing plant away from a distillery. It never did exist in the economy of alcohol. Those permits have been granted, however, and it is our effort now to so regulate those special denaturing plants as to confine their business to the strictly legitimate, and in doing that, in the month of February, our men reduced the amount of output in the Philadelphia district alone, as compared with the month of January, from 1,700,000 gallons to 500,000 gallons. That is, under this very close supervision which we established they put out 1,200,000 gallons less in February than they did in January.

Senator REED of Missouri. Twelve hundred thousand gallons?

Assistant Secretary ANDREWS. Twelve hundred thousand gallons less, and in the month of March---

Senator REED of Missouri (interposing). That is in Philadelphia?

Assistant Secretary ANDREWS. Yes, sir.

Senator HARRELD. That is more than two-thirds.

Assistant Secretary ANDREWS. Yes, sir.

Senator WALSH. Let me understand, then, they would withdraw from the bonded warehouse?

Assistant Secretary ANDREWS. From the distillery.

Senator WALSH. From the distillery?

Assistant Secretary ANDREWS. Yes; then it goes direct to a special denaturing plant, and there is, presumably, denatured and sold to the manufacturer who is going to use it.

Senator WALSH. But, as a matter of fact, there considerable diversion occurs.

Assistant Secretary ANDREWS. Yes; from the special denaturing plant to the manufacturer and on is where we have our difficulty.

Senator MEANS. Just what is the process after it leaks out of the special plants when it is put into---

Assistant Secretary ANDREWS (interposing). Industry?

Senator MEANS (continuing). No; but into the industry of the bootlegger.

Assistant Secretary ANDREWS. Yes. The most, popular method is for a man to set up a service which uses alcohol and enter apparently legitimate industry and have the protection of the laws for industry, and, of course, the laws are there properly to protect the man that is in the business. Now, instead of using all the alcohol that he withdraws for this industry legitimately he finds means of disposing of large quantities of it to the illegitimate trade--- to the bootlegger. He will withdraw--- the famous one is the tobacco spray-alcohol to make a tobacco spray, and instead of making a tobacco spray and selling it he only pretends to make a tobacco spray. The same way with perfume and toilet articles and all through the business.

Now, they become competitors of legitimate business to the injury of legitimate business, because they want to sell of their product enough to justify their existence, and they are willing to undersell legitimate business in order to maintain themselves in business, and therefore I feel that this control of alcohol is vital to legitimate industry. That is my function, to take care of legitimate industry, quite as much as it is to stop the diversion, and I have the same problem in the brewery situation, if you will be interested for me to explain that. The brewer who wants to maintain his plant and keep his capital secure starts out to manufacture and sell a cereal beverage. He is an honest man. But another man who wants to make money, no matter what, sells high-test beer, not altogether, but from time to time, and puts it on the market, and by that kind of competition injures the honest brewer, and it is because I want to protect the honest brewer that I am asking for this legislation which will enable me to put the dishonest brewer out of business, as well as because I want to keep high-test beer off the market. So there is always apparently that double phase of the task of the Government to protect the legitimate man in business and to eliminate the illegitimate.

Senator MEANS. Did I understand you to say yesterday that if you could, not entirely, but relatively speaking, control that one method of distribution, you have solved the greatest problem of law enforcement.

Assistant Secretary ANDREWS. Yes, sir; and I had reference to both alcohol and beer. Yesterday I felt very confident, because I have accepted the interpretation of the law which I have been told was correct and was the intention of Congress, that all these permits, all of them were intended to be reviewed annually by the commissioner. After I left you yesterday I received word from New York that the circuit court had reversed the district court in New York, and that this annual review was not intended by the law, and the 340 permits which we had refused to give again for next year are therefore in question, and it is to be quite a little more difficult for me to control that alcohol under that court decision than yesterday morning I thought it would be. It would take more men and more time. I have to go over the same ground again.

Senator WALSH. Was that a State court, the circuit court of appeals?

Assistant Secretary ANDREWS. No; it is the Federal court, but in Now York State.

Senator REED. You say you need this law to protect legitimate business, General. Has there been a substantial interference with legitimate business by this competition you speak of?

Assistant Secretary ANDREWS. Yes, I think so; that is my information; they feel it very strongly.

Senator REED of Missouri. You mean to say then, if I understand you right, that institutions that are organized really, as a cover for the alcohol business have sold so much of their goods at a reduced price that they substantially injure the legitimate business man who does not wrongfully divert his alcohol?

Assistant Secretary ANDREWS. That is my meaning exactly, Mr. Senator.

Senator REED of Missouri. And how great is that injury now? Is it great enough to be a matter of serious consequence?

Assistant Secretary ANDREWS. It would be in one industry, perhaps, or another, I can not give you a detailed answer to that. I can speak quite confidently of the retail drug store, for example, where diversion of medicinal whisky, I mean improper sale of medicinal whisky, etc., in other words, entering the bootlegging industry on the part of the drug store, results in undesirable competition.

Senator REED of Missouri. Is that quite extensive?

Assistant Secretary ANDREWS. It depends on the locality. I am informed by the druggists' association in New York City that it is becoming a very serious menace to their business.

Senator REED of Missouri. That is to say, there were so many drug stores---

Assistant Secretary ANDREWS (interposing). So-called drug stores.

Senator REED of Missouri. So-called drug stores?

Assistant Secretary ANDREWS. Yes.

Senator REED of Missouri. Who were really making their money out Of whisky?

Assistant Secretary ANDREWS. Yes.

Senator REED of Missouri. That the so-called drug stores cut the price of legitimate drugs to such an extent as to seriously injure the legitimate drug business of New York City?

Assistant Secretary ANDREWS. Yes.

Senator REED of Missouri. Now, does that condition exist in other places besides New York?

Assistant Secretary ANDREWS. Well, that is the one place where it has been brought to my attention; that was brought to my attention by the Association of Retail Druggists of Greater New York.

Senator REED of Missouri. Yes.

Assistant Secretary ANDREWS (continuing). As a serious problem.

Senator REED of Missouri. What is your opinion, General, you have studied this question, of course, a great deal, as to whether a similar condition exists in other cities; I mean an opinion based upon your general observation of the whole situation and of reports.

Assistant Secretary ANDREWS. I am trying to think of the reports I have had. I know of two other large cities where a similar condition

exists, and where my men are, as in New York, vigorously trying to correct it.

Senator REED of Missouri. Now, what are those two cities?

Assistant Secretary ANDREWS. Chicago and Los Angeles.

Senator REED of Missouri. What is your judgment, now, if this condition exists in Chicago and LOS Angeles, as to whether it does not exist generally throughout the country. I am not asking--- when I ask this question, I want to say in explanation, I am trying to get your judgment based upon your general observation and experience.

Assistant Secretary ANDREWS. Yes; my judgment is that in several other large cities the same condition has existed to a greater or less extent, and I am working now on the details of a law which I shall ask Congress to consider which will enable me to control the distribution of medicinal whisky, which I can not now do.

Senator REED of Missouri. That is, you hope it will enable you to?

Assistant Secretary ANDREWS. Well, I can demonstrate that it will.

Senator REED of Missouri, Possibly you can. Is there any reason that you know of why these conditions existing in these several large cities do not exist in small cities?

Assistant Secretary ANDREWS. Yes, I think I can give a reason. The present law is such as to force present owners of whisky to dispose of their goods and protect their investment by selling them in a competitive market. That is the only way the present owner of medicinal spirits can sell his product in which he has his big investment--- by selling it in a competitive market.

Now, they sell through commission agents. Those commission agents have got to make sales in order to make a living. So they become often, not always but often become what I call " procurers " of illegitimate business in order to get a market. My information, and the investigation which we are conducting in New York justifies my belief, is that doctors are often induced to sell prescription blanks of which they have 1,200 a year. I do not mean to say that all doctors do that, of course not, but here and there is one who does it.

Senator REED of Missouri. And here and there are two that do it, I suppose.

Assistant Secretary ANDREWS. Well, I do not want to accuse the medical profession, because I have the highest regard for the members of that profession.

Senator REED of Missouri. No, I do not wish to accuse them either.

Assistant Secretary ANDREWS. Then the druggist also is a man on whom we all depend for the health and security along that line of our families. We do not want to accuse him, but here and there is a druggist who will yield, and between the two it is, in effect, a conspiracy, and the representative of the owner of the whisky, who has determined he has got to sell it, they arrange for using that whisky which is withdrawn to flavor alcohol, what we call "split whisky," and if the druggist is entitled, say, to 20 cases of whisky he gets 20 cases but they have been split, and the bootlegger gets 60 cases, which he sells on the market. So the druggist is selling to his patients impure whisky and the gentlemen who want to buy it are buying spurious whisky all under the label and strip stamp, and so on.

Senator REED of Missouri. You may not have understood my question, or maybe I did not make my meaning plain. You have said

that the conditions you referred to existed in several large cities, and I asked you if you knew of any reason why it did not similarly exist in smaller cities.

Assistant Secretary ANDREWS. Oh, I did not answer your question. The market, then, which justifies that kind of thing has got to be a good-sized market, and it will only be in the big cities that this business is carried on. That is my experience.

Senator REED of Missouri. Why should not a druggist in a town of 25,000 or 30,000 people get into that traffic the same as druggists in larger cities?

Assistant Secretary ANDREWS. Well, there would not be enough business in such a city I think to justify the bootlegging machinery, the covering up, and the meeting of all the difficulties of conducting this illegitimate business.

In the small town there would not be enough business to justify all that machinery. That is the way I have sized it, up.

Senator REED of Missouri. But you are not certain of that?

Assistant Secretary ANDREWS. No, I am not because our investigations have not gone far enough to tell. We have not gone into the small towns along that line.

Senator REED of Missouri. So that one result we get is that the whisky that is sold in many drug stores as pure whisky is, in fact, this split whisky.

Assistant Secretary ANDREWS. Yes, sir.

Senator REED of Missouri. That is one result at least.

Assistant Secretary ANDREWS. That is right, that is one result.

Senator WALSH. Will you right there please explain what you mean by "split whisky"?

Assistant Secretary ANDREWS. It is alcohol flavored with whisky. Do you get me?

Senator WALSH. I do not know that I do.

Assistant Secretary ANDREWS. A quart, we will say, of rye whisky, or we will say three quarts of alcohol mixed with one quart of rye whisky will make four quarts of so-called rye Whisky.

Senator REED of Missouri. Plus some water to bring the proof down to 50 or 60, or somewhere along there.

Assistant Secretary ANDREWS. Oh, yes; always.

Senator REED of Missouri. Since Senator Walsh does not know anything about this business let me say: It has been stated to me, and I am going to state it to you, although I never performed the operation myself, have not been made that desperate yet but the process is something like this: They take a gallon of approximately 100 proof whisky, and make it about half water, reducing it to about 50, and then take a gallon of 100 or 110 proof alcohol, and make that half water, so that they have four gallons, and they mix the whole together, so that the purchaser gets in the end 25 per cent alcohol, 25 per cent whisky, and 50 per cent water.

Assistant Secretary ANDREWS. Yes.

Senator REED of Missouri. And that is what you call " split whisky. "

Assistant Secretary ANDREWS. Yes, sir.

Senator REED of Missouri. And of course those proportions can be increased or diminished.

Assistant Secretary ANDREWS. Yes; I think so.

Senator REED of Missouri. That is about the best grade there is on the market now, is it not?

Assistant Secretary ANDREWS. Our reports indicate, Senator Reed, that of all the different captures---and every one is tested you understand in the laboratory---98 per cent are impure; that is, what at we call adulterated.

Senator REED of Missouri. Split?

Assistant Secretary ANDREWS. Yes, sir.

Senator REED of Missouri. Do you mean poisonous?

Assistant Secretary ANDREWS. No, sir.

Senator REED of Missouri. It is just alcohol and water mixed with whisky?

Assistant Secretary ANDREWS. Yes; but I am assured that alcohol is just as wholesome as whisky.

Senator REED of Missouri. Well, that is a gratifying bit of information.

Senator MEANS (the chairman). If you are through, I want to ask a question right there.

Senator REED of Missouri. I am not through with my examination, but am through with this phase of it, except to ask: How many druggists have been arrested to your knowledge or according to your reports for engaging in this trade; could you give us an idea?

Assistant Secretary ANDREWS. No, sir; I can not answer that question at all, only to say this, that an aggressive campaign is now under way to clean up all of that.

Senator REED of Missouri. Was not there any aggressive campaign conducted under your predecessors?

Assistant Secretary ANDREWS. I presume so; yes, sir; but I do not know the results of them.

Senator REED of Missouri. Are not there any reports in your office touching this matter?

Assistant Secretary ANDREWS. I will have to ask Mr. Jones to answer that question.

Prohibition Director JONES. We do not separate them, Senator. They all come in with a total of 62,000 minus for last year. I doubt if the Department of Justice, that has handled the cases, could tell you how many druggists were arrested as differentiated and distinguished from other citizens. We do not keep our records showing occupations. It would entail too much trouble.

Senator REED of Missouri. That is, there are so many of them you can not keep an account of them?

Prohibition Director JONES. Well, we do not keep an account of them according to occupation.

Senator REED of Missouri. Mr. Chairman, I think Mr. Jones will necessarily be called on for information from time to time. I think you had better swear Mr. Jones so that if he does give testimony it will come in under oath.

Senator MEANS (the chairman). I think that is true. Mr. Jones, will you please stand up. You do solemnly swear before the Everliving God that the testimony you will give in the matter now under hearing before this subcommittee of the Judiciary Committee of the United States Senate will be the truth, the whole truth, and nothing but the truth I

Prohibition Director JONES. I do.

021OV-26--VOL. 1-6

Senator MEANS. And give your full name for the record.

Prohibition Director Jones. My name is James E. Jones.

Senator MEANS. And your position.

Prohibition Director JONES. I am director of prohibition.

Senator WALSH. General Andrews, I am told that drug stores sell whisky in what are said to be nonrefillable bottles, which I understand they represent must be pure whisky. Do you know anything about that?

Assistant Secretary ANDREWS. I know it has been supposed as being true, but never to my knowledge has it been accepted as a condition for medicinal whisky. Do you know of any experiments along that line, Mr. Jones?

Prohibition Director JONES. I think Four Roses is presumed to be in nonrefillable bottles. But I am told that there is no such thing in fact as a nonrefillable bottle.

Senator REED of Missouri. Of course not.

Assistant Secretary ANDREWS. That is my information.

Senator REED of Missouri. You know that all that is necessary in order to fill what is called a nonrefillable bottle is to pour the liquor in very slowly, and that you can fill such a bottle just as you can fill any other bottle except it is a slightly longer operation.

Prohibition Director JONES. That is the reason I made the statement I did.

Senator REED of Missouri. And it may be a little trying on the nerves of the man who is waiting to get it.

Senator MEANS (the chairman). What I wanted to ask you on that subject, if Senator Reed has exhausted his inquiry?

Senator REED of Missouri. Yes.

Senator MEANS. I have heard, either in general conversation or from the newspapers, that the filling stations selling alcohol as a nonfreezing solution have been the source of annoyance to your department; that they may be considered as some of the leaks. Will you inform us as to that particular branch of the so-called industry?

Assistant Secretary ANDREWS. Do you mean the gasoline filling Stations?

Senator MEANS. Yes.

Assistant Secretary ANDREWS. On account of selling antifreeze mixture?

Senator MEANS. Yes.

Assistant Secretary ANDREWS. Until perhaps two months ago we all believed that the antifreeze mixture should be distributed as freely as water; that it was impossible to do what we call " renature " it. That is, to undertake to make it possible for use for beverage purposes. But the chemical art has been going forward so fast that to our astonishment about two months ago we found a distilling plant that was making beverage alcohol out of antifreeze mixture. And in the same city we found one using embalming fluid for beverage purposes. So that it has become a pretty serious problem to let people use alcohol for these purposes; and they get to even using wood alcohol, and they are apparently not afraid of it.

That is where the poison comes from, Senator Reed. We do not expect them to take a thing that is put out to keep an automobile engine from freezing and try to drink it, where they put wood alcohol and kerosene and all kinds of things in it.

Senator REED of Missouri. But the man who wants a drink frequently disappoints all expectations.

Assistant Secretary ANDREWS. That is true.

Senator MEANS. The reason I asked the question is that it is a problem that now confronts your department, and does the law that you have proposed to us cover that situation or control that situation, or do you further contemplate a recommendation to the Congress of laws which you think will aid you to control these leaks which result from an increased use of the art of extracting intoxicants from almost any kind of industrial alcohol?

Assistant Secretary ANDREWS. Until that decision of yesterday I was satisfied that I had asked in this law the two things. One is to bring denatured alcohol and denatured rum into the same class when we find them being used for beverage purposes, or about to be used or about to be manufactured into beverage purposes; to bring denatured alcohol into the class of spirits that can be so used. Heretofore it has been thought outside of possible use for beverage purposes. We have been handicapped there.

Senator REED of Missouri. I do not mean to interrupt you, but I do not quite understand that.

Assistant Secretary ANDREWS. In other words, the law has handled denatured alcohol differently from the way it was handled whisky generally and all other like things because it has not been supposed to be capable of use as a beverage. Now I am asking that it be brought into the same category as beverage liquors when we find that it is being so used or manufactured for that purpose.

I am also asking of the Congress a severe penalty for the manufacture of beverages from denatured alcohol, because that is a brand new kind, and it is I feel a serious offense to the welfare of the community--- it does contain or may contain at least ingredients that are injurious to the health of the community.

Senator MEANS. Is there anything in this law that you have proposed to us which you desire to change or alter or ask us to withhold as a result of the New York decision to which you have referred?

Assistant Secretary ANDREWS. No, sir.

Senator MEANS. Then the law you propose to us is one that you yourself believe is necessary to help you in abolishing this so-called industry which is producing leaks.

Assistant Secretary ANDREWS. Yes, sir; but the change as the result of yesterday's decision that I think I shall have to ask for is an explicit statement on the part of Congress that permits to manufacture and use industrial alcohol may be reviewed once a year, as other permits are. That was apparently left out, although I did not think so, and neither did Mr. Volstead think so.

Senator HARRELD. Do you mean in order that they may be canceled at the end of each year, or that they may be reissued every year?

Assistant Secretary ANDREWS. Yes; that we may review them, and if we find they ought not to be renewed then that we will not renew them.

Senator HARRELD. Have not you the power now to revoke permits?

Assistant Secretary ANDREWS. Yes; to revoke permits, and we can get along with that power if we have to.

Senator REED of Missouri. As to the power to revoke, it is a power which can be exercised only for cause.

Assistant Secretary ANDREWS. Yes, sir.

Senator REED of Missouri. But you want the power arbitrarily, and I do not use the term offensively, once a year to refuse to reissue a license without giving a reason therefor.

Assistant Secretary ANDREWS. I do not think it would ever be issued in that way.

Senator REED of Missouri. I do not say that it would, but you want that power.

Assistant Secretary ANDREWS. I think we would always give a reason. In every one of the cases we have had we called the owner in and explained to him why we would not give to him his permit for another year, and have him a chance to make good if he wanted to. It is an easier and surer process, and will have a much better effect on permittees. If the permittee knows that on January 1 of each year he must come up with a clean record he is going to conduct his business more carefully than if he is only to depend on our catching him.

Senator REED of Missouri. Then you propose to have a law that you do not have to catch a man in a concrete act, do not have to have any evidence against him which would warrant a rescission of his permit, but you want the power vested absolutely in the Prohibition Department to decline to issue the permit without giving any reason why, except that you do not think he ought to have it. That is the way you want it, is it?

Assistant Secretary ANDREWS. I would be willing to give you a reason why.

Senator REED of Missouri. Well, now, then, if you are willing to give a reason why that is all you have to do now---is to give a good reason why in order to revoke a permit, is it not?

Assistant Secretary ANDREWS. Revocation is a matter which is reviewed in the courts, and we have got to have evidence that we can take into court and sustain.

Senator REED of Missouri. And you want to revoke permits, then, on evidence which you can not take into court? You want the power to revoke or refuse a permit on evidence which you can not take into court and can not sustain.

Assistant Secretary ANDREWS. Well, I do not want to have to take it into court. The courts are more than crowded now. It is awfully hard to get these things done.

Senator REED of Missouri. You want to have the right to refuse to reissue a permit upon evidence which maybe satisfactory to you, but which you could not present to a court and expect to sustain your case on.

Assistant Secretary ANDREWS. Senator, as I see it this is an administrative function of determining whether or not a man should be entitled to transact business, whether there is any necessity for it, and whether it is a good economic thing for him to do it. We have both phases of it in our hands, and we have that right when it comes to granting permit in the first place, you know.

Senator REED of Missouri. Yes.

Assistant Secretary ANDREWS. We look the situation over and see---and other Governments do the same thing---whether or not a

permit should be granted to the applicant. Of course there is a great deal of difficult there, because even in that situation we sometimes are taken into Court and the court orders us to grant the permit. So it seemed to me that if that power to refuse a permit originally was carried on so that from year to year we could have permittees more closely under our control, we might relieve the courts of a burden, and would be able to administer the law more intelligently for the benefit of the community.

Senator REED of Missouri. Yes; and if we were to permit every constable to have the right to take a man and throw him into jail without trial we would relieve the courts a great deal, too.

Assistant Secretary ANDREWS. But I am not dealing with a constable but with the man who administers, the law.

Senator REED of Missouri. A constable administers the law.

Assistant Secretary ANDREWS. Not in the sense that I used the word. I have a man now in the district with the authority of commissioner, and presumably with the discretion of a commissioner. The business has got to go on, and there is a tremendous number of these permittees, and the spirit of the man who administers the law is to encourage legitimate business, to take care of legitimate business. We recognize that the industrial use of alcohol is essential to business, and it has got to be carried on. Now, if we are tied down too closely by having everything reviewed in the courts, and particularly (if the court is trying to apply to the situation the rules of ordinary business, it is quite a handicap both to the courts and to the administration of this law. And let me assure you that the bigger the bootlegger the more clever the bootlegger, the better his books are kept, the cleaner his records are kept. An honest man will not begin to keep such a set of books as a business man as will the big bootlegger, because the bootlegger is looking forward to that very kind of thing.

Senator REED of Missouri. You do not like to take that kind of case into court because you might be beaten.

Assistant Secretary ANDREWS. Well, no, Senator; but---

Senator REED of Missouri. That would seem to be the situation.

Assistant Secretary ANDREWS. Well, I would not want to be taken into court, and I would not want to be beaten in a case that I had like was the situation on yesterday in New York. I admit that I do not like that.

Senator REED of Missouri. As a matter of fact alcohol is absolutely necessary to the conduct of many very large businesses in this country.

Assistant Secretary ANDREWS. Right.

Senator REED of Missouri. So that a man obtaining a, permit to use alcohol may invest many millions of dollars in a plant and business where if the permit is withdrawn his business is destroyed.

Assistant Secretary ANDREWS. Right.

Senator REED of Missouri. Do you think that in a free country a power like that ought to be vested in any man outside of a judge of a court, where there is control had according to law, and whereby that man can of his own volition and without giving a legal reason destroy the permittee's business? Do you think that is compatible with a free country?

Assistant Secretary ANDREWS. Well, I would not contemplate any such situation as that, Senator.

Senator REED of Missouri. Well, you say you want this authority of renewing permits I placed absolutely in the Prohibition Department and in an unqualified way so that a holder of a permit has no right to go into court, and because you want to relieve the courts of that business. Now, does it not generally just come back to what I have said that I, for instance, might go down and get a permit, and on the strength of the permit proceed to invest in plant and in business many millions of dollars, if I had the money; that may properly conduct my business, may keep my books perfectly, and may be entirely innocent of any wrongdoing doing, and yet under the rule your propose a prohibition officer could refuse me a permit for one of the essential ingredients in my business, and I could be ruined. Do you think that is compatible with free government?

Assistant Secretary ANDREWS. Well, I do not believe we have understood each other exactly, Senator., Every action, as I understand it, of an administrative officer is reviewable in court. If any such picture as you draw were true, of course you would take the administrative officer into court.

Senator REED of Missouri. Under what authority, if you have by law vested in these men the absolute right of decision without giving a reason, without producing facts that they could carry into court to sustain them as you said a moment ago, would the man who was refused the reissuance of a permit get into court and have any standing in court?

Assistant Secretary ANDREWS. Of course, we have not got the law before us, nor have thought out in detail what that law should be in order to give us this power. I should assume, however, that the law would certainly provide for judicial review if it is not already the constitutional right-- and as I understand it, it is a constitution right, because you can not deprive a man of his property without due course of law.

Senator REED of Missouri. You are not depriving him of his property without due process of law. But I think you have admitted my contention, which is all I desire. At the same time certainly your last statement, and I say it with all respect in the world, is not consistent with the statement you made a while ago that you wanted the power vested in the Prohibition Department so that cases could not be taken into court.

Assistant Secretary ANDREWS. Well, I did not intend to say it that way.

Senator REED of Missouri. If you do propose to allow them to be taken into court, then do you propose that the judge shall decide the case upon the merits of the proposition?

Assistant Secretary ANDREWS. Senator Reed, I am not prepared discuss this in detail I have not worked it out. It is as new to me. It came yesterday evening as a result of the decision in the New York case to which I have referred.

Senator REED of Missouri. Won't you think of it along the line of whether arbitrary power to destroy any business should be vested in any authority on earth except a court of law, where the case is entirely reviewable, upon evidence presented in court, and where the presumption is not indulged that the act of an administrator in revoking a permit is to be taken as legal without being sustained by a court.

Assistant Secretary ANDREWS. All right, Senator Reed.

Senator HARRELD. Is not this the situation: That under the present law it is incumbent upon you, or the administrator, where you revoke a certificate to go into court and show bad faith on the part of the other fellow, and do you not assume the burden of showing that bad faith? On the other hand, is it not the purport of your new bill to change that so that he must show bad faith on your part in order to continue the canceled or revoked certificate; is not that the real effect of the proposed law you want to offer?

Assistant Secretary ANDREWS. I have not proposed a law to meet this situation as yet. This situation arose unexpectedly last night as a result of the decision in the New York case, and it seemed to me that naturally--- if I were to carry on this plan that the law should be amended to give me the right I supposed I had. But the details of that matter I can not give you right now.

Senator HARRELD. You in any, case do not expect to take away from the court the power to review your act?

Assistant Secretary ANDREWS. No; I do not see how I could.

Senator HARRELD. But having the power to act in the first instance, you feel that you ought to have that power conferred on you to act in the same way at the end of each year?

Assistant Secretary ANDREWS. Yes; that is the idea, exactly.

Senator HARRELD. And then the man against whom you act, or through whom you refuse to reissue a permit, would still have his right to go into court and attack the good faith of your action in revoking the permit, would he not?

Assistant Secretary ANDREWS. That is undoubtedly true. I do not think that any Government officer could so act without the power to have his acts reviewed.

Senator REED of Missouri. Now General, you are, as I understand, a distinguished officer of the Army.

Assistant Secretary ANDREWS. But not of the law.

Senator REED of Missouri. No. But you are not a lawyer.

Assistant Secretary ANDREWS. I am not a lawyer.

Senator REED of Missouri. But I just call your attention to the fact that laws have been passed by which the act of an administrative officer, 'where he is vested by the statute with a discretion, can not be inquired into in court. I Plenty of them. I think that is just the kind of a law you were talking about just a little while ago. But these things lead generally to just the point I have indicated. Now, let me add. You have discharged how many men for crookedness or incompetency? Six hundred and something?

Assistant Secretary ANDREWS. No; over 800.

Senator REED of Missouri. Over 800?

Prohibition Director JONES. Eight hundred and seventy-five.

Senator REED of Missouri. Which is a pretty large percentage out of a total force of how many?

Assistant Secretary ANDREWS. I believe over 10,000 men have passed through.

Senator REED of Missouri. Ten thousand?

Assistant Secretary ANDREWS. Yes.

Senator REED of Missouri. But your total force runs about---

Assistant Secretary ANDREWS. Runs about 3,600 to 3,800, and that is a period of, we will say, six years.

Senator REED of Missouri. Yes. Now with that tremendous proportion of discovered corruption, to say nothing about the undiscovered corruption, do you think it is very safe to put great business institutions in a position where

Senator HARRELD (interposing). One out of twelve of the disciples went wrong, and this is only 1 out of 10.

Senator REED of Missouri. But there is no Jesus Christ in this, either at the head or along the line. My friend has gone into Biblical matters, a question I did not understand he was at all familiar with.

Senator HARRELD. I asserted that 1 out of 12 of the disciples went wrong, and this is only 1 out of 10 of these employees.

Senator REED of Missouri. Well, admitting that there is 1 out of 12, do you think that it is safe to vest this tremendous power in any body of men when it has already been discovered that this enormous percentage of corruption exists, this power that might crush a great business or a man's small business, and deny a full and complete trial in the court?

Assistant Secretary ANDREWS. No; I do not believe it is.

Senator REED of Missouri. No; of course it is not.

Senator MEANS. And might I add that I do not think Congress
would ever do such a thing---

Assistant Secretary ANDREWS. No.

Senator MEANS (continuing). As to deliberately break any industry down or to deny any men the right in court. As I understand, General, all that you spoke about was to give you the same power at the end of the year that you had before, and that you intended that that power in the first instance is reviewable, but that there was no vested right at the end of the year beyond that which you granted in the first year; in other words, they are from year to year, and that any action of yours or your body would be reviewable by court. Is that what you intended to express when you said that you wanted a law that would give you that privilege?

Assistant Secretary ANDREWS. Yes; but I did not intend to enter into the discussion of it, of course, because I have not worked out the detail of it at all, and I have not looked into it at all.

Senator MEANS. Yes.

Senator REED of Missouri. You do not mean to say now, do you, General, that when a man makes an original application to you to-day for a permit, and it is refused, that that action is reviewable in court as an ordinary lawsuit? You do not mean to say that is true to-day, do you?

Assistant Secretary ANDREWS. That it is or is not reviewable?

Senator REED of Missouri. That it is reviewable, so that he enters there to try the case on its merits, and is not confronted by an almost conclusive presumption that your action was right?

Assistant Secretary ANDREWS. I am a little confused on the question, but the answer is this: I believe that the administrator has the authority to decide that this applicant for a permit should not have a permit.

Senator REED of Missouri. And that that authority thus exercised is not reviewable in court?

Assistant Secretary ANDREWS. No; I assume that he can be taken into court.

Senator REED of Missouri. Well, is it not true that the Prohibition Department can not to-day be taken into court where they have refused an original application for a permit, unless at least--- and I have not examined the decisions--- the applicant is confronted by a practically conclusive presumption that the action of the Prohibition Department is proper? Is that not the situation you have to-day?

Assistant Secretary ANDREWS. I think it is.

Senator REED of Missouri. And then you want that same power with reference to the

Assistant Secretary ANDREWS (interposing). To the annual renewals.

Senator REED of Missouri. You want that same power with reference to the annual renewal?

Assistant Secretary ANDREWS. Yes.

Senator REED of Missouri. So we come in the same hole we went out of a little while ago, that is to say, you want the power in the Prohibition Department to refuse a permit upon whatsoever grounds are satisfactory to them, or upon no ground at all, and that the applicant or business man engaged under a former permit can have his business destroyed? Not a real trial in court?

Assistant Secretary ANDREWS. Now there are just two points there. One is "no ground at all." I do not accept that. And the other is that you must remember that the man who is going to pass on this permit is working under instructions, and has been selected for the purpose to bring him into a position where it is his business to protect industry.

Senator REED of Missouri. Yes.

Assistant Secretary ANDREWS. He is there for the purpose of protecting industry.

Senator REED of Missouri. Exactly. It is his business to protect industry. And you want to vest in him the arbitrary right of decision, and we get back then to---

Assistant Secretary ANDREWS. I do not like the word "arbitrary." I do not believe that is true, Mr. Senator. I think it is an administrative right.

Senator REED of Missouri. Well, the right of decision upon whatsoever is satisfactory to him, although it may not be a case that he can take into court and sustain upon legal ground? Now is not that arbitrary power?

Assistant Secretary ANDREWS. Why, that is administrative power.

Senator HARRELD. General, have you any---

Senator WALSH. Senator Harreld, I beg your pardon. I want to suggest to the Senators that we are taking up the time of the petitioners here. Their time is limited.

Senator REED of Missouri. Well, if counsel objects I will stop.

Mr. CODMAN. I do not in the least, Senator.

Senator WALSH. Very well.

Senator HARRELD. I would like to ask a question. Is it not true, General, that in a great many cases where permits have been granted for a certain amount that the applicants have asked for an increased amount, which you have declined to give, and the courts have beard those cases and entered decrees in those cases?

Assistant Secretary ANDREWS. I am not sure of any court cases. Mr. Jones says there are.

Senator HARRELD. Mr. Jones says there are some cases.

Prohibition Director JONES. In many cases---

Senator HARRELD. Many Cases?

Prohibition Director JONES. Many cases in which the permittee has asked for an increased allowance and the courts have ordered it.

Senator REED of Missouri. That is after he had the license.

Senator HARRELD. In administrative cases.

Senator REED of Missouri. Yes, that is true. Now a moment ago we were talking about the amount of liquor that had been diverted through the drug stores, with the result that the druggists engaged in this illicit business had cut prices in drugs to such an extent as to injure the legitimate drug store. You had stated also that a similar condition existed in the manufacture of

Assistant Secretary ANDREWS (interposing). Cereal beverages.

Senator REED of Missouri. Cereal beverages. To what extent has the legitimate manufacture of cereal beverages been interfered with by the illicit manufacture of alcoholic beer?

Assistant Secretary ANDREWS. I could get you figures, Mr. Senator. I remember particularly the Euhlein Bros., who make some one of the well known brands of beer, brought the figures to show me exactly what had happened to their business in cereal beverages.

Senator REED of Missouri. Would you bring that to the next hearing, please, sir?

Assistant Secretary ANDREWS. Yes.

Senator MEANS. I want that statement of Mr. Jones in the record. Will you state that again, Mr. Jones, about where permits have been granted, and upon applications for increases, and denials by the administrative department, that the courts have ordered the increases?

Prohibition Director JONES. Yes, sir; right here in the District of Columbia.

Senator REED of Missouri. No doubt about that.

Prohibition Director JONES. Oh, yes.

Senator HARRELD. Does it not follow, therefore, that if your present law was passed, Mr. Secretary, that at the end of the year if you refused to renew a permit to any man he could go into court under the present law and do that like the man did whose permit to get an increased amount was refused?

Assistant Secretary ANDREWS. Yes. The only thing about it was that the court's decision yesterday said that I can not review the permit at the end of the year. I may not review the permit at the end of the year.

Senator MEANS. Except upon the theory, of revoking.

Assistant Secretary ANDREWS. Of revoking at any time of the year.

Senator HARRELD. Yes, but my question was if the present proposed law was passed when the end of the year came and you did review the permit and refused to reissue it

Assistant Secretary ANDREWS (interposing). He Could go into court.

Senator HARRELD (continuing). He would have the right to go into court just the same as if you refuse to grant a permit for an additional amount he can enforce action if he is in the right?

Assistant Secretary ANDREWS. Yes.

Senator MEANS. It is now 11.30, and it is the sense of the committee that we will adjourn to-day at 12 o'clock on account of the highly important matter that is before the Senate, being a matter of

special privilege. I will have to go, and ask you to excuse me, Mr. Codman, and Senator Reed, will you preside, please, until 12 o'clock, and the committee will recess at that hour.

(At this point Senator Means left the hearing room.)

Senator REED of Missouri (presiding). Mr. Codman, the General states that Mr. Buckner is here from New York City, and has been here from day to day and that he, the General, can come at any time and suggests that we might put Mr. Buckner on in his place. Do you want to do that for the short time that is left to-day!

Mr. CODMAN. It is 25 minutes to 12. I should not want to do it, Senator.

Senator REED of Missouri. To-morrow morning then? Would that be agreeable to you, Senators? To-morrow morning we will put Mr. Buckner on, and we can call you, General, whenever you are wanted.

Assistant Secretary ANDREWS. You can call me on the telephone and I will be here in 10 minutes.

Senator REED of Missouri. General, I wanted to ask you one other question. You say that there have been nearly 10,000 people that have been at various times employed in the prohibition department?

Assistant Secretary ANDREWS. Yes; those are the figures.

Senator REED of Missouri. And you told us the other day the number that have been actually discharged for misconduct. What is the great reason for this enormous turnover in the employees?

Assistant Secretary ANDREWS. Right now, in my time, the turnover, Which is big, is due to the fact that we are determined to build up in each district a group of men that will be loyal to their chief, and work for the interests of the Government, and wherever we find a man that we do not think is qualifying to the high standard which we are trying to establish we discharge him. And in that connection, as a fundamental proposition in the reorganization on the basis that I would have a big chief in the field in each district who would be the bead of a group that would be loyal to him and to him alone, I actually discharged every man in the field force as of the date six weeks after the appointment of the administrator, unless reappointed in the meantime, I think that resulted in the dropping of about 300 right there.

Senator REED of Missouri. Three hundred out of 3,600?

Assistant Secretary ANDREWS. No; out of about 2,000 field agents. And since then some of -my administrators are very keen to

sure.

Now we anticipate civil service. I believe that the Congress will pass it. My reorganization bill includes a clause that the appointments shall he made under civil service. We want to come up to the day when civil service is effective in our force with high grade men in the organization. You know just as well as I do now the men were selected, probably, in the past.

Senator REED of Missouri. No; I do not. I wish you would tell us.

Assistant Secretary ANDREWS. Don't you really?

Senator REED of Missouri. I do not.

Assistant Secretary ANDREWS. Well, I am told that they were selected on the recommendation of the directors in the field and the

field supervisors of the more mobile force, and that there was more or less political reason for their appointment in many cases.

Senator REED of Missouri. That is, you mean they were appointed generally on recommendation by somebody in politics or somebody who held office?

Assistant Secretary ANDREWS. Or some other organization, may be.

Senator REED of Missouri. What other organization?

Assistant Secretary ANDREWS. Well, any that are interested.

Senator REED of Missouri. Well, can you name some of them?

Assistant Secretary ANDREWS. Yes, I could name the churches, and the

Senator REED of Missouri. What churches?

Assistant Secretary ANDREWS. All the churches, so far as I know. They are all interested in this law.

Senator REED of Missouri. And they have been recommending men I

Assistant Secretary ANDREWS. I think so. I have heard recommendations from them.

Senator REED of Missouri. Who else?

Assistant Secretary ANDREWS. The 'Women's Christian Temperance Union, the Anti-Saloon League, or any of these organizations that are interested in the welfare of the community and the enforcement of this law.

Senator REED of Missouri. And who represented the Anti-Saloon League particularly?

Assistant Secretary ANDREWS. In making recommendations?

Senator REED of Missouri. Yes.

Assistant Secretary ANDREWS. Oh, that is all before my time. I can only tell you

Senator REED of Missouri. Well, do you not know as a matter of history?

Senator HARRELD. Well, do you not think that the Anti-Saloon League ought to be consulted?

Senator REED of Missouri. Let him answer.

Assistant Secretary ANDREWS. Do you mean the name of the person now?

Senator REED of Missouri. Yes.

Assistant Secretary ANDREWS. Well, I Will Say *in answer to that, sir, the superintendents, the State superintendents of the Anti-Saloon League.

Senator REED of Missouri. Yes. Anybody here in Washington?

Assistant Secretary ANDREWS. Mr. Wheeler. Let me say, though, that he has never made any recommendation to me, though, about it.

Senator REED of Missouri. You stopped it, did you not, General, pretty early?

Assistant Secretary ANDREWS. He never made any effort to do so. I started out on the basis that I have stuck to ever since, that the administrator in the field should select his personnel.

Senator REED of Missouri. Exactly. Now, notwithstanding the fact that these people were put in with these various recommendations you have told us of, you thought it was necessary to reorganize the entire force in order to get an efficient force?

Assistant Secretary ANDREWS. Perhaps because of that, rather than notwithstanding that. Mr. Senator, I wish to put all the responsibility for law enforcement on the administrator. Now he can not exercise that, he can not be held responsible for that unless he may name every man who must work for him and with him and under him.

Senator REED of Missouri. Exactly.

Assistant Secretary ANDREWS. Now, that is common sense.

Senator REED of Missouri. I think so.

Senator HARRELD. But, General, does he not have to ask somebody and get some information from some source about the man he employs?

Assistant Secretary ANDREWS. In the beginning when he first goes in, yes.

Senator HARRELD. Can he do that better than to call on the friends of prohibition and the law in getting recommendations of that sort?

Assistant Secretary ANDREWS. Unless he has personal knowledge. If he has not any personal knowledge I do not know who he can go to better than those that I am speaking of.

Senator HARRELD. That is than those who know the men qualified for the appointment. Is it not impossible for the administrator to know who are the qualified men for the appointment in every case 2

Assistant Secretary ANDREWS. If he was a stranger to the district and a stranger to the organization, yes.

Senator HARRELD. Then he must get his information from some source, and that is, you think, as good a source as he can get it from.

Assistant Secretary ANDREWS. To start with.

Senator HARRELD. Yes.

Assistant Secretary ANDREWS. And then he knows his man, and from that on, all right lit.

Senator REED of Missouri. Well, if that is as good a source as they can get them from to start with, your men are going to start out just as likely to get a lot of crooks now as before?

Assistant Secretary ANDREWS. Yes; but they drop them awful fast.

Senator REED of Missouri. They drop them awful fast?

Assistant Secretary ANDREWS. Very fast, Senator. And it is not crooks either, Mr. Senator, that cause me annoyance as much as the men who lack appreciation of what the law means and how to enforce it. In other words, stupidity is more of a nuisance to me than crookedness.

senator REED of Missouri. You go on the theory that you can handle a crook, but you can not do much with a fool, is that it?

Assistant Secretary ANDREWS. Well, I agree with you, yes. I think stupidity is---

Senator REED of Missouri. But now there were let out this large number of men, some 800, for misconduct of various kinds. Part of it was crookedness?

Assistant Secretary ANDREWS. Yes. That is one of the reasons why we want more careful selection, and why we believe in civil service in order that a man may know that he has got a position

there, that he is a responsible, permanent representative of Government.

Senator REED of Missouri. Then you do think there is a better source to go to for the qualifications of a man than to these various interested organizations! You think a civil-service board is better, do you not?

Assistant Secretary ANDREWS. When we may go to it.

Senator REED of Missouri. Yes; when the law is passed.

Assistant Secretary ANDREWS. Yes.

Senator REED of Missouri. Well, there is a better source available. It may, not be available to you to-day.

Assistant Secretary ANDREWS. It has not been available, nor is it available to me to-day.

Senator REED of Missouri. No. And you think in the meantime it is better to appoint a man whom you think, after your investigation is made, is a responsible man, for a prohibition agent in the district, and leave to that man to gain his information from all sources, not from particular sources, as to the qualifications of the man he is about to select?

Assistant Secretary ANDREWS. Yes; and his personal judgment in the end is the big thing.

Senator REED of Missouri. And then he has to watch this man as carefully as he can and observe his conduct, and then keep him or discharge him, as he sees fit?

Assistant Secretary ANDREWS. That is exactly the basis on which we are working, and has been since the 1st of September.

Senator HARRELD. I do not know that I am opposed to the civil service method, but what personal decision would our administrator have if it was placed under the civil service? He would have none, would he?

Assistant Secretary ANDREWS. Well, to start with, the requirements for a prohibition agent or requirements for an inspector on our force or requirements for an investigator on our force will be set up by the Civil Service Commission after consultation with us, so that we feel quite sure that they will be reasonable and helpful to us. And then when their list comes along, as you know, the administrator has the choice of the first three, and if out of the first three he does not find one that is suitable he says, "Well, I will not fill this vacancy just yet," and looks for another list.

Senator HARRELD. As a matter of fact it does take away from him discretion to a large extent?

Assistant Secretary ANDREWS. Yes; to a considerable extent. And they tell me it will also take away from him the power to fire.

Senator HARRELD. It does to a large extent.

Assistant Secretary ANDREWS. To a considerable extent. Although I am sure that there are only two reasons on which he may not fire. One of them is religious and the other is political.

Senator REED of Missouri. And he must have reason?

Assistant Secretary ANDREWS. Yes; I say he may fire for any other reasons than religious or political.

Senator REED of Missouri. But they must be reasons going to the Competency of the man, surely, General.

Assistant Secretary ANDREWS. Well, I am only quoting what they assured me in the hearing of the Civil Service Committee.

Senator REED of Missouri. Because, of course, General, you know this, that if I have a right to discharge---if you will permit me---

Assistant Secretary ANDREWS. Yes.

Senator REED of Missouri (continuing). You from the Army for any other reason but religious or political, and not give the reason I could fire you anyhow.

Assistant Secretary ANDREWS. Yes; you could find one before night.

Senator REED of Missouri. Yes; I could find one before night.

Senator HARRELD. But we all remember what a time President Harding had when he tried to fire some men from the Bureau of Engraving.

Assistant Secretary ANDREWS. Well, I only know what the press said. I gathered that that was political.

Senator HARRELD. He did not get away with it, and he was President.

Assistant Secretary ANDREWS. Yes.

Senator REED of Missouri. Well, he was getting away with it all right until the fire got too hot. Now, General, you will bring us the information we called for when you come back?

Assistant Secretary ANDREWS. Yes.

Senator REED of Missouri. That is all I desire to ask, Mr. Codman, at this time.

Mr. CODMAN. General, just a few more questions on this line which I can take up before recess. We will go to other matters when you return to morrow. I understand that we adjourn at 12 o'clock, Senator.

Senator REED of Missouri (presiding). Yes. The committee will adjourn at 12 o'clock.

Senator HARRELD. On account of this Brookhart-Steck contest we must be there.

Mr. CODMAN. You have testified that 875 men were separated from the service for various causes, and I will not go into the rest of the causes except that 119 were discharged for unsatisfactory service and insubordination and 187 for intoxication and misconduct?

Assistant Secretary ANDREWS. Yes.

Mr. CODMAN. Now you do not think that when you got rid of the 875 men that you found out and convicted that you cleared out all the improper or unsatisfactory men from your department, do you?

Assistant Secretary ANDREWS. No; as I have just stated, Mr. Codman, we are engaged even to-day in trying our best to weed out the incompetents and ineligibles.

Mr. CODMAN. Certainly.

Assistant Secretary ANDREWS. And get better men in their places.

Mr. CODMAN. Yes; now as to the salaries of these men. Take the field force. The salaries of these men are comparatively small salaries, are they not? What do they run? I want to go over that as quickly as I can.

Assistant Secretary ANDREWS. You have a paper carrying all the salaries, Mr. Codman.

Mr. Codman. Well, I thought perhaps you could give me a general idea of what they were.

Assistant Secretary ANDREWS. The maximum salary is $6,000.

Mr. CODMAN. The maximum salary, is $6,000?

Assistant Secretary ANDREWS. For an administrator.

Mr. CODMAN. The maximum salary for an administrator is $6,000?

Assistant Secretary ANDREWS. Yes. Now, I give to counsel, the legal adviser of the administrator, under my now policy sometimes as high as $6,000, because of the necessity---

Mr. CODMAN. Well, General, I do not care so much about the men in the higher ranks in the department as I do care for the prohibition officer whose duty it is to enforce the work in the field.

Assistant Secretary ANDREWS. His salary starts at $1,860 and runs up as high as $5,000, depending on the type of work that he is doing and the quality of the man.

Mr. CODMAN. Of course, the greater number are in---

Assistant Secretary ANDREWS (interposing). Are in the vicinity of $2,000?

Mr. CODMAN. Are in the vicinity of $2,000?

Assistant Secretary ANDREWS. I think it will be nearer $2,400 when our organization is in effect.

Mr. CODMAN. That is sufficient for our purpose. Now, are not a great many of those men subject continually to great temptation to evade and avoid their duties?

Assistant Secretary ANDREWS. Yes; many of them are.

Mr. CODMAN. Is it not possible for them by a very little dereliction of duty which can be done without very much notice, to obtain enormous rewards?

Assistant Secretary ANDREWS. Now and then a man has an opportunity for an enormous reward; yes. That is, if you will assume $50,000 or $75,000 as an enormous reward.

Mr. CODMAN. I look at that as an enormous reward for a man receiving $2,000 a year; yes, sir.

Assistant Secretary ANDREWS. And I have known men to resist it.

Mr. CODMAN. Yes; and very much to their credit indeed. And you also know of a good many men that have not resisted it?

Assistant Secretary ANDREWS. Yes.

Mr. CODMAN. And we all know that human beings are liable to error and to fall. And you know that these men of your force are subject to very great temptation and very persistent temptation, are they not?

Assistant Secretary ANDREWS. Persistent; yes.

Mr. CODMAN. Yes; persistent temptation.

Assistant Secretary ANDREWS. I do not believe many of them have much chance to make great amounts of money.

Mr. CODMAN. But they have enough chance to make enough money to make a good deal of difference and a good deal of an addition to $2,000 or $2,400 a year?

Assistant Secretary ANDREWS. Oh, yes; or in addition to $4,000.

Mr. CODMAN. Yes.

Assistant Secretary ANDREWS. I do not believe you can buy honesty.

Senator REED of Missouri. I do not want to interrupt you, but I want to ask a question. How many of these men that have been discharged for crookedness have been prosecuted?

Assistant Secretary ANDREWS. You have got those figures, Mr. Jones?

Prohibition Director JONES. Yes; I have those.

Assistant Secretary ANDREWS. Mr. Senator, of course, it is very difficult to prove bribery. I do not need to explain that to you.

Senator REED of Missouri. No.

Assistant Secretary ANDREWS. And very often, with all the work that we have in hand, it is better to get rid of a man and have it over with than it is to take the time of the courts and ourselves trying to prove that he is guilty.

Mr. CODMAN. Did you want to ask another question, Senator?

Senator REED of Missouri. Well, I just wanted to get this answered.

Mr. CODMAN. Very well, sir.

Senator REED of Missouri. Here is a statement which Mr. Jones handed to me. You may put it in the record if you believe it correct.

Assistant Secretary ANDREWS. I do believe it correct. This is Exhibit E in answer to the Senator's question.

(The paper was marked "Exhibit E" and is here made part of the record.)

Since the enactment of the national prohibition act upwards of 10,000 prohibition workers have been employed in the Prohibition Unit.

Senator REED of Missouri. The paper will appear in the record. Will you let me have it, please?

Assistant Secretary ANDREWS. Yes.

Senator REED of Missouri. Then, according to this statement, the number of employees of all classes of the Prohibition Unit (excepting narcotic workers) convicted of violation of the national prohibition act is 23?

Assistant Secretary ANDREWS. Yes, sir.

Senator REED of Missouri. And the number of employees of all classes of the Prohibition Unit (excepting narcotic workers) convicted on all other charges than violation of the national prohibition act is 118?

Assistant Secretary ANDREWS. Yes sir.

Senator REED of Missouri. That is up to March 30, 1926, is it?

Assistant Secretary ANDREWS. Yes, sir.

Senator REED of Missouri. But you have a policy, General, you do not regard it as the proper policy, unless it is an aggravated case, and the evidence is clear cut, to get rid of the man.

Assistant Secretary ANDREWS. Yes, sir. In those cases, I presume most of them are parts of conspiracies. I do not know that but I imagine so.

Prohibition Director JONES. Of the 118 a great many of them are minor offenses rather than conspiracy.

92101*-26_-V0L. 1-7

Senator REED of Missouri. That is of minor offenses that were violations of the law.

Prohibition Director Jones. Yes.

Assistant Secretary ANDREWS. May I say in explanation of the intoxication, that unfortunately the only way we can get evidence of sale, that is really good in the court, is to have the man drink the liquor. That is one of the very unfortunate things about this law enforcement, that our agent who goes into a dive, one of the tough places, the only way he can get away with evidence is to drink it and bring it inside of himself and give evidence of the fact that it was intoxicating, whereas it would seem reasonable for him to buy a drink and bring it out and take it and test it, the situation is such he probably would not get out with his sample, so he has to drink it.

Senator REED of Missouri. Well, they also drink it where they could safely get out with the sample.

Assistant Secretary ANDREWS. There may be a few instances, but it is so poor that no man drinks it willingly; we had two men poisoned up in New York the other day.

Senator REED of Missouri. That is all the questions I want to ask.

Mr. CODMAN. You mean to say, Mr. Secretary, that all of this liquor that these men sample is usually so poor that nobody would drink it willingly?

Assistant Secretary ANDREWS. No; I did not say that.

Mr. CODMAN. I wanted to be sure.

Assistant Secretary ANDREWS. I say that they did not drink it willingly.

Mr. CODMAN. They did not drink it willingly?

Assistant Secretary ANDREWS. No; they dislike it; it is an unpleasant duty.

Mr. CODMAN. Unless I have been very much misled by things I have seen in the press, I should have said, that some times in these more prominent hotels, like the Mayflower, where the prohibition officers went in---

Assistant Secretary ANDREWS (interposing). You are speaking now of a rare case?

Mr. CODMAN. That is a rare case?

Assistant Secretary ANDREWS. Yes.

Mr. CODMAN. Well, I hope it is a very rare case, but in that particular case they showed a great willingness to drink liquor and spend a great amount of money.

Assistant Secretary ANDREWS. I should like to introduce a letter which I wrote in regard to that.

Mr. CODMAN. I should like to have an answer. They did drink liquor and spend a great deal of money, did they not?

Assistant Secretary ANDREWS. Yes.

Senator REED of Missouri. General, if you have issued a letter about it, you can introduce it. I presume that is satisfactory Senator Walsh.

Senator WALSH. Yes, sir.

Assistant Secretary ANDREWS. I think Mr. Chairman, it might be very informing to the committee who are interested in my policies and what I am trying to do, if I submitted the entire file of letters of instructions to administrators, as a matter of record.

Senator WALSH. I think that would be helpful.

Senator REED of Missouri. That is agreeable.

Assistant Secretary ANDREWS. I will do that.

Senator REED of Missouri. I suppose what you will submit will be copy so that you will not disturb your own file.

Assistant Secretary ANDREWS. Yes, sir.

Senator REED Missouri. That will be satisfactory.

Mr. CODMAN. I will be through in about five minutes more.

Senator REED of Missouri. I think we had better adjourn.

Senator WALSH. There will be a roll call.

Mr. CODMAN. You testified yesterday in regard to the patrol that you hoped to organize, that you had 1,600 men in all to enforce all Government regulations, both custom, immigration, and prohibition, on the two lines, both Mexican and Canadian borders.

Assistant Secretary ANDREWS. Yes.

Mr. CODMAN. And I suppose those 1,600 men would not be able to work all the time, would they; they would have to be at work in shifts, would they not?

Assistant Secretary ANDREWS. Well, they would not work all the time. We do not work them in shifts, however.

Senator REED of Missouri. You do not expect them to work more than about eight hours a day, do you?

Assistant Secretary ANDREWS. Yes, sir; they do, really.

Senator REED of Missouri. You will be in conflict with the Federation of Labor for that.

Assistant Secretary ANDREWS. They do. They patrol and other things at night. They do not work on regular schedule.

Mr. CODMAN. They would have a border line of something over 5,000 miles?

Assistant Secretary ANDREWS. Yes.

Mr. CODMAN. And it is an easy arithmetical calculation about how many miles per man that would be.

Assistant Secretary ANDREWS. Yes.

Mr. CODMAN. Provided they worked---if 800 were working all the time-- in other words, if they worked in 12-hour relays. Now, do you not think that with the smugglers, of course, having the initiative of getting their stuff across the line, and knowing just where they were to make their attempt to get their bootleg liquor across the line, that they would be able, in the main, to outwit so small a force that you hope to have as a border patrol on those lines?

Assistant Secretary ANDREWS. Not in any commercial quantities.

Mr. CODMAN. Have you anything to base that opinion on, Mr. Secretary?

Assistant Secretary ANDREWS. Yes, I have considerable experience and quite a familiarity with the border. The Mexican border, we will take for example, is not crossed at very many points; it is mountainous, desert, uninhabitable, and without roads, and while an individual might get through alive, he would not carry much liquor in those territories, so there are the known routes and only those that may be used; and on the Canadian border it depends--- there are long stretches which are mountainous where you do not have to count mileage. We can stop the commercial smuggling across the Canadian border.

Senator REED of Missouri. Will you let me ask a question before you go. What proportion of the liquor smuggled into the United States has been caught, in your judgment, up to date?

Assistant Secretary ANDREWS. What proportion has been caught?

Senator REED of Missouri. Yes.

Assistant Secretary ANDREWS. Probably not a large proportion, but the proportion that had been smuggled in as compare with that which is in the market, we estimated is now down to 5 or 10 per cent.

Senator REED of Missouri. Yes; but do you think you have caught 5 per cent of the liquor that has been brought in?

Assistant Secretary ANDREWS. In the past; no.

Senator REED of Missouri. We will have to adjourn until to-morrow morning at 10 o'clock.

Mr. CODMAN. And if the Secretary will postpone for a short time, I am going to put on the Attorney General.

Assistant Secretary ANDREWS. If you will call my office I will be here at any time in 15 minutes.

1 This covers such cases as conspiracy to violate the national prohibition act, to extort bribes from violators, to defraud the United States Government, etc.

2 This classification includes failure to report violations of the national prohibition act; leaving guard duty without permission, etc.

3 Misconduct covers such matters as immorality, assault, arrest for speeding, gambling, fighting, creating disturbance, etc.

(The committee thereupon, at 12 o'clock noon, adjourned until to-morrow, Wednesday, April 7, 1926, at 10 o'clock a. m.)