A study of state regulations affecting the alcoholic beverage industry

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Content A STUDY OF STATE REGULATIONS AFFECTING THE
ALCOHOLIC BEVERAGE INDUSTRY
A Thesis
Presented to
the Faculty of the Department of Marketing
The University of Southern California
In Partial. Fulfillment
of the Requirements for the Degree
Master of Business Administration
by
David Meyer Horwitz
September 195>5
UMI Number: EP43433
All rights reserved
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This: thesis, written by
3
DAVID MEYER. HORWITS M , 1
"X> (
under the guidance of his Faculty Committee*
and approved by all its, member®* has been
presented to and accepted by the Faculty of
the School of Commerce in partial fulfill
ment of the requirements for the degree of
Master of Business Administration
Cate
APPROVED
4 ih. ; __
TABLE OF CONTENTS
CHAPTER PAGE
I. THE PROBLEM AND DEFINITIONS OF TERMS USED . . . . 1
The problem.................................... 3
Statement of the problem................... 3
Importance of the study..................... 3
Method of procedure.......... I j .
Organization of the remainder of the
thesis.............. 7
Definitions of terms used ................... 8
Alcoholic beverages . ....................... 8
Beer ................................ 8
Distilled spirits ............................ 8
D r y........................................... 8
Liquor ...................................... 9
Monopoly state ............................... 9
Off-sale .................................. 9
On-sale ...................................... 9
Open-license state ........................... 9
W i n e ............................. 10
II. THE LIQUOR INDUSTRY AND ITS MARKETING
i
STRUCTURE.........................................11
. 11 |
. 11 ;
,n i
The industry
The distillers
The Big Four
iii
CHAPTER PAGE
The effects of World War II on the
liquor industry ....................... 12
The market.................................. 19
Market size and pattern ..... ........ 20
The marketing structure ..................... 21
The wholesaler............................ 21
Wholesaling contracts ................... 22
Requirements of the wholesaler......... 22
Liaison functions ....................... 23
The retailer.............................. 2b
III. THE DEVELOPMENT OP LIQUOR CONTROL j
{
LEGISLATION.................................. 26 I
i
The history of liquor legislation 27 !
1
!
The Whiskey Rebellion 28 \
\
1
The reform movement 29 i
i
Temperance societies ................... 30 J
I
Legislation since Repeal ................... 3b
The Twenty-first Amendment............... 3 ^ 1 -
State liquor control systems ........... 35
The monopoly s t a t e....................... 36
The open-license state ................... 37
Local option............ 39
Federal liquor regulations............... i | _ 0
Summary........................... i j . 2
iv
CHAPTER PAGE
IV. REGULATIONS AFFECTING THE MARKETING OF
LIQUOR--PART I ................................ i j l j .
Pricing and price controls in monopoly
states......................... I 4 . J ?
Pricing and price controls in open-license
states................... l j .7
Price fixing within the liquor industry. . . I 4.8
Resale price maintenance................... $0
Comparison of prices between monopoly and
open-license states....................... 53
Controls on credit and terms on sale........ 55
Credit transactions ........... 55
Discounts.................................. 56
Tie-in sales....................... 57
Consignment selling ............. ..... 57
V. REGULATIONS AFFECTING THE MARKETING OF
LIQUOR--PART I I .............................. 58
Sales restrictions........................... 58
Place of s a l e .............................. 58
Schools and churches..................... 58
Exceptions......................... 59
Restrictions on persons eligible to buy . . 59
Minors.................................... 60
Intoxicated persons ..................... 60
_____ Habitual drunkards . . ._. ............. 61
V
’CHAPTER ' “ ' " " ’PAG-E’
Interdicted persons .................... 6l
Insanity.................................. 6l
Indians.................................... 62
Hours of sale................................ 62
Regulation of selling period .............. 62
Sundays and holidays..................... 62
Election day ............................ 62
Quantity which may be sold to single
individual................................ r 63
Terms of sale................................ 63
Cash or credit............................ 63
Packaging and labeling .................... 63
Size of container......................... 63
Labeling standards ................ 6 1 4 -
Delivery of packaged g o o d s ................. 6 1 4 -
Advertising .................................. 65
Window displays ............................ 65
Signs...................................... 65
Handbills and direct mail................. 66
Other media................................ 66
Kansas..................... 66
Other responsibilities of the retailer . . . 68
Excise t a x ................................ 69
Price posting.............................. 69
_____Adulteration__. . . ._._._._._._._____. . . ____ 70
CHAPTER PAGE
The premises.............................. 70
Clientele................................ 70
Entertainment............................ 71
Minors loitering ......................... 71
Records.................................. 71
Other civil liabilities ................. J2
Trade restrictions............. . ........... 73
Type and number of retail outlets........ 73
Sales between retailers ................... 75
The industry's promotion of alcoholic
beverages.................................. 75
The manufacturers' advertising code .... 77
Purposes of advertising ................. 77
The code..................... 78
Radio and television................. . 79
Federal regulation of advertising ........ 8l
The Alcohol Tax Unit ............... 8l
Legislative attempts ..................... 82
Advertising techniques ..................... 83
Superlatives .............................. 83
Extent of advertising..................... 8 1 4 -
VI. ADMINISTRATION AND ENFORCEMENT OF LIQUOR
REGULATIONS.................................. 86
Administrative bodies....................... 86
__________Duties of liquor boards and commissions. . .___ 87
vi I
CHAPTER ‘ ~~ PAGE
Licensing.................................... 90
License qualifications . . . ............... 92
Nature and meaning of the license.......... 9k-
License f e e s .............................. 95
Excise t a x e s .............................. . 97
Federal excise taxes ........... 98
State excise t a x e s ..........................100
Tax exemptions.............................. 102
Discriminatory taxes ..................... 103
Enforcement.....................................105
Penalties.................................... 105
Criminal prosecution ................... 105
Revocation of license . ................. 106
VII. SUMMARY AND CONCLUSIONS..........................108
Summary 108 j
! 5
i ;
I Conclusions Ill}, j
| BIBLIOGRAPHY 118 i
J
I CHAPTER I
I
i
| THE PROBLEM AND DEFINITIONS OF TERMS USED
(
I
Possibly no other class of commodities has ever been
the subject of so much social control and governmental
regulation as the class known as alcoholic beverages.
The history of the use of alcoholic beverages, and of
attempts to control that use, may be traced to very ancient
origins. Primitive groups found that they could produce
alcohol by natural fermentation of fruits, cereal grains,
and related substances. Thus the brewing of beer and the
fermenting of wines very early extended over most of the
areas where agriculture developed. There is much evidence
of this in early Hebrew script and Babylonian tablets.^"
i
i
Tribal drinking, however, appears to have been limited !
^largely to religious or ceremonial occasions. Solitary j
| !
| 1
jor individual drunkenness was virtually unknown, but when !
2 |
detected was subject to very severe punishment. Persistence
j
in the use of alcohol throughout the ages, even though at j
I
times severe penalties were imposed, would imply that it I
|
had a significance deeply rooted in human habits, customs, j
I
i ;
i _ _ _ _ - _ _ _ _ _ _ ■_ _ _ _ _ _ _ _ _ _ '
1 i
| Clarence H. Patrick, Alcohol, Culture, and Society I
! (Durham: Duke University Press, 19!?2), pp. 13-15"* " ’
\ 2 !
Raymond G. McCarthy and Edgar M. Douglass, Alcohol
[and Social Responsibility (New York: Thomas Y. Crowell
Company and Yale Plan Clinic, 19I 4. 9), p. 3*
2
and relationships^
In the United States, prior to the close of World
War I, whatever controls were imposed on the use of
alcoholic beverages were the jurisdiction of the individual
states. In 1919 the Eighteenth Amendment to the
Constitution was ratified, and pursuant to this Amend
ment the Volstead Act was enacted by the Federal Congress.
This law prohibited the manufacture, sale, transportation,
or exportation of Intoxicating liquors. But enforcement
of the Act proved to be a very difficult matter, and many
I groups insisted that Prohibition was not workable.^"
Ultimately Prohibition was repealed by ratification of the
Twenty-first Amendment In 1933-
Control of the sale and distribution of alcoholic
i
!beverages was again returned to the several states. The
j i
i states, as might be anticipated, chose to apply different j
| |
jtypes of controls. Some states chose to maintain a j
jcomplete state monopoly over the marketing of alcoholic j
jbeverages, but most of the states elected to permit the
[licensing of private distributors.
i
' The controversial nature of alcoholic beverage
! j
|control is indicated by the large body of literature which j
j j
i :
! Ibid., p. I j . . !
| k i
^Fletcher Dobyns, The Amazing Story of Repeal
[(Chicago: Willett, Clark & Company, 19I 4.QJ, pp. "2o£>-298.
_ _ _ _ _ . _ !
has developed on the general subject. The ardent and J
fanatic Prohibitionist writers would have one believe that !
!
the liquor manufacturers are attempting to make “alcoholics”
of the entire population.^ The so-called “wets” who believe
there should be no controls on liquor tend to argue from
the general premise that controls are a menace to the
6
freedom of society.
I. THE PROBLEM
Statement of the Problem
The purposes of this study were (l) to analyze,
summarize, and compare state laws governing the manufac
ture, sale, and distribution of alcoholic beverages, with
i
particular emphasis on the differences between controls in
1
monopoly and non-monopoly states; (2) to inquire into 1
marketing restrictions and to evaluate the effectiveness
!
iof the latter; (3) to consider the ultimate effect of
i
alcoholic beverage legislation on both the industry and
the consumer.
Importance of the Study.
It is estimated that there are some 65 million users j
{of alcohol in the United States who are normal social 1
|
. . . . . . » n i . . . . . . i
j |
Gilbert Burck, “How Hard Do Americans Drink?” '
Fortune, I 4. 7:121-122, March, 1953*
_________^Ibid.. p . 123._________________________________ ; ________
k
drinkers; there are some I 4 . million alcoholics.7 In the
year of 1950 more than 190 million gallons of distilled
spirits were consumed in the I 4.6 states where liquor is
legal (Mississippi and Oklahoma forbid distilled spirits).
This amounted to a per capita consumption of 1.3 gallons.
In 1951 Americans spent $9.2 billion for alcoholic
beverages— beer, wine, and distilled spirits. That was
$ l i - billion more than was spent for foreign aid, almost as
jmuch as was spent for automobiles, $2 billion less than
i
1
|was spent for all other types of recreation, and 50 per
j Q
cent more than was spent for all schools. The control
and regulation of so vast an industry should merit careful
study as regards the possible effects of controls on
marketing of the commodities involved.
■ Method of Procedure
| Through actual experience in the retail liquor
* I
business the writer has acquired an interest in legislation j
affecting the sale of alcoholic beverages. The form of
the study was influenced somewhat by the prospect of a
i ]
jfuture in the retail liquor business. ;
The most productive source of materials for this !
/ j
study has been the literature provided by the states which j
I
|
7Ibid.
8Ibid.
permit the sale of alcoholic beverages. Requests for
information were addressed to the several state alcohol
control boards, and in most instances the boards responded
j
with literature pertaining to the liquor controls of the
state. Considerable pertinent information was obtained
from a United States Government publication on State Liquor
hegislation.^ The latter was a comprehensive study covering
the legal aspects of liquor control in each of the states.
For information on licensing and taxing procedures
in the various states a booklet by the Research Department
of the Kansas Legislative Council was most helpful.
The most recent and comprehensive information on
all aspects of marketing was a handbook published late in
19$U by Benjamin W. Corrado.'*''*'
i
i ;
| Most of the writings on alcoholic beverages are I
i ;
focused on the psychological and sociological aspects of j
their use. Libraries devote wide shelves to studies of J
i
the alcohol problem, but materials confined to legislation j
f
I ^Works Progress Administration, State Liquor
iLegislation (Washington, D.C.: United States Government
‘Printing Office, 1914-1), IOI4 . I pp.
10
Kansas Legislative Council, Liquor Control,
Licenses and Taxes in States (Kansas: Research Depart
ment, 19I4 . 9T7 65 PP.
! 11 |
Benjamin W. Corrado, editor, Corrado's Handbook ;
of Liquor Marketing, 195b (New York: Benjamin W. Corrado
Marketing Consultants, 195>li)» 281 pp.
6
on the subject are scarce. An occasional chapter on the
legislative aspects was found, but no full length books
were obtainable. For background information on the
sociological and cultural history of beverage alcohol,
12
Clarence H. Patrick's Alcohol, Culture, and Society was
helpful. An excellent reference for information on the
factors which brought about Prohibition in 1919 and its
repeal in 1933 was Fletcher Dobyn's The Amazing Story of
13
Repeal. The latter contained a detailed discussion of
the specific problems arising in a country converted from
I
j”wetn to f , dryH and back again. For an evaluation of
liquor legislation and its sociological impact, the most
useful book found was Alcohol and Social Responsibility^
} ■ " '
I
'by McCarthy and Douglass of the Yale Plan Clinic, iftiile
i
!the book was devoted largely to the problem of education
as a preventive measure in alcoholism, considerable space
1
jwas given to consideration of the effect of certain types
i
I of legislation. This was perhaps the most objective and
i
f
;thoughtfully prepared book found in this research.
| Some time after the present study was undertaken
la Doctor's dissertation on a parallel subject was accepted
Iby the University of Chicago. The dissertation, entitled
j ■'•^Patrick, o£. cit., 28l pp.
| ^Dobyns, ojo. cit., IpOB pp.
| _ ^ McCarthy and Douglass, op. cit., _30l+ pp.______
7
"A Comparison of the Marketing of Alcoholic Beverages
under State Monopoly and Open License Systems," was
prepared by Jesse B. Allen.^ Mr. Allen, however, confined
his study largely to package store operations under the
various types of state controls.
Other useful sources of information were found in
periodical articles covering the period since repeal of
Prohibition in 1933. Perusal of these articles gave a more
I
1
jgraphic picture of the alcoholic beverage industry than
could have been obtained otherwise. The most useful
| articles were found in Fortune**-^and The American Mercury.^
i
i
The former gave an excellent analysis of consumption trends
and the latter contained useful information on bootlegging.
Organization of the Remainder of the Thesis j
i
This study consists of seven principal divisions, j
including the introductory chapter and final chapter of I
i
summary and conclusions. Chapter II concerns the marketing,
i
i l
jstructure and the industry, the role of the distillers,
|size and pattern of the market, and channels of
i
' 15 «
! Jesse Bishop Allen, A Comparison of4the Marketing
iof Alcoholic Beverages under State Monopoly and Open I
jLicense Systems,” (unpublished Doctor's dissertation, The ]
jUniversity of Chicago, Chicago, 1952), 180 pp. j
! ^Burck, 0£. cit., pp. 121-125, ll+l-l58. !
17
Harry Thompson, "Bad Booze Is Big Money," American
Mercury, 77:35-38, 1953*
8
distribution. Chapter III is a brief history of the
growth of liquor legislation before Prohibition and since
Repeal. Chapters IV and V concern legislation affecting
the marketing of alcoholic beverages. Chapter IV compares
pricing and price control in both monopoly and open-license
states and discusses terms of sale. Chapter V reviews
marketing restrictions placed on the retailer and on the
advertising of alcoholic beverages. Chapter VI concerns
administration and enforcement of liquor legislation in
I the United States.
II. DEFINITIONS OF TERMS USED
I
Alcoholic Beverages
Drinks which are capable of being consumed by a
jhuman being, such as spirits, liquor, wine, beer, and 1
; i
!
cider containing alcohol, are called alcoholic beverages. j
i |
'Beer !
~ !
t ;
i Any fermented beverage manufactured from malt is
i
jcalled beer.
1 1
IDistilled Spirits j
I
' Alcoholic beverages obtained through the process of
1
distillation are termed distilled spirits. j
Dry
A dry is any person, group, or branch of government
9
committed to a position in opposition to the manufacture,
sale, and distribution of alcoholic beverages under
sanction of law. Also, any geographical area where such
legal sanction does not exist is considered dry.
Li quor
Any distilled or rectified spirits, brandy, rum,
t
gin, or cordials are considered liquor.
Monopoly State
A state engaged in the business of buying alcoholic
beverages and selling them to consumers through state
owned and operated stores is referred to as a monopoly
state. |
i
i
i
Off-Sale i
Any sale of alcoholic beverages which is by package j
is an off-sale and the merchandise sold is not intended !
i
!for consumption on the premises. Off-sale premises are j
j !
'retail outlets for the sale of packaged goods. j
j |
I
! |
!On-Sale I
i — — — — — — j
| Any sale of alcoholic beverages by the drink rather J
{
than by the package is an on-sale transaction. On-sale
premises may be bars, taverns., hotels, or restaurants.
i
Open-License State
A state in which the alcoholic beverage business
10
operates under state regulation and control through a
system of licensing, but as a private enterprise, is
called an open-license state.
Wine
The product of the normal fermentation of the
juice of fresh fruit, primarily grapes, is called wine.
I
CHAPTER II
THE LIQUOR INDUSTRY AND ITS MARKETING STRUCTURE
; This chapter is concerned with the liquor industry
jand its marketing structure. The nature of the industry,
I
jand some of the problems associated therewith, is examined
I in some detail. The latter part of the chapter discusses
i
marketing channels from distiller to consumer.
I. THE INDUSTRY
The Distillers
------------------ i
! t
! A survey made in 19$k showed that there were 107
! '
Jregistered distillers, 238 bonded Internal Revenue ware-
I
'houses, and 198 liquor rectifiers. Of the total volume
, .. •
;of alcoholic beverages consumed 70 per cent was domestic !
jwhiskey, both straight and blends.1 j
i ;
; j
, The Big Four. The competitive pattern for distillers;
i
: was set before World War II and consolidated during the I
j
jconflict by four major companies: Schenley Distillers
1 j
Corporation, Seagrams Ltd., National Distillers Products
Corporation, and Hiram Walker. These four had $0 per cent j
;of the distilling capacity in the United States and |
Benjamin W. Corrado, editor, Corrado * s Handbook
of Liquor Marketing, 195^4- (New York: Benjamin W. Corrado
Marketing Consultants, 1954)* P« 10*_____________________
12
marketed approximately 70 per cent of the whiskey and
2
80 per cent of all the distilled spirits sold. Today they
sell 75 per cent of all the whiskey sold, although they
produce only half of this themselves; they buy the rest
from small distillers and bottle it. In the production
of whiskey the Big Pour rank as follows: Seagrams— 25.1+
per cent, Schenley— 23.1 per cent, National— 16.2 per cent,
iHiram Walker— 10 per cent.
Recently, one other distiller, Publicker Industries,
has been rising in importance to the point where it is
icompeting with the Big Pour. This company was formerly j
I
the largest producer of industrial alcohol in the United
States. Taking advantage of wartime liquor shortages,
!
iPublicker entered the beverage field which is much more
^lucrative than Industrial alcohol. Today Publicker ;
! j j
jproduces 6 per cent of the whiskey consumed. i
i |
The effects of World War II on the liquor industry. j
I <
Certain far-reaching changes took place in the distilling j
| |
jindustry which not only altered the pattern of the industry j
but ultimately caused a change in patterns of liquor !
consumption. The grain shortage which occurred during j
j !
! _ _ _ _ _ _ _ _ _ _ I
j p [
! "Whiskey Rebellion,” Fortune, 35:ll+0-ll+3, June, 191+7*
! 3”Distillers Fight Grain Controls,” Business Week,
jpp. 25-26, January 2 1 + . , 191+8.
! ^Ibid., p. 25.
13
the war resulted in restrictions on the industry’s raw
material supply. In addition, the urgent need for indus
trial alcohol led to government orders to convert the
industry's facilities to the production of industrial
alcohol. (Although the distilling industry uses only
1 to 2 per cent of the grain in the country, it is the
jfirst industry curtailed when there is a grain shortage.^
[A seeond curtailment took place after the war in 191+7 *)
| With distillers virtually out of the beverage
I
^business consumption of straight whiskey fell from 1+8 per
i
jcent to 8 per cent of the total whiskey consumed.^ All of
i
' f
the distillers, wishing to keep their brand names before j
j
the public, converted their existing stockpiles of bonded, j
aged whiskies to blends. By using 60 per cent or more of
jneutral spirits with the bonded whiskies they managed to
I 7 ;
supply consumers with various "types” of whiskey. j
I :
Seagrams was the only company which kept strictly ;
j
to grain alcohol. The rest used any form of potable j
i
I
ialcohol which could be procured. Much Puerto Rican rum. |
jwas used, and even potato spirits were pressed into service. |
1
jThe big distilleries began the process of buying up the
Corrado, op. cit., p. 26.
6
Ibid.
^"Whiskey Rebellion,” op. cit., p. 11+3.
small distilleries. The Big Four bought more than 70 of
the 1$2 small plants in the United States. When wartime
controls interfered with the supply of cooperage, the
A
distillers went into the barrel making business.
Furthermore, the problem of procuring enough neutral
i
spirits to make their blends prompted the major distil
leries to buy up a large part of the California wine
industry and vineyards. Fruit spirits could be substi-
o
tuted for grain.
The most important and far-reaching effect of war-
! time curtailment, however, was the change in liquor
!
consumption patterns. Whereas before the war straight
whiskies were the most popular sellers, blends of whiskey
became the only supply during the war, and remained
popular even when there was no longer a need to produce !
i j
{blends. This is particularly true in the Middle West !
1 p
|where more blends than straight whiskies are sold. ;
; I
i From the point of view of the distillers: S
i i
i '
i The change over proved to be one of the most profit-|
j able moves in distilling history, since stretching a j
| barrel of aged whiskey into three or four barrels of I
j whiskey blended with alcohol stretches profits accord- 1
ingly.. And profits can be further boosted by adding ;
distilled water to reduce proof (alcoholic strength). !
! Thus, a fifty-gallon barrel of four year old whiskey i
| that might give the distiller a $60 profit on 15 cases |
; of 100-proof straight whiskey, could, when stretched, j
8Ibid.
9Ibid.
15
give a #218 profit on fifty cases of 86-proof blended
whiskey.10
It was the war which entrenched the Big Pour in
their positions of eminence in the industry (notwithstanding
the rise of Publicker Industries). They were big before,
but by the time they had acquired over 30 per cent of the
1
small distilleries, entered the California wine industry,
bought cooperages and bottling plants, they were in a
position to press their advantage. For some time the
Justice Department watched warily over their expansion and
[warned and threatened them. However, in February 1955* an
>
(anti-trust suit was brought against Sehenley Distillers
following that company*s purchase of Park and Tilford. No
more mergers will be permitted. While Sehenley alone is
being sued, it is nonetheless true that all of the Big Four
|are under fire.1’ 1 , I
i
Special problems of the distillers. The distilling j
i I
|industry is under constant surveillance and frequent |
(attack by various bodies: federal and state government
agencies, politicians, social agencies, prohibitionists.
In fact, it is only recently that they have been able to j
[get along with themselves. Marketing statistics have been J
! I
! I
! — — — 1 ■■ ■ ■ I .1 H I .mil— — iiim «i.ii.im i
i 10ibid. !
I . . .
j J"L,!Justice Department Attacks Big i | - Control,”
1 Business Week, p. 138, February 26, 1955*
16
difficult to gather because mutual jealousy and distrust
within the industry caused them to be kept top secret.
This policy has prevented intelligent guidance” in mar-
I keting. Up to 19^7 the only useful figures on marketing
jwere those gathered by the 17 monopoly states. These have
| been compiled by a private agency which charges its large
l
I 12
j clients §25 thousand or more for the statistics.
The distilling industry's complaints against the
government are not about stringency of regulations but
about the volatile quality of the regulations. As an
! example of this the "barrel ruling" is illustrative.
Since 1936 distillers have been required to use new,,
charred oak barrels for aging liquor. All whiskey must be
I
j aged. It is during this aging process that most alcoholic j
r j
; beverages improve by acquiring their characteristic color, I
1
| flavor, bouquet, and mellowness. Whiskey aged less than j
■2 years cannot be labelled straight whiskey. Bottled-in- >
I Bond whiskey must be aged for at least 4 years. Govern-
| ment regulations do not permit age claims in excess of 8
| years for whiskey. During the war the shortage of kegs
I caused some distillers to buy cooperage factories and j
! others to reuse old barrels. Using old barrels saved them J
I I
145 per cent of the cost of new barrels, but they could not j
1 i
! label the liquor aged in them as straight whiskey. Earlier,
!
i
! -
' ________^jiVviJhi-Skey^-Rebellion,.op_._-Cit_.,.. p . . l82.______________
17
all of the distilleries had applied for permission to
follow the practice of using old barrels and dating the
whiskey from the period of storage. The government
officially ruled that this was misleading. Two years
later the decision was reversed without apparent reason.
This ruling upset the entire market by changing the value
of stock some millions of dollars. Some distillers were
in a position to lose their standing at the top of the
industry; others stood to make millions. Because of
protest and pressure the ruling was first held up and
' 13,Ik
later cancelled.
i
The distillers are at present concerned over the
serious problem of bootlegging and its effect on the
legitimate business. They blame the high excise tax of j
, $10.50 per gallon and poor law enforcement for the fla- s
t 1
1 grancy of the illegal operations. It is argued that the j
i tendency to discriminate against the alcoholic beverage j
|
• industry with extremely high taxation is putting the boot- 1
\ 15 I
jlegger and racketeer in business. j
; The steady increase in bootleg whiskey has been j
estimated by the federal government at 35 per cent of all j
j
f
.... « ■ ■ ■ » ■ « ■ ------- — .......... f
■^’ ’Millions in a Federal Ruling,” United States News,!
! 2?:l6, July 22, 191*9. <
: l^-”01d Oaken Barrel,” Time, 5l+i70, July 25, 19k-9»
I
j ^ ”No Bright Glow in Moonshine,” Business Week,
i p. 38, October 21, 1950.
18
the liquor consumed and is further estimated to have cost
the government about a billion dollars through loss of
revenue. Bootleg liquor is of higher quality today than
it was during Prohibition. Of that confiscated 95 per cent
has been found chemically pure, but it is considered only
a matter of time before cheaper, dangerous products are
sold. Already in Atlanta, Georgia, 50 deaths have
occurred from one batch of bootleg liquor admittedly cut
■ j ^
with wood alcohol. The legal industry suggests the
following methods of checking bootlegging: 1) reduce
taxes, 2) check big sugar sales, 3) have stronger enforce
ment agencies, I4.) require all bottles to be broken.1^
Most of the bootleg liquor is being sold in bottles with
I
forged labels which cannot be distinguished from the j
! ... 2.8 j
ioriginals.
j
\ The prohibitionists are constantly looking for
abuses in the liquor industry. Their particular target is
advertising. With a strong, well-organized lobby, this
group has considerable influence on legislative bodies.
Most of the articles in Prohibition publications are
■^Harry Thompson, "Bad Booze Is Big Money," American
Mercury, 77:37-38, August, 1953.
Taxes Bring Back the Bootlegger," Newsweek,
M);7l}.-75, July l i j . , 1952.
1 f t
Thompson, loc. cit.
19
J radical in their approach. Some even claim that the
1
I distillers* ambition is to create a nation of alcoholics,
! 19
and particularly a teen-age group of consumers.
Because of the unusual surveillance exercised over
the alcoholic beverage industry, the distillers police
themselves for the good of the industry. No matter how
ridiculous the claims of the prohibitionists or politicians,
I
j
j the distillers do not underevaluate them. Therefore, they
]
) proceed cautiously to avoid anything which might be con-
| trary to the public interest. To encourage the distillers
! in this policing action, both federal and state govern-
|
ments have various effective controls also. Actually, the
industry prefers mandatory regulations to voluntary. When
j
rules are mandatory it is up to the government to enforce
20 i
them. Otherwise the industry must do its own enforcing. [
II. THE! MARKET j
I ;
i i
| Marketing refers to that process in any business of i
| moving a product from producer to consumer through various
i
| channels of distribution, i..e..» manufacturer, wholesaler,
; jobber, retailer, consumer. The marketing of a product
|
j such as toothpaste tends to follow the so-called "orthodox"j
I i
t !
i. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . • - - .. . •
i ' — —
■^'Churches Seek Ban on Liquor Ads," Christian
Century, 69:716, June 18, 1952. j
^Gilbert Burck, "How Hard Do Americans Drink?"
1 Fortune, 47:121, March, 19f?3.
20
channels of distribution, with a minimum of regulations.
However, the marketing of alcoholic beverages cannot be
explained that simply. The sale of liquor is a business
only by virtue of an act of Congress, even though it is
one of the world*s oldest industries. Because of the
significance that the use of alcohol has to many, the rules
and regulations which affect other businesses have been
multiplied and complicated at each level of this industry.
The liquor business does not stand upon the same
plane, in the eyes of the law, with other commercial
occupations. It is placed under the ban of the law,
and it is therefore separated or removed from the
! natural rights, privileges, and immunities of the
I citizen.21
i
Since 19^2 consumption has remained relatively
static even though there has been a rising adult popula-
| tion. Some observers have maintained that high federal
1 taxes on liquor, some nine times higher today than they j
22 I
| were at Repeal, are responsible. j
{ Market size and pattern. There are approximately j
l ' ' ■ . {
| 65 million people in the United States who occasionally j
! ■ - i
j use alcohol. However, of this number only i | i } - million may j
: be classified as ”drinkersB in any regular sense, and most
21
Works Progress Administration, State Liquor
Legislation (Washington, D.C.: United States Government
Printing Office, 19J 4.I), p. 19.
22Corrado, o£. cit., p. 10.
21
of these are moderate drinkers.2^
While the overall size of the liquor market has not
changed much, the pattern of the market has shown many
changes in product types, brand standings, geographical
relationships, and consumer tastes. There has been a
gradual trend away from rye whiskies in the East and
Bourbon in the West, and toward the increased use of
blended whiskies. More blends than straights are sold in
New England and the Middle West. The East and West are
still heavy users of straights, but blends are becoming
!
j more popular. The South still prefers straights. Three-
fourths of all the rum used in the United States is
consumed along the Atlantic seaboard, particularly in New
England.2^
i
i
I
III. THE MARKETING STRUCTURE |
i
The Wholesaler. 1
M B IM H M H IM M H W M M M H M M im illk
J According to a recent survey2^there are about 1,500 |
! , i
| bona fide liquor wholesalers in the United States. Ac- j
j j
| tually there are more because most of the distillers and j
i j
I importers have wholesalers* licenses, too. The functions
of the wholesaler are largely restricted to open-license
23Ibid.
2^Ibid., p. l l | - .
2^Ibid.,p. 185*
22
states because monopoly states usually bypass the whole
saler and negotiate directly with distilleries.
Wholesaling contracts. A private wholesaler
usually makes a contract with the distiller so that his
supply of spirits may not be withdrawn arbitrarily by the
distiller. He frequently has what is called a ”bulk
i
contract” by which he agrees to buy a certain amount of
aging whiskey in the warehouse for bottling under an
exclusive brand name in a territory. Some wholesalers
purchase bulk whiskey and bottle it under their own labels
! in a given town or community.^ j
In large cities such as Chicago and New York a
’ 'multiple distribution” system is used which allows
1 competing distributors to handle the same brand of liquor
!
j Requirements of the wholesaler. Like all other j
i i
; branches of the industry the wholesaler is licensed to |
t !
| operate. His operational expenses are high. He must have j
i warehouses, trucking facilities, a sales staff, and
I
| considerable capital to carry his huge investment in
| inventory, as well as to cover the period in which he
awaits payment by the retailer. A Department of Commerce
i ,
| Survey taken in 195k- 25k- wholesalers revealed that the
i
2^Ibid., p. 189.
I 27Ibid.
23
average distributor held an inventory of $1|00 thousand
28'
Liaison functions. The wholesaler's job is to see
that the product he is representing is widely distributed
in his territory. He works to help the retail end of the
business by giving assistance to the individual retailers.
He frequently works closely with the distiller's represent
atives, and is the ndistillers' eyes and ears in the
market.
In his functions as liaison man between the
I
! distiller and the retailer he is more than a mere source
i
I
j of supply* It is generally the wholesaler who keeps the
t
| retail merchants informed about changes in legislation and
' interpretations of legislation. The wholesaler can
! - i
j probably give more concrete information to new licensees j
j i
| seeking to open a retail outlet than anyone else— |
} j
i including the state control agency. He has information on '
! - |
such subjects as location for retail sites, zoning !
ordinances, and community regulations. He can give help
with layout and assist the retailer in budgetary opera
tions. He knows merchandising and in most instances it is
he who helps the local merchant set up a workable stock
control and inventory system. He can help arrange for
licenses in some instances, insurance, tax payments, and
28Ibid.
29Ite&.
2\±
the like. He usually knows sources of equipment and
furnishings, where to get personnel, and how to put up
window displays. Most important, he knows competitive
pricing and can suggest methods for controlling or
30
reducing retail expenses.
i
| The Retailer
As the final link in the marketing chain from
manufacturer to consumer, the retailer must be discussed.
In 1952-1- there were approximately L|_0 thousand package
■
j stores in the United States and 150 thousand on-premise
■ 31
j outlets, 37 thousand of the latter in monopoly states.
i The problem of the retailer will be dealt with only
i briefly here because succeeding chapters have further
I
j material on his function in the industry's marketing i
i structure. !
1
I In few other businesses besides the retail liquor !
| \
I trade is the dealer held accountable for what his customers]
j I
I do with the merchandise he sells them. The candy merchant ]
is not considered responsible if a customer gets a stomach-j
!
ache, but the proprietor of a retail liquor outlet is j
j
usually held morally, if not legally, responsible for over-;
I -3Q
] Jesse Bishop Allen, "A Comparison of the Marketing;
I of Alcoholic Beverages under State Monopoly and Open Licensb
] Systems,” (unpublished Doctor's dissertation, The University
j of Chicago, Chicago, 1952), pp. 138-lij.l. i
] -^Corrado, ££♦ clt. p. 89.___________________________ |
indulgence on the part of his customers.
The retail liquor dealer is beset with rules which
sometimes require a lawyer to explain fully. He cannot
sell to certain classified groups such as minors, habitual
drunkards, etc., and lack of knowledge or intent does not
excuse him. He is restricted on the hours he may sell.
He must tactfully get rid of objectionable persons and not
allow them to buy. All community regulations and or
dinances must be complied with. As a man he must be mod-
j erate and temperate in his habits. His public relations
i
j are important not only to himself but to the industry as
well.
CHAPTER III
THE DEVELOPMENT OF LIQUOR CONTROL LEGISLATION
Alcoholic beverages throughout the history of their
use have tended to provoke controversy. At some periods
in history they have been condoned; condemned at others.
i
Even during those periods when attitudes have been favor
able to their use there has been concern over excessive
consumption and drunkenness.
Man differs from the lower animals chiefly in that
! he has created an artificial environment for himself.
i
This is reflected in his clothing, transportation,
refinement of food, and establishment of religion. The
I
i
j use of alcohol plays a part in this cultural environment j
i and must be looked upon in its relationship to the whole
I i
j cultural picture. !
I i
■ In Europe alcohol is most often used in conjunction i
I ;
i with meals to give added zest to the food. However, in :
I
j America drinks are not generally served with meals but
j 1
I usually taken before, between, and after meals. Where
the American drinks coffee or tea with his meal, the German
, j
I will take beer and the Frenchman or Italian will have wine.j
! j
1 Instead of the alcoholic beverage being merely a pleasant |
| ;
i i
j Clarence H. Patrick, Alcohol, Culture, and Society
, (Durham: Duke University Press, 195>2), p. ij.1.
27
addition to a meal and a concomitant part of every day
living, in America it is most frequently used as an
expression of joy, celebration' and festivity.
It is culturally imperative to toast the bride,
christen the ship, seal the bargain, speed the friend,
salute the New Year, celebrate good fortune, wake the
dead, and even symbolize and ingest the blood of the
Savior through the medium of alcohol. . . . With so
many various forms of culturally approved drinking
the amazing result is that we have so few people
dependent upon alcohol. . . . The teetotaler is, after
all, equally abnormal from the cultural standpoint as
the habitual drinker. . . .
The need to conform is one of the common reasons
i
! given by Americans to explain their drinking habits. If
| most of the other individuals in one’s social group drink, !
conformity becomes the simplest course. As a nation,
America places a premium upon the "average”. In the drive
! toward identification with the average, conformity is an I
I ideal— a fact used by advertisers in all fields. Alcoholic;
! !
| beverage advertisements stress the theme that "everybody” j
i
i i
| is using or switching to the particular brand being i
| i
| advertised.3 j
j I. THE HISTORY OP LIQUOR LEGISLATION 1
| 3
In the United States the first efforts to regulate i
I !
j the use of liquor were made early In our Colonial history, i
I I
i !
I _ _ _ _ _ *
2 I
"Drunks and Doctors," Time, 37:36, January 6, 19^1*:
^Patrick, op. cit., p. ip9•
28
In l6i|.2 Maryland imposed a fine of one hundred pounds of
i j .
tobacco on persons who drank to excess. Connecticut, in
l650, forbade anyone to drink for more than half an hour
<
at a time. After America gained its independence from
Great Britain, alcoholic beverages were used freely, with
little effort made to restrict individual consumers. At
that period in our history alcohol was believed to be a
necessary adjunct to health, actually possessing medicinal
qualities when properly used. Also, the distilling
industry was becoming important in American economics,
j Tavern keepers were licensed with a view to collecting
revenue. The distilleries themselves not only employed
men but put to use the farmer*s excess grain.
j Everyone who has read his American history knows j
i I
i that in this country the first excise tax legislated on !
I |
| whiskey generated the Whiskey Rebellion of 179^1-. ®he i
I !
; farmers in Pennsylvania who were principally affected
refused to pay the tax. Government agents sent to collect
i
! taxes were tarred and feathered. The farmers burned barns i
i ' !
! of those Who were suspected of sympathizing with the
j ^/Iforks Progress Administration, State Liquor
Legislation (Washington, D.C.: United States Government
] Printing Office, 194.I), p. 1.
29
federal government. Finally the militia was sent to
western Pennsylvania to quell the rebellion. However, a
large group of armed farmers met and disarmed the troops.
I
I The soldiers were then given all the whiskey they could
drink and sent away. Eventually the rebellion was brought
under control when more troops were sent out. However,
because of its continued unpopularity, this law was
repealed in 1801.
1 The Reform Movement
■ By 1807 Boston had as many as forty distilleries.
; However, the violence of American drinking habits caused
the growth of reform movements. From an objective point
| of view the early reform movements were far more successful
| than the later ones. At first there was no intention of
! I
legislating against the use of spirits, and certainly not j
against the use of beer and wine. Temperance organizationsj
I
which formed at this time were actually what the name
I implied: temperate. Their aims, generally speaking,
were to set examples through abstinence themselves. The
! number and enrollment of such organizations increased I
! . . . i
j rapidly and reached a peak by 1 8 3 6 . Temperance news- j
papers and journals were published. Even temperance j
i
hotels were established for abstainers. The once popular !
I
j belief in the medicinal properties of alcohol died away.
I ’ ’Apparently this wave of enthusiasm commanded more than
-----------------------------------------------------------------
lip service: distilleries were closing everywhere.”
30
Temperance societies. Between 1836 and 1850,
however, there was a transition period in which temperance
workers were becoming less temperate and inclining more
and more toward a desire for legislation which would
altogether curb the making and use of alcohol. Many
former temperance workers disagreed radically and withdrew
from the movement. However, although there were fewer of
them, the newer temperance workers were more militant.^
The first experiment in legal prohibition in the
United States, as such, started in 1851 when Maine passed
a law prohibiting sale and manufacture of alcoholic
beverages.
Between lQ^l and 18^5 state prohibition of the j
manufacture, distribution and sale of alcoholic j
beverages became effective in all the New England
states and in Minnesota, Michigan, Indiana, Delaware,
Iowa, Nebraska and New York. This represented moreo
; than a third of the thirty-one states in the union.
! l
| However, only in Maine did the prohibition law |
1 I
| remain in effect as it had been passed. By 1863 eight j
J other states had repealed their laws altogether while
|
i four other states had modified them extensively.
i
I 1
\ ......... -... i
< 1
6 •
I Raymond G. McCarthy and Edgar M. Douglass, Alcohol :
and Social Responsibility (New York: Thomas Y. Crowell I
Company and Yale Plan Clinic, 19^9), p. 21. !
7Ibid., pp. 22-21} . . 8Ibid., p. 27.
31
To aid in financing the Civil War a federal tax was
imposed on alcohol. Monies derived from this tax were a
significant source of government revenue. This hastened
! the birth of the United States Brewers1 Association which
organized to combat the new taxes:
This group was aggressive, legislation minded,
organized on a national basis and adequately financed
| — the characteristics of the temperance groups half a
century later.°
The National Prohibition Party came into existance
in 1872, but as a political instrument it never enjoyed
much influence and was superseded by the Anti-Saloon
i
! League and the Women1s Christian Temperance Union. Both
i
i
of the latter organizations were powerful, well-organized, j
i
and well-financed. j
1 !
j With the spade work already accomplished the ;
j
temperance organizations were able to push along legis- :
I !
' lation for national prohibition. i
! !
; In viewing the rise of national legislation to j
i control alcoholic beverages, it must be remembered j
! that such a development was in no way unique during
i the first two decades of the twentieth century.
Rather was the opposite the case. This was the era
I of the trust-busters and the muck-rakers. This was
the period of legislation for reform in the field of
; conservation of natural resources and in the field i
| of human rights, especially of children and of labor. !
j This was the 20-3 7 -ear period which saw legislation |
| such as the Pure Pood Law, the Clayton Act, the j
Interstate Commerce Act, the establishment of the I
Federal Trade Commission, the passage of an amendment
9Ibid.
32
following a federal income tax, the adoption of
provisions of initiative, referendum and recall,
and many other laws in the area labeled social
progress and reform.
The Eighteenth Amendment was intended as a reform
movement and a panacea to the social ills of the nation.
So the corner saloon disappeared and bootlegging appeared.
According to Gilbert Burck in an article in Fortune,
Prohibition probably did not reduce either the consumption
of alcohol nor alcoholism. All drinking was invested
with the taint of immorality and many individuals consumed
more spirits than they otherwise might have. It mattered J
not whether one drink or twenty were taken, the social ■
i
stigma, according to the fanaticists, was the same.^
Burck refers to the type of drinking during Prohibition as
j wIndian” drinking, or the early American custom of drinking
; until -unconscious: ”It (such drinking) is supported by the !
I f
; ancient maxim that people who do anything of which the i
* I A I
| group disapproves almost always do it to excess.” ' !
I
! Although nothing but estimates may be made of the
I
i
| amount of alcohol consumed while the Eighteenth Amendment
I j
| was in force the amount was considerable. At first it was j
i |
; smuggled into the country from other regions. Also, j
i
10Ibid., p. 33.
\
■^Gilbert Burck, ’ ’ How Hard Do Americans Drink?”
Fortune, i+?:121-5, March, 1953*
l22Mii., p. 153.
33
stockpiles laid away from a wetter era were sold illicitly.
However, as existing stocks were depleted simpler expe
dients were found. The era of the still was issued in.
The law was never adequately administered or enforced for
a variety of reasons, hut primarily because it was not a
popular law. Many of the returning service men from World
War I were inclined to think that Prohibition had been
slyly installed before they could return home to vote it
down. Prohibition was apparently never popular in most of
the more cosmopolitan cities like Hew York, Chicago, and
i i
; San Francisco. The speakeasy flourished almost openly._J j
It has been reported that if you were a stranger in Hew j
!
York and did not know your way around you looked for a j
policeman to direct you to a drink. If he liked your face j
13 !
he pointed out the nearest speakeasy. j
Graft, corruption, gangsters, and vice syndicates !
characterized the decade of the twenties. It was the era j
l 1
I of ill Capone, gangland mobs, and gang killings. Many I
i
persons attributed this gangsterism to the highly
profitable bootlegging "rackets” of the time. This was
!
‘also a period when the government was making no revenue on
j
!alcoholic beverages.
! The election of 1932 involved repeal as part of the j
i ;
i
(platform of the Democratic party and Franklin D. Roosevelt,
! 13"prohibition, Hew York," Saturday Review of
S (Literature . . 3 l L r 19---2.0-,__DjeLC.emb er._. 1, __±9b± — —— --------
3k
its candidate. The Republicans were considered tenta
tively as the dry party, but even there strong dpubts
were being expressed, and President Hoover was speaking
!
of the need for some modification of the law. However,
this was not the only issue involved in the campaign:
Economic and social distress and uncertainty
provided a great deal of the motivation for a
political upheaval which swept the Democratic party
into office. But the proposal to relegalize alcoholic
beverages was manifestly popular. Nine days after his
inauguration President Roosevelt called on Congress to
modify the Volstead Act so as to legalize beverages
containing not more than 3»2 per cent alcohol by
weight. A measure to this effect was passed by
! Congress and approved by conventions elected for that
| purpose in three-fourths of the states, was proclaimed
| the fundamental law of the land on December 1933 •
Thus the Prohibition era was ended.
II. LEGISLATION SINCE REPEAL
I The Twenty-first Amendment
i
i
j After ratification of the Twenty-first Amend-
f
!ment in 1933 administrative systems providing for the
f
j control of the manufacture, distribution, and sale of
1
|alcoholic beverages were set up in the several states.
|The legislators sought to frame laws which (1) correspond
|
I with the expressed will of the people in each state
Jfor the regulated sale of alcoholic beverages; (2) avoid
return of social irresponsibility with its evils which
has been attributed to the alcoholic beverage industry
^McCarthy and Douglass, op. cit., p. i+O
35
under pre-Prohibition systems; and (3) ensure an adequate
tax revenue to units of government. The second article of
the Twenty-first Amendment prohibited the transportation,
i
importation, or possession of intoxicating liquors for
delivery or use in violation of any state law. The
purpose of this section of the Amendment was to guarantee
i
i
federal protection to any state in which prohibition
statutes would remain in force or be enacted.
State liquor control systems. Today there are
forty-six states which permit the sale of intoxicating
: liquors. Mississippi and Oklahoma remain dry although the :
| former allows beverages of not over I } , per cent alcohol by
| volume, and Oklahoma allows beer of not over 3*2 per cent
i
1
; alcohol by weight. Wherever the purchase of alcohol for j
J human consumption is recognized, numerous strict laws and J
! I
i regulations exist to protect the public interest, promote j
i ]
I temperance, and maintain wholesome social conditions.
i i
j Since 1933» state legislatures in setting up liquor
control systems have adopted either the monopoly plan or
the license system. States following the monopoly plan
i
; function through a board or commission which usually
maintains a monopoly on the wholesale distribution and
I
package retailing of distilled spirits. The board may |
! !
purchase spirits in quantity and sell them through
official stores. The sale of beer and wine in privately
36
owned outlets, stores, restaurants, and taverns Is ordi*--
narily allowed under license. Many monopoly states permit
!
| the sale of distilled spirits by the glass in selected
j private outlets.
|
Ihe Monopoly State
It is the belief of monopoly states that by elim
inating the opportunities for private profit in the sale of
distilled spirits competition will be reduced and thus
cause a reduction in the sale of beverages of high alcohol
content. It is assumed that a state board engaged in the
1
purchase and distribution of spirits is better able to
exercise closer supervision over the liquor business than
would be a purely administrative commission. In actual
; practice the monopoly system has, for many states, provided
a good revenue-producing system. i
I
The majority of sales in monopoly states are made
by state-operated stores. Some monopoly states require
| the purchasers of alcoholic beverages to obtain special
|
| permits for the privilege of buying at the state stores.
1 The fee for this permit ranges from fifty cents in Utah i
i :
I to one dollar in Oregon and Washington.• I
i 1
{ - j H j
i There are seventeen monopoly states. ° However, j
' 1*5
I Alabama, Idaho, Iowa, Maine, Michigan, Montana,
! New Hampshire, North Carolina, Ohio, Oregon, Pennsylvania,
! Utah, Vermont, Virginia, Washington, West Virginia, and
; Wyoming.------- ------ ------------------------------------------
37
["North CarolinaTTs classified by some as a license state
| and Wyoming is sometimes considered an open-license state.
In all monopoly states the state control boards
reserve the right to fix prices. Some monopoly states have
laws which attempt to encourage the sale of home-grown
products. An example of this is the Michigan law which
provides that wine manufactured in Michigan from grapes
grown in Michigan shall only earn a gross profit of 10 per
cent over production costs, while other alcoholic beverage
items shall return a gross profit of 55 P©** cent.
In general, monopoly states have found their trade
in alcoholic beverages to be profitable, yet the average j
retail price in state-controlled stores is considerably
lower than the average price in open-license states. In
i i
I monopoly owned stores all net profit accrues to the state. >
In some instances monopoly states even own the j
i
\ distilleries within the state. If imports are allowed the ■
!
I |
! state naturally controls them. Monopoly states maintain ;
i ;
I
! absolute control over wholesaling.
1 The Open-License State
In open-license states the granting of different
types of licenses to private citizens for the sale of
j alcoholic beverages is usually under the supervision of a
state commission appointed for this purpose. In a few
Instances the responsibility is assigned to other state
38
officials. Twenty-nine states have adopted the license
system.^
The District of Columbia, under Congressional
administration, has a license system. Kansas was the last
state to repeal its prohibition laws which had been in
effect since 1880. Since November 19^4-8 Kansas has been an
i
j open-license state.
In most open-license states all retail sales are
made by licensed retailers. The retailers, however, are
engaged in a private, profit-making business, and there-
I fore, unlike the monopoly state, the only revenue accruing
to the state is that collected from excise taxes and
license fees.
1
The distribution of these revenues from licensing
i
varies widely. In some states all the revenues go into
1
! the general fundj in others a part is allocated to the
! !
i counties or municipalities. license fees frequently >
!
i
revert to the municipality where the outlets are located.
South Carolina earmarks 65 per cent of the revenue to the
i
I
general fund for public school use. State welfare, aid to j
f j
dependent children, old age assistance, and debt retirement
■^Arizona, Arkansas, California, Colorado, Connect-
! icut, Delaware, Florida, Georgia, Illinois, Indiana, Kansas,,
; Kentucky, Louisiana, Maryland, Massachusetts, Minnesota,
! Missouri, Nebraska, Nevada, New Jersey, New Mexico, New
| York, North Dakota, Rhode Island, South Carolina, South
| Dakota, Tennessee, Texas, Wisconsin.
39
accounts are recipients of allocated amounts deposited in
the general funds by various state control boards.
Massachusetts levies a special excise tax to pay bonuses
to World War II veterans. In Connecticut 9 P©*1 cent of
the license fees are allocated to the state Commission on
.Alcoholism for the treatment and rehabilitation of
alcoholics and for educational activities designed to
prevent the development of alcoholism.
Local Option
i Local option Is the right of the citizens of a
jlocal governing unitr-county, city, or town--to vote to
J permit or prohibit the sale of different kinds of alcoholic
(
!
jbeverages within the area of the unit. Local option laws
1 in some form are In effect in thirty-six states, both
i
3
| monopoly and open-license. Twelve states and the District >
|
I of Columbia have no such provision. Thirty-two states
i permit a direct vote on the sale of beer. However, seven
I states do not provide for option on the sale of beer of j
! !
j 3.2 per cent alcohol, or less, by volume. Two other states j
! have no local option on beverages containing 5 Per cent !
' i
alcohol, or less, by weight. Local option on the sale of !
spirits by the drink is permitted in three states. j
The local option laws of most states require that !
elections be held on special dates by petition of a
j specified number of voters. In Illinois, Pennsylvania j
j and Ohio, the election called by petition, must I
! coincide with a common election date which occurs once
40
every two years. In Maine, New Hampshire and Massachu
setts, local option questions on the sale of alcoholic
beverages appear automatically on the ballot every two
years, and in Vermont, each town must vote annually on
the issues. It was estimated at the close of 1948
that approximately 27 million people, or 19 per cent
of the population reported in the 194^ census, reside
in legally 1 1 dry” are a s. 17
Federal Liquor Retail Regulations
A retail dealer may not sell distilled spirits,
wines, or malt liquors in quantities of five wine gallons
or more— a wine gallon equals 128 fluid ounces--without
paying a special tax as a wholesale dealer in liquors
unless such sales are for immediate consumption on the
premises where sold.
On payment of special tax, a stamp is issued, but
only as a receipt for payment of tax, and is not pro
tection against prosecution for violation of any state law.
It may not be transferred or sold to another dealer. The
tax stamp must be openly displayed on the premises.
Any change in location or ownership--that is,
vesting of control in a legal representative, spouse, or
remaining partner, or in the event of insolvency— must be
indicated by filing an amended return with the local
Collector of Internal Revenue within thirty days, although
for good cause this period may be extended.
The retailer must provide at his own expense
"^McCarthy and Douglass, op. cit., p. 67.
Ui
records of invoices and bills for distilled spirits,
wines, and fermented malt liquors received, showing the
quantity, date, and from whom received. Both records and
I premises must be open to inspection during business hours.
All distilled spirits must be in bottles or similar
containers of a capacity of one gallon or less and must
bear either a green or red strip stamp on the neck of the
bottle passing over the cork, stopper, or cap. The stamp
must be destroyed when the container is open but a portion
shall be left on until all of the contents are used.
Provision is made for restamping if the original stamp
has been mutilated or is missing.
Penalties are provided for violation of any of the
laws and regulations described above and include for-
j feiture of the stock involved. The purchase and sale of ;
j used liquor bottles and other marked containers bearing j
i * 1
| the clause: ’ ’Federal Law Forbids Sale or Reuse of this ■
! I
| Bottle,” is prohibited. No liquor bottle or other I
container shall be reused for the packaging of distilled
spirits, nor shall the original contents of any part left
! in the liquor bottle be increased by adding any substance, j
| Any place where liquor is offered for sale— hotel, j
| [
I bar, restaurant, club— is subject to the federal tax on i
! 1
! ;
liquors. The retail dealer who permits dancing, vocal- j
izing, or other entertainment on his premises is expected I
j to pay 20 per cent amusement tax, unless he provides music
!
| for listening pleasure only. Social security taxes
!
| covering his employees are also due to the government.
III. SUMMARY
Almost from the beginning of history alcoholic
beverages in one form or another have been known and used.
And almost since the first recorded history efforts have
been made to regulate their use. Opinion has been
| divided on the best methods of regulation, but there has
|
}
! been no lack of opinion or willingness to express it.
i
Today, even though a large percentage of the population
drinks, there are ardent Prohibitionists anxious to again
curtail legally the use of alcohol. On the other side of
1 the picture, the manufacturers, dealers, unions, and
others in related fields (coopers and bottlers) are united
1 in opposing Prohibition and are responsible for anti-
i 18
; Prohibition lobbies in state and federal legislatures.
i Social regulation is the avowed purpose of all
|
| liquor control legislation. There are many disagreements
| as to what constitutes social regulation. An instance of
this is found in the excise tax situation which will be
discussed further in this study. The Mdrys, J favor very
i * l Q
i "Dry Forces Are Still Trying,” Business Week,
! p. 76, December 26, 1953*
I high excise taxes on alcoholic beverages and consider
|
j these not only regulating, but a good means of raising
| necessary revenue. The ’ ’wets" insist that the result of
i
excessively high taxes on any legal commodity is discrim
inatory and is conducive to such illegal operations as
bootlegging and moonshining. At any rate, there is no
industry so beset with rules, regulations, and restric
tions as the liquor industry.
^ CHAPTER IV
REGULATIONS AFFECTING THE MARKETING
OF LIQUOR--PART I
The preceding chapter presented a generalized
discussion of the historical development of various forms
of liquor control in the United States. This and the
following chapter will deal with some of the more specific
aspects of control as they affect the marketing of liquor.
The present chapter is concerned with the controls on
prices and price policies, credit arrangements and
related matters. Chapter V will cover principally the
regulation of sales and sales promotion policies.
The prices of most commodities are determined
j largely by the cost of manufacture, distribution costs,
!
| and sellers* markups. Perhaps there is an occasional
; excise tax incorporated into the price the consumer-
i
i buyer pays. With liquor, quite the reverse is truej all
j
| other price factors are secondary to taxes. Liquor prices
{
I
i in fact show a considerable rigidity over time, except for
j the increase in state and federal excise taxes. Pres-
t
| ently, over 55 per cent of the retail price of an average
j
j fifth-bottle of liquor represents direct taxes on the
J product. Against this only about 25 per cent of the
| price represents the retailer»s markup (on the basis of
the national average), while about 8 per cent of the
retail price reflects the wholesaler* s markup. The
remaining 9 per cent includes the cost of production,
aging, bottling the liquor, and promoting its sale.'*'
The average retailer is lucky to net some 2-3
per cent on his sales, . . . while the average whole
saler nets about 1-2 per cent of his gross sales.
Distillers net some 3.3 per cent according to
composite figures which inelude distiller income
from other sources such as beer, wine, chemicals,
and other activities.
I. PRICING AND PRICE CONTROLS
IN MONOPOLY STATES
In all monopoly states the alcoholic beverage
control boards reserve the right to fix prices. In setting
j retail prices these monopoly state control boards are
■ generally guided by two factors: 1) the promotion of
\
I temperance and 2) the accumulation of revenue for the
i
| state. The relative emphasis placed on these two factors
| varies substantially among the monopoly states, possibly
I
j as reflections of differing social philosophies, tax
!
I
| structures, and revenue needs. Some monopoly states
i
! avowedly place the accumulation of revenue ahead of
I '
| Benjamin W. Corrado, editor, Corrado* s Handbook
' ££. Liquor Marketing, 195k- (New York: Benjamin W. Corrado
Marketing Consultants, 195k- » PP« li|.-15?-
2
Ibid., p. 15.
I ( . 6
temperance considerations. J
Within the individual monopoly state there are no
price variations permitted on any given brand of liquor.
i
Monopoly states may, and do, differ among themselves, j
j
however, as to the prices established for given items. j
I
Prices of the monopoly states are administered
prices; they are the same throughout the state; they
are influenced by the desire of the state to promote
temperance, and to prevent the growth of illegal
competition by the bootlegger. They are also
influenced by federal taxes.-*
The monopoly state control boards acquire their
liquor at substantially the same prices as do the im
porters in open-license states. Their ability to buy
direct from the manufacturer eliminates the distributor’s
margin. Moreover, the boards perform most of their own
retailing functions. Since there are no competitive \
I
outlets they may simplify their stocks by handling fewer j
I
varieties and brands. As a general consequence of their j
volume buying and low overhead the monopoly state outlets
i
tend to be in a position to provide a reasonable selection
of merchandise at lower prices than are possible in the
open-license states. More will be said on this point in !
i
)
a subsequent section of this chapter. j
Moreover, evidence indicates that the state revenue
^Jesse Bishop Allen, 1 1 A Comparison of the Marketing
of Alcoholic Beverages under State Monopoly and Open
License Systems,1 1 (unpublished Doctor's dissertation, The
University of Chicago, Chicago. 1952). p. 116.____________
k - 7
derived directly from the monopoly system is almost
twice as large as. that secured by the license state
through taxation.^-
The above statement is tentative rather than conclusive,
in view of the fact that no adequate statistical study has
ever been made of the amount of revenue accruing to open-
license states from their business taxes on retail
5
operations.
II. PRICING AND PRICE CONTROLS
IN OPEN-LICENSE STATES
j
| While the prices of liquor in the monopoly states
are rigidly administered by the alcoholic beverage control
boards with statutory powers to control the prices, this
' !
i
is generally not true in the open-license states. Since, i
j by definition, all liquor sales in open-license states j
; are made by licensed retailers, prices are the result of j
! ' j
j business decisions devoid of any temperance or fiscal !
| considerations. Prices in the open-license states are,
| therefore, relatively more fluid and subject to more
i
! competitive influences.
i
! Notwithstanding the fact that alcoholic beverage
I control boards (except in a very few instances) have no
i
! statutory powers over prices in the open-license states,
^~Ibid., pp. 7-8. ^Corrado, 0£. cit. , p. Ip.
the prices in these states tend generally to be admin
istered prices. They are administered by the industry,
however, rather than by control boards. A few open-
i license states have attempted to invest their control
boards with some measure of authority over liquor prices,
as shall be pointed out more clearly elsewhere.
Price Fixing within the Liquor Industry
Since there are few compulsory controls on liquor
prices in the open-license states, the control of prices,
i
! if any, must be implemented by the industry itself. This
I
i it has done very extensively under the aegis of the resale-
price maintenance laws. As is generally known, most of
! the open-license states have Pair Trade Acts. When the I
I ■ I
I j
; federal government enacted the Miller-Tydings Act in 1937, |
5 |
| authorizing resale-price maintenance in interstate trade j
! i
! among those states with Pair Trade Acts, the liquor j
i !
' industry was quick to take advantage of this type of j
j 6 - I
I control. Since that time the liquor distillers have made
I extensive use of controlled but non-uniform pricing for
, the various open-license states. j
; I
| This policy of controlled non-uniform pricing is j
! I
I evident in the following testimony given by W. W. ¥/achtel, ;
\
I !
i-------- --------
! A
Works Progress Administration, State Liquor
Legislation (Washington, D.C.: United States Government
Printing Office, 19£j.l), p. 16.
b9
president of Calvert Distillers Corporation, before the
Temporary National Economic Committee:
Mr. Wachtel. "Mark-ups vary (according to ter
ritory). It (sic) would have to."
Mr. Berge. "in order to meet competition?"
Mr. Wachtel. "Not that alone. Take Los.Angeles,
for example. You have something like 8,000 retail
licensees, probably ip times more than they have any
right to have. It is difficult for a retailer there
to make a living. Competition for him is too great.
In New York City we have 1200 package stores. Com
petition is less; there is better opportunity to
make money.
"In Massachusetts the number of licensees is much
too many; competition is very keen among retailers."
Mr. Berge. "In other words, you take into account,
or try to take into account, in fixing the price,
what you deem to be the retailer*s welfare. If you
think he can exist on one price, you fix it there,
and if you think he requires a higher price you fix '
it there." I
Mr. Wachtel. "That is right." ;
Mr. Berge. "If you think a smaller margin of '
profit is sufficient for him, you would lower the \
price?" ;
Mr. Wachtel. "Yes, sir, . . . In those states -
where we are permitted to operate under fair trade, j
the mark-up in one market might be 33-per cent, in j
another it might be 38, in another market it might
be IpO. " '
j Alfred R. Oxenfeldt, Industrial Pricing and
!Market Practice (New York: Prentice-Hall, Incorporated,
; 195177 p. li^-0, citing W. W. Wachtel, President, Calvert
Distillers Corporation, Temporary National Economic
Committee Hearings, Part 6, pp. 2565-2567.
50
Resale Price Maintenance
All major distillers support the price control of
the Fair Trade Acts, although not with equal enthusiasm.
Some distillers whose brands are not well established
believe that they would be in a better position to increase
their share of the market if prices were not controlled.
iMost distillers apparently feel that without price control
laws the industry would be afflicted by price wars. They
have even established a voluntary code of price control
Iwhich is to be enforced voluntarily by the distillers in
any state where there is no Fair Trade Act.
i
Without resale price control of some kind the
industry appears to feel that there would be a high turn
over among distributors, retailers, and possibly even
i
distillers. Wachtel has expressed the distiller’s concern
in the following testimony:
The retailer benefits, not the distiller. You
pull the plug out tomorrow (that is, end resale price
j maintenance) on Calvert and our sales would double,
j but we don’t think it would be good over the long
! pull because the retailer would go broke.^
!
jWhere the controls are not in effect the liquor trade has
i
jtended to alter both price structure and margins. When a
jdealer is able to make a "deal” with a wholesaler he has
i
jgenerally lowered the price on the product as an induce
ment to the consumer rather than taken advantage of it
! _______ 8Ibld.. - , p . . .ii7Q..._______________________________________
51
himself through a higher markup.° Needless to say the
independent package store dealer in the open-license state
has traditionally favored the control of prices through
resale price maintenance."^
While the control over liquor prices in open-
license states has been largely a matter of price-fixing
within the industry, and within the framework of so-called
voluntary resale-price maintenance agreements, there have
been numerous efforts to establish more rigid controls.
These efforts have usually taken the form of mandatory
l
!
i
ifair trade arrangements, tying resale-price maintenance
j
in with the activities of the alcoholic beverage control
boards. In California, for example, all distillers must
j
file their prices with the beverage control board. Any !
price changes must be filed and publicized in proper trade
'journals at least i^-5 days before the changes are to become I
! j
ieffective. Presumably this is to give competing distillers J
i
ja chance to match such price changes if they desire. So
I
|long as a distiller's price list remains effective,
^retailers must display and maintain these prices. Failure j
i j
ito comply with these requirements may result in the control I
i
11 1
board suspending or revoking the dealer's license. j
! x i
j _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ j
J ^Allen, op. cit., p. 59* j
10Ibid.
I ----
i -^The net effect of this type of legislation is akin
jto providing the distillers with an open price association
$2
j In certain other states, principally Illinois, New
York, and Florida, similar controls have been invoked from
time to time. In these states, however, such mandatory
12
controls have been declared unconstitutional.
In their apparent zeal to control prices in open-
license states, the members of the liquor industry have
not only pushed for mandatory price maintenance but have
occasionally run afoul of anti-trust legislation. State
fair trade acts, for example, permit distillers to fix
prices in the open-license states providing there is no
collusive action. One notable suit against eight liquor
manufacturers resulted from such collusive action. The
charges grew out of the manufacturers taking collusive
action under the Colorado Fair Trade Act of 1935. The
firms involved pleaded nolo contendere (admitting the
I government's charges for the purpose of clarification of
i
1 the case). This was the first of a series of anti-trust
cases brought for collusive action to control prices.^
While established brands of alcoholic beverages
j are under some form of resale price control, either
i
I mandatory or voluntary, private stock bottled under a
under the compulsion of statute.
1 O
’ ’Fair Trade Revolt; Liquor Price-Cuts Stir,”
Business Week, pp. 8I 4.-85, May 21, 19i|-9. See also "Liquor
Fair. Trade Outlawed in Illinois," Business Week, p. 52,
October 1, 19q-9*
_________^-"Whiak.ey_,.R.ebelli,Qn.^’ l-Eortiine-, - - . . 3^-tli4 -l-,---June-^JL9j 4 . Y - ._
53
j private label can be set at any price. Certain retail
chain stores have used this method to establish prices
lower than those set for major brands. This is not a
ll+
violation of any of the price controls.
III. COMPARISON OP PRICES BETWEEN MONOPOLY
AND OPEN-LICENSE STATES
Liquor prices are generally somewhat lower in
monopoly states than in open-license states. The prin-
i
| cipal factor contributing to the lower prices in the
j monopoly states, presumably, is that the monopoly state
eliminates the wholesaler's markup. A second determinant
is that merchandising and sales promotion are far less
costly in the monopoly state. Prom the consumer's point
; I
I
! of view, then, the monopoly state may be able to sell him i
J I
j liquor at a price below that of the dealer in the open- !
i i
: license state. It may be less convenient for him, however,|
i j
' since the monopoly states tend to impose stricter limits j
! on the number of outlets.
(
: To compare price differences between open-license
i ;
, and monopoly states a standard four-fifths of a quart of |
| !
| Park and Tilford Reserve has been used. The monopoly j
I states are able to deliver this bottle of whiskey to the i
t s
i - - - - i t — !
^■’ ’Pair Trade Revolt,” Business Week, p. 85>
L_May_2l.,. -19k9-------------------------------------------- ■ ----- !
54
| consumer at an average price of §3.62, while in the open-
license state the average price is §4*12.
i Three open-license states had a retail price of
; 14.15 (close to the average of $4*12). These three states j
are Arizona, Indiana, and New Mexico. Arizona does not
allow local option, sells by the package and drink, and
imposes an excise tax of $1.20 per gallon on whiskey.
Indiana makes no provision for local option, but allows
small communities of less than five thousand to regulate
| on-sale licenses, sells by package and drink, and imposes
i
an excise tax of $2.08 per gallon. New Mexico allows
local option, sells by package and drink, and imposes an
excise tax of $1.30 per gallon with an additional tax of
| 2 per cent of gross receipts.^ j
J These three open-license states have few similar- !
|ities, yet their retail prices are identical. All sell j
!by package and drink, but they differ widely on local j
|option provisions. Their excise tax differences are |
i 1
(also marked. j
I
■ |
| Near the average price of $3.62 for monopoly states I
' '
jare the retail prices in Montana and Vermont at $3.60. |
[Both states have local option, both sell by package and j
i 1
i , . . ,
i ^Distilled Spirits Institute, Summary of State
j Liquor Control Saws and Regulations Relating to Distilled
j Spirits (Washington; Distilled Spirits Institute, 1 9 5 2 ) ,
!pp. 2-l4. ____________
55
drink, but Montana imposes an excise tax of 8 per cent of
of the retail selling price while Vermont imposes excise
taxes of $3.60 per gallon.^
i
It is not the purpose of this study to discuss the
merits or faults of either system of control. It is
sufficient to state that since Repeal no state has changed
its original control structure. There have been some
changes in control boards, but no monopoly state has
changed from state control to straight license system, nor
t
vice versa.
: IV. CONTROLS ON CREDIT AND TERMS ON SALE
i
j
j Credit Transactions
i
\
j Regulations covering credit transactions are
i i
: designed to promote temperance. They stop consumers from !
■ pledging future earnings. Many state statutes specif- j
! i
, ically provide that retail sales shall be cash, and whole- j
' sale transactions are specifically limited to a minimum of j
! I
! ten days and a maximum of thirty days. Since many of j
j these state regulations are poorly enforced, the federal
• government has considered cancellations of federal tax !
| stamps and has threatened wholesalers with this penalty ;
j unless they adhere strictly to the thirty-day limit on i
56
credit to retailersT^
A few states demand cash on delivery of merchandise.
In New York payments are made on the tenth of the month
following delivery. Default results in the retailer being
placed on a published list sent to all manufacturers and
wholesalers. Such persons must pay cash on all purchases
until their names are removed from the list. In Wyoming
the extension of credit over the sum of $500 is prohibited
unless bills are fully paid within sixty days from the
date of the original obligation.
I
j
i Discounts
Discounts, although strictly illegal between private
companies and individuals, are occasionally used between
manufacturers and monopoly states. There is evidence that j
i
this policy has, at least in the past, been frequently j
violated. Before and following World War II owing to high !
I
; ■ (
liquor prices, much off-brand merchandise, and buyer j
resistance, distillers offered very large discounts, often j
|
| as high as 30 to I 4 .O per cent, and occasionally even j
i 1
! !
j offered free merchandise as an inducement to retailers. j
1 However, as this is the basis for price wars within the j
■ * “ 1 " !
industry, the majority of distillers have been cautious |
---------------------------------------------------------------------------- j
1 17
Mr; A1 Gray, Representative of Young’s Market j
Company, Statement made during personal interview, los
Angeles, California, August 2, 1953*
$1
in the practice.I8~~
Tie-in Sales
The tie-in sale is an illegal practice which exists
only when there is a shortage of merchandise to meet
consumer demand. Such a condition occurred during World
War II. At that time this illegal practice existed on all
levels of the industry. There was virtually no good
whiskey available, but there was a superfluity of "junk”
merchandise— off-brands, poor blends, rums, wines. To
i
!
| get a small supply of whiskey the dealer was frequently
forced to buy several cases of "junk" merchandise. t To
rid himself of this excess he passed it on to the consumer
via the tie-in sale. Evidence for prosecution in such
cases was difficult to obtain and the practice continued
\
\ unabated until 194-7 when buyer resistance stiffened and
i
| the supply of whiskey caught up with the demand. -
!
i
i
| Consignment Selling
j W n M B B IIM B M M M IIW IM W W M lM IIIM M a H H n a M M H IM M l
| To circumvent the laws pertaining to credit re-
I strictions distillers provided for sales on consignment or
I
; conditional sales contracts. Such sales were nullified by j
the majority of the states as attempts to extend credit. !
i
There have been instances where the use of the courts has j
I
been denied to wholesalers in recovering bad debts arising j
I
from credit illegally extended.
__________ iMlhid— __________________________________ ______________________
CHAPTER V
REGULATIONS AFFECTING THE MARKETING
OF LIQUOR--PART II
Legislation affects the entire structure of the
liquor industry but at no level is it more apparent or
more obtrusive than at the retail level. So much emphasis
is placed on what the retailer may not do that retail
promotion in most states appears very limited.
The present chapter is divided into two sections,
the first of which is concerned with retail sales restric
tions and responsibilities of the retailer, and the second
i
with restrictions on promotion and advertising within the j
| j
| industry, particularly on the manufacturers level. i
i ;
I. SALES RESTRICTIONS j
The following rules and regulations do not apply in ;
! !
I all states, but are, nonetheless, the most common of the ;
i i
j sales restrictions. Since monopoly states operate their j
| own state-controlled stores some of the following restric- j
tions apply only to open-license states.
i
t
! Place of Sale !
| ■■■ ■ ................
| Schools and churches. The sale of alcoholic bev-
I
j erages near schools and churches is generally prohibited.
59
In some states institutions of higher learning are
specifically included. For example, there are no liquor
stores in the immediate vicinity of the University of
Delaware and Washington University at St. houis. Some
states restrict sales in areas near prisons, homes for
the aged and poor, insane asylums, military stations,
public buildings, and homes for veterans. In Wisconsin,
dry zones are established around fair grounds and public
auctions. In other states special licenses are given for
temporary outlets on fair grounds, although these are
usually restricted to the sale of beer.
j
Exceptions. In the matter of these restrictions,
J exceptions are usually made for those businesses in
j existence before the restrictions went into effect or
i
| where the institutions were erected after the retailer
was licensed, or where, by authority of law, consent
j to continue in operation may be given by the school or
i
j church affected, as in Arizona, Maine, Washington, and
|
West Virginia.
Restrictions on Persons Eligible to Buy
In the matter of persons to whom sales may not be
made are found the most numerous violations of the law.
Six classes of persons may not purchase liquor, and to
i
I
| sell any type of alcoholic beverages to them subjects the
I
j retailer in any state to criminal prosecution. Not all__
60
states, however, include all six classes.
i
Minors. Minors may not buy alcoholic beverages
except in New Mexico and Georgia upon the consent of a
parent or guardian. The average age of attaining the
majority is twenty-one except in three states: New York,
Illinois, and North Dakota. The latter states permit the
sale of liquor to persons over eighteen years of age. In
some places distinctions are also made between men and
women, the type of beverage sold, and even as to whether
the drinker is married.
I
In addition to suspension or revocation of license
|
for sales to minors, every state and the District of
Columbia provide for criminal penalties. More and more
states are attaching penalties to the minor for mis- :
j .
( representing his age, but the burden of proof and the
| |
| responsibility still rest upon the licensee. In Vermont ;
i '
! one must have a birth certificate as evidence of age. ;
| !
! Wisconsin and Arizona issue registration cards which may !
i
; be obtained by an individual reaching his twenty-first j
j !
i birthday. Cheeking registration cards in these states |
relieves the licensee of responsibility, but in Connect- j
I icut, New Jersey, and Pennsylvania, reasonable error and !
! ' !
| good faith are not enough to excuse the retailer. i
j j
Intoxicated persons. Every state except Florida
Land New Mexico makes specific provision against sales t o__
v
6l
individuals who are obviously intoxicated.
Habitual drunkards. Almost every state bars the
sale of alcoholic beverages to habitual drunkards and
persons of known intemperance.
Interdicted persons. An interdicted person is
defined as one to whom the sale of liquor is forbidden
on notice or order to a licensee by a member of the
drinker's family or dependents, various public officials,
state liquor authority, certain courts, etc., and on the
grounds that he is addicted to excessive drinking, a
apendthrift, on relief, neglectful of his family, or an
idle person. The retailer is harshly penalized if he
sells to an interdicted person. Twenty states issue
i 1
| orders of interdiction.
I
Insanity. Many states bar the use of alcohol by
| Insane persons, but few define clearly what is meant by
| an insane person. Within this category, Nevada also
i
| includes the mentally retarded. Maine and West Virginia
j
: make it legal to sell beer to such persons but not
spiritous liquor.
| ^"Connecticut, Delaware, Idaho, Iowa, Kentucky,
! Maine,- Maryland, Massachusetts, Minnesota, Nevada, New
| Hampshire, North Carolina (if criminal act has been com-
! mitted under influence of alcohol), Ohio, Oregon, South
Dakota, Utah, Virginia, Washington, Wisconsin, Wyoming.
62
Indians. There are still a few states which
restrict the sale of alcoholic beverages to Indians,
although more of them are changing this policy. However,
i
federal law prohibits the sale of liquor to Indians on
re servations.
Hours of sale
Regulation of selling period. The time, both day
and night, when alcoholic beverages may be sold is fixed
j by law and regulation of state and local authorities.
j
| Hours may vary for the kind of beverage sold and the type J
5
; I
of license.
| Sundays and holidays. Twenty-five states do not
J allow liquor to be sold on Sundays and in many others the
i i
j sale is allowed only for brief periods. For example, the ;
I i
law may restrict the sale to on-sale premises between j
i !
; 2:30 and l+sOO in the afternoon and later between 6:30 and ;
| 9:00 o‘clock. In some states, bars and lounges must be
|
I closed; in others package stores must close. In thirteen
i j
i states retail liquor outlets must be closed on specified j
i !
; legal holidays. The decision as to holiday closing is \
| I
; usually left with local authorities. !
| !
! Election day. In all states except Wyoming and j
i i
j
i the District of Columbia, sales of alcoholic beverages
i
are forbidden while the polls are open on election day.____
63
Quantity which May Be Sold to Single Individual
By federal law no amount larger than five gallons
| may he sold to an individual consumer. There is no
!
uniformity found among the individual states as to how
much may be sold. However, all states set a limit, many
of them lower than the federal limit. The amount may vary
depending on the beverage sold, the type of sale, and the
class of the license for the retail outlet.
Terms of Sale
Cash or credit. As stated in the previous chapter,
intra-industry sales are very limited as to credit buying.
At the retail level, however, some credit buying is per
mitted. In a few states charge accounts may be opened.
Hotels and clubs are permitted in many states to extend j
I credit to bona fide guests and members. Special licenses j
! . I
| in New York permit on-sale retailers to defer payment by j
| their customers. Otherwise, credit plans and subterfuges |
i
I such as lay-away schemes and deposits on merchandise, are
j
not allowed.
j
! Packaging and Labeling
i Size of container. Most liquor authorities restrictj
i ‘ I
' the size of the containers of alcoholic beverages. There j
! !
| is not much agreement among the states, but only one,
' Alabama, provides specifically for the sale of any package
6k
|less than eight ounces. Alabama permits a one and one-
jhalf ounce miniature. Maximum package sizes run from a
jquart to a gallon. Beer and wine receptacles run pro-
i
|portionately larger. Distinctions are made between
|package and drink sales. In on-premise sales even the size
I
Jof the glass served is prescribed by law and subject to
regulation. Some states are interested in the maximum size
only; others restrict the maximum size. Although not
expressly forbidden in most states, the miniature, "one
j shot" bottle is generally frowned upon.
i
Labeling standards. Labeling standards require ,
j
the printing in legible English of the quantity of liquor
in each package, its ingredients, the identity of the
* I
Imanufacturer, and the age and quality of the beverage* i
( ' i
jThe alcoholic content of the beverage is generally i
■ i
I restricted. !
i
i Delivery of Packaged Goods .
| Delivery is recognized practice in all open-license j
i i
|states, although South Dakota and Tennessee subject j
;delivery to the condition that the sale be C.O.D. and in j
;accordance with local regulations. West Virginia holds !
! !
|that non-intoxicating beer may be delivered only if the j
[ I
vendor has a copy of the order on file at his place of !
I
l
[business. Pennsylvania provides for delivery in a
iretailer-owned vehicle bearing prescribed markings, or,
65
as in Florida, with, special license plates. Hew York
permits transportation or trucking companies, identified
by special signs, to make home deliveries. This should
not be mistaken for peddling or door-to-door solicitation
which is condemned in most jurisdictions.
Adverti sing
Almost all advertising of beer and wine as well as
distilled spirits is conducted as a national campaign.
Restrictions on the retailer are frequently so stringent
that he cannot advertise at all, although some states do
permit him to advertise his store subject to regulation
of either the control agency or the community.
Window displays. In the various states window
I
\
| displays featuring packages may or may not be restricted.
I In some states no brand name may be shown in a display.
i
I I
Signs. Signs in and about the premises are limited ;
| j
; in size and number and are frequently subject to approval I
i j
j by the state control agency. In some states, signs may
i
| not be displayed in the vicinity of schools and churches. ;
I In others there may be no outside signs of any type I
i i
! i
I indicating the nature of the enterorise. However, these i
! I
! states generally permit window signs. Florida allows only !
one neon window sign. Wisconsin permits neither neon nor
! electric lighting in signs. Inside the premises signs may
66
not show from outside the premises.
Handbills and direct mail. A few states permit
handbill and direct mail advertising. However, the
majority forbid the practice.
Other media. A dealer may usually insert the name
of his business in the newspaper providing he offers no
"special” or inducement to buy. Premiums or gifts may not
be given away, nor may samples or gifts. Many states
i permit the dealer to make use of advertising cards on
j public transportation facilities. Billboard advertising,
| if permitted, is restricted to manufacturers.
i
i •
j Kansas. Kansas was the last state to repeal the j
! I
i Eighteenth‘ Amendment. In framing its liquor legislation j
j I
j it had the advantage of being able to study the existing |
j i
j laws of the forty-five states where liquor was already !
> legal. For this reason it is cited as typical of the type j
j
I of legislation regarding advertising that is found in most
i
i
!
! states:
i
! lij.-8-l. "Advertisement” defined. The word "adver-
■ tisement" as used in this article shall mean and |
i include any advertisement of alcoholic liquor through I
! the medium of newspapers, periodicals, circulars,
I pamphlets, or other publications or any sign or out-
J door advertisement or any other printed or graphic j
; matter.
I
5
j lip—3—2• Statements and testimonials prohibited. No
I advertisement of alcoholic liquor shall contain:
L________(.a)__Any„^s.tatement._.that^is f alse_on^mi si eading_in___
67
any manner;
(b) Any statement, design, device, or represen
tation which is obscene or indecent;
(c) Any statement concerning the brand of alcoholic
liquor that is inconsistent with any statement
on the labeling thereof;
(d) Any statement of the price of such alcoholic
liquor, if the advertisement is directed to
the public;
(e) Any statement concerning or illustrations of
women, children, or family scenes;
(f) Any statement describing such liquor as being
helpful or beneficial; or
(g) A testimonial of any nature.
ll|--8-3. Public display of alcoholic liquor regulated.
No public display of alcoholic liquor shall be made in
any place or at any other location than the licensed
premises.
li|.-8-5. Signs inside licensed premises and display of
"dummy" bottles prohibited. No licensee shall display
on the inside of such licensed premises any sign,
poster, placard, design, or decoration advertising
alcoholic liquor; nor shall any such licensee use any
"dummy" bottle for any display purposes.
li;-8-6. Advertising on vehicles prohibited. The
advertising of alcoholic liquor on any vehicle is
prohibited.
l i q . —8—7- House to house solicitation prohibited. No
licensee shall, directly or indirectly, solicit from
house to house, personally, by telephone or mail, the
purchase of alcoholic liquor, nor allow, permit, or
suffer any such solicitation,
1I 4.-8-8. Signs on buildings prohibited. No signs
advertising alcoholic liquor shall be painted or in
any manner exhibited on the exterior or interior of
any building.
ll|.-8-9* Lighting of exterior of licensed premises by
floodlights, spotlights and neon lighting prohibited.
The use of any floodlight or spotlight to illuminate
the exterior of any licensed premises, regardless of
where such floodlight or spotlight may be located, is
prohibited. The use of any neon electric lighting on
the exterior of the licensed premises in any manner
68
is prohibited.
lip-8-10. Advertising referring to certain holidays
and special days prohibited. No manufacturer, dis
tributor, or retailer shall publish or cause to be
published or otherwise circulated in the state of
Kansas any advertisement referring to the days pop
ularly known as Mother’s Day, Father’s Day, Memorial
Day, Independence Day, tabor Day, Thanksgiving,
Christmas, or Easter. It Is the intent and purpose
of this regulation to prohibit any form of advertise
ment of alcoholic liquor which makes use of or ref
erence to any of the days or occasions namad herein
by the names set forth or by other names or appel
lations .
1I 4 .-8-II. Retail licensees to have only one sign.
A retail licensee shall have only one sign on the
j licensed premises, and said sign shall conform to
I the requirements of section 77 of the act; and any
j other sign of any kind advertising or directing
i people to the licensed retail premises, regardless
j of its location is prohibited.
j l l ( . -8-12. Advertising by radio, television, motion
! pictures, gifts, etc., prohibited. No licensee shall
' advertise any alcoholic liquor except beer, over the
i radio, television, public address system, or by means
j of motion pictures, still slides, or film strips; or
i by the gift or distribution of recipe books, matches
' or similar advertising media.
i
i lip-8-13. Advertising by photographs of licensed
premises prohibited. No photograph of the interior
j or exterior of a retailer’s or a distributor’s
| licensed premises shall be used in any manner to
| advertise or display alcoholic liquors.
i
[Other Responsibilities of the Retailer
1 Although major emphasis has been placed on sales
i
[restrictions for the retailer, there are many other
2
Alcoholic Beverage Control, Arthur A. Herrick,
Director, Rules and Regulations Relating to Alcoholic
[ Beverage Control (Kansas, November, 1951)> pp. 36-38.
69
obligations with which he must comply; some of these are
outlined below.
Excise tax. A beverage tax is levied in almost all
states on liquor, wine, and beer, and payment is shown by
the use of stamps, crowns, lids, or strips affixed to the
package. Normally, the excise tax is paid and the stamps
attached at the wholesale level or above, but it remains
the duty of the retail licensee to refuse unstamped goods,
or else to place his tax stamp on the container. This
applies as well to the affixing of federal strip stamps.
The retailer should have enough stamps on hand for this
purpose. The penalties for selling or possessing un
stamped beverages include confiscation of stock, license I
j
revocation, and imposition of a fine. >
i
When the container is opened, the stamp must be j
destroyed or mutilated. It is unlawful for this stamp to ;
be used again. In some states the container itself must '
i
be destroyed. If a licensee is authorized to repackage
beverages from larger containers he must affix his excise
stamps to the new packages, even though the liquor is !
i
taken from a tax paid container.
Price posting. Prices should be plainly posted on i
the premises and should refer to liquors which are on hand !
for sale. A few states specify that the arrangement of
price. schedule-S-must-be._-in-vi.ew—ln-_the—lic-enae-d—pr-emi-se-s-^__
70
Drinks must contain the brand and quality called for by
the patron and the licensees may not cheat by substituting
— if a Bacardi cocktail is ordered but not available, the
vendor must so inform his customer.
Adulteration. Adulteration is generally forbidden,
| not only by the alcoholic beverage laws but by pure food
j
; and drug laws, health, and sanitation ordinances as well.
Adulteration by adding a foreign substance to a product
can, if discovered, cause criminal penalties to fall on
| the licensee including revocation of the license.
The premises. The premises must be open to clear
view and plainly lighted. Screens and booths are either
forbidden or limited in height. Bars may also be re-
j stricted in length. In New York they may not be the
!
! predominant fixture. Several states demand that the
| entrance to the premises open on the street level; that
j there be no rear exits into lodging or dwelling places;
J and that there be shown on the front window or door the
j correct name of the licensee, the class and number of the
j
| license.
Clientele. Licensees are responsible for the
behavior of their clients which must be orderly and law-
abiding. Gambling in any form is forbidden. Gangsters,
prostitutes, pickpockets, confidence men, and other persons
71
i --------------- —-- — ---------------— ------ ■ i — -■ — —
of ill repute may not loiter on the premises nor congre
gate there. Lewd conduct, obscene pictures and literature,
i
loud and boisterous noises are violations of the terms of j
|
the liquor permit and can result in closing the premises j
as a nuisance. Some states,, like Hew Jersey, give the
owner of the building a right to cancel the lease of an
establishment for violation of the laws. In Arizona, a '
j licensee must report any acts of violence in his place.
| Entertainment. While legitimate entertainment is
J permitted in many states on payment of the necessary tax,
!
| restrictions exist as to the type or nature of amusements
which are to be offered. Juke boxes, pinball machines,
i
| radios, and other devices which will cause people to
‘ congregate in a package and on-sale premises which have |
: no special license, are prohibited. j
i <
? j
i s
Minors loitering. Minors are not tolerated in '
j taverns and other places where liquor is sold by the I
i i
; drink, unless, in Hew York and Connecticut, they are j
j accompanied by a parent or guardian. Exception is also j
I
! made for eating places where service of food and alcoholic !
; i
j beverages are made to customers seated at tables. j
; i
i i
| 1
Records. The keeping of records of the purchase t
j :
j of spirits and sales to the public, the taking of inven-
I
tories, and the saving of receipts, invoices, original
72
bills, books of account, bills of lading, shipping
invoices, etc., are requirements of the federal and most
state governments to enable taxing authorities to compute
tax due. Records should be preserved a minimum of two
years under federal law, and the state may insist upon
longer periods, as, for instance, in Illinois where
records must be retained for three years. In states where
consumers need individual permits to purchase beverages,
'a book containing their signatures and the quantity
purchased should be kept on hand for inspection.
!
j Regulations require free access into the licensed pre-
i
mises by government officials during the regular business
hours for inspection of the books and premises.
Other civil liabilities. Besides restrictions on
i . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
I
j nuisances, the retailer is subject to other civil liabil
ities. A cause for action is given in many states to the
! husband, wife, child, parent, or guardian, and even an
| employer against anyone who causes another to become
!
I intoxicated. In fact, Illinois and Connecticut hold the
i
| seller of liquor responsible to anyone injured as a
j result of the intoxication of any person. In addition to
| actual damages some states also make the vendor liable to
| exemplary damages. Iowa goes to the extent of awarding
i
| reasonable compensation to anyone who takes care of an
i intoxicated person. In Delaware a verdict of exemplary
73
damages can cause revocation of the license.
Criminal penalties are also provided by statute for
many violations of the alcoholic beverage laws, the most
1 frequent being the sale of liquor during restricted hours
and days, the sale of liquor with higher alcoholic content
than permitted by license, sales without a permit, sales
of unstamped liquor, maintaining a disorderly establish
ment, permitting gambling or intoxicated persons on the
premises, or allowing minors to congregate.
[
(
j II. TRADE RESTRICTIONS
j
i
j The following trade restrictions are those which
I apply within the industry rather than between retailer and
i
i consumer.
i
I !
I Type and Number of Retail Outlets !
| j
| In ten of the states legislation has limited sales |
i i
* 2 I
! to the package only. Alabama permits package sales by
i
j state stores for off-premise consumption, but package
f - I
i
! sales for on-premise consumption are made by private j
s !
! i
j licensees. Nebraska has a state law that requires cities i
3
f
j and villages to vote individually their approval of on-
! sale establishments, while off-sale licenses are legal
j Arkansas, Georgia, Kansas, North Carolina, South
! Carolina, Tennessee, Utah, Virginia, Texas, and West
! Virginia.
7 1 4 -
jexcept in those cities and villages where the citizens
J have voted against them. The other states sell by both
package and the drink.
About two-thirds of the states have refrained from
placing in their laws arbitrary numerical limitations on
license issuance for retail outlets, thus the issuing
authorities are in a position to utilize objective
measurement of the qualifications of persons and premises
as the prime listing device. The limiting of outlets in
open-license states appears to result in more outlets |
f
than in those states where no such limitations exist. !
i !
This is due in a few instances to the fact that the out
lets existed when the limitation was imposed. Restricting j
i
of licenses in monopoly states has resulted in fewer |
i
)licenses per capita being issued than in those monopoly
I !
states where no numerical restrictions exist. I
i !
| Apparently in no state where the law vests j
|discretion to limit the number of licenses has the I
!
I licensing authority adopted an over-all numerical limit, I
i
i [
jMost states, however, base their limit on issuance of new j
licenses on population increases. California, for j
i
|example, limits liquor on-sale licenses to one for each
i
|one thousand persons or fraction thereof in each county.
The same limitation applies to off-sale licenses. ;
75
Sales Between Retailers
Sales between retailers are almost always barred.
A sale for retail means a sale and not a resale. Federal
!
|law restricts the maximum amount to less than five gallons,
i
?
and most of the state laws restrict the practice alto
gether. Retailers must purchase their stock from licensed
wholesalers, distributors, or others permitted by law to
deal with them.
Importing
i Retailers may not import directly from outside the !
' k !
.state except in a few instances,^ and then only if the
i
merchandise is not available through a licensed importer
'and a special importer's fee is paid. During the war,
jbecause of scarcity of goods, there was a flagrant i
!
'violation of this regulation. Ohio, however, countenanced i
J i
; c f i
;the practice and allowed dealers to buy where they could.^
! I
I III. THE INDUSTRY'S PROMOTION j
i
| ALCOHOLIC BEVERAGES
i
The purpose of most advertising is to promote a
; product by keeping the brand name before the public and by
I
I I
j ^Delaware, Montana, New York, North Carolina,
[Oregon (wine only), Pennsylvania, Washington, and the
(District of Columbia. j
^’ ’Whiskey Rebellion,” Fortune, 35s ll+O> June, 191+7• j
76
offering certain inducements to the buyer which will make !
I
him select the particular product rather than some other
which may be comparable in all respects. Ihe psychology
of all advertising is suggestion through repetition and
emotional satisfaction, which is frequently snob appeal.
Whereas toothpaste or cosmetics may be described
in superlatives and almost limitless claims made for them,
alcoholic beverages are set apart once again. Numerous
restrictions govern their promotion. On the state level
| there are many laws and restrictions, depending upon the
| individual state. Naturally most of the advertising is
j done in open-license states. If a small distiller is not
| recognized in a monopoly- state there is no point in
i wasting the company1s advertising allowance in an area
| where, by law, the product cannot be sold. ”The inability |
] i
j to get a brand listing in a monopoly state will completely j
| £ \
| handcuff the brand-owner in that market.” !
Aside from legislative restriction, the manufac- |
| turers of alcoholic beverages must be wary of offending j
certain powerful groups. The prohibitionists, whose j
f
! ultimate object is to reinstate Prohibition, have their j
i
immediate sights on alcoholic beverage advertising. They j
I
I
! 6 i
• Benjamin W. Corrado, editor, 'Corrado1s Handbook of j
Liquor Marketing, 195^4- (New York: Benjamin W. Corrado j
Marketing Consultants, 195k-)» P« 4-*
77
argue that liquor advertising is untruthful and unprin
ciples and is intended to increase the number of drinkers,
| 7
I particularly among the young. Such advertising has been
!
i
i the focal point of their attack since 1933* They base
their arguments against liquor advertising on the prin-
i
ciple that it is in violation of the Interstate Commerce
Act and the Twenty-first Amendment which guaranteed each
state the right to decide for itself and legislate its
own alcoholic beverage legislation. Efforts have been
made to introduce legislation which would curb such
advertising going through the mails, or being transmitted
i
i I
i in any form on grounds that it may be directed into a
dry state or county. Since many of the states have'; dry
j counties owing to local option, such restrictions would
i make any advertising at all virtually impossible. j
I The manufacturers do not underrate the Prohib- j
j 3
i itionists or discount their influence. For this reason j
i |
j the beverage industry has certain self-imposed rules as j
j ;
] illustrated by the Manufacturers1 Advertising Code which j
i
: s
j has been established within the industry. j
: i
The Manufacturers* Advertising Code j
i *
| Purposes of advertising. The beverage industry I
( C
: 7 i
| Raymond G. McCarthy and Sdgar M. Douglass, Alcohol
i Social Responsibility (New York: Thomas Y. Crowell
, _ C omp any _ and Yal e Plan Cl ini c, 19^9) »_.P- 7 l_t_________________
78
j states that the purpose of advertising is to keep brand
j names before the public rather than to create a larger
| market through new drinkers. In a debate, "Should We Try
I
Prohibition Again?" Stanley ..Boar, speaking for the
negative, stated:
The alcoholic beverage industry advertises not to
induce people to drink, but to urge, "If you drink,
I drink this brand." Alcoholic beverage advertising
does not create the desire to drink, nor is it intended
to do so; drinking is a widespread, universal social
custom that has persisted since time immemorial* long
before there was any advertising as we know it.0
The code. At a Senate hearing in 19^+7 the Distilled
I Spirits Institute submitted the following statement of
policy:
The advertising of distilled spirits is well
supervised through the Alcohol Tax Unit of the Bureau
of Internal Revenue under regulations that demand
meticulous care as to accuracy and Informativeness. |
. . . In addition many states have enacted laws and
promulgated regulations which impose various require
ments and restrictions on the advertising of distilled
I spirits.
| In addition, the members of the organization in the !
interests of good taste and having a decent respect
for the sensibilities of others, by voluntary action
• taken more than ten years ago, placed certain restrie-
| tions on the manner in which their advertising of
; distilled spirits should be conducted. Under these
: voluntary restraints members of the Institute have j
refrained from advertising in papers carrying a Sunday j
j date line, from using pictures or references to women
I in advertising, and from placing advertising in
Ibid., Appendix, p. 21, citing Stanley Boar,
j "Should We Try Prohibition Again?" printed by Allied
I Liquor Industries, New York, n.d.
79
religious publications. Also, and again before there
was any bar against this type of advertising, Institute
members agreed not to use the radio to advertise their
distilled products, and this agreement has beenQcare-
fully observed by them for more than ten years.'
The beer and wine industries also have a voluntary
code which bans the showing of a child drinking wine,
illustrations showing Santa Claus or fairy tale characters
in conjunction with their product, ads suggesting that
wine is used by athletes or revered persons. ^
Radio and television. The radio and television code
I states that ”the advertising of hard liquor shall not be
accepted. . . . The advertising of beer and wine is ac
ceptable only when presented'in the best of good taste..
Nonetheless, despite the stated codes of the
i manufacturers, individual distillers have not adhered so
i
l
| strictly to it as the Distilled Spirits Institute would
J
| have believed. In August 19^9, during a low ebb in radio
and television advertising accounts, Schenley Distillers,
one of the Big Four, asked for radio time at Christmas.
The answer was an unequivocal ’ ’ no11. However, the request
I ^Ibid., hearing before the Committee on Interstate j
i and Foreign Commerce, U.S. Senate, Eightieth Congress, j
{ First Session on S26$, ”A Bill to Prohibit the Transporta- j
| tion in Interstate Commerce of Advertisements on Alcoholic |
Beverages and for Other Purposes,” May 12 and 13, 19k?• !
■^’ ’Whiskey and the Air Waves,” Scholastic, 60:5~7* i
February 27, 1952.
f
[____ ^^Ibid., p. 6 .___
80
j was repeated and this time a qualified "yes” was given.
j
Mutual Broadcasting was the only network which remained
| pure. National Broadcasting was the first to capitulate.
|
' There had never been any objection to the advertising of
beer and wine, but the advertising of hard liquor was
12
revolutionary in the industry.
As stated, permission was qualified, and the
following restrictions were set forth by the network: the
show would have to go on after midnight to assure the fact
that no juveniles would be apt to be listening in. It
would have to be a "disc jockey” service.^-3 The final terms
I
stated that the commercial would have to be an institu
tional type which allowed ”. . . the makers of a Schenley
product to advocate the purchase of savings bonds.The
i |
j final condition was that if too much protest occurred as a :
result of the Schenley advertising, the network reserved
the right to cancel the contract. A tempest did occur
i !
i
I with new attempts to force federal legislation against
I )
|
|such advertising and the program was dropped after a short
!trial.
I
i
i
_____________________________________________________________________________ I
I p i
Ibid., pp. 6-7. j
! ^"Amber Light,” Time, August 8, 19^4-9• !
J _» '
| "And Now Liquor,” Newsweek, 3^-:37> August 1, 19^9.
! ^"Dry Try,” Newsweek, 35>:l8» January 23, 195>0.
81
Federal Regulation of Advertising
The Alcohol Tax Unit. The right to review adver-
| tising for alcoholic beverage manufacturers rests with the
Alcohol Tax Unit of the Treasury. If the industry fails
in its self-policing policies this agency halps by
reviewing and passing on suitability of advertising
claims. The following slogans have been banned: ’ ’Nary a
haze in the morning;5 1 "Drink it tonight and feel like a
million tomorrow;” "Soothes frayed nerves at the end of |
i the day;” "A real aid to d i g e s t i o n . j
In 19^-8 the Alcohol Tax Unit of the Treasury !
Department reviewed 121,0lj.8 advertisements of alcoholic
beverages in 27,619 publications and suggested changes or
! corrections in 1,733 cases where minor technical irreg- s
ularities were found. The Tax Unit also reviewed 20.200 i
I
radio continuities and over three thousand point-of-sales J
• advertising cards and devices. To prevent improper or j
i (
s incorrect advertising campaigns the Tax Unit previewed j
j 2,OI4I4 . advertisements. The standards set up by the
j industry itself are designed to conform to the Internal !
' !
Revenue Bureau’s standards. !
6 I L ^
| "Whiskey and the Air Waves," Scholastic, 60:5-7,
j February 27, 1952.
• 17
! McCarthy and Douglass, op. cit., PP. 78-79.
82
Legislative attempts* None of the legislative
attempts to restrict the advertising of alcoholic bev
erages altogether has met with success. The Interstate
Commerce Commission is of the opinion that the advertising
of alcoholic beverages should be legal because the in
dustry itself is legal and advertising is a part of the
1 P
selling process for any legitimate enterprise.
The Twenty-first Amendment repealed Prohibition
but it also forbade the transportation of liquor into any
state for delivery and use contrary to the laws of that
state. This was to protect areas which wished to remain
dry. It is the latter portion of the Twenty-first
Amendment which is the basis for the legislative attempts
on liquor advertising. Those urging tighter legislation
argue that advertising of alcoholic beverages is in j
violation of the rights of the states to regulate traffic j
i
in alcoholic beverages. j
i
Among attempts at legislation the most notable
bills introduced have been the Capper Bill, the Johnson-
Case Bill, and the hanger Bill. These bills died in
committee because they were considered to be in violation
of the First Amendment which guarantees freedom of the j
press. However, large and powerful groups of lobbyists j
arrived in Washington to urge support of each of these j
l8Ibid.
83
bills. Even though these attempts at legislation failed,
such movements have powerfully influenced the industry as
well as the various federal and state bodies, to watch
advertising claims closely.
!
Advertising Techniques
With the many restrictions which are imposed on
alcoholic beverages the high-powered advertising campaign
must depend on eye appeal or snob-appeal:
High-powered advertising perhaps influences many
adults in using or serving a variety of alcoholic
beverages. People continue to use the beverages,
however, because of the alcohol contained in the
drink and its effect on the nervous system. This
fact is usually ignored completely in the adver
tisement.1 9
i Superlatives. In the words of one authority:
, Much of the advertising of alcoholic beverages is
> based on superlatives which are designed to lead to j
j popular association of drinking with symbols of ;
j culture, prestige, and respectability. An analysis j
of the statements appearing in such advertisements j
. . . identifies the attempt to associate the use of j
| alcoholic beverages with the social habits of j
: successful people.20 j
l j
I Whiskey, brandy, and liqueurs are frequently j
| I
1 advertised by words and phrases such as "heritage",
"rich”, "quality", "distinctive”, “tradition", "old and
!
| respected”, "famous”, "cherished”.
19Ibid., p. 81.
20Ibid., pp. 79-80.
Wines are "joyful11, "a pleasure to serve",
"balanced", "delicate", "glorious", "distinguished",
"treasured", "remembered”, "exquisite", "eminent", "full-
flavored", "velvety®, "gala", "unsurpassed", and have
"breeding".
Beers have purity", "bouquet", are "pale crystal",
and "clean and clear". Sometimes they are "liquid
luxury”.
However, the above advertising jargon must prove
effective if the following figures have significance.
Extent of Advertising
In 191-1-6 Time, Life, and Fortune had 810 pages of
I pages of liquor advertising which brought a revenue of
$8 million. Colliers, in the Christmas issue that year,
had $13lj- thousand worth of liquor advertising at the
21
single insertion rate.
A few magazines of national circulation do not
accept liquor advertisements, most notable being the
Curtiss Publications.
: Today, advertising is greater than it has ever been '
! t
i because competition is also greater. There is no shortage !
i *
I !
| of supply but neither is there much’ free spending," and |
i
i
i consumers have more choice in what to buy. High taxes ;
I 21
j "Moderation and Profit," Christian Century,
' I 6 l4. i l6 8 February £, 19^7 •
Q$
have also driven many to the bootleg market.
Competition for the liquor market was never sharper
than it is today, and this is borne out by the fact
that industrial advertising and promotion expenditures
continue to increase. . . .
The heaviest months for advertising distilled
spirits are November and December because of the two
major holidays, Christmas and New Year. Beer advertising
23
picks up around Independence Day and Labor Day.
However, as competition increases new users must
be found. One authority phrases it thus;
i
The alcoholic-beverage industry operates in a
highly competitive field under a strict system of
controls, some of which are self-imposed. It Is
understandable that a high-powered advertising program
may be necessary to maintain brand names and markets.
At the same time it is questionable that a sales
program costing millions of dollars annually can
operate in a vertical direction alone. As competitionj
increases, new users of any product must be developed, i
It has been demonstrated that there is a larger i
proportion of drinkers in the age-class 21-30 than in j
any other age group of like size, and the explanation [
that has been suggested is that this period in life is j
one in which most people experiment with taking a j
drink ”to see what it is like,” though they may sub
sequently become abstainers. Advertising alone does
not necessarily create a desire to drink alcoholic
beverages but it does confirm and strengthen their
social appeals and values attached to their use.4 -
2 2
Corrado, op. cit., p. Ip.
23Ibid.
^McCarthy and Douglass, op. cit., pp. 79-80
CHAPTER VI
j ADMINISTRATION AND ENFORCEMENT
1
j OF LIQUOR REGULATIONS
| This chapter deals with the administration and
jenforcement of state liquor regulations. The following
iitems are discussed: (1) administrative bodies; (2)
1
]
jlicensing, rules and fees; (3) excise taxes, exceptions,
|discriminations, results of unbalanced taxation; and
i
; (if) enforcement.
i
{
i
I. ADMINISTRATIVE BODIES
The laws regulating the sale and distribution of
alcoholic beverages are administered by alcoholic beverage
jcontrol boards, more commonly referred to as the ABC agen- i
jcies. One principal control organization exists in each of j
i !
'the forty-six states permitting the legal sale of alcoholic j
j |
;beverages. However, the states of Idaho, Iowa, Kansas, <
iNorth Carolina, North Dakota, and West Virginia have two J
I i
|control organizations: one for liquor control, the other j
f i
t
:for beer. This makes a total of fifty-three organizational !
! ■ I
junits administering liquor laws. j
' i
i In twenty-two of these organizational units i
administration is under the exclusive direction of one
person, while in ten others a director has almost complete
87
authority. The other agencies are administered by
commissions or boards made up of several members. In many
I instances these board members are appointed by the governor.
!
i
jState governors exercise considerable control over ABC
jfunctions in all states except Colorado, Maryland, North
i
|Dakota, and Wisconsin, principally through their powers of
appointment. This power, however, is often qualified by
requiring that the terms of members overlap. The average
salary of board members is about $6,200 yearly.
The majority of state laws regarding the sale and
;distribution of alcoholic beverages are vaguely written.
IBecause of this, most states have enacted laws granting
extensive powers to ABC agencies to adopt adequate rules
!
land regulations which have the force and effect equal to
\ i
i •
laws adopted by the legislatures. The state of North ;
' i
jDakota, on the other hand, does not confer any rule-making I
, i
power and the statutes of South Carolina establish specific |
ilimits to rule-making. A number of states provide for j
1 i
i
jadvance notice of a proposed rule and give opportunity for j
jprotest by interested parties. Most state control boards j
*
make an effort to distribute copies of new rules to i
‘licensees and other affected parties.
!
I
Duties of Liquor Boards and Commissions
i
The duties of the state liquor boards and com- I
t
!
|missions are to make rules, interpret laws, conduct
88
hearings, issue, suspend or revoke licenses, fix license
taxes and permit fees, punish violations, and, generally,
exercise supervision from manufacture to consumption,
subject to prevailing statutes.
In some states the control board has the sole
jurisdiction over the issuance of licenses,while others
2
require the consent of local authorities. In a few states
■ 3
licenses are issued by the local authorities. Massa
chusetts and Vermont laws require the approval of the
state control boards for all licenses issued by the cities
|and counties. In a few states local jurisdictions are
allowed to make recommendations, but these are not
necessarily binding on board members.
Mississippi, which legally prohibits anything
i
:stronger than light wine and beer, issues its licenses
i
;through the state control board with the consent of local
i
(authorities. Oklahoma, which prohibits anything stronger
I
j California, Connecticut, Delaware, Indiana, Iowa,
[Louisiana, Missouri, Montana, New Hampshire, Ohio, Pennsyl-
Ivania, Rhode Island (night club licenses), South Carolina,
'Tennessee, Utah (except light beer), Vermont (except wine I
land beer), Virginia, West Virginia. j
j 2 ''
J Alabama, Colorado, Florida, Idaho, Kentucky,
[Michigan (by drink), North Dakota, Tennessee (beer), South
!Dakota.
-^Illinois, Maryland, Iowa (beer), Minnesota, New I
[Jersey, Nevada, North Carolina, North Dakota (liquor) |
JRhode Island (except night clubs), Wisconsin, Utah (beer), j
89
than light beer, issues licenses through local authorities
only.
Ten of the open-1icense states^- and five of the
£
monopoly states-^ have legal restrictions on the total
number of off-sale and on-sale licenses which may be
issued. rThese restrictions are usually based on population
i f '
figures./^ For the year 1945 those open license states with
numerically restricted numbers of licenses had a mean of
3.15 total off-sale and on-sale outlets per one thousand
population while open-license states without a numerical
restriction had a mean of 2.87 outlets per one thousand
population. Monopoly states which were restricted had 2.67
outlets; non-restricted monopoly states had a mean of 2.84
^ I 6
\'outlets per one thousand population.
\ !
N — it is interesting to note that the administration of
jlicense restriction provisions, by and of itself, does not
jappear to affect materially the ratio of outlets to
!population.
1 4
Arizona, California, Florida, Indiana, Massachu-
|setts, Minnesota, New Jersey, Rhode Island, South Dakota,
jWisconsin.
' 5
i ^Iowa, Michigan, Ohio, Pennsylvania, Wyoming.
6
■ Alcoholic Beverage Control (Cleveland: The Joint
jCommittee of the States to Study Alcoholic Beverage Laws,
11950), pp. 100-101.
90
II. LICENSING
Regulation of the alcoholic beverage trade is
implemented by the license system* Without the written
consent of the authorized government agencies, no retail
!
enterprise may conduct a legitimate liquor business. The
applicant must meet the standards set by his state for a
license. The application for any type of alcoholic
beverage license must always be in writing containing the
representations that the candidate has the necessary
I
Iphysical and moral qualifications and bearing his promise
!
that he will abide by the miles and regulations of the
licensing authorities. In many states it is necessary to
jpost a bond.
I
! The following excerpt from Minnesota’s regulations
<
Jfor liquor licensing is illustrative: j
i ,
j Every person desiring a license from the liquor !
| control commissioner, shall file with him a verified !
written application in the form to be prescribed by ■
the commissioner. All applicants for manufacturer's
and wholesaler's licenses to sell intoxicating liquor
shall file with the liquor control commissioner a bond
with corporate surety, to be approved by the liquor
l control commissioner, before granting such license, or,
in lieu thereof, cash or United States Government bonds
in the sum of $10,000, according to the character of
j the license, made payable to the State. . . .
I j
j Every person desiring a license from a local j
i governing body shall file with the clerk of the !
| municipality a verified written application In the
| form to be prescribed by the commissioner, with such
! additional Information as the local governing body ;
j '-shall require. An applicant for an , r 0f££ale” license j
! shall file with the municipality a bond with corporate
91
surety, or a liability insurance policy or, in lieu
thereof, cash or United States Government bonds in a
sum, not less than $1,000 and not more than $3,000
as the local governing body of such municipality shall
determine, which bond or policy shall be approved by
such local governing body and the liquor control
! commissioner.'
Fingerprinting of the applicant is made part of the
[application procedure in several states, particularly when
the applicant is unknown in the jurisdiction or is suspected
of having a criminal record. These reasons are furnished
jin Missouri and Virginia for taking prints. In Nevada this
point is left up to the local authorities.
I The licensing agencies generally require that
publicity be given the application. This is accomplished
by advertising in newspapers of general circulation,
)
posting notices in public places (i,.£., town hall or court- j
I
house), and obtaining clearances from local authorities. j
1 j
jFublic hearings may be held to permit interested persons to j
|make known their objections to the issuance of a permit. j
! I
In this manner, the ability of the applicant to meet license!
i
requirements and the suitability of the premises to the
neighborhood and to local conditions are double-checked.
i ,
jln addition, inquiries may be made by investigative agents j
jin the neighborhood of the licensed premises and the variousj
! !
jlaw enforcement officials may be contacted for whatever
| ^State of Minnesota, Liquor Laws and Regulations.
iSec. 3I 4.O.12 (St. Paul: Liquor Control Commission, 1952).
!
92
records might be in their possession pertaining to the
proposed licensee.
The results of this thorough investigation help the
administrative boards decide whether (1) the applicant is
qualified for a license; (2) the location and type of
building concerned is suitable to the neighborhood and
inoffensive to the local taxpayers; and (3) the number of
similar licenses previously issued would be exceeded to
the detriment of the public interest.
License Q.ualifications
The following eleven qualifications are found most
commonly in the state regulations. None is common to all
the states:
| The most frequent requirement for a license is
i i
I :
jUnited States citizenship. Kansas requires citizenship for !
I ■ i
! . j
jat least ten years preceeding the application. Montana j
j ;
^requires five years previous citizenship. New York does '
lextend the citizenship clause to include aliens whose !
icountries have reciprocal trade treaties with the United
•States. I
I
! In the majority of states applicants with a criminal j
! ' j
{record may be denied a license. Some states only consider ;
I I
|a felony punishable by death as a bar to a license. For a j
' . i
number of minor violations most state laws provide only for J
|temporary suspension of applications, ranging from two years!
93
in Arizona to ten years in the District oi Columbia. A
few state laws specifically provide that an applicant must
not have been convicted of maintaining a house of prostitu
tion or of dealing in narcotics.
An applicant can have no prior conviction for
violations of any federal or state liquor laws nor can he
have had another liquor license previously revoked.
The applicant must be a person of good moral
character. The mere absence of a criminal record is
insufficient, and a few states require character recom
mendations.
| The applicant must be over the age of twenty-one
Jin almost all states, with Delaware demanding that an
|applicant be thirty. Other methods are employed such as i
\ \
|forbidding minors from working in liquor establishments or \
I insisting that the applicant be a qualified voter. i
! ■ ■ i
' The applicant must be the actual owner of the
i i
i i
I business and cannot act as an agent for an ineligible ;
i i
iperson. This is to prevent an ineligible person from
lusing another as a ’ ‘dummy” or ’ ’front” behind which to
!
' operate.
! In most states an applicant for a retail license j
I i
i !
Icannot have any interest in a wholesaler’s or distiller’s j
! i
‘ license. The converse also applies.
Residence in the state and county for a considerable
9k
period of time prior to the application date is required by
a majority of the states. The state residence requirement
I
varies from six months in Louisiana to ten years in Kansas.
The applicant must be financially responsible. This
provision is probably intended to discourage those with
insufficient resources to warrant their full and undivided
interest in the business. Connecticut and Delaware ban
from licensing any person who negleets or is unable to pay
t
his just debts. Connecticut law also states that in the
case of a woman her business must not interfere with her
(obligations toward her family.
| The applicant must not use alcoholic beverages to
(excess. Definitions vary as to what constitutes drinking
(to excess and at best remain arbitrary. However, previous
'arrests and convictions for drunkenness would probably [
I ' *
iaffect one’s chances to secure a license. |
i ;
I I
; i
I Hature and Meaning of the License j
i
The license is a certificate properly attested to by !
,the control board that the person named therein is author
ized to engage In the sale of alcoholic beverages.
i
(Usually the license must be conspicuously displayed. j
i I
(Separate licenses are usually required for each place of i
t !
business even though the licensee is the same. |
j A license is usually issued for one full year, but
(may expire earlier upon the death, insolvency, or insanity
95
of the licensee.
The privileges granted under the license are purely
personal, and therefore, the license cannot be considered
property which may be given away or sold to another person.
Transfers of licenses can only be granted if the full
consent of the licensing authorities is granted. In a
few instances state statutes prohibit any type of transfer
whatsoever.
A license shall be purely a personal privilege,
good not to exceed one year after issuance, except a
| non-beverage user’s license, unless sooner revoked as
i in this act provided, and shall not constitute property,
; nor shall it be subject to attachment, garnishment or
execution, nor shall it be alienable or transferable,
voluntarily or involuntarily, or subject to be encum
bered or hypothecated. Such license shall not descend
by the laws of testate or intestate devolution, but it
shall cease upon the death of the licensee, provided the
executors or administrators of the estate of the deceased
licensee, and the trustee of any insolvent or bankrupt i
j licensee, when such estate consists in part of alcoholic
! liquor, may continue the business of the sale or manu-
| facture of alcoholic liquor under order of the appro-
| priate court, and may exercise the privileges of the
‘ deceased or insolvent licensee after the death of such 1
decedent, or such insolvency or bankruptcy or insolvency I
j of such licensee.^
i
I V
i
i
ILicense Pees
| ;
; Despite considerable differences in the size of
; i |
,yearly license fees, the states are generally consistent in
|
jtheir classification of the business unit into retailers,
>
| i
: I
Q
State of Illinois, Liquor Control Act, Article VI,
Sec. 1, July 1, 19^4-9 (Chicago: Liquor Control Commission,
P3E9).
96
wholesalers, and manufacturers. The lowest fees are paid
by retailers, the highest by manufacturers.
Pennsylvania provides for the largest distiller
license fee, payable at $25 thousand dollars. The basic
fee is $2,500 for the first 500 thousand gallons with $100
for each additional 100 thousand gallons. Montana, Nevada,
and North Dakota have no fees for distillers, and Oregon
and Idaho impose a fee of only $100. The majority of fees
range from $1,000 to $2,000. The most common fee for a
winery is between $200 and $300. New York sets the highest
ifee for a brewery at $I(.,000. Pour states have no fee at
i
all for breweries, and South Carolina sets a fee of only
$100. Most states range their brewery fees between $750
■ \ Q )
jto $1,200:^ The majority of states combine their liquor
jand wine fees for the wholesale field. New York has the
jhighest fee at $L(.,000 and Illinois has the lowest at §150.
i
iThe commonest fees rage between $500 and $1,000. Beer
I
’ wholesaler's fees range between $500 and $1,000 in Indiana
and Ohio to $25 in Wisconsin. The average for the rest of
the states is between $200 and $300. j
Retail fees are usually divided between off-sale and
o
1 ^Kansas Legislative Council, Liquor Control,
Licenses and Taxes in i+5 States (Kansas: Research Depart-
m s s z r ' B m r j t t : ----------
10
Ibid.
(
97
on-sale licenses, with, the fee for on-sale being the higher.
On-sale fees which permit on-premises consumption of
I
!alcoholic beverages range from $1',200 in New York to $5>0
I
I
in Illinois. The average in most states ranges from §350
to §750. Off-sale license fees range from a high of §800
in New York to a low of $25 in New Mexico. A majority of
states impose fees between §250 to §500. ifessaehusetts,
Minnesota, Nevada, New Jersey, Wisconsin, and Wyoming make
no provision for a state retail license fee.-^
Pees paid to the state do not reflect the whole
jlicense picture as in the majority of the states additional
license fees are levied by counties or municipalities. In
Nebraska, for example, the cities and villages may impose
an occupation tax not to exceed the amount of the state
;
jlicense fee, but co-unties are not allowed to levy any j
additional taxes. In Colorado the fee which can be j
!
I collected by the local authorities is fixed by the legis- }
| i
j1ature. I
! !
i |
! III. EXCISE TAXES I
I i
I i
i s
Social regulation, not revenue or punishment, is j
! . i
(asserted to be the primary objective of liquor taxation. j
i i
j The effort to maintain effective control can be greatly j
j j
j I
I
98
hindered or immeasurably advanced by the kind of tax system
in operation.
Federal Excise Taxes
The first federal excise tax on spirits was that of
179^4- which culminated in the Whiskey Rebellion. This tax
was later repealed. In I86I 4.,’ although excise taxes on
liquor had existed for some time, the need for additional
revenue to prosecute the Civil War caused the tax on
whiskey to rise from eight to twelve times the production
cost of seventeen to twenty-five cents per gallon. The
tax was first raised to $1.50 and later to $>2.00. Boot-
12
legging rose with the taxes.
Realizing the unpopularity of high excise taxes and
ithe end result of the customer approaching the bootlegger,
jin 1933 a formula with regard to taxes on liquor was set
jforth by the House Ways and Means Committee: price
jcompetition must be facilitated by keeping the tax burden
|
jon liquor comparatively low to permit the legal industry to
■offer more severe competition to the illegal competition.1^
1
; During this same period a study of the Rockefeller
j
i
Institute warned:
j
| The temptation to load on the liquor trade all our
I P i
Harry Thompson, ”Bad Booze Is Big Money,” American ;
Mercury, 77:3b-38, August, 1953-
I 13Ibid., p. 37._______________________________________
99
government deficits should be resisted at all costs,
for high taxes will produce high prices, and will thus
make inevitable the continuance of the moonshiners, the
bootleggers, and the whole system of corruption.1^-
Up to World War II the above philosophy prevailed
and tax increases were voted with caution. However, from
19^ 4-0 until the present time there have been continuous
increases in the amount of the federal excise taxes on
jliquor. In 1933 with Repeal the tax was $1.10 per gallon.
Taxes rose in the following amounts and order: 19^4-0— $3*00»
19* 4 - 1-“$*4 -00, 19*4-2— $6.00, 19*4*4- (Wartime Bnergency Act)--
#9.00, 1951— $10.50. It was claimed that in 195*4- taxes
would revert to the $9.00 level. However, this did not
come about and taxes remain the same. It was maintained
that taxes needed to be kept at the 1951 rate because the
jadditional revenue was necessary. However, for the first
'three months following the tax hike, federal revenue was j
j _ |
[$398s 231,1 4 . 33, or 22 per cent less than the $51*4-,921,123 i
i I
'collected in comparable months the preceding year under the j
! j
1 K >
llower tax, and revenue has continued to drop. ^
1
i
j Among the results of such taxation is the high price
jof alcoholic beverages. Taxes account for 8l per cent of |
| |
'the price increase since the beginning of World War II,
whereas production costs account for only 19 per cent.
........... .......... ............., — i . j
li+Ibid.
I 1^Ibid.
100
With this increase in price has come buyer resistance.
That the buyer has felt the pinch has been evidenced in the
increase of tax stamps sold for small bottles (half pints,
four-fifths pints, and pints), In 1950 before the tax
increase, 36.8 per cent of stamps were for small bottles.
The year following the tax boost there was an increase to j
lp3 per cent for small bottles. Probably the worst result
from a social point of view is the increase in bootlegging.
In 19^1 the number of captured stills (19,6341.) was com
parable to the annual capture of around twenty thousand
during Prohibition.^
I
istate Excise Taxes
I State laws divide alcoholic beverages into three
major categories: distilled spirits, wine, and beer. Even j
among these, taxable variables can be found between light j
jand heavy beers and light and heavy wines. The highest !
!tax rates apply to distilled spirits with lesser rates for !
' 1
1 j
■wine and beer.
! Excise taxes for distilled spirits range from f>3»60
i
per gallon in Vermont to fifty cents a gallon in nearby
Rhode Island. The typical levy ranges from $1.50 to $2.50
j ' j
iper gallon. Wine taxes range from forty cents to sixty j
1 !
cents per gallon for heavy wines and fifteen cents to ;
i 1
1 s
; 0,1 Liquor Industry: Taxes Bring Back Bootlegger,"
Newsweek, _ij.0:71-75, _ July 1I 4-, 1952 .
101
twenty-five cents per gallon for light wines. Maine has
the highest beer tax at sixteen cents per gallon, but the
majority of states levy a tax of between five and ten cents
I 17 ^
per gallon. ' !
Most of the monopoly states do not levy an excise
tax on spirits, possibly because they have the advantage
of a wholesale and retail mark-up whereby they secure
revenue. The exceptions to this are Ohio with an excise
tax of $1.00 per gallon, Vermont with $3.60, and Wyoming
with eighty cents. Some of the other monopoly states,
Jhowever, levy a special percentage tax based on the retail
I
i
sales price of the distilled spirits. Vifashington has a
high of 20 per cent and Montana imposes an 8 per cent tax.
Some also subject their alcoholic beverage sales to their
' 18 i
iusual state sales tax.- 1
I j
Officially, Mississippi is one of the two states
which still has a prohibition law. It appears, however, j
}
jthat many counties have agreements with city officials to j
joverlook any irregularities. One of the Mississippi laws j
levies a 10 per cent tax on the gross Income of all illegalj
lenterprises. This tax statute, known as the "Black Market" j
i '
jtax, allows county tax officials to force bootleggers to
i
i
i _ _ _ _ _ _ _ _ _ _
I i 17 , . \
Liquor Control, Licenses and Taxes in I 4.5 States, 1
|o£. cit.,-fT3T----------------- /
I l8Ibid.
102
pay 10 per cent of their revenue for an activity which
actually violates other state laws.^
Tax Exemptions
There are three principal exemptions from state
liquor taxes: (1) beverages exported from the state,
(2) wines used for sacramental purposes, (3) liquors used
for non-beverage purposes. S®my states have additional
miscellaneous exemptions to meet local conditions and
demands.
There are seventeen states in all which exempt |
ialcoholic beverages from taxes if they are to be exported i
20 ' ^
to other states. In monopoly states which impose a j
retail sales tax on beverages sold in state stores, an j
!
jexemption exists on exported products even though specific j
jprovision for such exemption is not granted by law. The j
j j
i i
ilatter products are not subject to the retail sales tax. |
j
Pennsylvania allows a refund to beer manufacturers who j
}
export their products. With reference to distilled spirits j
|
and wine, the manufacturer is allowed a refund in such I
i
amount that the tax finally paid by him on beverages ;
I
i
I ^John Combs, "You Can Wet Your Whistle in a Dry
jState," Tab, pp. 68-70, March, 1953- I
20 *
! Arizona, California, Colorado, Connecticut, Florida!,
Illinois, Indiana, Kentucky, Massachusetts, Minnesota, {
[Nebraska, Nevada, New Jersey, New Mexico, Rhode Island,
'South Dakota, Tennessee.
f ■ — . . . . . . . . — . . . -
exported to any state which is in substantial competition
is equal to the taxes which that state imposes on beverages
jexported into Pennsylvania. If the other state imposes
Lo export tax, then the Pennsylvania manufacturer is
(granted a full refund. Texas has an inspection fee on all
i
exports.
Many states evidence the belief that the taxation of
sacramental wines might be construed as an interference
with religious freedom, consequently, such wines are
exempted from the operation of the liquor statutes as a
21
whole.
Thirteen states do not wish to interfere with
scientific advancement by restricting or taxing the use of
22
alcohol for scientific or medicinal purposes.
Arkansas and the state of Washington also have
provisions relieving the growers of fruit for beverage j
{purposes from paying any tax on home consumed products. I
i
i
i j
Discriminatory Taxes [
| i
j Some states impose a discriminatory tax on out-of-
!state wine produets. As an example, Oregon bulk wines are 1
i
i !
; I
'i ■ ........ —......... .............. ■; ■ — ...... t
21
Colorado, Delaware, Indiana, Kentucky, Louisiana, j
Massachusetts, Michigan, Minnesota, New Mexico, North j
(Dakota, Ohio, Pennsylvania, Rhode Island, South Dakota, j
Tennessee. I
I i
22 !
i Arizona, Connecticut, Delaware, Illinois, Indiana,
Kentucky, Louisiana, Nebraska, New Jersey, New York, North
Dakota, Pennsylvania, South Carolina^ ___________ __ _______
10ij_
taxed at a lower rate than bottled wines, but the state
statutes provide that all wines produced within the state
shall be classified as bulk wines. Ihis provision creates
!a discrimination against out-of-state bottled wines.
[Another example of discrimination is found in Maine.
Maine has set up a barrier against out-of-state wine
growers by taxing fruit products grown outside of Maine
for use in Maine wineries. This tax on out-of-state
produce amounts to four cents a gallon. On the other hand,
domestic fruit produce used for the same purpose is
I
I exempt from any taxation.
On distilled spirits Georgia imposes a tax of 100
per cent more on out of state spirits than is imposed on
domestic products.
Besides discriminatory taxes, eight states have
retaliatory provisions which provide for the raising of the
| I
|tax rate against those states which discriminate against ’
I 2 3 I
[them. J The administrative agency usually has the authority'
!to impose such a tax. In Michigan a statute applying only
i
jto beer provides that the Liquor Control Commission has j
I ' j
ithe authority to designate states which discriminate against
i j
Michigan beer and to prohibit all Michigan licensees from |
\
|purchasing beer from the designated states. !
j :
|___________________
^Connecticut, Florida, Indiana, Michigan, Ohio, !
[Oregon, Pennsylvania, Rhode Island. 1
/
105
! Rhode Island has a law which states that fees
imposed by Rhode Island on beverages imported from another
state may be raised to equalize any market advantage given
by such state to its own products as compared to Rhode
Island products.
IV. ENFORCEMENT
Since the repeal of Prohibition on December 5» 1933
each state has been given the right of regulating,
(controlling, licensing, and even in some cases, prohibiting
j
jthe sale of alcoholic beverages. Such control and
| 1
(regulation is unlimited except to the extent that no state j
may declare legal what the federal government declares i
i |
jillegal, and it is within the police powers of the j
jindividual state to see that enforcement of the laws takes !
i |
place. I
i
I
All states have granted authority to enforce the j
Haws pertaining to alcoholic beverages to the controlling ;
i
(agency. Municipalities and counties have the further
•privileges of enforcement with regard to infringements of j
i 1
(local ordinances. j
i I
{ |
! j
iPenalties j
!
| j
i
I Criminal prosecution. All states are empowered to [
j
•prosecute as criminal acts infringements of the liquor
106
code. However, some violations are considered by nature
to be misdemeanors only.
Revocation of license. Since the issuing of
licenses is a discretionary power of the state control
board and not an inherent right of the possessor,
violations of the laws, rules, and regulations pertaining
to alcoholic beverages may be punished by the revocation
of the license as well as criminal prosecution. Such
Irevocation may be permanent or it may be only for a period
of time described by law. Action of this type is usually
referred by most states to the municipal authorities.
The following statement from the state of New Jersey is
jillustrative:
!
i Punishment may be either temporary suspension of the j
license for a designated time or permanent revocation I
j of the license. If the latter, it may be accompanied, j
1 if deemed proper. . . by an order that the licensed I
| premises shall be ineligible to become the subject of S
i any further license for a period of two (2) years.^4 j
! x 1
| Revocation is not necessarily confined to a violation!
of liquor law, nor is it limited only to acts occurring
(after the license is issued. Pacts suppressed on appli-
1 • !
c§tion are sufficient to cause revocation should they come i
J j
jto light.
| ^"State of New Jersey, Rules and Regulations, .
'July 1, 1950 (Newark: Department of Law and Public Safety,
Division of -Alcoholic Beverage Control, 1950), p. 6l j . .
10?
The making of false reports, sales to unauthorized
persons, accepting bribes or inducements from wholesalers,
convictions in court for violation of, the liquor laws,
failure to maintain license qualifications, failure to pay
taxes, violations of local ordinances, or violation of
fair trade laws are reasons for license revocation.
j
According to the individual state policy, revocation
disbars the licensee for from one to five years in obtaining
another license and frequently prevents the establishment
from being reopened for a specified period. A sign or
[notice must be posted on the premises to show that
i
i *
revocation has taken place.
Hearings on complaints are generally heard by the
liquor authorities. The complaint may be issued by the
[commission itself, by local authorities, or even by ,
complaints of a specified numbers of residents in the
area.
I ;
i i
I i
i i
I
I
I
I
I CHAPTER VII
j SUMMARY AND CONCLUSIONS
i
i
I
Summary
In the United States there are four major distillers
who produce the bulk of the distilled spirits sold. These
companies, Schenley Distillers Corporation, Seagram’s Ltd.,
National Distillers Products Corporation, and Hiram Walkers,
today produce over 70 per cent of the distilled spirits
sold.
Since 1933 there have been certain trends apparent
I i
i
in the consumption of alcoholic beverages in the United
States. The most notable change was that resulting from
i
■World War II. Because of grain shortages the distillers I
I . - -' i
' j
jwere unable to produce enough straight whiskeys to fulfill j
1 i
|the demands. Therefore, other types of alcohol were used, |
| j
1 primarily fruit spirits. The "blended” whiskey became s
j
jpopular because it was the only whiskey available. Blends ‘
I
! consisted of a small part of straight whiskey, flavoring,
Coloring, and neutral spirits. By 19^1-7 when supplies of [
!
straight whiskey were once more plentiful, it was found !
\
| that the public taste had changed to a preference for |
I - i
i 5
jblends. As a result, today more blends are sold than j
straights.
Because of the nature of the product, distillers
109
have certain problems not common to the average business.
They are under constant surveillance by federal, state, and
local governments, and the public as well. The major
problems of the distillers are (1) stringent regulations,
(2) inconsistencies in federal rulings, (3) bootlegging,
(ij.) constant attack by Prohibition groups.
The market for alcoholic beverages has remained
relatively static since 19^2. Apparent increases in
consumption have been due to population increases. The
greatest change has been in the pattern of consumption.
In the development of legislation affecting the use
of alcoholic beverages it is noted that, although the use
of alcohol is very ancient, the history of attempts to
control its use is equally ancient. Throughout history,
drunkenness has been severely condemned and punished.
Despite harshness and stringency in dealing with intem
perance there is no evidence that the use of alcohol has
ever been other than mildly curtailed. It is thought by
many authorities that this persistence in its use indicates
some deep-seated social need in human beings.
Early attempts at legislation were designed to
prevent misuse of the product. The object of later
legislation was the accumulation of revenue as well as
regulation of the use. The Whiskey Rebellion of 1791+ grew
out of the first excise tax on liquor in the United States.
110
Excise taxes have never been popular although today they
are more tolerated because taxes are so deeply imbedded in
socio-political thinking and practice that they are the
norm rather than the exception.
In the nineteenth century, a period characterized by
social awakening, efforts were made to prohibit the use of
alcohol. However, the first law on a national scale
prohibiting the use of distilled spirits, beer, and wine,
was the Eighteenth Amendment. The latter, never a popular
law, was repealed in 1933.
Since that time, forty-six states permit the sale of
j
jaleoholic beverages. However, opinion is divided as to the
I
jmethod of control. There are two types of state controls:
monopoly and open-license. States following the first plan
have a monopoly on the wholesale distribution and retailing j
of distilled spirits. The state owns the retail outlets,
j
jfixes prices, and generally limits the number of outlets. I
i ,
i In open-license states the sale of liquor is a j
I s
Iprivate venture on the part of properly licensed individuals!.
j j
;The licensees, however, are not so free as those partici- ;
! * '
ipating in other private industries. Nonetheless, there is j
|
much more competition in open-license states than in
monopoly states, and there are usually more retail outlets.
|
In general, prices tend to be higher in open-license states !
than in state monopolies. j
: !
i
L_______In the matter of pricing and price controls the______ j
Ill
monopoly states are usually guided by two factors:
promoting temperance and accumulating revenue. There are
no price deviations on any one brand in the individual
state. Because the profit of the wholesaler is eliminated
these states can make a higher profit, although the
consumer is charged less.
Most open-license states have a system of price
controls known as fair trade acts. The objective of such
laws is to prevent price cutting and price wars. The
I industry itself supports fair trade laws and in states
i
where the latter have been declared unconstitutional the
distillers have instituted voluntary resale price main
tenance .
No two states have exactly the same laws, but every
j
state has a large body of legislation controlling the sale
of alcoholic beverages. At no level of the industry is
i
control more rigid than that imposed on the retailer. He I
• j
iis restricted on where he may locate his business, to whom j
I I
jhe may sell, when he may sell, and how much he may sell.
•There are laws pertaining to packaging, labeling, and
i
Advertising. Other responsibilities of the retailer
!
!include payment of excise tax, state and federal tax, price
i
Iposting, maintenance of the premises, meeting pure food and
jdrug and sanitation laws, as well as keeping complicated
records.
112
Within the industry are also numerous restrictions.
Type and number of retail outlets are frequently regulated.
Some states restrict sales to package only; others have
both on-sale and off-sale premises. A number of states
limit the number of licenses issued, usually at the rate of
one license per thousand population. Sales between
retailers are forbidden, and the retailer may not do his
own importing or in anyway by-pass the wholesaling function.
In the promotion through advertising of alcoholic !
beverages, the industry, has its own code and is subjected
i
ito further control by the Alcohol Tax Unit of the Treasury j
( j
Department, and local control boards as well,
j The techniques of advertising alcoholic beverages
must depend more on eye and ear appeal than anything else. !
I ' i
Manufacturers are not permitted to describe the effects of \
i
| ' |
the use of the product. Therefore, snob appeal is employed j
i
'along with superlatives to describe the taste. However, j
I ;
.'advertising is on a very wide scale and lavish expenditures j
are made for this purpose. Since the overall size of the
market is not increasing, much of the advertising done is
simply to keep certain brand names before the public to j
; i
Iprevent losing that share of the market the manufacturer
[already has. 1
I
I ;
j Individual administrative bodies for alcoholic
beverage control are of two types. In twenty-two states
113
such administration is under exclusive direction of one
individual; the remainder of the states have commissions
{appointed to administer. The powers of such commissions or
boards are extensive because vagueness of the alcoholic
beverage laws require broad interpretations. The duties of
the boards include rule-making, interpretations, issuance
of licenses, collection of license taxes, punishment of
violations.
Aside from certain personal requirements which the
licensee must meet, he pays a fee for the privilege of
i
having a license. There are different types of licenses j
i
and fees for every level of the industry from distillers,
wholesalers, to retailers.
There is much dissatisfaction over the present high
i j
excise tax on alcoholic beverages. Since Repeal the tax j
|
rate has climbed from $>1.10 to a present high of $10.-£0 per j
gallon. There is evidence that the high tax rate is !
|
responsible for the vast increase in bootlegging which has !
occurred in the past few years. Over half the price of an
i
[average fifth of whiskey is federal tax. However, taxation I
[ !
i ;
: does not end on the federal level. There are also state i
1
excise taxes which average between $l.f>0 to $2.£0 per j
jgallon. Most monopoly states do not levy additional excise j
j i
Itaxes on liquor because of the economic advantage they !
enjoy through direct buying from manufacturers and their
134
ownership of the retail outlets.
Enforcement of the laws pertaining to alcoholic
beverages falls to the individual states and control and
enforcement is unlimited except insofar as federal controls
are observed. Laws imposed by counties or municipalities
must be enforced by local and county police agencies.
Conclusions
The objective of liquor control legislation is
neither taxation nor punishment, but rather, social control.
Regulation of the use of alcoholic beverages is primarily
intended to promote temperance, with the collection of
revenue secondary. It is the privilege and right of the
iindividual to purchase and consume liquor so long as he
jdoes not encroach on, or abuse the rights of others. This
!
jis ample reason for electing or appointing to the liquor
!
?
|control boards, able, honest, and efficient individuals.
I
, It is natural that liquor control boards are fre-
I !
jquently subject to much unscrupulous pressure. Human nature!
i
i
{is vulnerable; therefore, only men of the highest integrity j
i f
!and ability should be placed in positions of control. Even j
jthen, civic-minded citizens interested in law enforcement !
jmight do much to insure the continued integrity of enforce
ment agencies.
Prom time to time licensing abuses are brought to
jthe attention of the public through press. This is
115
probably good, although the motives behind such exposes
are sometimes dubious. However, publicity brings public
awareness and causes a tightening of enforcement activities.
Today there are, as there always have been, powerful
groups opposed to the sale of alcoholic beverages. Total
prohibition appears to be their objective. Such pressure
groups frequently wield considerable political influence.
{
They ignore the known bad effects of the Eighteenth
Amendment and base their arguments against the use of
Ispirits on the evils of poor law enforcement, the dangers
iof alcoholism, and the effect on public morals. In some
areas whole political campaigns have been waged and won on
Prohibitionist arguments and appeals while candidates have
ignored such real issues as poor schools, bad roads, and
inadequate housing.
Prohibition was repealed because it was not the
ipromised panacea for all social ills of the nation. The j
j j
| t
javerage person probably does not wish to lose his freedom j
I
ito use distilled spirits if he wishes. However, it is
\
'frequently difficult to produce sound arguments against the
« j
Prohibitionists in the light of weak administration and
flagrant abuse of the laws regulating liquor consumption. j
I
The inconsistency in the Prohibitionist argument is J
|
that the latter takes no cognizance of the vast number of
(casual and moderate users of spirits, but focuses entirely
116
on the alcoholic problem. The ”drysM apparently lack the
numerical strength to bring about a second coup like the
Eighteenth Amendment. However, there is a larger group
comprised of those individuals who are not classed as Mdrys, f
and who normally pay little or no attention to the use of
liquor, perhaps do not use it themselves, or, if they do,
[only occasionally. It is this group which can still throw
jpolitical support to the Prohibitionists if abuse of
I
jexistent laws becomes so great that it cannot be ignored.
[ There are two major problems confronting the United
States which result from the use of alcoholic beverages.
The first is the problem of the alcoholic. The second is
that of the increased accident rate in automobiles. Since
neither of these at the present time constitute grounds for |
i ;
(legislation against the use of alcoholic beverages, one (
jinsurance against the growth of either of these problems is
!
education. Most states require that a given number of |
j
'hours be allotted per semester to education in the schools ;
!
|
I 'o n the use of alcoholic beverages and narcotics.
i
| The public itself appears to be maturing in its
approach to the alcohol question. The organization,
• i
| Alcoholics Anonymous, has aroused interest and sympathy on ;
i !
iall levels of society, and is accepted, even by physicians, j
i
jas desirable therapy for the alcoholic or potential ’
alcoholic. More and more frequently today, alcoholism is
117
being recognized as a disease rather than merely a dis
graceful antisocial condition.
Since the total consumption of alcoholic beverages
is not increasing, it may be argued that alcoholic beverage
legislation is effective in curtailing the use somewhat.
However, legislation is not the sole factor to be considered.
Any explanation of the consumption figures on alcoholic
beverages must take account of many factors, not the least
of which are social and economic.
Failures of liquor legislation appear to stem not
j
Ifrom too little legislation, but from a need for more
; !
suitable enforcement of existing laws. Where laws are
arbitrary or open to varied interpretations it is fre
quently difficult for the best-intentioned member of the
i - I
^alcoholic beverage industry to comply to the fullest !
extent. |
For the good of the industry, the consumer, and the !
jnation itself, it would appear that the most beneficial
i
jaction which might be taken would be a lowering of federal
!excise taxes on alcoholic beverages to eliminate boot-
t
legging, weeding and pruning existing legislation to rid it j
jof nonessential legislation, and stricter enforcement by
jhonest individuals of purposeful and forthright laws which
contribute to the social good of all.
BIBLIOGRAPHY
1 1 9
A. BOOKS
Corrado, Benjamin W. (ed.). Corrado*s Handbook of Liquor
Marketing, 195k-• New York: Benjamin W. Corrado
Marketing Consultants, 195k*
Dobyns, Fletcher. The Amazing Story of Repeal. Chicago:
Willett, Clark & Company, 194-0•
McCarthy, Raymond G., and Edgar M. Douglass. Alcohol and
Social Responsibility. New York: Thomas Y. Crowell
Company and Yale Plan Clinic, 1949*
Oxenfeldt, Alfred R. Industrial Pricing and Market
Practice. New York: Prentice-Hall, Incorporated, 1951*
(Patrick, Clarence H. Alcohol, Culture, and Society.
! Durham: Duke University Press, 1952.
B. FEDERAL AND STATE' PUBLICATIONS
Alcoholic Beverage Control. Cleveland: The Joint Committee
of the States to Study Alcoholic Beverage Laws, 1950. j
Distilled Spirits Institute. Summary of State Liquor ■
| Control Laws and Regulations Relating to Distilled j
j Spirits. Washington: Distilled Spirits Institute, S
! 1952. |
i ;
Kansas Legislative Council. Liquor Control, Licenses and j
^ Taxes in 1+5 States. Kansas: Research Department, 19^4-9• |
I
Works Progress Administration. State Liquor Legislation,
i Washington: United States Government Printing Office,
! 19kl
C. PERIODICALS
I*Alcohol Dwindles,” Business Week, November 6, 191+3,
pp. 19-20.
*Alky on the Loose," Business Week, November 18, 1914+,
pp. 19-20.
j*Amber Light," Time, 5l+:38, August 8, 191+9.
120
"And Now Liquor,” Newsweek, 34:37» August 1, 1949.
Asbury, Herbert, "When Prohibition Was in Flower,” American
Mercury, 63:40-7, June, 194-6.
”Back to Barleycorn,” Newsweek, 33:23-24, March l4, 1949.
"Back to Bourbon,” Business Week, January 6, 1945,
pp. 19-20.
"Ban Advertising of Liquor," Christian Century, 67:100,
January 25, 1950.
Bells, Charles R., "Dry up Liquor Profits!" Christian
Century, 63:1371-1372, November 13, 1946*!
Burck, Gilbert, "How Hard Do Americans Drink?" Fortune,
47:121-125, 151-154, March, 1953.
"Capper Bill Would Curtail Liquor Advertising,” Christian
Century, 167:227, February 19, 194?.
"Cheaper by the Vat," Business Week, August 19, 1950,
pp. 64-65.
"Cheaper Liquor," Business Week, September 24, 1949, p. 48*
"Christmas Cheer," Business Week, December 6, 194?, P» 22.
i
"Churches Seek Ban on Liquor Ads," Christian Century, j
69-716, June 18, 1952. ;
j
Combs, John, "You Gan Wet Your Whistle in a Dry State," j
Tab, March, 1953, pp. 68-70. j
"Cork Pulled," Time, 53:96, April 11, 1949.
"Distillers Fight Grain Controls," Business Week,
January 24, 1948, PP* 25-26.
! ■ i
i . 1
['"Distillers Hedge,” Business Week, January 1, 1949, p. 26. [
; I
["Distillers Slapped," Business Week, January 3, 1948, p. 2 4 - j
i"Drop in Liquor Sales Stirs up Attack on Tax," United j
States News, 32:80-83, April 4, 1952. j
i
"Dry Forces Are Still Trying," Business Week, December 26,
i 1953, p. 76.
121
|"Dry Try,’ 1 Newsweek, 35:18, January 23* 1950.
i
"End of an Era," Nation, 168:319,. March 19, 19^9.
"Exit Liquor Law," Business Week, March. 1+, 1950, pp. 72-73.
"Pair Trade Revolt; Liquor Price-Cuts Stir," Business Week,
May 21, 19^9, pp. 8I 4 .-85.
"Pair Trade Test," Business Week, August l i j . , 19^4-3, p. 99.
"Grain for Whiskey May Stay Uncontrolled," Business Week,
March 6, 19^4-8, p. 22.
"Justice Department Attacks Big i j . Control," Business Week,
February 26, 1955, p. 138.
"Liquor Pair Trade Outlawed in Illinois," Business Week,
October 1, 19^4-9, P* 52.
"Liquor Industry: Taxes Bring Back Bootlegger," Newsweek,
i 14.0:71-75, July 1I 4 . , 1952.
"Liquor Is a Price Problem," Business Week, July 9, 19l|-9,
! P» 25.
"Liquor Sales by State," Business Week, October 2, 1914-3,
p. 82.
"Liquor Tapped," Business Week, August 16, 1952, p. 92.
IMadison, James M., "For a Second Whiskey Rebellion,"
| American Mercury, 76:85-87, January 1, 1953.
i"May Shake up Liquor Control," Business Week, December 8,
; i95i, p p. 98-99.
1
"Millions in a Federal Ruling," United States News, 27:16,
| July 22, 1914.9.
;"Moderation and Profit," Christian Century, 6l|:l67-169,
| February 5, 1 91-4-7 •
I
-"Moonshine--Big Business Again," United States News,
i 37:7l|--75, September 17, 19514-.
"No Bright Glow in Moonshine," Business Week, October 21,
1950, p. 38.
j"Oklahoma Votes Dry: Still Wet," Newsweek, 3lj-:26,
: _____fLc±.obuer liy -I9I1 - 9 - ________________________________________-
122
1,Old Bluenose Rides Again,” Colliers, 132:110, October 30,
1953.
’ 'Old Oaken Barrel," Time, Sk'70, July 25, 19J 4. 9.
"Prohibition, New York," Saturday Review of Literature,
3l|-:19-20, December, 1951.
"Return Engagement," Colliers, 130:70, August 23, 1952.
"Roll Out the Barrel," Business Week, September 22, 19^-5*
P. 83.
Small, Collie, "Kansas Staggers to the Polls," Colliers,
122:13, August 28, 19*4-8.
"Step Right Up," Business Week, December 18, 19^4-3>
pp. 113-llij-.
"Tax Threat Adds to Liquor Chaos," Business Week,
j February 10, 1951» p. 20.
"The Whiskey Counts," Business Week, January 2, 195il> p. 79.
Thompson, Harry, "Bad Booze Is Big Money,” American
Mercury, 77:35-38, August, 1953.
"Time to Remember," Newsweek, If.2:80, December 7» 1953*
j"Whiskey and the Air Waves," Scholastic, 60:5-7* !
! February 27, 1952. i
j I
|"Whiskey Jitters," Business Week, April 12, 19^7, p. 76. |
! j
f'Whiskey Rebellion*" Fortune, 35: l 2 - ) _ 0 —llp3, June, 19-lp7 . j
D. STATE STATUTES
Klabama. Intoxicating Liquor. Wetumpka: Alcoholic
| Beverages Control Board, 19I 4 -O.
I
Arizona. Liquor Laws. Phoenix: Department of Liquor
i Licenses and Control, 1939.
Arkansas. Revised State Beer, Wine & Liquor Regulations.
1 Alcoholic Beverage Control Board, 1952.
123
California. California Alcoholic Beverage Control Act and
Related Constitutional Provisions. Sacramento:
State Board of Equalization, 195>1 •
Colorado. Liquor Code and the 3«2 Beer Act and Rules and
l Regulations. Denver: State Licensing Authority, 19^9 •
Connecticut, Intoxicating Liquors (revised). Liquor
Control Commission, 19^2. ™
Delaware. Liquor Laws. Wilmington: Alcoholic Beverage
Control Board, 19^4-8.
Florida. Laws of the State Beverage Department of Florida.
Tallahassee: State Beverage Department, 1952T
Georgia. Law and Regulations Pertaining to the Sale of
Malt Beverages. Atlanta: Alcoholic Beverage Control
Board, 195>27
i
;Georgia. Law and Regulation Pertaining to the Sale of
! Wine. Atlanta: Alcoholic Beverage Control Board,
19&.
Georgia. State Laws, Rules and Regulations Relating to
Distilled Spirits. Atlanta: Department of Revenue,
i m : ------ — ” !
I ;
|Idaho. Liquor Laws. Boise: State Liquor Dispensary, 1953* ;
1
Illinois. Liquor Control Act of the State of Illinois. j
Chicago: Liquor Control Commission, 19^9« !
! - I
!Indiana. Alcoholic Beverages Law. Indianapolis: Alcoholic;
j Beverage Commi ssion, 19^7•
Iowa. Seventeenth Annual Report. Des Moines: Liquor
Control Commission, 195>1 •
I Kansas. Rules and Regulations Relating to Alcoholic j
Beverage Control. Topeka: Alcoholic Beverage Control j
j Board, 1951»
I Kentucky. Alcoholic Beverages Law (annotated). Frankfort:
j Department of Alcoholic Beverage Control, 1950* I
:Maine. Laws Relating to Liquor and Liquor Licenses.
| Augusta: State Liquor Commission, 195>1 •
12if.
; Maryland. Alcoholic Beverages Law. Annapolis: Comptroller
of the Treasury, Alcoholic Beverages Division, 1952.
Massachusetts. The Liquor Control Act. Boston: Alcoholic
Beverages Control Commission, 1939•
Michigan. The Liquor Control Act and Rules and Regulations
Governing Sale of Alcoholic Beverages at Retail.
Detroit: Liquor Control Commission, 1952.
Minnesota. Liquor Laws and Regulations. St Paul: Liquor
Control Commission, 1952.
i
Missouri. Intoxicating Liquor Law and Nonintoxicating Beer
Law. Jefferson City: Department of Liquor Control,
19F2.
Montana. Rules and Regulations. Helena: State Liquor
Control Board, 195^•
Nebraska. Liquor Control Act. Lincoln: Liquor Control
Commission, 19^-9 •
Nevada. Liquor Law. Carson City: Liquor Tax Division,
19^7.
New Hampshire. Laws and Regulations Relative to the Sale
of Liquors, Beer and Wines. Concord: State Liquor
Commission, 1952.
New Jersey. Rules and Regulations. Newark: Division of
Alcoholic Beverage Control, 1950.
j
i
New Mexico. Liquor Laws and Regulations. Santa Fe: !
Bureau of Revenue, Division of Liquor Control, 19^1. I
I
New York. Alcoholic Beverage Control Law. New York: j
j State Liquor Authority, 193^.
(North Carolina. Alcoholic Beverage Control Laws. State
| Board of Alcoholic Beverage Control, 19k-9*
I ' ;
iNorth Dakota. Alcoholic Beverage Laws. Bismarck: State |
! Treasury Department, 19^1-3• ‘
| )
iOregon. Liquor Control Laws and Regulations. Salem: j
j Liquor Control Commission, 195l•
Pennsylvania. Regulations. Harrisburg: Liquor Control
Board, 1952.
125
Rhode Island. General haws (Chaps. 162-175). Providence:
Department of Business Regulation, 1952.
South Carolina. The Alcoholic Beverage Control Act of 19^+5
and Regulations. Columbia: Tax Commission, Beverage
Tax Division, 19^-5«
South Dakota. Alcoholic Beverages Code. Pierre: Division
of Licensing, 1951•
Texas. Liquor Control Act. Austin: Liquor Control Board,
1951.
Utah. Liquor Control Act and Amendments. Salt Lake City:
Liquor Control Commission, 1914-3*
Vermont. Statutes Relating to Control and Regulation of
Intoxicating Liquors. Montpelier: Liquor Control
Board, 1950.
\
jVirginia. Alcoholic Beverage Control Act and 3.2 Beverage
Laws. Charlottesville: Alcoholic Beverage Control
Board, 1952.
Washington. Liquor Laws. State Liquor Control Board, n.d.
Washington, D.C. The Alcoholic Beverage Laws. Washington:
; ■ U.S. Government Printing Office, 1951*
Wisconsin. Beer, Liquor, Cigarette and Gambling Laws,
j Madison: Division of Beverage and Cigarette Taxes, !
| 1950. I
Wyoming. Liquor Control Laws. Cheyenne: Liquor Commission,-
' 1951.
i
E. UNPUBLISHED MATERIAL
Allen, Jesse Bishop. ”A Comparison of the Marketing of
Alcoholic Beverages under State Monopoly and Open
! License Systems.” Unpublished Doctor's dissertation,
The University of Chicago, Chicago, 1952.
University of Southern Califouala

Asset Metadata

Creator Horwitz, David Meyer (author)

Core Title A study of state regulations affecting the alcoholic beverage industry

Contributor Digitized by ProQuest (provenance)

Degree Master of Business Administration

Degree Program Business Administration

Publisher University of Southern California (original), University of Southern California. Libraries (digital)

Tag Economics, Commerce-Business,OAI-PMH Harvest,Political Science, public administration

Language English

Advisor Whitlo, Charles M. (committee chair), Dockson, Robert R. (committee member), Gilchrist, Franklin W. (committee member)

Permanent Link (DOI) https://doi.org/10.25549/usctheses-c20-136127

Unique identifier UC11262850

Identifier EP43433.pdf (filename),usctheses-c20-136127 (legacy record id)

Legacy Identifier EP43433.pdf

Dmrecord 136127

Document Type Thesis

Rights Horwitz, David Meyer

Type texts

Source University of Southern California (contributing entity), University of Southern California Dissertations and Theses (collection)

Access Conditions The author retains rights to his/her dissertation, thesis or other graduate work according to U.S. copyright law. Electronic access is being provided by the USC Libraries in agreement with the au...

Repository Name University of Southern California Digital Library

Repository Location USC Digital Library, University of Southern California, University Park Campus, Los Angeles, California 90089, USA