Cammarano v. United States

PETITIONER:Cammarano
RESPONDENT:United States
LOCATION:Fargo, North Dakota

DOCKET NO.: 29
DECIDED BY: Warren Court (1958-1962)
LOWER COURT: United States Court of Appeals for the Ninth Circuit

CITATION: 358 US 498 (1959)
ARGUED: Nov 19, 1958
DECIDED: Feb 24, 1959

Facts of the case

Question

Audio Transcription for Oral Argument – November 19, 1958 in Cammarano v. United States

Earl Warren:

Number 50, F. Strauss & Son, Incorporated, of Arkansas, Petitioner, versus Commissioner of Internal Revenue.

Mr. Eichenbaum, you may proceed.

E. Chas. Eichenbaum:

Mr. Chief Justice, may it please the Court.

In this case, certiorari to the Eight Circuit tried in the Tax Court, there ruled against the petitioner on the grounds that there was lobbying.

There was a practically similar fact situation as in the case described by Colonel Wiener and initiative in referendum measured opposed by the clients F. Strauss, Incorporated, a liquor wholesaler.

Earl Warren:

Was it initiative or referendum (Voice Overlap) —

E. Chas. Eichenbaum:

It was an initiated act.

And the initiated act would have brought back prohibition to the State of Arkansas.

And I may say that in this case, there is no 90% question of whether or not the business of the taxpayer would’ve been destroyed.

There is no question as to percentage.

The record clearly indicates, and it has never been contravened, our taxpayer would’ve been out of business.

I should like to say that our record differs but it’s likely with reference to the state of facts other than with that situation.

There are, in this record, a typical advertisement such as have been heretofore discussed.

I should also like to say, and I think that it is the crux of this situation that the ordinary and necessary expense undergone by this taxpayer apart from the regulation would be completely allowed.

I repeat, apart from the regulation, the expenditures would have been ordinary and necessary expense.

Now, why ordinary and necessary?

We may deal slightly with the elementals for a moment, but I think it gets back to something that was in the question by Mr. — Mr. Chief Justice a few moments ago.

What is ordinary in the sense of the statute and the deductions which are permitted under the statute?

Ordinary or the expenses in the sense that they are usual and customary in the business community and so to the challenge and so to defend is ordinary.

I — if I may say so that which embarks upon a new course, a new venture, again becomes an ad hoc situation, again becomes a matter for determination of whether it is ordinary and necessary.

But there can be no dispute that to defend the preservation of the taxpayer, I need not cite the well-known phrases in Heininger from the circuit court which is — I have cited approvingly by this Court in the Levy case that if you have no business, you have no income, if you have no income, you have no tax.

In this case, ordinary is in the sense of the usual and customary and it becomes ordinary to defend against the challenge.

And necessary is necessary, necessary in the usual sense and in the tax import.

Necessary, because it becomes appropriate and helpful and in this sense, necessary for survival.

So, apart from the regulation with which we shall deal in this case expense allowable ordinary and necessary.

Now, we take the position and we differ slightly probably only in the order of presentation with our Brother Colonel Wiener, we take the position that the regulation does not apply.

We take the — the position that it is not intended by its terms so to apply.

Now, the reason that we take that position is that we say that legislation, in its ordinary sense, does not include the initiative and referendum procedures or the constitutional procedures of amendment.

And we advance that reason for — on two bases.

The first is that we think that it may well have been out of contemplation of Congress in the enactment of the statute or out of contemplation by the Commissioner in the promulgation of the regulation that those appeals directly to the people should have supervision or governing restrictions.

E. Chas. Eichenbaum:

Now, we do say that with reference to such basis that Luther Ely Smith is, of course, highly significant and the acquiescence of the Commissioner for the period of 14 years which we shall touch upon in the matter of the question of reenactment again even more highly significant.

What we say beyond that that the purpose of the regulation, if not, if — if applicable to matters of all technical character in legislation and one can characterize technically initiative in referendum procedures and constitutional amendment as a type of legislation, we say that the purpose of the safeguards are to reach the influencing of legislative procedures so as to safeguard against improper acts, that is to say that the regulation, the regulation itself is not applicable because it is intended to pertain to illegal activities.

And why may we say that?

We say that because of all reasons Textile Mills decision itself indicates the applicability.

Those were not idle words that were written when defining the — the prerogatives of determination by the Commissioner.

This Court said that ordinary and necessary may be construed and interpreted to mean — to — to convey certain meanings, and what meanings?

Meanings of ordinary and necessary as distinguished from the illegal and not necessarily always the definitive certainties of illegality.

In Textile Mills, there may have been no certainty upon which — that some could be placed.

But as the Court said, it belongs to that class of contracts, that class of contracts which might be and which you use the word “tainting”.

Ordinary and necessary have their specific meanings in the interpretation of tax law in the opinion in the Hubert case.

Necessary had a certain meaning.

It was not necessary to violate the law.

It is always within the prerogatives of the Commissioner to interpret, interpret but not extend.

Interpret but not subtract from the substantiality of the provisions.

Why do we argue initially that the regulation is invalid?

We do it for a reason.

Because we say that by giving this interpretation, we have avoided the question as under the rules of interpretation, we think we should proceed to avoid the questions of constitutionality.

Because certainly, if applied, I will say in — invalidity and unconstitutionality, because if applied to ordinary and necessary expenses to the same degree, as may have been argued in the preceding case, to ordinary and necessary expenses, it is an obvious over extension of the statute.

Applied so, applied so the regulation, applied to the facts in these cases, constitutes a reaching out into the area of legitimate business expense and ringing from the business itself the right to defend.

Now, why constitutional?

And we think this is a necessary position which we must take.

We think that it is apparent, that not only as counsel for the Government has stated in the companion case, not only our deductions matter of — matters of grace, but deductions when extended cannot be invaded for the purpose of distinction.

And there, if we may say so again, we urge that Speiser versus Randall, First Unitarian Church obviously extend to a situation.

It is more than a deduction immunities granted under the law cannot be invaded justly.

Deductions cannot be invaded justly.

Now, let’s talk about establishing a tax equilibrium, that sounds very good except that there’s no tax equilibrium between one who has income and one who has an income.

There is no tax equilibrium between the individual and the corporation, between the individual who is in business and not making income, not earning income and one who has.

A tax equilibrium has no place here.

Nor do I think that tax equilibrium has any point in the history of this.

I should like to touch upon that history.

E. Chas. Eichenbaum:

I think it varies upon the question of reenactment.

Now, there has been mentioned here and I touched upon the arguments which preceded of that during this period in which the regulation was on the books that there was only one case, the Luther Ely Smith case, the Tax Court case.

I beg to differ.

Now, let’s see what cases there were during the period prior to 1939 as being recognized by counsel in statement that post 1939, no enactment to the tax year.

Well, now, we recall Lucas versus Wofford, Fifth Circuit.

What was Lucas versus Wofford?

Well-known to this Court, appearance before legislative committee, deduction allowed, ground legal methods of presentation in matters of legislation.

Los Angeles and Utah Rail — Los Angeles and Salt Lake City Railroad Company and all the companion railroad company cases which, as the Court will recall, were the cases in which railroads subsequent to World War I and the time in which the Government took over the operation of railroads were about to return them.

And all the railroad companies filed, issued it — advertisements with reference to the type of legislation and the type of conditions because it would be done by legislation that the railroad should be returned in.

Now, during these years — during the years pre 1939, there was no single instance.

No, I — I am in error.

There was.

There was one case, and it was not in accord with the majority, the Sunset Scavenger case, if I may refer to it.

But all other cases during that period, completely distinguished the legal from that which was within the tainted class from that which the Commissioner should properly define and determine and interpret.

And so, up to 1939, what was the situation?

Could there be acquiescence by — and the Eighth Court suggested that there might be reenactment by acquiescence with reference to cases which favor the petitioners?

And I should add that Textile Mills in setting forth that the purpose of the regulation was to permit the Commissioner to define that class, that deduction which should be disallowed only again serves to point up the reenactment.

Reenactment is the acceptance of long, well-continued, well-settled rules.

Now, did that exist here?

Counsel would indicate it existed.

But I have this to say about the position of the respondent in this case.

Certainly, one would think, certainly one would think that the person most likely to know that rule if it existed would be the respondent, would be the Government.

But up until 1950, the year our tax year involve the respondent himself, the United States Commissioner of Internal Revenue was himself interpreting, was himself interpreting the regulation not as counsel has argued.

There is in the Research Institute of America Inc., January 13, 1950, tax service, and I — I must suggest that the authority is not as authentic as if I were able to learn something — bring something of higher authority.

The announcement of the Internal Revenue Service ruling regarding the deduction of contributions to Colorado United Inc., and there, the contributions by brewers to the organization were allowed as a business expense deduction in the ruling obtained for the United States Brewers’ Foundation.

The Appendix D, this happens to be a brief of amicus curiae in the Court of Claims, I — I must apologize that we didn’t have it in our own brief.

The Commissioner of Internal Revenue under date of August 11, 1950 just about the time that our taxpayer was serving his business, was saving his business address the communication to Mr. Howard T. Jones, Executive Secretary of the Distilled Spirit Institute in which he answered the request for the ruling of the bureau in connection with Colorado United Inc.

And I quote, “The Bureau has not issued any published ruling in this matter but it has held that contributions to Colorado United Inc. by taxpayers engaged or financially interested in the alcohol beverage industry are deductible under Section 23 (1) A of the Internal Revenue Code.”

Charles E. Whittaker:

(Inaudible)

E. Chas. Eichenbaum:

No, and I apologize.

E. Chas. Eichenbaum:

We should’ve had it in our brief.

Actually — actually, I applied for a copy of the ruling to the Bureau and they told me they want the published ruling and I couldn’t have it.

And I didn’t know later that it was — they were been secured and I found that in the brief from Mr. Hart Spiegel in the Court of Claims, his amicus curiae in this case and as this case in the Court of Claims.

And we knew about this ruling.

We knew that the Commissioner had all — had taken the position up to 1950 that these expenses were deductible under 23 (a) (1) (A) but we had no published ruling on it.

They refused to give us one.

Potter Stewart:

Mr. Eichenbaum, did — does it appear in there what Colorado United Incorporated is?

E. Chas. Eichenbaum:

Oh, yes, sir.

I — may I read it?

Colorado Brewers formed an organization, Colorado United Inc., for the express purpose of defeating a state prohibition amendment.

Contributions by brewers to the organization were allowed as a business expense deduction in a ruling obtained for the U.S. Brewers’ Foundation.

“Reasons given were,” I’m quoting from Research Institute of America, “reasons given were that, one, taxpayer was financially interested in the activity which would help him stay in business and two, prohibition would’ve been imposed by a constitutional amendment rather than legislation.”

Again, distinction.

I — may I reserve —

Earl Warren:

Yes, you may.

E. Chas. Eichenbaum:

I — I have —

Earl Warren:

You may use whatever time you wish.

E. Chas. Eichenbaum:

All right.

Thank you.

Earl Warren:

Mr. Davis.

Oscar H. Davis:

Mr. Chief Justice, may it please the Court.

The counsel has not previously furnished to us the material on the Colorado United Contribution which he discussed with accorded — appears clearly from the excerpt that he read in the Research Institute of America.

And my colleague informs me that the amendment in the — that the provision in that case was a constitutional amendment and the Commissioner was then following the decision in Luther Ely Smith at which he — in which he had acquiesced, so that the decision that the grant of an allowance of the contribution in that case went under this old decision in which the Commissioner had then acquiesced which he does not know acquiesced and which we believe to be totally wrong.

I have reserved to this case the discussion of the Heininger case because we conceive that in this case, the adoption of prohibition in the State of Arkansas would have put the petitioner out of business.

I should, perhaps, have said in the earlier case that we do not concede that the adoption of the Washington initiative would’ve put the tax person in that case out of business.

We will not press the point that they would’ve been financially effective.

We do not concede that they would’ve been put out of business.

In this case —

(Inaudible)

Oscar H. Davis:

No, sir, the — the — only the finding was that 90% of the wholesalers would’ve been put out of business.

Oscar H. Davis:

But there’s no showing which particular wholesalers would’ve remained in existence.

And it could very well been that those particular wholesalers would’ve been able to remain in — in existence.

And the District Court as Colonel Wiener pointed out and the Court of Appeals said that there was even no showing that they would be affected by the — by the injuriously affected by the initiative.

But in this case, there is no such question.

And — so I would —

William O. Douglas:

(Inaudible)

Oscar H. Davis:

Well, it is —

William O. Douglas:

— clear.

Oscar H. Davis:

Here, it’s clear that they’ve been put out.I would say, and I said, that the (Inaudible) in the other case.

There were — 90% of the wholesalers had been put out of business.

And it would depend upon the financial status and other factors whether a particular wholesale would’ve been able to — the wholesalers aren’t fungible and — that’s what [Laughs] —

Hugo L. Black:

Do you think that — that distinction would be —

Oscar H. Davis:

Pardon.

Hugo L. Black:

— do you think that distinction would — should change the result the fact that —

Oscar H. Davis:

No.

Hugo L. Black:

— it would’ve put — whether they might have had a chance to save them?

Oscar H. Davis:

No, no, sir.

I don’t think that the distinction turns on that at all.

But I just say that in case it is thought that the distinction should turn on that.

Felix Frankfurter:

Do you think we could reverse this case and not Mr. Wiener’s case?

Oscar H. Davis:

I do not think so.

But it is possible that others might.

He was reserving the point.[Laughter]

Oscar H. Davis:

Now, to the discussion of the Heininger case that debt is to engage in false and fraudulent advertising through the mails.

The first thing to point out, I think, is that that case involve litigation expenses and not lobbying.

Litigation expenses have had a long and different history under the Internal Revenue Code from lobbying expenses and expenses for the promotion or defeat of legislation.

There is no comparable tax equilibrium policy, we believe.

Felix Frankfurter:

(Inaudible) wonderful phrase.

I — I mean to be (Voice Overlap) —

Oscar H. Davis:

I’m indebted to Professor Stanley Surrey of Harvard Law School for the phrase.

Oscar H. Davis:

The — the —

Felix Frankfurter:

(Voice Overlap) after get up there or before he got there.

Oscar H. Davis:

I believe after he got there.[Laughs]

The — the concept –[Laughter]

(Inaudible)

Oscar H. Davis:

The — Mr. Justice, the concept, as you know, goes back to — to Judge Learned Hand or even earlier.

But Stanley Surrey is the author of the particular phrase.

Hugo L. Black:

I —

Felix Frankfurter:

Put it in words that fix the idea.

Oscar H. Davis:

Shorthand (Inaudible)

Felix Frankfurter:

Yes.

Hugo L. Black:

What was —

Potter Stewart:

Isn’t it —

Hugo L. Black:

— your phrase again?

I don’t —

Oscar H. Davis:

Tax equilibrium, tax equilibrium.

To — to make sure that people supporting an opposing particular aspects of legislation do not get a benefit from the Federal — from the Federal Treasury, that is if I can repeat what I’ve said before and elaborate on a little bit, the tax person in this and in the preceding case would be able to get a very sizable deduction of — not in their particular case, to call the brewers of — or liquor interest of Arkansas.

It spent about a $100,000 to defeat prohibition in Arkansas, and the other case about over $200,000 was spent.

They would — the various interests involved would be able to deduct under the theory of the petitioners in these cases, the — the cost of this advertising completely.

Their opponent who were not engaged in business would not be able to deduct it at all.

They would have to pay out of their own pocket the full amount of any countervailing advertising and publicity.

Also —

Hugo L. Black:

Was it illegal — was it illegal to observe?

Oscar H. Davis:

Oh, no, no sir.

No, sir.

Hugo L. Black:

And there’s no statute fixing but — but they’ve set it all.

Oscar H. Davis:

As — as far as I know — at least that they were — it was within — they were within the — the limits of — of —

Felix Frankfurter:

Mr. Davis, do you think Bishop Cannon would like to be put on — on a level and be quality with the brewers?

Oscar H. Davis:

I think, in this respect — in —

Felix Frankfurter:

(Voice Overlap) —

Oscar H. Davis:

— in respect to the —

Felix Frankfurter:

(Inaudible)

Oscar H. Davis:

— to the financial —

Felix Frankfurter:

(Voice Overlap) —

Oscar H. Davis:

I think, yes.

Yes, I think so.

I think it’s terribly important in — in political life.

How much money you have to spend and if the amount of money you have to spend is going to be half or maybe more than that because the — your federal income tax is — is going to take it up, then you’re better able to spend a lot of money.

And —

Felix Frankfurter:

You brushed off my suggestion that virtue is not intangible.

Oscar H. Davis:

No, but I — I think the — the — if I may use your suggestion, Mr. Justice, I think that what this regulation has done and what Congress in — in reenacting an acquiescing in this regulation.

And the word “acquiescing” in the regulation is this Court’s word two or three times in decisions in other fields not my word alone.

What Congress has done really is to say that in the field of elections and on the field of legislation, you have to act as a citizen.

You cannot act as a businessman.

You have to act as a citizen, whether you support or oppose, you have to act as a citizen.

Potter Stewart:

But Mr. Davis, as you pointed out this phrase “tax equilibrium” which has a very nice ring to it, originated perhaps as such with Professor Surrey.

But it was — it dates back to cases like Slee against —

Oscar H. Davis:

Yes.

Potter Stewart:

— the Commissioner in the Second Circuit.

But isn’t it true that those were 23 old cases that they were contributions made.

Oscar H. Davis:

Yes, the — but —

Potter Stewart:

Now, therefore, isn’t it also true that — that in addition to — philosophically, also looking back to the terms of the statute.

There’s a very, very deal in what Mr. Justice Frankfurter has said that the reason that the proponents of prohibition couldn’t deduct this, and that the reason that these petitioners, perhaps, could deduct this was that in the one case, it has nothing whatsoever to do with their business, then in the other case, it meant the destruction of their business.

In one case, it was a business — not a business expense.

In the other case, it clearly was.

Now, isn’t that —

Oscar H. Davis:

Well, Mr. Justice Stewart —

Potter Stewart:

(Voice Overlap) —

Oscar H. Davis:

Mr. Justice Stewart, if we were faced here with just the words of the statute and this problem arose the first time in 1958, I do not deny that I would have a very hard case.

But I am not faced with that situation.

Oscar H. Davis:

I am faced with a statute and a regulation, a regulation which is almost contemporaneous with the first income tax act, a regulation which has been interpreted through the years, particularly since this Court decided the Textile Mills case in 1941 as disallowing this kind of deduction.

And so I don’t think that I have to bare the burden of what one would have to decide they know but with all the — without the benefit of this past history.

I have — I think I can properly rely on the fact that this regulation which — which adopt and incorporate the notion of tax equilibrium has been on the book since 1918 and was foreshadowed even in 1915.

And I think I can rely greatly on that.

Potter Stewart:

Well, my only — my only query with was how much can you rely on cases such as Slee —

Oscar H. Davis:

I — I don’t —

Potter Stewart:

— which have nothing to do with business expense to the taxpayer?

Oscar H. Davis:

I don’t rely on — on Slee.

I just —

Potter Stewart:

All right.

Oscar H. Davis:

— mentioned Slee as a case which really first articulated this notion which we think was incorporated in — in the regulation previously and which has been carry on through.

The cases that I rely on the lower court are cases all under 23 (a) (1), all the cases that I rely on in this Court, the case particularly.

The Textile Mills case is a — is a similar case.

I rely on no case really under the charitable contribution.

Felix Frankfurter:

Mr. Davis, may I just give you the suggestion that that the crux of the question, milking the coconut, which you so subtly administered the word, when you used the word — phrase, “this kind of deduction,” the whole question is whether it’s — whether it is this kind of deduction.

Oscar H. Davis:

Well —

Felix Frankfurter:

That’s the question.

Oscar H. Davis:

A deduction for a publicity —

Felix Frankfurter:

(Voice Overlap) —

Oscar H. Davis:

— yes, yes.

Felix Frankfurter:

All right.

Oscar H. Davis:

But a deduction for a publicity campaign.

I would like to get back to that if — if I —

Felix Frankfurter:

Not just publicity because certainly publicity having — having to do with —

Oscar H. Davis:

No.

Felix Frankfurter:

— any of the Government that process are allowed.

Oscar H. Davis:

No, publicity having to do — it’s — again I say, it’s not a question of disallowing or prohibiting the publicity.

Felix Frankfurter:

Well, I mean allow —

Oscar H. Davis:

Yes.

Felix Frankfurter:

— deductibles.

Oscar H. Davis:

Well, there’s a question of how much the — the regulation says advertising other than trade advertising is not allowable.

And —

Felix Frankfurter:

Well, I do commend the House of Lords on that business what they do and mostly —

Oscar H. Davis:

Yes, well, on the House of Lords, if I may go off in a minute, the statute is different.

It does not contain —

Felix Frankfurter:

I mean — I — I didn’t mean to say it governs this case.

Oscar H. Davis:

I — I —

Felix Frankfurter:

I wanted — I want —

Oscar H. Davis:

But as Colonel Wiener mentioned, I’d like to say the statute is different.

It was accredit to a decision of the House of Lords.

There was no such history as we have here and no regulation.

Felix Frankfurter:

I want to — to make one commendatory remark, mandatory to you and counsel on the other side.

It took the House of Lords five days to argue this case.[Laughter]

Oscar H. Davis:

That’s true.

I’m not sure that they cannot with a wiser result.

Felix Frankfurter:

Could you (Inaudible)

Earl Warren:

But they still disagreed.

Felix Frankfurter:

They still —

Oscar H. Davis:

They still disagreed.[Laughter]

Felix Frankfurter:

(Inaudible)

Oscar H. Davis:

Mr. Justice Stewart, let me return to the Heininger case because I do think that it has a bearing here, and I don’t mean to avoid this cut.

The first thing, as I said before, it involve litigation expenses which has a different history.

The second thing is, that there was no regulation involve there.

And at the very beginning of this opinion, Mr. Justice Black for the Court said, “We do not have here the aid of an interpretive regulation of the Commissioner as we had in the Textile Mills case.”

So that there, the Court was being asked to decide a question without the aid of the — of the regulation and the history which we have here.

And the third thing about that case was that the aspect of destruction of business, I think, was not central to the case.

I think that if Dr. Heininger’s business had not been destroyed, but just been seriously affected, but it — they didn’t stop all this math only part of this mess, the decision of the Court would’ve been the same.

And certainly, since — decision of the Court went on the ground that the — that the postal fraud statutes did not require the disallowance of his litigation expenses.

And that would’ve been true whether his — his business was destroyed or whether his business was only seriously affected.

So that on the whole I think that the Heininger case does not control this case.

Oscar H. Davis:

I don’t deny it has a bearing on the case — on the case, but I think it doesn’t control the case.

The — back for a moment to the issue of the matter of tax equilibrium if I may be pardoned to use that shorthand expression.

I would like to — to point out one further thing that I think failed to make clear to the Court, and that is that in this day and age when there are an awful lot of initiatives and referenda throughout the country on all matters of importance involving matters of taxation, matters of regulation, matters in which the public is — is largely concerned and then — which industries are concerned.

What you will have if businesses can deduct their publicity campaigns is a great advantage to the larger businesses which have — which have better — which have higher rates of taxation and therefore get a greater benefit from their expenditures, that is —

Charles E. Whittaker:

(Inaudible)

Oscar H. Davis:

Yes, Mr. Justice Whitaker.

The Government would pay 52% of the cost —

William O. Douglas:

Well, that’s — that’s through the case of a corporation that is defended in its trust suit.

Oscar H. Davis:

That is true.

But the — but the person on the other side there is the Government.

On the other side here, there are other businesses maybe or private citizens who also have an interest as private — as citizens in the adoption or defeat of the proposed legislation.

And it’s not only — if the corporation, if that’s true, with individual taxpayers, it may be even 70% to 80% of the Government would bear in — in — and we think this is an important factor that this is not an issue which relates only to this particular tax.

But it also relates to things as the — as the Court knows are going out throughout the country today that is more and more, these issues are coming before the public in initiative and in referenda.

And they’re very important issues relating to taxation and — and business regulation.

And great sums of money are — are being expended and having expended in the past for promotion or defeat of this various projects.

Potter Stewart:

Well —

Oscar H. Davis:

I don’t say there’s anything wrong about this.

There isn’t anything wrong except into far as — as it may violate a particular statute or regulation of the State or the Federal Government.

Potter Stewart:

They are very few, wouldn’t you say, and neither one of us knows, but wouldn’t you guess there are very few of these referenda that have the effect of absolutely destroying somebody’s business?

Oscar H. Davis:

I think in the liquor industry, maybe all really.

And that’s another fact that I’d like to say.

These people are in the liquor industry.

The liquor industry has historically been subject to — to regulation and prohibition more than any other industry.

They ought —

Yes.

Oscar H. Davis:

I should — to put it perhaps rather bluntly and crudely.

It’s the one industry that has to expect this kind of thing in — in the future.

So that I don’t think that if I — if any industry has to be singled out for bailing out with respect to this, that it’s the liquor industry that should be singled out because both prior to — to prohibition — during prohibition and certainly under the 21st Amendment, the — the liquor industry knows that it’s going to have face and it does face regularly these various attempts to — to change and — and —

You said the argument —

Oscar H. Davis:

Pardon?

I said that argument cut against you.

Oscar H. Davis:

You — you mean that they ought — that — that —

You made in ordinary expense.

Oscar H. Davis:

Well, I don’t deny that perhaps it does make it more of an ordinary expense.

But I — I think that perhaps it indicates the — the kind of capital expense which can’t be considered an ordinary expense that — it’s something that they have to take into account and appreciate over the years rather —

Earl Warren:

We’ll recess now, Mr. —