The gavel was in the firm grasp of Del. William Rush (D-Baltimore) as he chaired last week's public hearing of the House Economic Matters Committee on bills covering the alcoholic beverage industry.
The room was filled to its corners with 90 representatives of that industry, which once counted Rush as a member. With laughter and jeers these representatives showed their overwhelming opposition to a bill that would abolish the franchise system in Maryland. That system allows nine of the 25 wholesalers to contro 90 per cent of the wholesale liquor business in the state.
The abolition was proposed by Delegates Ida G. Ruben and Charles A. Docter, both Montgomery County Democrats. It went to the heart of industry practices in the state and the businessmen didn't like it. Competition, they said, would put them out of business. Competion in their business would become cut-throat competion, unethical competition.
The hearing saw some committee members, like Del. George J. Santoni (D-Baltimore City), ask industry spokesmen leading questions such as : "Isn't the worst thing about this bill that it would really make a new bureaucracy? Take away the personal touch of the industry?"
Afterward, Ruben complained to the speaker of the House about unfair practices. She has been ruled out of order twice by Rush and her co-sponsor, Docter, had been refuesed the right to question and industry spokesman who spoke in favor of the bill. Rush ruled that the spokesman, Jerome H. Markoff, did not have to answer Docter's questions
"I think Del. Ruben was in her rights to complain to the spealer," said Docter. "Markoff orchestrated the testimony, he sat at the table wit hte witnesses and then he said he agreed with everything that they said. I think he owed the Committee testimony unless he thinks that wine-tasting parties are the answer for legislation."
Last week Markoff, who is the lobbyist for the Licensed Beverage Distributors of Maryland, threw a wine-tasting party with buffet luncheon for the Committee that later heard testimony on this bill.
With his suitcase in his hand, Markoff approached the witness table at the close of the hearing. "Everything I was going to say has been said so I'm not going to say anything but thank you," said Markoff as he walked out of the room.
Docter tried to ask Markoff a question but the lobbyist refused to answer and asked Rush if he had to answer questions. "No, you don't", answered Rush and the lobbyist left with chuckles from the audience.
The focus of the battle moved from the merits of the competitive free market system to the need for regulation in the alcohol industry whitout either side budging. Ruben and Docter contended that the franchise system creates private monopolies that hurt the consumer, who miight be able to buy liquor at reduced cost if prices were competitive.
Industry - opponents there were 66 signed up against the bill and none in favor - said that on the contrary, but abolishing franchises the industry would open itself up to "cut-throat competition" that would reduce customer services and eventually create monopolices.
"Under the franchises we can develop brand loyalty and train wholesalers in better sales techniques and still offer lower prices," argued William Z. Scott of the Distilled Spritis Council of the United States.
"It is entirely up to a gentlemen's agreement who will get a franchise for a new brand of spirits," said Scott, who said he did not like the use of the word "monopoly".
Since Prohibition was repealed in the 1930s, all but two states have maintained either franchises, as in Maryland, or state monopolies, as in Virginia. In Maryland, a retail store can buy a certain brand only from the wholesaler who has the frahccise. In Virginia the state holds the franchises, in a sense, and customers must buy their liquor from the state luqour stores.
Rush asked one witness about prices: "I remember the prices on my shelves and it's been 30 years since I was in the business. Prices haven't gone up much, have they?"
The audience burst into applause when the answer that was given was "no", only eight per cent since1970.
Del. Frank J. Komenda (D-Prince George's) brought up the question of kickbacks and asked: "If each distributor can carry every product, isn't that when you get ioto practices of gimmickry?"
The witness said yes, by abolishing the franchise system you might open the door to kickbacks because competition would encourage "gimmickry."
At the completion of the testimony, there was little doublt that the bill had small chance of reaching the floor for a vote. Del. Donald F. Munson (R-Washington), who said the bill would eliminate jobs in this county, moved that the bill be killed but a vote was posponed for another day.