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his price, as a means of restoring and improving quality, or to rely primarily on price alone to attract customers. It is, after all, his brand and his reputation which is at stake. Only he can make the decision. However before he can use the Quality Stabilization Act, there must be goods usable for the same general purpose available to the public from other sources. The brand name owner's product must be in free and open competition.
Wholesalers and retailers will be free, too, to determine whether they wish to handle products of stabilized quality or a competitive unstabilized one. They may elect to handle top brand lines which are stabilized and others on which they can vary the price. It is their decision. If they elect to handle the quality stabilized brand, they must respect the law and the manufacturer's established policy. This means that the reseller may not abuse the brand name by misrepresentation as to make, model, size, or age, by bait and switch merchandising techniques, or by selling that brand name product at other than the manufacturer's established price.
THE CONSUMER'S INTEREST
This legislation safeguards the consumer. This committee is not unmindful of the situation that results when an unprincipled retailer can take advantage of a product by running a loss-leader ad. For every dollar spent by the misguided customer who is brought in on account of this ad, sacrificing a brand name or a trademark of some producer, that customer spends an estimated $9 by inferior products or junk merchandise at the regular or higher price.
It does not take long for that honored product to lose customers Soon the loss-leader advertiser drops the brand name product and picks up another quality product to pack temporarily his store with unsuspecting customers. It is operations of this kind that the quality stabilization bill will control by protecting the customer, the producer, and the small retailman.
Enactment of the quality stabilization bill will result in availability of products in which the public can have confidence-confidence in their stabilized price and in their quality. Customers can buy that which they seek. quality and price, or price alone. The retailer, by offering both quality stabilized and unstabilized brands, can give the consumer an excellent mix of durable, high-quality products and products of lesser quality whose prices fit his pocketbook or his limited needs.
There will be many brands, made by reputable manufacturers. which will not be stabilized even though some of their brands are stabilized. The quality stabilization bill will affect discount merchants only as to the products the manufacturers place under quality stabilization and then, only as to the brand name thereof. On those products the manufacturer will have the legal and equitable right to protect his property. But the discounter is optionally free to handle quality stabilized products along with merchandise that he does not elect to come under quality stabilization.
It is not the purpose of the quality stabilization bill to put anyone out of business. Indeed it is my conviction that it will reduce the number of small businesses whose owners find it necessary to liquidate.
This bill will help sustain, in a positive way, our brand name system of distribution that has in the past enabled legitimate retailers and manufacturers to build a successful marketing economy second to none in the world.
Opponents of quality stabilization legislation attack it by smear propaganda, identifying it with fair trade and price fixing. Anyone who reads and studies this bill can easily determine for himself that no provision in the bill identifies it with fair trade or even remotely with price fixing.
The quality stabilization bill contains none of the usual fair trade language. There is no provision for contracts as the bill is wholly predicated on the owner's property rights in his good name; there is no dependence on a nonsigner clause as is the case with fair trade. The essential difference is that fair trade enforcement is to compel a dealer to raise his prices for a product, while under the quality stabilization bill, the action is one akin to trespass—to stop a reseller from abusing a manufacturer's property right in his trademark reputation.
In urging speedy consideration of this bill by this committee I direct your attention to the fact that unrestrained price slashing disables labor, industry, resellers, and the public. Unless the quality stabilization bill is enacted, our entire economy will deteriorate at a time when our President is asking for economic growth to strengthen our Nation for survival.
I represent the great industrial Calumet region of Indiana. In recent years consumers and small retailers have been asking me what can be done to reestablish confidence in retail marketing. Unemployment in my area is critical.
Enactment of this quality stabilization legislation will contribute more toward restoring employment than any other legislation before this Congress. When a manufacturer is forced to make 15 men do the work of 20, and is forced to employ cheaper and less skilled labor as well as inferior materials, both American labor and the American consumer are injured where it hurst most. Congressman John Dent, our colleague, will testify as to pressures upon our production economy resulting from the jungle merchandising prevalent today.
In conclusion I call to your attention that almost 70 national trade and professional organizations have endorsed the quality stabilization bill. These include: National Retail Hardware Association. National Office Machine Dealers Association. Independent Garage Owners of America. National Association of House to House Installment Companies, Inc. National Sporting Goods Association. National Association of Retail Clothiers & Furnishers. National Retail Furniture Association. Retail Jewelers of America. Master Photo Dealers & Finishers Association. National Appliance & Radio-TV Dealers Association. National Wholesale Jewelers Association. National Stationery & Office Equipment Association. Wholesale Stationers' Association. Toy Wholesalers' Association of America. Billiard and Bowling Institute of America.
Gift and Decorative Accessories Association of America.
I call further to your attention that this is strictly nonpartisan legislation. Eleven Ü.S. Senators of both parties have cosponsored the quality stabilization bill, and approximately 25 Members from both parties-have introduced the identical bill in the House of Representatives.
I remind you again of the approval given this measure last year by your committee, by the Rules Committee, and the special subcommittee of the Senate.
And I urge you to think of the purposes of the bill and its goals not in terms of theory, not in terms of statistics, but as a measure affecting people of flesh and blood with a real problem of survival or failure in a business that is perhaps small, yet still a precious thing to them. It is not coincidental that the thousands upon thousands of members of these 70 national associations view the quality stabilization bill as the one essential piece of legislation before this Congress.
I thank you, Mr. Chairman.
Mr. STAGGERS. The Chairman appreciates our colleague taking this time to appear before us. I might state that Mr. Madden is also the author of the bill H.R. 3670. Do you have any questions, Mr. Dingell?
Mr. DINGELL. Yes, I want to welcome our old friend back to the committee. I am rather distressed, however, over your statement :
Opponents of quality stabilization legislation attack it by smear propaganda, identifying it with fair trade and price fixing.
I am sure the gentleman knows many in the House of Representatives who are more opposed to this legislation than I. I was wondering if he was accusing me in this statement of "smear propaganda"?
Mr. MADDEN. No, I am not accusing my distinguished friend of that, but I do know
Mr. DINGELL. I find it very distressing to be accused of smearing.
Mr. MADDEN. I would like to answer your question, if I may. I found out that some of the opponents of this legislation have
Mr. DINGELL. Do you refer to me?
Mr. DINGELL. Then I have not smeared by calling it fair trade and price fixing
Mr. MADDEN. I say they may not consider it a smear, but I was against fair trade, as you know, and am against it today, but I am very much in favor of this legislation because it is not fair trade or it is not price fixing, but I do know that opponents of this legislation through publicity and otherwise are using that term against the legislation and I call it a smear against this bill.
I think it is a smear because it should not be applied to this bill.
Mr. DINGELL. I am going to make the statement, then, that this legislation is price fixing. Am I smearing it!
Mr. MADDEN. Well, yes, you are smearing it.
Mr. MADDEN. Yes, when you say it is price fixing, because it is voluntary. Mr. Chairman, it is voluntary.
Mr. DINGELL. Now, just a minute.
This bill authorizes the manufacturer to fix the price, is that not right? Mr. MADDEN. It is aMr. DINGELL. Yes, or no? It authorizes
Mr. MADDEN. He can set a price on a stabilized product that he wants to protect so he can continue to maintain quality.
Mr. DINGELL. That is right. He fixes the price?
Mr. MADDEN. That is right. He sets the price but under the bill if there is no similar product on the market in the area he cannot.
Mr. DINGELL. When he fixes the price, that is price fixing, is it not?
Mr. MADDEN. Well, he fixes price on that particular article, but he can have
Mr. DINGELL. Just a moment. When he fixes price
Mr. DINGELL. Right, that is price fixing. Now, fair trade is also price fixing, is it not?
Mr. MADDEN. Yes.
Mr. STAGGERS. Just a moment. I do not believe that two of you can talk at one time, and I believe that one must have the floor. Now, John, go ahead. If you have a question to ask, ask it.
Mr. DINGELL. Now, this bill is price fixing. You have already conceded that. Fair trade is price fixing. You have conceded that. Therefore, this bill and price fixing are one and the same, are they not?
Mr. MADDEN. No, no. Under this bill it is 100 percent optional. Under fair trade it was price fixing because it was a blanket price fix. A manufacturer can put out several articles, but if he wants to protect his brand name, he has an option to say that that must be sold at a certain price, so he can maintain the quality, and labor that is involved in making the article. He can then protect his brand name and his product by stating that a certain price must be maintained if the retailer exercises the option and sells the product. The manufacturer can manufacture a similar article and put it on the market without placing the product under quality stabilization.
Mr. DINGELL. You concede that this bill is price fixing ?
Mr. MADDEN. No; I do not. I concede that a manufacturer has a right to fix a price on a quality article that he elects-optional-to put under this law.
Mr. DINGELL. Is that not true under fair trade?
Mr. MADDEN. Under fair trade it is more or less of a straitjacket proposition.
Mr. STAGGERS. Are you interpreting the bill that is up before us that there is an option?
Mr. MADDEN. What?
Mr. STAGGERS. I just wanted to keep the record straight. Do you have any further questions?
Mr. DINGELL. No further questions.
Mr. GLENN. Mr. Chairman, just let me compliment our colleague. I think this is a very fine statement. It think it is very logical, and I think it covers the subject very well.
Mr. MADDEN. In closing, let me say, and I would like to invite my good friend, John Dingell, some time to come with me to Gary, Ind. I would like to take him up and down Broadway and Washington