Again at page 710 of the 1945 F.T.C. report: The manufacturers of the price-maintained brands of drugstore items covered in this study generally named minimum prices that were within the range of prices actually charged by their large volume customers just prior to the time they placed their trademarked products under minimum reseale price contracts. Adoption of this policy had two distinct advantages from the viewpoint of the manufacturers of nationally advertised brands. It avoided material increases by large distributors in the prices of brands when they were put under price maintenance, and thereby avoided unduly stimulating the sale, by any type of retailer of private brands of non-price-maintained merchandise, or of competing manufacturers. Now, I have appended to this part of my prepared testimony a statement of some 56 principles. These principles are set up directly to illustrate to labor, which has opposed this bill, exactly what the principles that are involved in this bill are, and how they relate to the same principles which labor has supported over the years and which I, as a Member of Congress, have supported for 21 years. I am going, with the permission of the chairman, to include this in the record. I do not intend to read it all. Mr. DINGELL. Without objection, so ordered. (The document referred to is as follows:) QUALITY STABILIZATION LEGISLATION IS IN ACCORD WITH THESE PROPOSITIONS 1. That Matthew Woll, as vice president of the American Federation of Labor, correctly foresaw today's chaotic marketplace when he said: "The makers who sold at a price lower than anyone else could meet were once considered great benefactors; but now they are disliked, and the day will come when they will be considered criminals. Then a law will be passed permitting no manufacturer to sell at a price which does not show him a fair profit on top of a fair wage rate." 2. That quality stabilization will stabilize employment and will avoid skimping on labor costs and consequent layoffs of factory labor as price competition on the product forces the manufacturer to expect 15 men to do the work of 20. 3. That labor is the greatest consumer of goods it produces and should lead, therefore, in the demand for orderly marketing of quality branded goods-as essential to a stable economy. 4. That the closing of only one store or shop puts, as a minimum, one more family out of work, adding to the critical employment problem in this country. 5. Millions of union wage workers are engaged in producing and selling brand name merchandise. Unless the distributive pattern for such merchandise is protected at every step, those workers' jobs will be imperiled. 6. That the predatory merchant, whose volume of sales comes predominantly from the wage earner, is an enemy of labor, because he uses advertising lures of brand name merchandise to unload inferior merchandise. 7. That much of the predatory merchant's tremendous and unholy profits come from foreign goods or inferior merchandise from low-wage areas, neither category of goods being made by union labor. 8. That quality stabilization is not fair trade, is not price fixing, and does not conflict with Federal or antitrust laws. 9. That quality stabilization stimulates incentive of the citizen to create, produce, and distribute new and better products to raise our level of living and national security. 10. That quality stabilization will incur no cost on the part of the Government for enforcement nor will it be to the detriment of the consumer. 11. That quality stabilization will provide encouragement to tomorrow's citizens to go into business for themselves; that without quality stabilization, only giants will be left and only those with huge capital will be able to go into business. 12. That quality stabilization will restore the confidence of the consumer by providing a standard of value to help make her selection in the marketplace-a standard against which to measure the quality of a product and to measure the fairness of applicable prices. 13. That labor, unless it supports quality stabilization, shall, by forfeiture, contribute to the destruction of its own basic principle of a fair wage, in this instance to the employer of labor. 14. That labor must lead the fight to keep domestic production standards high, and American quality supreme, in order to maintain security of jobs. 15. That quality stabilization is the only measure before Congress that can and will bolster the ability of the American manufacturer, distributor, and worker to compete on a value basis (quality of product as related to its price) in the intensely competitive world market. 16. That the welfare of labor and the welfare of the employer are interdependent, and are based on fair wages and fair profits. 17. That if labor's wages are to be stabilized and to grow, then the product creating those wages must be stabilized as to quality and price. 18. That quality stabilization will in the long run increase market demand and factory output by promoting fair competition-thus creating more stable jobs and more security for labor. 19. That quality stabilization is essential to the implementing of the established principles of the AFL-CIO-to ever strive to improve product and quality of workmanship. 20. That quality stabilization asks only that the U.S. manufacturer of a trademark product be given the same protection and remedy as was given long ago by Congress to the foreign manufacturer of a trademarked product under the tariff law. 21. That the mushrooming growth of retail monopoly is a threat today to the AFL-CIO. 22. That labor's interest will be promoted by endorsing quality stabilization as necessary to the preservation of labor's own dignity, economic welfare, and security. 23. That quality stabilization enables the honest manufacturer of a quality brand name product-and the ethical distributors of that product-to compete on a fair basis in the market place. 24. That quality stabilization promotes and encourages vigorous competition between the quality brand name product and all other goods, branded or unbranded, and stabilized under the Quality Stabilization Act or unstabilized. 25. That quality stabilization gives the consumer an unlimited range of choice of price and quality of product to best suit the consumer's needs. 26. That the present rampant "jungle warfare" in the marketplace is affecting the manufacturer's ability and incentive to create quality goods-thereby injuring labor and the consumer. It is causing a flight of industry to cheaper and cheaper labor areas here and abroad. 27. That President McKinley in an earlier era correctly admonished: "I do not prize the word cheap. It is not a badge of honor *** it is a symbol of despair. Cheap prices make for cheap goods; cheap goods make for cheap men; and cheap men make for a cheap country." 28. That predatory price cutters, in the long run, hurt labor more than they can help labor. 29. That quality stabilization protects the quality-conscious manufacturer by stopping the predatory retailer who in his war of destruction against smaller competitors forces price (and quality) concessions and specifications upon the manufacturer. 30. That a manufacturer of a popular quality brand product may be driven out of one marketing area after another because smaller retailers will refuse to handle it as a loss. 31. That such manufacturer is confronted with increasing costs as his volume shrinks, and must cut quality to cut his costs. 32. That the manufacturer, to stay in business, may be forced to reduce costs, with quality materials being sacrificed for inferior materials and quality employees being scarificed for those less skilled. 33. That the consumer (and wage earner) thus is often the innocent victim of deceptive pricing, forcing in a vicious cycle lower and lower quality into the product-thus giving the consumer (and wage earner) less and less in value. 34. That substitutions of inferior labor and materials forced upon the manufacturer endanger public health and safety and depresses the market of labor. 35. That the New York Times of August 19, 1962 reported there were 153,000 shopkeepers in 1950 in the metropolitan area of New York, yet 10 years later the number had decreased from 150,000 to only 66,474-despite the enormous increase in population and sales. 36. That though the small businessman is the backbone of American economic strength, he is, at the same time, the stepchild of American Government, fighting against unfair competition, complicated tax laws, and conflicting regulations. 37. That the wholesaler and retailer find in their business today the stabilization of rent, employee salaries, freight rates, travel rates, light, gas, and power rates, advertising rates, etc. 38. That the wholesaler and retailer is thus confronted with stabilization of almost every aspect of his business except the right to earn a profit. He cannot earn a profit if practically every part of the distribution cost pattern is rigidly controlled and he is forced to earn his profit in a "cutthroat competitive" area of profit margin. 39. That leaders of communism boast they can take over this country if the small businessman is put out of business-which is happening today at an alarming rate. 40. That United Press International has issued stories quoting discount house enthusiasts as saying "their movement is going to take over, lock-stock-andbarrel, before 1970, 80 percent of the retail business of the country." 41. That unfair and predatory price cutting retailers frankly confess that they use well-known quality brand name products as "leaders" to lure the unsuspecting consumer into their store. 42. That the discounter openly confesses he tests the value of his advertising of popular trademarked products, not by how many units he sells of that product, but by how many people does the advertising bring into the store. 43. That there is overwhelming endorsement of quality stabilization provisions to retard injury to the consumer by helping check the evil practices of "bait and switch" tactics and misrepresentation of well-known quality brand name products. 44. That the predatory merchant promotes automation and less manpower, with one of his major goals the attainment of unattended or robot retailing. 45. That necessary to robot retailing is still greater reliance by predatory merchants on the well-known quality brand name product presold because of its quality and price by its manufacturer to the consumer-thus posing even greater danger for the manufacturer and employees making that product. 46. That courts and regulatory agencies in opposing orderly marketing on the pretext that such programs are antimonopoly are in fact fostering and encouraging the most vicious form of monopoly-retail monopoly. 47. That if the United States is the land of free, individual enterprise, then the manufacturer must be able to exercise the same rights and privileges with respect to the merchandising of his products as retailers have in their private brands. 48. That quality stabilization will put the smaller manufacturer on an equitable footing with giant competitors using factory-owned retail outlets, with retailer-owned brand names, with consignment selling, with direct door-to-door selling, etc.—all of which practices are now lawful. 49. That research will come to a halt if the new product-the fruit of that research-is to be torpedoed in the marketplace as soon as the product is made available to the public. 50. That quality stabilization is unique-an example of free, competitive enterprise at its best-in providing an essential private remedy on an optional basis. It cannot be enforced in the sale of a monopoly item. There must always be similar competitive items available to the consumer, thereby protecting the consumer against prices based on a monopoly. 51. That quality stabilization will give the small ethical businessman a new lease on life to provide for the consumer the service and the assortment of necessary but slow-moving items that the "fast-buck" operator cannot and will not provide. 52. That loss of taxation revenue of government-at all levels--resulting from the "swallowing up" of the smaller ethical merchant and manufacturer can be reversed by enactment of quality stabilization. 53. That the honest citizen and the honest manufacturer should each have the right to protect his good name against defamation. 54. That implicit in quality stabilization is the right of a reseller to engage in any practices that may injure the reseller's name-so long as that reseller does not involve the brand name or good will of the trademark owner. 55. That under quality stabilization no manufacturer will be restrained from building the best product he can, or the cheapest product he thinks he can sellwith or without any pricing restrictions at the retail level. 56. That quality stabilization will survive and serve only if it is good; that it will quickly die if it does not fulfill its purpose. Mr. HOLIFIELD. But I would like to pick out a few points in this 56principles statement and stress them. Labor is the greatest consumer of goods it produces and should lead, therefore, in the demand for orderly marketing of quality branded goods as essential to a stable economy. Millions of union wage workers are engaged in producing and selling brand-name merchandise. Unless the distributive pattern for such merchandise is protected at every step, those workers' jobs will be imperiled. The predatory merchant, whose volume of sales comes predominantly from the wage earner, is an enemy of labor, because he uses advertising lures of brand-name merchandise to unload inferior merchandise on his customers, many of whom are the families of union workers and who think they are getting a bargain. Much of the predatory merchants' tremendous and unholy profits come from foreign goods or inferior merchandise from low-wage areas, neither category of goods being made by union labor. Quality stabilization will provide encouragement to tomorrow's citizens to go into business for themselves. Without quality stabilization, only the giant retailers will be left and only those with huge capital will be able to go into business. And I don't like this situation, because I, as a young man, at the age of 17, went into business for myself and I built a business, a successful business, against competition. And that business I still own and operate today. Labor, unless it supports the principle of quality stabilization and this legislation, by forfeiture contributes to the destruction of its own basic principle of a fair wage, in this instance to the employer of labor. The welfare of labor and the welfare of the employer are interdependent and are based on fair wages and fair profits. If you do not give the small independent retailer, who is an employer, the right to fair profits, he can not employ employees and pay them a fair wage. His first move will be to operate with scab labor and his second move will probably be to go broke. If labor's wages are to be stabilized and to grow, then the product creating those wages must be stabilized both as to quality and to price. You can't stabilize one without the other. Quality stabilization is essential to the implementing of the established principles of the AFL-CIO to ever strive and improve product and quality of workmanship. I say that the mushrooming growth of retail monopoly is a threat today to the AFL-CIO. Quality stabilization enables the honest manufacturer of a quality brand product and the ethical distributor of that product to compete on a fair basis in the marketplace. The present rampant jungle warfare in the marketplace is affecting the manufacturers' ability and incentive to create quality goods, thereby injuring labor and the consumer. It is causing a flight of industry to cheaper and cheaper labor areas here and abroad-and make no mistake of that. The words of President McKinley, in an earlier area, correctly admonished: I do not prize the word "cheap." It is not a badge of honor * * * It is a symbol of despair. Cheap prices make for cheap goods; cheap goods make for cheap men; and cheap men make for a cheap country. The manufacturer, to stay in business, may be forced to reduce his costs with quality materials being sacrificed for inferior materials and quality employees being sacrificed for those less skilled. Under quality stabilization, no manufacturer will be restrained from building the best product he can, or the cheapest product he thinks he can sell with or without any pricing restrictions at the retail level. Quality stabilization would survive and serve only if it is good and it will quickly die if it does not fulfill its purpose. Now, in conclusion, I looked up in Webster's Unabridged Dictionary the meaning of the word "competition." The first, primary meaning active competing, especially of seeking or endeavoring to gain, what another is endeavoring to gain at the same time. A contest between rivals. The effort of two or more parties, acting independently, to secure the custom of a third party by the offer of the most favorable terms; also the relations between different buyers or different sellers which result from this effort. Then there is a quote in the dictionary: Where competition does not act at all, there is complete monopoly. Now, I am not advocating the elimination of competition. I am only saying that competition has to be modified in areas where you are dealing with nonmonopoly items in order to make equitable the chain of production and distribution from its beginning to its final end of delivering into the consumer's hand a product. And, I reiterate that if you give modification of competition in all of the links of that chain, until you get to the final link and there you impose upon that final link in the pattern of production and distribution, jungle warfare of unmodified competition, you are neither just nor consistent. Now, monopoly. I looked up that word. The first meaning: (a) Exclusive possession of the trade in some article or exercise of some business. I submit that this bill would not give exclusive possession of the trade in some article or the exercise of some business. (b) The exclusive right, privilege, or power of selling or purchasing a commodity or service in a given market. Again, I say that this bill would not come under that meaning of the word "monopoly." And I point out in the common law that the term "monopoly" was specifically applied to an exclusive privilege of trade created by a State grant or charter. A patent, for instance, in effect establishes a modified monopoly in a certain area for a specified length of time. Why did we do this? We did this for the social benefit of our Nation. We did it to give 99-685-63- -18 |