and cleaners. Of the 132 items surveyed, an average of 119 were available in each city. Of the 119 items, some 78 were sold on the average below the fair trade prices. Consumers in these 8 non-fair-trade cities could purchase these 78 items at a savings of 27 percent below their fair trade value. Taking into account all 119 items-the 78 sold below fair trade price and the others sold at fair trade price, consumers could effect a savings of 19 percent below fair trade prices. The Department of Justice suggested, on the basis of this survey, that fair trade prices may afford such wide profit margins as to invite discount house operations. The Department of Justice, incidentally, also stated that large department stores or mail order houses-mass sellers, they were calledcould market their own private brands, substantially identical to nationally branded goods, at prices lower than fair trade items, so that fair trade prices would literally provide an umbrella over the market for their own private branded items. It was suggested that Congress make this area the subject of investigation. Not to be overlooked in evaluating the future of fair trade legislation is the opposition of both the AFL-CIO and the American Farm Bureau Federation to the quality stabilization bill (as presently drafted). When these two large membership groups (ordinarily on opposing sides of legislative questions) join together in opposition to legislation, it does not augur well for the future of that legislation. From what I have said, I would conclude that there is no immediate likelihood of action by the Commerce Committees of Congress in favorably reporting out the quality stabilization bill-at least in its present form, and probably even if it were reduced to the mere establishment of a property right to set retail prices on merchandise other than drugs and medicines. Hard evidence will be needed to rebut testimony such as that presented by the Department of Justice, and it will take time and expense to develop that evidence. I would like to close on a hopeful note, however. Hard evidence relating to deceptive practices should not be too difficult to produce, and it will cause Congress to take some type of effective action, even if the State legislatures do not move. During the last session extensive hearings were had with respect to deceptive practices in the area of labeling and packaging. I believe there is a good possibility of some kind of legislation being enacted to stop these practices. As I stated earlier, the Federal Trade Commission already has authority to move against deceptive advertising practices by issuing cease-and-desist orders. It may well be that more rapid enforcement and more severe penalties can be provided to insure more effective work by FTC. Moreover, I would think that FTC's authority could be broadened to enable it to fight more effectively its battle against the deceptive use of preticketed prices which make the buyer think he has a great bargain. It isn't good when one reads that the Commission suspends part of a cease-and-desist order because the examiner has found that a deceptive practice is so widespread in the watch industry, for example, that if the particular firm under investigation were forced to desist from the practice it might be put out of business. This is an intolerable situation, and I would expect Congress to take appropriate action when FTC makes its recommendations for enlarged authority. I recognize that some of my observations are not as optimistic as some of you would wish. However, I have reported the situation as honestly as I know how, and I am sure you would not want to be misled by any false, optimism on my part. After all, you people deserve to know the facts. Your able executive secretary, Phil Jacobson, in his report last evening on the future of the proposed Sunday closing bill, was clearly pessimistic. It would have been unfair to you for him to have been otherwise. I hope that this knowledge of the future of fair trade legislation will enable you to know better how to proceed in the partnership which I hold with you in better serving the people of our State. (The telegram referred to follows:) Congressman JOHN DINGELL, House Office Building, Washington, D.C.: BOSTON, Mass., April 25, 1963. Pressure of university business prevents appearance at hearing this week. Wish you to convey to committee my continued conviction that Quality Stabiliza tion Act is just as objectionable as former fair trade bills. Price fixing is completely unsuitable for the American economy. Urge committee to defeat this ROBERT J. MCEWEN, measure. Boston College. Mr. DINGELL. The subcommittee will stand adjourned pending the call of the Chair. (Whereupon, at 12:50 p.m., the subcommittee adjourned, subject to the call of the Chair.) QUALITY STABILIZATION-1963 TUESDAY, MAY 14, 1963 HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON COMMERCE AND FINANCE OF THE The subcommittee met, pursuant to call, at 10 a.m., in room 1334, Longworth House Office Building, Hon. Harley O. Staggers (chairman of the subcommittee) presiding. Mr. STAGGERS. The committee will come to order. We have met again to continue the hearings on H.R. 3669, and at this point in the record I would like to include a statement by the American Association of Retired Persons and the National Retired Teachers Association. I would like to present it for the record. (The statement referred to follows:) STATEMENT OF DR. ETHEL PERCY ANDRUS, PRESIDENT, NATIONAL RETIRED TEACHERS ASSOCIATION AND AMERICAN ASSOCIATION OF RETIRED PERSONS It is my privilege and duty as president of the National Retired Teachers Association and the American Association of Retired Persons to submit to your committee for inclusion in the printed hearings the position of our two organizations in opposition to H.R. 3669, the Quality Stabilization Act. The National Retired Teachers Association consists entirely of persons who have retired from teaching. Total membership for the present year numbers approximately 250,000. Membership in the American Association of Retired Persons is open to persons age 55 or over, and total membership numbers approximately 450,000. National, State, and local or chapter officers of the two organizations number between 500 and 600 persons elected by the members. NRTA and AARP are dedicated to the purpose of serving the needs of their elderly membership. They are nonpartisan and nonprofit organizations. When our campaign for insurance protection was initiated, there was no hospitalization or medical program exclusively for retired persons, and most programs designed to serve employed men and women arbitrarily excluded them from participation in the plan the day they reached the age of 65, or advanced the premiums with lowered benefits. To break this age barrier to hospitalization protection, the officers of the two organizations worked for 7 years before convincing an insurance company to be daring enough to pioneer with us. The success of this breakthrough is attested by the fact that today more than 350,000 retired men and women, members of our two associations, take advantage of a broad hospitalization insurance program which was denied them until a few years ago, on no more valid ground than that of age. During the years 1958 and 1959, our members by the thousands protested the high cost of drugs. Many members reported to us at that time that they were paying more for drugs and medicines than they were for hospital and medical care. To assist them with this problem we established and have conducted for several years a nonprofit drug service for our membership. The major functions of our drug service are to fill prescriptions for our members and to provide their vitamin and other medicinal needs. I have related this brief summary of some of our interests and services as background for our concern and alarm regarding the quality stabilization bil now before your committee. INCOME LIMITATIONS OF OLDER PEOPLE Many members of our two organizations have a local, State, or Federal pension Often if they receive social security, it is as an offset against their public pension. Some are employed part time. Those entitled to social security under the terms of the law begin to lose that source of income the month they earn more than $100, and the social security retirement income is sacrificed completely for the year in which the individual earns as much as $2,900. In any case, the incomes of older people generally are much less than half of those to which they were accustomed during their working years. Half of all the people aged 65 and older-more than 81⁄2 million people have less than $1,000 in cash income a year. Unfortunate as it is, we cannot overlook the fact that one out of eight, or more than 2 million, persons over age 65 who must depend upon public assistance receive approximately $60 per month which must be stretched to buy as much food and other of life's necessities as it wil buy. Regardless of the source of the retirement income-be it pensions or annuities, interest or dividends-it is usually a fixed figure. The 85-year-old retired schoolteacher who qualified for her pension of $100 a month 20 years ago finds that the pension check now buys less than half of the services and necessities that it paid for in 1943. We think it is remarkable and a source of pride in our economic system and in individual lifetime planning that some 15 million of the over-65 population are self-supporting in the sense that they are not dependent upon local, State, or national welfare. We believe the passage of H.R. 3669 would result in an unnecessary but certain increase in living costs; and, furthermore, that it would incite an artificial and dangerous inflationary trend. Older persons living on fixed incomes have every right to live out their years in a reasonably stable economy. One way by which the Congress can hold the line, protect all consumers, and help older persons to maintain their independence, their personal dignity, and their self-respect is to reject price fixing which is the main thrust of the fair trade bill, H.R. 3669. MORE BUSINESS FAILURES IN FAIR TRADE STATES The proponents of the fair trade bill year after year have contended that the number of business failures was one of the strong planks in their platform for price fixing by congressional approval. It does sound impressive until we make a simple but objective State-by-state check of the real significance of these annual business failures. Such a check, the test chosen by the promoters of fair trade, shows incontrovertibly that business failures are significantly higher in those States having fair trade laws in effect than in those States without any fair trade protection for the manufacturer. In support of the above statement, we call your attention to no less reliable a source than Dun & Bradstreet quoted in your committee report on the Quality Stabilization Act of 1962, page 51, report No. 2352, dated September 12, 1962. The Dun & Bradstreet statistics show that among the 23 fair trade States there were more than 100 business failures per 10,000 concerns in 1961. In Arizona, 102 businesses per 10,000 failed, in California 124 per 10,000 failed, and in New York 130 per 10,000 failed. If we accept the promoters' case for a Federal fair trade bill, we might logically expect to find a higher percentage of business failures among those States which do not have fair trade laws in effect. On the contrary, however, the Dun & Bradstreet data show a very much smaller number of failures in those States. Among the non-fair trade States, Texas, District of Columbia, and Utah had the most business failures. The number per 10,000 for District of Columbia was 34, for Texas 36, and for Utah 34. A summary of these facts is even more damaging to the case of the fair trade promoters. The average business failure rate in the 23 fair trade States was 75 per 10,000 businesses, but the average failure in the non-fair-trade States was less than half of that figure, or 30 failures per 10,000 businesses. |