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STATEMENT OF WALTON HAMILTON, ATTORNEY-Continued Government suits under Sherman Act are given preference, but trials themselves subject to long delay. Triple damage suits hindered because plaintiff can't find enough information with his resources to be able to go to court. Once in court, he can use discovery procedure but needs resources to afford it. Purpose of triple damage suit not merely windfall to plaintiffs.

If he succeeds, he recovers his costs but not the expense incurred in building up a case. Almost impossible for small litigants to bring such suits against large violators. Results achieved in Government case are prima facie proof in private suit. However, frequently Government doesn't bring suit or nolo contendere and there is nothing to be used. Small-business men are hesitant in bringing suit for fear of reprisals.

The private antitrust suit is really a public action. Triple damages
are inducement to bring the suit for infraction of public law. But
judges deal with case like a private tort action. Congress should
specify that private complainant is really bringing action on behalf
of the public.

Hesitancy on part of judiciary to impose jail sentence because of
general language of law or uncertain state of law; question of whether
the answer is to be found by way of a jail sentence.
He does not believe criminal prosecution is very promising. There
is a great hesitancy of fining respectable business men for violating
Sherman Act. Jury doesn't think fixing prices in nature of crime.
Two chief suggestions would be to smooth private triple damage
suit and follow O'Mahoney bill by making the violation of the act
a public tort.

He gives example of difference in attitude when Government brings
suit and when private plaintiff brings suit. In latter, inquiry of
judge direct at narrow issues: "When was plaintiff injured; specific
acts, etc."

Perhaps plaintiff by triple damage is unjustly enriched, but Congress felt need of an incentive to get individual to bring suit.

In private suits, equity injunctions should be framed to protect whole public in light of what was revealed at the trial. Damages should be triple what the plaintiff suffered.

Conclusion of Hamilton: "One, the inquiry in court I would have as broad as the violation; two, I would limit the damage to compensation for his injury; three, I would have the decree framed, the decree as affecting future behavior, framed in such a way as to protect the public." In addition, the Government can bring a criminal action, an equity action, and law allows a private suit even where the Government brings action.

In addition, would bring public tort action against defendants, as proposed in the O'Mahoney bill.

In United States v. Cooper, Supreme Court decided that Government was not a person entitled to sue under section 7 of Sherman Act. Several years later, State of Georgia brought suit for triple damages, and Court decided that State is a person and can sue in tort, while United States Government is not. Arnall brought the suit for Georgia.

Would like to see penalties increased. He would allow maximum
penalties to run into millions and leave it in discretion of judge.
Would not fix a maximum. Doubts whether constructive remedy lies
through use of criminal prosecution.

He thinks jail sentence provisions largely rhetorical in the present
statute. Perhaps it is a deterrent, but he doesn't think so.
Discusses old Logan bill designed to establish courts to deal with na-
tional economy. You get trained personnel who would acquire
knowledge of individual fields. On other hand, you would have
people who would see that subject only and not view things in the
terms of the whole economy.

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STATEMENT OF WALTON HAMILTON, ATTORNEY-Continued

May lose sight of consumer. Many people opposed to so-casieu special court for patents, because judges would become specialized patent lawyers; as patents involve whole economy, you need wide range of experience. Some of the most eminent men in the United States Supreme Court have been country lawyers.

Being opposed to things established does not mean going wild. It means a clean-cut analysis, clean-cut objectives, knowing what your goal is, and moving toward your goal.

from there.

STATEMENT OF LAZARE TEPER, of ILGW

He is director of research of ILGW, which has 405,000 members. He is
an economist, graduated from Johns Hopkins, and has a doctorate
Economic concentration incurred despite antitrust laws. In 1939, 0.1
percent of total number of business establishments employed 40 per-
cent of all workers. 200 largest nonfinancial corporations controlled
in 1937 45 percent of all corporation assets.
Large corporate concentration is matter of concern. True owners of
enterprise exert no control. Stocks are widely scattered. Tendency
toward self-perpetuation.
When small number dominate market, activities of any one appreciably
affect entire market. Prices no longer affected by competition. De-
cline in demand does not result in price readjustment, but production
curtailed, and workers laid off. When number of buyers is restricted,
they force suppliers to operate on buvers' terms. A small producer in
the middle of such groups is victim of squeeze plav.
This is situation in women's garment industry. With concentration of
textile producers, and among buvers, garment maker is easy prey.
Bulk of garments made by small factories employing average of only
33 persons.
Some factories operated by manufacturers, others by
contractors, who produce garments out of material owned by "job-
bers."
Jobber does all the purchasing, designing, makes samples, but actual
job of manufacture done by subcontractors. Jobbers originally
powerful enough to pit contractor against contractor without regard
to labor costs.

Industry was demoralized. Jobbers encouraged excess number of con-
tractors. In 1926 a commission in New York determined that sta-
bility could be maintained only if jobber assumed full responsibility
for labor standards of employees in contractors' shops. Contractor
was really nothing more than a foreman.

Contractor today is important method of production, but collective
agreements between ILGWU and employers cover workers employed
in contractors' shops. Work is distributed equitably and fair labor
standards preserved. (Exhibit 1 attached shows number of firms
in New York and size of labor force.)
The cooperation between jobbers and manufacturers has recently been
attacked by the Federal Trade Commission. Unless true relation-
ship is revealed, labor standards can't be maintained. Unless jobbers
realize obligations, industrial peace cannot be maintained. FTC
has ignored fact that union activity has stabilized labor relations and
has not affected competitive character of industry or brought mass
aggregation of capital.

Exhibit II shows that 60 firms had dollar volume in excess of $4,000,-
000-only 15 percent of business and 1.6 percent of total number of
firms.

Largest of the 1.6 percent did not exceed $25,000,000. This refers only
to women's garments.

Largest firms, according to exhibits III and IV fall in classification of
10 to 24 million dollars. He lists volume of some important firms.
In garment workers' industry, you do not have Big 4 or Big 10. He
recites statistics to emphasize that there are no gigantic firms in this
industry anywhere approaching size of firms such as auto, steel,
textiles, or even retail field.

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STATEMENT OF LAZARE TEPER, OF ILGW-Continued

Competition is keen. Most of corporations are family-owned. Few resort to public financing. No barriers to enter field. Mortality was high in 1930's with about one-third of contracting and one-fifth of jobbing and manufacturing establishments going out of business in course of year.

Recently, mortality has been less than number of new businesses.
Exhibit V shows average life span of suit and coat firms. Similar
table for dress industry in same exhibit.

TNEC concluded: "The industry, in each of its stages, is actively
competitive."
Danger to industry comes from (1) concentration of textile industry;
(2) concentration among retailers who buy garments. Reads portion
of article in Southern Economic Journal on integrated organizations
in textile industry.

TNEC studies concluded that on over-all basis textile industry was
competitive; same studies revealed concentration in specific products.
There has been greater concentration since then.

Statistics show largest four firms in industry turned out more than 75 percent of the total output of 16 products and between 50 and 75 percent of 34 products.

War gave impetus to concentrate because of OPA regulations; shortages; taxes. Earnings because of low capitalization subject to high excessprofits tax; high personal taxes discouraged withdrawing of profits. Some owners preferred to sell and pay capital gains. Purchasers

could buy at high prices because high capitalization reduced excessprofits tax. Some concerns deliberately bought up low profit mills to off-set taxes incurred for high profits earned in other activities. Exhibit VIII shows the expansion of the principal textile corporations. Increase in sales volume may be explained only by consolidations which took place. Before war, only 9.5 percent of cotton broad goods sold through outlets owned or operated by the mills. After war, 75 percent of cotton fabrics were sold by integrated organizations. One of largest integrations is Textron, which controls substantial percentage of all fabrics used in ladies' underthings, also produces underwear and blouses on its own account. Burlington Mills formerly sold 90 percent of output of converters; now converts 90 percent of goods itself.

Everything Burlington does reminds of what elephant said: "Everyone
for himself" as he danced among the chickens.

He now quotes superlatives in Fortune article regarding Burlington.
One type of pressure applied by textile interests is to force garment
manufacturers to promote textile brands instead of their own.
Some fabric promotions may lead to undue control of the market in
finished garments. Cf. case of Goodall Palm Beach suits-now no
price cutting.

309 This integration in suppliers has led to numerous abuses. Uniformity of prices, tie-in sales, etc. One large producer of wool fabrics refuses to sell his fabrics unless they are made up into garments to sell above a certain price. Exhibit IX demonstrates that textile industry has been able to command prices completely out of line with costs. Profits in 1948 represented 15 cents out of every sales dollar. He doubts that manufacturers in garment industry will combine to meet these combinations of suppliers. There are too many manufacturers. Competition exists in the ladies' garment industry. Mergers in textile industry are baneful to the Nation. As far as resistance to retailers, some arrangements were worked out, but they were challenged by Federal Trade Commission. No decision as yet.

310

He lists sources of his statistics.

These statistics are accepted by the manufacturers and the industry. True competition is rapidly diminishing among retail distributors, with devastating effect upon manufacturers. "The most important influence on the apparel markets is exercised by department stores, chain stores, and mail-order houses. These aggregations of purchasing power dwarf the manufacturers."

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STATEMENT OF LAZARE TEPER, OF ILGW-Continued

Sales volume of Montgomery Ward was $1,211,956,000. Volume of
Sears, Roebuck was $2,295,991,000. $500,000,000 of business in
women's wear must be done by these two companies-enough to
absorb business of several hundreds of garment manufacturers.
Department stores have also grown. Cf. J. C. Penney.
Cites statistics of Allied Stores. Combined purchasing power of
various stores operating on a consolidated basis is high. Macy's
dollar volume for 1948 was $315,035,000; Gimbels was $307,289,000;
May's was $407,266,000.

More than one-third of department store's business is in products of
women's wear industry. Mr. Michener asks if breaking up chains
would not raise price to consumer. Teper says mass production
buying tends to lower quality of garments. Better value found
today in independent stores where individual selection of merchan-
dise is made.
Also, costs of distribution in department stores are high; smaller of
retailers operate on a much lower mark-up; their distribution cost is
lower.
Would not say bigness per se is bad. There is room for business ex-
pansion. However, when one institution acquires such economic
power that competition is no longer among equals, then it is time for
the Government to step in.

When business group has mass purchasing power and can exact tribute
from other party, its operations are no longer in the public interest.
A & P case showed that they made little profit in retail operations.
Main profits from manufacture of goods sold in their own stores.
They sold same goods to independents at higher price.

We want to permit small-business man to exist. Many similarities
between practices in his field outlined above and practices in other
fields.
Garment industry with keen competition being hemmed in by concen-
tration in the textile interests which supply material and concentra-
tion in the retail trade which purchases the garments.
Garments may be sold at same prices in stores controlled by same
interests; not at prices fixed by manufacturers. Doubts if any price

fixing in women's garments extends to retail level. Not prepared to
testify on espionage system of retailers in finding competitors' price.
and meeting it.

You will find some loss leaders. Cut-rate stores were found to have huge mark-ups. May find pricing of trade-marked article on competitive basis. But in case of dresses, stores won't have an identical stock.

In New York market alone, dress industry turns out average of 75,000 different dress designs per year.

So two competing retail outlets might not have identical dresses on their racks. Actually there is a great uniformity of prices among larger stores. There is competition among smaller stores, and the best service to consumer.

Dr. Teper can testify with greater impunity than can the manufacturers.

There used to be strife in the industry between labor and employers but cooperation now.

He is not out for all he can get out of the industry; otherwise would be on strike all the time. Monev is not only consideration-hours of work, conditions, sanitary facilities, etc. But union's policy is not one of getting everything it can without regard for the economics of the situation. Nor are manufacturers anxious to get every dollar out of consumer. Otherwise they would consolidate.

Last strike in coat and suit industry was in 1926. Last strike in dress industry in 1933. Price of clothing in relation to incomes has constantly decreased.

"Ladies' wool suits which in 1914 required an average worker to work 37 hours in order to earn enough to buy it, in 1948 only required 11.4 hours of work."

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Statement of Lazare Teper, of ILGW-Continued

This is the best way to determine relative costs and is not finding of
union study but of a manufacturers, research organization.
Cites statistics showing concentration in specialty shops.

Large-scale establishments also operate jointly for buying purposes.
Largest combination is of 32 department stores which own coopera-
tively the Associated Merchandise Corporation.

Mutual Buying Syndicate buys for 66 department stores.

Fernfield

Association buys for 191 apparel stores, etc. Combined purchasing
power of these groups is terrific, especially when compared with the
volume of the individual garment maker.

Estimate that "close to 75 percent of the total volume in women's
wear passes through the hands of buying offices." Group buyers
can issue edicts when to buy and when not to buy.
In industry, such policy would be a restraint of trade. In retailing it
goes unchallenged.

Cf.

These buying offices can insist upon special concessions such as dis-
criminatory discounts, special advertising allowances, the right to
return seasonal garments at will. These demands place manufac-
turers in vulnerable position and subject them to a squeeze.
complaint filed by FTC against Associated Merchandising Corp. and
affiliated stores. This was unopposed and cease-and-desist order
issued.

AMC admitted to have induced discriminatory prices by means of
discounts. Obtair ed rebates on purchases.
AMC case is far from unique. However, when manufacturers get
together to protect themselves by certain rules, FTC charges them
with restraint. Legislation should be applied to curtail big business
engaged in monopolistic practices. Never intended to victimize
small-business men who adopt a code for own protection.
Only a healthy industry can provide decent working conditions for
workers. That is why union concerned with ability of industry to
compete. That is why he wants fair play between workers, manu-
facturers, suppliers, and retailers.

If manufacturers testified as he did, might face reprisal from retailers
and textile interests. Mr. Celler cites example of "design copyright
bill" where tried to get cutters and manufacturers to testify and
couldn't.

One remedy is to subpena them.

Another is to hold closed hearings so committee could protect witnesses. Mr. Celler says it is a serious problem, hopes that Teper will tell manufacturers the hearings are open for them and committee will help them against reprisals. Charts placed in the record as exhibits to talk.

HEARINGS, MONDAY, JULY 25, 1949 STATEMENT OF EVERETT M. KASSALOW, CIO Today, trying to suggest a method or approach. Later, should like to submit detailed suggestions. CIO believes concentration of outstanding importance. Danger of ever-increasing Government regulation. Failure to control during past few decades seems to point to increasing regulation as only alternative.

Many investigations but no action. TNEC; Economic Concentration and World War II, Senate Committee Print No. 6. Should not in this investigation attempt to retrace TNEC. Can be little question over bulk of data revealed in TNEC reports.

We should reexamine recommendations of TNEC, which have gone unnoticed by the Congress. These proposals can form nucleus for an effective program, especially on price maintenance laws, trade associations, and patents.

Calls attention to Walton Hamilton's TNEC Mongraph No. 16, on ineffective history of Government program. He hopes this committee will give action, not merely investigation.

Previous investigations including TNEC have tended toward an overlegal approach. Tendency to search for collusion. Must give equal emphasis to another line. Many large corporations are in a strong national policy forming position.