have a right to fix the retail price. This is in effect saying to the consumers of his products that they shall not have the benefit of competition in the retail distribution of those products. We do not think this is a right the manufacturers should have; and actually I do not think very many of them want it. But, of course, if we get such legislation, I expect that many of them will resort to it. Mr. KEITH. Well, I do not look at it that way. As I have watched the subject unfold, at these hearings. I do not see that it is going to result in frustrating competition. The manufacturers will still compete with varying lines, and Gillette will still compete with Schick. Mr. TRIGGS. We would not testify that no competition would exist. Certainly I think there would be competition. There would be a lesser degree of competition. Competition is not a thing that either exists or does not exist; it is a question of degree, and competition in retail markets would be eliminated by the enactment of the bill. Mr. KEITH. In your opinion? Mr. TRIGGS. Yes, sir. I do not see how you can avoid that conclusion, though. Mr. KEITH. In retail markets? Mr. TRIGGS. Yes. Mr. KEITH. I would think that some stores would be run more effficiently than others; they would simply be paying the same price for their goods and marketing them at the same price, but there would still be competition and management and other matters of merchandizing. Mr. TRIGGS. Yes; there would still exist some measure of competition except in retail market pricing. I suspect that competition, if this bill were enacted, would come into the picture in different ways. For example, I have here a clipping from the Washington Post. If I take this to Peoples Drug Store and buy $3 worth of goods, I get a hundred extra trading stamps. If I buy $6 worth of goods, I get 225 extra trading stamps. This kind of competition by the big mass merchandising companies will continue and be accelerated. I think that it would be to the disadvantage of small business. Mr. KEITH. As I said, I am not convinced that a price-fixing job is what the proponents want, but I do not yet see the constitutional objections that were applicable in the case of this bill as such. Mr. TRIGGS. We have not made the constitutional argument. Mr. KEITH. Thank you, Mr. Chairman. Mr. STAGGERS. Thank you, Mr. Triggs. Mr. TRIGGS. Thank you, Mr. Chairman; we appreciate the oppor tunity of appearing before you. Mr. STAGGERS. This concludes our list of witnesses for today. So the committee will stand adjourned until tomorrow at 10 o'clock. (Whereupon, at 11:25 a.m., the subcommittee adjourned, to reconvene at 10 a.m., Wednesday, May 15, 1963.) QUALITY STABILIZATION-1963 WEDNESDAY, MAY 15, 1963 HOUSE OF REPRESENTATIVES, Washington, D.C. The subcommittee met, pursuant to recess, at 10 a.m., in room 1333, Longworth House Office Building, Hon. John D. Dingell presiding. Mr. DINGELL. The Subcommittee on Commerce and Finance of the House Interstate and Foreign Commerce Committee will come to order. This morning we are considering H.R. 3669, and continuing hearings on the quality stabilization bill. Our first witness this morning is Col. William R. Hutton, of the National Council of Senior Citizens. Colonel Hutton, it is a pleasure to welcome you to the committee. STATEMENT OF WILLIAM R. HUTTON, DEPUTY DIRECTOR, NATIONAL COUNCIL OF SENIOR CITIZENS, INC., WASHINGTON, D.C. Mr. HUTTON. Thank you very much, Mr. Chairman. I am very glad to have this opportunity to present the views of the National Council of Senior Citizens with respect to this bill, H.R. 3669. The council is a fast-growing organization of more than 1,500,000 older people, including individual members and the membership of some 1,500 affiliated yet independent older peoples' clubs throughout the United States. Its national headquarters are located at 1627 K Street, NW., Washington, D.C. The president of the National Council of Senior Citizens is Aime J. Forand, who for many years prior to his retirement in 1960 because of ill health, was a Member of Congress of the United States and a distinguished colleague and friend of members of this committee. I regret very much that Mr. Forand's current state of health does not permit him to be here today. The National Council of Senior Citizens is perhaps better known to the public at large as the outspoken champion of the principle of provision of health care for the aged through social security. However, to our membership and to many others, we are also well known for the efforts we are making to increase community and national awareness of many problems of older people. Though we seek to focus national attention on the unmet needs and the untapped potentials of our senior citizens we do not wish to plead their cause as a special interest or group. I am quoting from the constitution of the national council, adopted at the founding convention on May 25, 1962, when I say that our objective is to promote the interests of senior citizens in the United States in harmony with the national interest. The headquarters of the national council is pledged to act as a clearinghouse for the exchange of information, ideas, and experiences among affiiated members and groups. Under the constitution we are directed to engage in fact finding and analysis of issues, to publish the results of such studies, and to provide a responsible and articulate voice for senior citizens. It is under these directives that I appear here today, then, to express the serious concern of our individual members and affiliated clubs on the so-called Quality Stabilization Act. Our membership is overwhelmingly convinced that the net result of H.R. 3669 would be to make price fixing legal on a nationwide basis. It would cause all consumers to pay higher fixed prices for many products which are needed for daily living, and the older people, living on reduced incomes, would be the hardest hit of all. We are grateful for the opportunity to express our views on this bill and for your kindness in listening to them, because powerful forces with seemingly unlimited financial resources are ranged against America's older people in regard to two important legislative proposals now before the 88th Congress. The pleas of the elderly in support of the desperately needed measure to provide hospital insurance through social security are frequently drowned out by powerful propaganda from some of the same financial sources which, while they are opposing the proposed Hospital Insurance Act, are promoting the enactment of H.R. 3669 which will further increase the already overburdensome cost of medical care for older people. Mr. DINGELL. I notice the National Association of Retail Druggists have joined the undertakers in opposition to the proposal for hospitalization for the aged group. Mr. HUTTON. That is right. Now, at a time when there is a general consensus that the medical problems of the aged cannot be ignored much longer, it is inconceivable to members of the National Council of Senior Citizens that this Congress of elected representatives of the people should wish to consider the enactment of legislation which would add still more misery to their already intolerable burden. Half of our retired people in America have almost no other income other than their social security payments-averaging $70 per month per person-and they have little in the way of savings. This is hardly enough to provide for basic food, clothing, and housing. Our members and clubs are located in many States. Some live in States with so-called fair trade laws and some live in so-called free trade States. Others live in States where such laws have been declared invalid as applied to "nonsigner" provisions. Most of our older people have had experience of fair trade since it was originally spawned by wholesale and retail merchant associations primarily the National Association of Retail Druggists in the depression days. They were grateful to see the proponents of resale price maintenance receive one setback after another since the end of World War II, because they are convinced that fair trade or pricefixing laws work to the detriment of both the consumer and the businessmen purportedly protected by them. The maintenance of artificially high consumer prices has been exposed in State after State. In States which outlawed fair trade the immediate result was that prices settled in the competitive market at about 20 percent lower than the former fair trade prices. In many previous hearings on this type of legislation, responsible agencies of Government have frequently demonstrated how much more the consumer must pay in fair trade States than in non-fair-trade States. To get a rough idea of what the enactment of this bill would mean in higher consumer prices, we followed a procedure as explained by Dr. Stuart Lee, chairman of the department of economics, Geneva College, as explained on pages 415 and 416 of the hearings on fair trade, 1959, of this committee. Based on a national retail sales of $234 billion for 1962 and an estimate that 712 percent of these sales would be affected by the provisions of the proposed Quality Stabilization Act (H.R. 3669), a total of $17.5 billion consumer sales would be involved. The average differential between fair trade and non-fair-trade retail sales is 24 percent-but using a more conservative figure of 20 percent, it is clear that this bill, if enacted, would force consumer prices up by $31/2 billion a year. The national council wishes to explain that in asking our member clubs for their reaction to this bill we were somewhat dismayed by the fact that large segments of the general public know little or nothing about H.R. 3669 or its contents. And we have had to undertake quite a job to get copies of the bill out to them so they discuss it. Proponents of this bill claim to have spent hundreds of thousands of dollars-largely raised from manufacturers "for intensified educational work and for conducting vigorous field contacts and repeated mailings to some hundreds of thousands of people who must communicate and activate others to communicate with their lawmakers in Washington." We venture to suggest, Mr. Chairman, that if but a small fraction of the money purported spent in this so-called education program had sought to spell out to the public the actual contents of the bill, this committee might be sitting today knee-deep in protests. What has happened to the great spirit of free enterprise which made America great our senior citizens ask us-when it becomes necessary to seek to legalize nationwide price fixing through a bill which is by far the worst of its type to be brought before Congress? H.R. 3669 flies in the face of our antitrust laws and the probability is that in seeking to ram this measure down the throats of States which have rejected fair trade laws, the measure is unconstitutional. The National Council of Senior Citizens intends to support all measures which proclaim a desire to attack deceptive practices, and we commend the activities of the Federal Trade Commission and the efforts of many States themselves to deal with these deceptions. But we doubt whether this bill will do much to help in this regard. We noted that President Kennedy, in his special message to Congress on aiding our senior citizens, dated February 21, urged that Congress extend the provisions of the Food, Drug, and Cosmetic Act of 1938 to include testing of the safety and effectiveness of therapeutic devices, to extend existing requirements for label warnings and to include household articles which are subject to the Food, Drug, and Cosmetic Act and to extend adequate factory inspections to cover foods, over-the-counter drugs, devices, and cosmetics. In this message, the President also said that the Secretary of Health, Education, and Welfare will take the necessary steps to expand measures to supply consumers, particularly aged consumers, with information which will enable them to make more informed choices in purchasing foods and drugs. In these, and other measures, and in the general spirit of competitive trade, we believe we shall find the best answer to deceptive practices and the improved quality of goods and products. In fact, the title to H.R. 3669 itself practices deception. The longodorous words "fair trade" have been dropped and the words "quality stabilization" added for improved propaganda effect. Our senior citizens clubs who have commented on the bill are asking: Who is for it? All rights are reserved exclusively for the national manufacturers and distributors, those large business enterprises which are the owners of brands. It does not give any rights of protection whatsoever to small business. It is common knowledge that the large national chains have much greater influence with the national manufacturers than the small retailers. They have a wider range to offer shoppers. If prices are fixed nationally, there will be less inducement for the consumer to shop around; small business will suffer. It will be a sad day for the people of the United States when Congress enacts a measure which will raise prices of goods rather than lower them. It will be a desperate day for the older people of America living on reduced incomes and particularly for those millions of elderly citizens who live on less than $20 a week. For it is well known that this law will vitally affect the prices of goods and products which are needed for maintenance of good health. Not all of these items are offered solely on prescription; and while we note that H.R. 3669 exempts prescription drugs, we are extremely concerned that the companion measure introduced into the Senate does not include this exemption. What might happen if this bill should ever get to a conference? Older people use many more drugs and other medications for health needs-on prescriptions and without prescription-than younger people. In their efforts to make ends meet, many needy senior citizens have taken advantage of a number of projects introduced in several States whereby senior citizens are granted a discount on drugs ranging from 10 to 25 percent. Enactment of H.R. 3669 would not only forbid these discounts for they are largely on branded products-but would actually raise prices beyond the current level. This legislation does not answer any of the many problems of marketing; it would probably flood the Federal courts with litigation. It |