business. This bill will permit small-business men to lay up a surplus for bad years and will enable them to keep their help employed during a depression.

In conclusion, I desire to thank this committee for the privilege of appearing before you at this time, and also thank you for the splendid work you have been doing for small business.

STATEMENT OF GEORGE N. KOTIN, ON BEHALF OF CHICAGO AND WISCONSIN LEATHER AND FINDERS ASSOCIATION

Mr. BALLINGER. Give us your name.

Mr. KOTIN. George N. Kotin, 77 West Washington Street, Chicago, Ill.; attorney representing the Chicago and Wisconsin Leather and Finders Association.

Mr. BALLINGER. Do you wish to make a very brief statement?
Mr. KOTIN. Yes; very briefly.

Since testifying in Omaha, Nebr., last week, I would like to say to the committee that, of course, it is a treat to be here this morning because it was worthwhile listening to Mr. Quinn and his excellent treatise and to the other complaints which made me feel at home because they are so similar to what goes on in the leather and finders industry.

Chairman PLOESER. You do not mean that misery loves company, do you?

Mr. KOTIN. It sort of makes you feel that way.

I would like to say that I can see clearly the tie-in between what Mr. Quinn said this morning as to the power of these monopoly monsters and what actually occurred to us. In Omaha we had three witnesses, competitors and one man, who testified and sort of said everything was rosy there. After I left the hearing I talked to this gentleman and to the other three and I find their testimony was merely because of the fear of being driven out of business by this particular competitor. They had just finished a couple of price wars in the last couple weeks where one of them was selling with tie-in sales and using discriminatory discounts which he receives for the purpose of choking off his competition throughout the area.

Mr. BALLINGER. What tie-in sales?

Mr. KOTIN. He was selling laces. He had some kind of a tie-in with shoe laces and he was able to get business that way. Then he used the names of certain shoe repairers in his advertising he would buy from and got the business that way. The whole thing is so tied up. You will find there are certain people, a certain small group, who because of the edges that they get from their suppliers, the large fellow can use them to crush his competition. That is going on and is going on today, with the result, Mr. Chairman, I honestly believe that unless something is done to enforce the Robinson-Patman Act in all of its aspects and to do away with this discrimination, you are going to find 68,000 individually owned shoe repair shops in America who are going to be relegated to a condition worse than they were before the war; living back again in their basements. That is, outside of the 1,200 finders who are choked to death finally.

In our industry you cannot get a word said or published about the Robinson-Patman Act, as I previously said.

I have found a copy of a letter I had written to the finders and shoe repairers of America merely discussing their rights under this law, the triple damages and other features of the law, merely a discussion of the legal aspects. This letter I wrote on January 15, 1948. Not a single publication in the industry would publish this letter. It must not be known. The Robinson-Patman Act must be a secret in the industry because the big fellow so decrees that it must not be known. I thought I would give you a copy of the letter because a certain witness said the reason it was not published is because it was too much publicity for me. There is none whatsoever in the

letter and I would like the record to show that.

Chairman PLOESER. The letter will be made a part of the record. Mr. KOTIN. This letter dated January 15, 1948, is as follows:

To the FINDERS AND SHOE REPAIRERS OF AMERICA:

JANUARY 15, 1948.

GENTLEMEN: I am addressing this letter to you as counsel for the Chicago Leather and Finders Association and the Wisconsin Leather and Finders Association whom I have represented for the past several years.

Since the lifting of price controls our associations found that our industry was presented with the many problems which had beset us during the years preceding the last World War and the setting of price controls under the OPA. In making a study of the principal evils of our industry we find there are about 1,200 finders throughout the United States and about 68,000 independently owned and operated shoe repairers throughout the country. We find that a small percentage of the shoe repair operators, perhaps even less than 5 percent, and a small percentage of the finders, approximately 5 percent, have for years been enjoying discounts and a favored buying position, which is not enjoyed by the great mass of the finders and shoe repairers. We find that certain suppliers of merchandise are giving discounts to certain finders which have no relationship to costs savings and that these discounts are substantially as high as 25 percent, and the mass finder is paying one price for his merchandise, but the favored few are getting the benefits of a price discrimination which we believe are forbidden by law. We find that certain finders are selling their merchandise to certain favored shoe repairers at prices as much as 25 percent lower than the prices at which the same finders sold the very same merchandise or similar merchandise, to their mass shoe repair customers. This discount puts the favored buyer in a position where from time to time he will use his favored buying power in his competition with others so as to permit him to undersell his competitors because of this advantageous purchasing power.

We recognzed that this price discount evil had resulted in serious harm to the mass shoe repairer and the mass finder and therefore the Chicago and Wisconsin Leather and Finders Associations requested me to make a study of the law to determine what, if anything, could be done to stop these practices in price discriminations. As a result of the study which I have made I have recommended to the associations and to the industry at large that these unlawful price discriminations could be legally attacked by adherence to the provisions of the Sherman antitrust laws, which are a part of the laws of the United States, particularly, the Robinson-Patman Act. The purposes of the Robinson-Patman Act are four in number, namely:

1. To prohibit discrimination in price or terms of sale between purchasers of commodities of like grade and quality.

2. To prohibit the payment of brokerage or commission under certain conditions-dummy brokerage.

3. To suppress pseudo-advertising allowances.

4. To provide a presumptive measure of damages in certain cases.

The act provides a general prohibition against price discrimination where either or any of the purchases involved in such discrimination are in commerce, and where the effect of such discrimination may be substantially to lessen competition, or tend to create a monopoly in any line of commerce, or to injure, destroy or prevent competition with any person who either grants or knowingly receives the benefit of such discrimination, or with customers of either of them. It must be understood that quantity discounts may be given, but they must be based upon the difference in the cost of manufacturing and distribution.

As far as this industry is concerned, the practice of suppliers of selling their merchandise to the large buyer or chain operator at the discounts which they have enjoyed in the past and which bear no relationship to cost savings, is in the opinion of the writer contrary to the provisions of the Robinson-Patman Act. The practice of the finders in selling to a certain few favored buyers at substantial discounts and at much higher prices to the mass shoe repairer is also in the opinion of the writer contrary to the provisions of the Robinson-Patman Act.

The act provides that both the person granting the discount and the person receiving the discount are guilty of a violation of the law, and the act further provides and gives the right to any person who suffers damages by reason of the violation of this act to recover treble damages from the persons causing such injury. In addition to the rights of the individual to recover damages, power is given to the Federal Trade Commission to issue order to stop such practices, Section 15 of title 15, USCA, provides as follows:

"15. SUITS BY PERSONS INJURED AMOUNT OF RECOVERY.--Any person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws may sue therefor in any district court of the United States in the district in which the defendant resides or is found or has an agent, without respect to the amount in controversy, and shall recover threefold the damages by him sustained, and the cost of suit, including a reasonable attorney's fee." In plain language this means that shoe repairers who are compelled to pay higher prices than those charged to the favored few have a right under the act to recover damages. The same is true of finders who are compelled to pay higher prices than those charged to the favored few in the industry.

It is true that no attempt has been made in the past to bring about compliance with this law in this industry, although many industries have already used the provisions of this act to bring about a change. We in Chicago and Wisconsin have been advocating adherence to this law for the past year and we believe that if the mass shoe repairers and the finders of America were to insist upon its enforcement and were to insist that the law be obeyed great strides would be made to correct the existing evils in the industry. We recognize there are certain differences in operating costs among competitors, but we also realize that these operating differences are very small and if the unlawful deals and price discrimination are eliminated it would result in healthy competition in the industry. We believe where a condition exists whereby a small group of men are in a favored position as the result of large discounts then the mass of the industry must be in constant fear of this small group because as in the past they can and have used this favored buying power to crush their competitors. The purpose of the Robinson-Patman Act was to do away with this very condition and we believe that no industry can exist unless it adheres to the laws of the Nation and demands the enforcement of its laws. We believe the greatest worry of both the finder and the shoe repairer can be eliminated by obedience to the RobinsonPatman Act.

I believe this matter is of sufficient importance to warrant every finder and shoe repairer to become better acquainted with this law, to study and know his rights. I am sure if this is done the unlawful deals and unlawful price discrimination will be stopped. The writer at the request of the Chicago and Wisconsin Associations is taking action in an effort to bring about proper enforcement of this law. We feel this job cannot be done alone, that it requires the awareness of all members of the industry to the end that they may all contribute their effort in bringing about this much needed reform in our industry.

I would like to thank the Wisconsin Shoe Post for the use of its columns to acquaint the finders and shoe repairers throughout the Nation with this highly important subject.

Very truly yours,

Attorney for Chicago and Wisconsin Leather and Finders Associations. Chairman PLOESER. Have you anything else?

Mr. KOTIN. I do not want to take up too much of your time. I want to say, though, I appreciate the work that the committee has done and the strength it has given to us. There are a few witnesses Mr.

Ballinger received telegrams about. One of them in particular, Leviton & Co., sent a telegram the other day. I told you he had spoken with me last week and he asked me what I thought. I told him that it was my opinion that the request of a committee of the Congress of

the United States should be honored, whether he had to or did not have to, I would not engage in that discussion with him, but I thought any citizen of America and a man who makes his money in this country owes it to himself and to his country to honor the request of the committee. He said he did not have to and that was the end of that.

Chairman PLOESER. Let me say this for the record in the case to which you refer: The committee has the power to issue a subpena. It has been the practice of the committee since I have been its chairman to avoid the issuance of subpenas. I would rather have cooperation and without exception we have had excellent cooperation on the part of even the committee's enemies at times.

We do not like to say to a man, "You must come and talk to us," but if he refuses and if it interferes with the good work of the committee and it becomes necessary, we will subpena him. This gentleman will be invited to come again. I thought it was well to notify him while we were in South Bend, being close to Chicago. I do not want to put people to any unnecessary expense. That is the purpose of carrying these hearings to the field. We are not coming back for his convenience and we may now be compelled to notify him to come a greater distance and maybe it will be a boosted invitation. I do not know.

At Omaha all of the witnesses were put under oath. It was done because I felt in the case of your industry it was necessary to put the witnesses under oath so that we might get the truth and ferret it out. If that becomes necessary we will do it again. It is not the standing pra tice of the committee of administering the oath to all witnesses, but we will do it if we feel it is important to do so.

Mr. BALLINGER. In this telegram Mr. Leveton says it is an invitation. In the letter sent to him it was a request, more than an invitation. In the telegram we received back he said, "Thanks for the invitation. Unable to attend."

That was in reply to a request made by the Special Committee on Small Business of the House of Representatives.

Chairman PLOESER. It is not mandatory that he attend under a request, and he has the right to say whether he will or will not come. We find so often in such cases it is not too long until that same individual is back asking the committee to do something for him.

I have been on this committee since its inception in 1941 and I think I can speak with experience in that field.

We, of course, will help him if he is right and if he is a smallbusiness man. In that sense maybe we do not have too much good sense, however, there will be no active retribution. If we find that his testimony is pertinent we might have to encourage him with a formal subpena.

Mr. KOTIN. Just one more thought. I received a telegram this morning from another witness who had been asked to come. He sent me a wire that he would be unable to attend the hearing on account of illness; however, you know my sentiments-will cooperate. Signed, H. Zelezinski of Globe Leather of Chicago.

The only thing I want to say about that is this: If he were here he told me he would testify to this effect, that in selling to certain large operators and chains the substantial discounts that are given to them over and above the other 68,000 little fellows run about 20 to 25 percent.

He said to me last week that the trouble is that even where you give those fellows 20 to 25 percent, now, somebody else gives them a few percent more. So you lose out even on that business. That would be his testimony if he were here today, because he has had quite an experience in selling to these accounts.

I want to thank you, Mr. Chairman and gentlemen of the committee, for this opportunity. I do not want to take up any more time because there are a few witnesses who can say a few things about this particular industry present.

Chairman PLOESER. We thank you.

(Witness excused.)

STATEMENT OF MILTON M. SAX

(The witness was duly sworn.)

Mr. BALLINGER. Give your full name.

Mr. SAX. Milton M. Sax, Milwaukee, Wis.

Mr. BALLINGER. You represent what company?

Mr. SAX. I represent Sax Bros., Inc., and also I am president of the Wisconsin Leather and Finders Association.

Mr. BALLINGER. You are a leather finder?

Mr. SAX. Yes, sir.

Mr. BALLINGER. A wholesaler?

Mr. SAX. Yes.

Mr. BALLINGER. I am not going to ask you any questions which might indicate you have been disobeying the Robinson-Patman Act, which might incriminate you, but I am going to ask you to be very frank with the committee in telling the committee what conditions have existed in the industry. Do you follow the Robinson-Patman Act in your industry, or do you feel the Robinson-Patman Act is a dead letter in your industry?

Mr. SAX. That is my opinion; yes, it is. We have found that tanners will call on accounts in the city or in the area. They will make a number of calls during that day. They will make offerings to us of sole leather and we will buy it at one price. They will go up the street and sell it to our competitor either at a lower price or maybe a higher price, depending upon how the salesman feels.

Mr. BALLINGER. Same quantity?

Mr. SAX. Approximately the same quantity. We then go out and try to sell our merchandise and we will find as against one we may be higher and as against another we might be lower, basing our selling price on our actual cost of doing business. We find from our experience of 38 years in the business that our costs run about the same year in and year out. So in order to stay in business we have to be in line and when we find certain of our competitors will buy at a lower pricewe have checked that up and talked to them-we ask what has hap pened on that particular day and he will tell us what has happened. We feel, then, that the Robinson-Patman Act is a dead letter.

Mr. BALLINGER. Do you feel there are certain leather finders, that is to say, wholesalers, who are preferred by manufacturers to whom they give very large discounts which are in turn passed on to the large repair shops!

Mr. SAX. That is common knowledge, yes; that is true.