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Mr. REED. Being free to buy what I wanted to buy and sell. There is such a thing as public acceptance.

Mr. STEVENSON. Where could you give the public the best bargains? Mr. REED. I could give the public what they demanded.

Mr. STEVENSON. At a higher or lower price as an independent? Mr. REED. Actually, it is according to whether they could do the work. I could do it at a lower price if they wanted to go buy this article and install it themselves. Why, they could probably do it, because they could not figure their time as worth anything. If they go to the Firestone and take it to the garage and have it installed, they would pay more for the transaction than if they bought it from me. and had me install it.

Here is something else. The Firestone company sells to dealers on predetermined prices. They have their price schedules. They are all set out. They load a man up on merchandise. That man gets out and works on a man 2 or 3 weeks. He gets over to him the idea of buying Firestone tires. The man gets ready to buy; but he says, "I am going on vacation. About what is the price?"

You give him a price, and he goes downtown, and Firestone will sell them to him cheaper than they sold them to you in the first place. Mr. STEVENSON. They compete with their own sales outlets? Mr. REED. In that respect, they are our roughtest competitors. Mr. STEVENSON. Have you found that Firestone products have a greater acceptance than the products of other manufacturers? Mr. REED. No, sir.

Mr. STEVENSON. Of tires, batteries, and accessories?

Mr. REED. No, sir.

Mr. STEVENSON. You think you should be free to sell whichever you want?

Mr. REED. Yes. I do not think it would be much trouble to prove that the products that they have are inferior.

Mr. STEVENSON. Inferior?

Mr. REED. To the nationally advertised brands.

Mr. STEVENSON. In what respect?

Mr. REED. I am letting the public be the judge of that. A man comes in and tells you a Firestone filter will not give him half the service that an AC or Fram or some others. When they come in in droves and tell you that, you have to believe something.

Mr. STEVENSON. When they come into your station, the one you own and operate, you want to carry a variety of lines?

Mr. REED. Yes, sir.

Mr. STEVENSON. If they come in and say, "I have a preference for this kind of spark plug," and you have it?

Mr. REED. I do not carry all lines; but, in the case of spark plugs,. I have all spark plugs that come as original equipment in automobiles. Mr. STEVENSON. You do carry a variety?

Mr. REED. Yes, sir.

Mr. STEVENSON. You do not cover the whole field, but you make an effort within a range to satisfy the public's desires for any particular brand that they like?

Mr. REED. Yes.

(Witness excused.)

Mr. STEVENSON. We will recess until 2 o'clock.

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(Whereupon, at 12: 15 o'clock, the hearing was recessed until 2 p. m. the same day.)

AFTERNOON SESSION

Mr. STEVENSON. The committee will come to order.

Chairman Ploeser was supposed to be here today; but, due to other pressing business, he was detained in St. Louis and cannot be here. Mr. Ballinger, do you have a witness for us?

Mr. BALLINGER. Yes, indeed.

TESTIMONY OF J. W. BOULTON, ON BEHALF OF UNIT PARTS CO., OKLAHOMA CITY, OKLA.

Mr. BALLINGER. Give your full name.

Mr. BOULTON. J. W. Boulton.

Mr. BALLINGER. Your business?

Mr. BOULTON. I run a unit-parts company. I mean, a rebuilder of automotive units.

Mr. BALLINGER. What is the name of the company?

Mr. BOULTON. Unit Parts Co.

Mr. BALLINGER. Located where?

Mr. BOULTON. 1117 North Robinson, Oklahoma City.

Mr. BALLINGER. Proceed with your complaint to the committee. Mr. BOULTON. We have two complaints. The first one is this: A large number of large motor rebuilders, the automobile-parts rebuilders in this country, are inflating the price of their units to the trade, or to the customer, in order to allow them a substantial exchange value, a trade-in value for the old unit, which in turn, instead of allowing this unit to be rebuilt—which in a great many cases is very easy to do-they destroy them, have them destroyed, before they will give the dealer credit for this allowance that he is permitted to give to the customer.

I can give you a number of instances. I will name a few items for your benefit. For instance, on a front shock absorber on a Chevrolet automobile, today it lists at $13.60 exchange. That is, to the consumer. If he does not have an old unit, it costs him $2 additional. In turn, the dealer is allowed $1.35 credit with the manufacturer if he destroys these units. If he knocks it, busts it up so it cannot be repaired.

On a Buick shock absorber, it is $14.40 exchange, with the same trade-in allowance and the same credit allowance, with the same result, if they smash it up so that they cannot be rebuilt. They are allowed that credit.

Mr. BALLINGER. How much credit?

Mr. BOULTON. $1.35. The actual junk value of that old unit as a piece of iron is about 30 cents at the most-somewhere between 20 and 30 cents.

You take a Chevrolet carburetor-$13.60 exchange; but, if you do not have an old unit when you buy a new one, they charge you $2 additional and hope you do not bring the old unit back, because all they have to do is destroy them.

Mr. BALLINGER. What is the price of a rebuilt unit?

Mr. BOULTON. These are the exchange units. These are new rebuilt units.

We will take the first number of the shock absorber that sells for $13.60. It retails to the trade as a rebuilt unit at $9.50. On the Buick the same price. We make no difference between them because our operation is the same.

Mr. BALLINGER. Any difference in durability between the rebuilt unit and the new unit?

Mr. BOULTON. None whatever. We give the same guaranty as a new parts guaranty; in fact, we do a little bit better. We will treat the trade a little bit better than the manufacturer does on a new unit. Mr. BALLINGER. HOW?

Mr. BOULTON. In cases where it is definitely a fault of the unit, we will allow the labor or partial labor in replacing it. The manufacturers will not do that.

Mr. BALLINGER. What are the companies engaged in breaking up units?

Mr. BOULTON. General Motors are the worst offenders, and the Carter Carburetor Co.

Mr. BALLINGER. What parts are broken up? Give a list of the important automobile parts that are being smashed up when they come back.

Mr. BOULTON. The different kind of units?

Mr. BALLINGER. Yes, in an automobile, that are being taken off the market.

Mr. BOULTON. In this particular case, we have shock absorbers, generators, starters, clutches, and carburetors, and windshield-wiper motors. There may be some others.

Mr. BALLINGER. You single out General Motors as the only large car manufacturer engaged in this practice?

Mr. BOULTON. They have made

Mr. BALLINGER. The others have not engaged in it?

Mr. BOULTON. No.

Mr. BALLINGER. How about Ford and Chrysler?

Mr. BOULTON. No. I have never heard of it if they have. You know, they recommend the rebuilding by their own dealers, or have their own particular set-up.

That is another angle I want to get to. I want to get to the generator situation, which is rather vicious at the present time, because generators are something which are extremely critical at this time. You cannot buy them at any price, new or old. They make a $6.60 allowance, exchange, not allowance; they allow the dealer $6.08 for that unit if he breaks it up with a hammer so it cannot be rebuilt.

Mr. BALLINGER. Carburetors are scarce at the present time?

Mr. BOULTON. Carburetors are not so scarce at the present time, but they are still somewhat scarce.

Mr. BALLINGER. Are there any other products which are being broken up?

Mr. BOULTON. Nothing, only the electrical units.

Mr. BALLINGER. What electrical units?

Mr. BOULTON. Generators and starters.

Mr. BALLINGER. Generators and starters are in short supply at the present moment?

Mr. BOULTON. Yes, sir.

Mr. BALLINGER. They are being broken up?

Mr. BOULTON. That is right.

Mr. BALLINGER. How do you know these things to be true?

Mr. BOULTON. Because we try to buy the old units for the purpose of rebuilding and servicing the trade with. You cannot buy them.

Mr. BALLINGER. In other words, you will go around to the car dealers?

Mr. BOULTON. We have men that do that; yes, sir.

Mr. BALLINGER. They report that they cannot sell them to you because they are going to break them up?

Mr. BOULTON. That is right.

Mr. BALLINGER. You have heard that from a number of parties, a number of car dealers?

Mr. BOULTON. Quite a lot of them. I had it direct from one customer of ours, and an account of ours who happens to be in the jobbing business as well as the car-dealer business. He told me he would swipe those out and ship them to me. Instead of breaking them up and letting General Motors give credit for it, if I would allow him the same credit, he would ship it to me instead of breaking it up. During the war, for your information

Mr. BALLINGER. One more question.

This gentleman you are discribing was willing to ship it to you?
Mr. BOULTON. Yes, sir.

Mr. BALLINGER. Do any of them say they are compelled to ship it back and if they did not they would get into trouble?

Mr. BOULTON. No; they just would not be allowed credit.

Mr. BALLINGER. They would not be allowed credit?

Mr. BOULTON. They don't ship it back. The fieldmen, as I understand it, will break it up before him and he makes out a sheet and signs it, then they send it to the junk man.

Mr. BALLINGER. With the difference that exists between the prices of rebuilt and new units, you could bid above him in price and get them, could you not?

Mr. BOULTON. That is right. You know the situation arises here, too, that I might describe. They come up a time or two and if this dealer does not turn in these parts, a representative number of these parts, why, he does not get too many automobiles.

Mr. BALLINGER. That is what I am coming around to.

Mr. BOULTON. That is what they tell me. Understand, I cannot verify that.

Mr. BALLINGER. That is why I am trying to get in testimony from you as to whether they feel they are under compulsion to return the parts.

Mr. BOULTON. Yes. Two or three of them have told me that recently.

Mr. BALLINGER. Go ahead.

Mr. BOULTON. During the war, of course, both the car manufacturer as well as the parts manufacturer were very much interested in rebuilders such as I, because we were the ones who kept the automobiles running for them if we could get parts. They could not furnish new parts. So, naturally, we expanded our business very fast. Since they are able to furnish new parts again, they are using various methods to try to hurt our business, which makes a good fight out of it.

The other point I wanted to bring up, you brought it out altogether that the dealer, if he does not turn in a reasonable amount of these parts, he is penalized. That is what they tell me.

Mr. BALLINGER. No further questions.

Mr. STEVENSON. How does that procedure affect the owner of the car, the man buying the parts, the consumer?

Mr. BOULTON. You take a rebuilt unit that the rebuilder guarantees to give new part service to, it sells from 50 to in some cases, in critical items where the parts are extremely high, as high as 85 percent of the value of the new one. If he can buy a rebuilt unit for from 50 to 85 percent of the value of the new one, he is being penalized by the destruction of the old units, where we cannot get enough of them to supply the demand. Not only that, but it runs the value of the whole units up. An old unit that we formerly paid 50 cents for, that had a good junk value, is now up to 5 or 6 dollars in order to get a unit that we can rebuild and service the trade with. Their market value will go up on it in comparison with the investment value of that unit. If it was not for that, we could sell several units for a great deal less money.

Mr. STEVENSON. That is the old theory of Henry Wallace of plowing all of the pigs underground, so the price will be high.

Mr. BOULTON. Yes.

Mr. STEVENSON. The capitalists are now destroying parts of automobiles to bring the price up?

Mr. BOULTON. That is right.

Mr. STEVENSON. That is all I have.

Mr. FORISTEL. You did not finish your list of units which you sell as used parts. What are the prices of the other units?

Mr. BOULTON. Take a carburetor, for instance, that sells for $13.60, we sell for $8. That is the consumer's price-$8.

Take a generator that sells for $23.30, we sell it for $17.50, that is, the consumer's price is $17.50.

A windshield-wiper motor sells for $4.50. There is a varied scale on them.

Take shock absorbers. Our market is $7.50 to $10.50, whereas the retail market on the new unit is from $9.50 to $35.

The same is true of generators. The price on generators varies, understand, due to the different types of assembly. I gave you an example of Chevrolet or Ford charges, approximately the same.

Mr. FORISTEL. No further questions.

Mr. STEVENSON. It looks like the ultimate consumer here is the one who is getting the beating again.

Mr. BOULTON. There are two of us-the rebuilder and the ultimate consumer. We take a beating because they have run the value on that old unit up. By breaking up the good ones, they have run the value up to where we have to charge more for it on the consumer, so we do not make any more profit on it, but the consumer has to pay for it. Mr. BALLINGER. The over-all effect is increased prices to the consumer and a lower buying power?

Mr. BOULTON. Definitely; yes, sir.

Mr. STEVENSON. We are learning today some causes of inflation that have not been brought out before the public before.

Mr. BOULTON. Yes; we can see some of them already.

Mr. STEVENSON. We thank you.

(Witness excused.)