Do you see the point? In other words, their cost of distribution is about the same.

Mr. BALLINGER. I think that is a good point; why do you not bring that up and raise it with the Federal Trade Commission?

Businessmen do not seem to know that the Federal Trade Commission exists to help them and to work for them. After you find it does exist, you will probably find it disappointing unless we can get some more funds all the time. You cannot tell what it will bring forth. That is what that agency was set up for, however; it was to look into these complaints.

Mr. DICK. We have the same problem.

That brings us back to a repetition of the problem we have in our paper situation. We are still confronted and face shortages. There is a critical shortage now in Tulsa. I do not know whether it exists here or not.

There is a critical shortage of butcher's paper. We have paid as much as 12.5 on up to 18 and 22 cents a pound for butcher paper. The higher it gets the worse it is in quality. That is all part of your problem, and an important problem.

And now, I am not trying to make the Northern Mills as the goat for this, but I am familiar with it in that I handled it all through the period I have been in the grocery business.

Prior to the war Northern tissue sold direct on a 50-case basis. Anyone who would buy 50 cases, and of course, now it is not possible to buy in that quantity. We are still confronted with other buyers buying Northern tissue on a direct basis, and they are underselling us. Northern tissue has cost me anywhere from 7 to 7.25 in recent months. At the time it was costing me 7.25

Mr. BALLINGER. For what?

Mr. DICK. A case. There are 100 rolls in a case. At the same time it was costing me 7.25 average and it was being retailed by other buyers at three for 19, which is six and a third, or $6.33 a case.

Now, I visited last evening one of the multiple buyers to see what the present price was on that same situation, that same tissue. They are now up to $7 a case retail, 7 cents a roll. But that brings us back again to facing the same problem.

Mr. STEVENSON. You could not buy under the OPA. You could not even get a roll of it.

Mr. DICK. You say continual correspondence is the way to bring about better proportions?

Mr. FORISTEL. Better proportions? You will find that your national organization has been very vigilant. It always brings to the attentions of the Commission these complaints.

Mr. BALLINGER. They need more appropriations. You can take advantage of the appropriations they have if you will tell them what is the matter. They cannot guess what is going on down in Tulsa, Okla. You have to let them know what is going on. They are supposed to act if they get information from you.

If at any time 10 or 15 members of your organization will send 10 or 15 letters to the FTC all based on the same point, I am confident something will be done about that. I say that from long experience with the Commission.

(Witness excused.)

TESTIMONY OF MRS. VERA CROFT, ON BEHALF OF THE TULSA RETAIL GROCERS' ASSOCIATION

(The witness was duly sworn.)

Mr. BALLINGER. Give your full name.
Mrs. CROFT. Mrs. Vera Croft.

Mr. BALLINGER. What business are you in?

Mrs. CROFT. I am executive secretary of the Tulsa Retail Grocers' Association.

If I may refer to this question you just asked Mr. Dick regarding direct selling, you seem to think that would save the consumer something.

I would like for you to consider that before a product could be accepted by the consumer, where the manufacturer could sell direct, someone must have done the ground work; that is done by the distributor.

Is it really fair, then, after he has established this and given it this consumer acceptance, that now they could sell direct, that that service should be eliminated, and the ground work to be done or planned for another product?

Is that not taking out one step in our American way of life and throwing other people out of employment?

Mr. BALLINGER. I thought the advertising was paid for by the advertiser, on national advertised brands, that is.

Mrs. CROFT. It is.

Mr. BALLINGER. That creates demand for the product, by their own advertising.

Mrs. CROFT. I would not be too sure of that. I would hate to depend on advertising alone without the help of your distributor.

Mr. BALLINGER. Certainly, it is an important factor.

Mrs. CROFT. I would not minimize the importance of advertising but it is a twofold thing. No more could they keep on going for an unlimited length of time without advertising than they could without the distributor. Why penalize the distributor who is working cooperatively and helping them do that, and start up with the new one at the time the advertising fails to fill the bill?

Mr. BALLINGER. There is another argument equally potent, and that is that under the system of distribution from wholesaler to retailer, the person who sells direct is kidding himself.

I remember back in 1938 one of the big chain stores that had been selling direct to their own stores gave it up and turned the matter over to the wholesalers and had the wholesalers contact their retail outlets, because they had lost money.

Mrs. CROFT. During this period of discovery is the period I am referring to. In that, of course, we are into a sort of era of trying to establish ourselves, maybe even change our way of merchandising. That can be disastrous in this part of the country.

I do not know about it in other parts of the country.

Mr. BALLINGER. The manufacturer is a specialist on manufacturing. When you have a wholesaler, he is a specialist on distribution. He is more sensitive to what the public wants. That is the reason the manufacturer and jobber perhaps should work together and figure out some sort of distribution system.

There is a lot to be said about the existing system.

Mrs. CROFT. It is like going to a friend and getting a purchase order and going around and buying something without someone getting a commission.

There is another thing I think the boys have covered. That is about cigarettes. You know, of course, we have a State tax on cigarettes. Every day or two in the mail we receive these notices that come from Missouri and Kansas soliciting our purchase of cigarettes at $1.50$1.47 to $1.50 a carton; while our grocers, whether in a filling station or drug store and anything else, they must sell their cigarettes for $2.05 a carton under our 6-percent law.

When these cigarettes are brought in we get competition. These men must pay a fee to sell these cigarettes. That really comes under a Federal law since these things are mailed into the State.

You can just watch the postman carrying in these big cartons of cigarettes. That is a bad situation.

Mr. STEVENSON. There was an attempt made to prohibit that in the Eightieth Congress, but it was voted down. There was an attempt to stop that practice. There was quite a bit of argument. I think you are on the right side of that case.

Mr. BALLINGER. You have to have a license to sell cigarettes here? Mrs. CROFT. Yes; it is $10 annually to sell cigarettes.

Mr. STEVENSON. They advertised over the radio and so on, "Ship these things in from other States," and they therefore get out of paying those taxes.

Mrs. CROFT. It is pretty bad for the man who wants to stay here and pay the tax, and maintain his store. Of course, I do not know the percentage that is trucked in, but when you see those things come through the United States mail, being delivered by the postman, and when you pay a $10 license in order to handle the cigarettes, it does not seem cricket, does it?

Mr. STEVENSON. It is not the fault of the mail.

Mrs. CROFT. I know; but where does the fault lie? Should we not terminate the $10 fee that is required? It looks like we are in sort of a competition.

Mr. STEVENSON. Then perhaps there should be some Federal law passed to stop that, or to put a Federal tax on these cigarettes that are shipped from one State to another to equalize that situaion. That was attempted during the past summer.

Mrs. CROFT. But nothing came of it?

Mr. STEVENSON. That is correct.

Mrs. CROFT. I thought I kept up on that.

Mr. FORISTEL. Your own Congressman, Mr. Schwabe, introduced the bill and tried to get it passed for you, but failed.

Mrs. CROFT. There is nothing about interstate commerce that would interfere with that?

That would not come under that?

Mr. STEVENSON. They can ship that through the mail in interstate commerce. There is nothing to stop that. But there could be a tax put on, as interstate commerce. I think all of the Oklahoma Representatives are in favor of that, Mike Monroney, Ross Rizley, and the rest of them.

Mrs. CROFT. Any questions? Mr. BALLINGER. No questions. (Witness excused.)

83019-49- -46

TESTIMONY OF P. A. DALE

(The witness was duly sworn.)

Mr. BALLINGER. State your name.

Mr. DALE. P. A. Dale.

Mr. BALLINGER. What is your business?

Mr. DALE. I am in the retail grocery business in Oklahoma City. Mr. BALLINGER. Where is your store located?

Mr. DALE. It is at Thirtieth and Walker, on the north side of the city. Mr. BALLINGER. Proceed.

Mr. DALE. Mr. Chairman, I have no complaint to make specifically, other than I would like to discuss with you the matter of the separation of the functions of multiple operations.

For instance, they maintain their own warehouses, their own buying organizations.

If you will pardon my referring to some notes here, I recently heard an independent jobber who supplied only independent grocery storesin other words, they are not affiliated with any buyers' group or advertising group-state that the costs of wholesaling by an independent jobber in Oklahoma were known to be around 10 or 11 percent average for them to make a little bit of money.

As I said before, those are the jobbers who service that corner grocery store, not the voluntary groups to which one might belong. They are able to do a business about 5 percent, plus maybe a little discount that they might get on milk or something like that, which is not passed along to us.

The multiple stores claim they operate their warehouses on about 2 percent. They are not taking into consideration they are performing other functions there such as planning and selling of the merchandise in their stores, advertising, and so forth; therefore, they are not charging anything to that.

We independent merchants wonder why those things are permitted when the packers have been ordered, or the Government or the Federal Trade Commission, as you say, has ordered the packers to discontinue packing canned fruits, or ordered them not to do anything else that is a violation, still these multiple groups can go ahead and operate their old warehouses as a wholesale unit, on only 2 percent; that is, they charge only 2 percent on it.

Mr. BALLINGER. Do you think they are transferring the profits of distribution to the retail front so as to lower the prices?

Mr. DALE. I did not get the question.

Mr. BALLINGER. You are sketching to the committee this problem of increases, where a man is a manufacturer, distributor, or retailer. Mr. DALE. That is right.

Mr. BALLINGER. He takes the profits from manufacturing which ought to be charged against manufacturing, and the profits from distribution which ought to be charged to distribution, and routes them to the retail front in the same subsidiary?

Mr. DALE. Yes.

Mr. BALLINGER. Enabling him to get prices to the point where an unintegrated merchant cannot compete; is that right?

Mr. DALE. Yes; that is right.

Mr. BALLINGER. Even a manufacturer could not compete.

Mr. DALE. Yes. We have had instances where they have controlled factories right here across the line in Arkansas, in the way of tomato canneries.

Mr. BALLINGER. Is it not a fact that the fact they do own such factories completely nullifies your Unfair Practice Act in this State? As I understand it, you have such an act here; do you not?

Mr. DALE. Yes.

Mr. BALLINGER. That is an act to prevent you from selling below

cost.

Mr. DALE. We require a 6 percent mark-up.

Mr. BALLINGER. At the retail level?

Mr. DALE. Yes.

Mr. BALLINGER. What mark-up at the wholesale level, do you know? Mr. DALE. Two percent.

Mr. BALLINGER. Two percent at the wholesale, six percent at retail. Mr. DALE. Yes.

Mr. BALLINGER. If a chain owns its own manufacturing subsidiaries across the State line, and then ships in here to the retail outlet, they can put any price they want on that merchandise. You can use the 6 percent mark-up if you want to, but their price will be way below the price you can meet.

Mr. DALE. That is right, sir.

Mr. BALLINGER. So that the effect of an organization owning its own subsidiaries is to make it impossible, practically, to enforce your State Unfair Practice Act?

Mr. DALE. Yes.

In the cooperative buyers' organizations we do a pretty fair job of meeting that competition, but we still cannot meet it, and make any money to speak of.

Mr. BALLINGER. Do you have many loss leaders down here in this territory?

Mr. DALE. We have not had too many loss leaders recently, due to the 6 percent mark-up, and due to the fact also that we have a very good retail grocers' organization which rather keeps under control the matter to the best of their ability. I think they have done a marvelous job along that line.

Mr. BALLINGER. That is all.

Mr. DALE. I thank you.

(Witness excused.)

TESTIMONY OF L. O. BOWMAN

(The witness was duly sworn.)

Mr. BALLINGER. Give your full name for the record, please.

Mr. BOWMAN. L. O. Bowman.

Mr. BALLINGER. Where do you live?

Mr. BOWMAN. 2508 Northwest Twenty-ninth, Oklahoma City, Okla. Mr. BALLINGER. What is your business?

Mr. BOWMAN. I am secretary-manager of the Oklahoma Retail Grocers' Association.

Mr. BALLINGER. You may proceed.

Mr. BOWMAN. I would like to make a few remarks about the Oklahoma Unfair Sales Act. I noted you gentlemen asked a few questions