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1. Pro: By use of the Sherman Antitrust Act the Justice Department can stop manufacturers from operating retail stores when operation of these stores promotes monopoly. Justice used this law in this manner in 1920 against the giant meat packers; the meat packers were stopped from setting up their butcher shops, haven't been able to do so since. Justice is now trying to get the movie makers out of the theater field. It can do the same in other industries.

2. Pro: By use of the Sherman and Clayton Antitrust Acts the Justice Department can stop manufacturers from forcing their dealers to buy only certain products (usually their full line, or items approved by them). Recently the Los Angeles Federal District Court upheld a Justice suit against Standard Oil of California on these grounds. Justice can do the same in other fields where conditions are similar.

3. Pro: As explained in Washington and Small Business Newsletter, the Federal Trade Commission can use the Clayton Act to fix and revise maximum discounts in an industry where current discounts favor a few giant buyers and kill off independents. This condition of unfair price advantage now exists in many industries where giant buyers are able to blackjack special price concessions from manufacturers and to undersell independents thereby.

1-2-3. Con: We need less, not more, Government interference in business. Over the years private business has shown itself well able to care for its problems. Federal Trade Commission and Justice Department actions like the above serve to protect "weak sisters" in a trade, serve only to place an umbrella over inefficiency. Bureaucrats shouldn't be permitted to decide what is, what is not, good for business.

4. The question here is, Is it fair for a manufacturer to pay transportation charges on deliveries to some of his customers and at the same time refuse to pay transportation charges on deliveries to others of his customers?

5. The question here is, Should manufacturers be permitted to get together and agree to use a system of paying transportation charges in order to fix prices in all markets in the Nation? In the Cement case, the Federal Trade Commission found that cement makers had decided to outlaw competition in the industry, that to implement this agreement they further agreed to absorb transportation charges in such manner as to fix prices in every market in the Nation.

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WASHINGTON AND SMALL BUSINESS

(By Federation Staff)

How Your Federation Works for You

To give you an idea of what your federation is doing for you in Washington and of the tremendous amount of effort necessary to overcome difficulties, the following history of just one of our current Washington efforts is given.

Directly action in this case stands to benefit tire men. Indirectly it stands to benefit all independent businessmen in all fields. We say this because success in the matter will establish the Federal Trade Commission's power to fix maximum discounts, under the Robinson-Patman amendment to Clayton Act, section 2a, to all buyers in any industry where prevailing discount practices are favoring giant firms and killing off the smaller men. Let's take a look.

For long, tire independents have complained that they have not been able to get the special, extremely low buying prices given by certain manufacturers to certain giant outlets and through their own retail stores (or direct) to the consumer. Tire independents have, therefore, steadily lost ground to the chains, mass distributors, manufacturer-owned store, giant oil firms, and others. Look around. You'll find countless other independents in other lines of business in the very same boat, and for much the same reasons.

Unlike independents in other fields, tire men had waged a long, vigorous fight in Congress and Government for action to preserve their rights as businessmen to a fair chance to succeed. Much information on their problems was available in Washington when the Eightieth Congress met, January of 1947. Your federation recognized the opportunities offered in the situation; then and there decided to take special interest in the matter. A victory in this case was bound to have tremendous significance for all independents; if unfair discount practices could be stopped through section 2a in this field, it followed that a pattern would be set for similar action in other fields.

First problem was to secure reestablishment of the House Small Business Committee. This group was very familiar with tire-dealer problems, much interested in helping these merchants. But the Congress itself was not too eager to reestablish the committee. Consequently your federation, together with tire independents led by its Washington representative, George Burger, went to bat. They actively lobbied for the committee. In this they were alone. The committee was reestablished.

One of the committee's first moves was to call on Mr. Burger to help it bring tire information up to date. With the close cooperation of your federation Mr. Burger collaborated with the committee. Within a month the study was complete. Committee chairman Representative Walter C. Ploeser announced that his group was faced with the choice of two possible alternatives-first, that of seeking special remedial legislation from Congress; second, that of demanding full enforcement of existing antitrust laws in the tire field. The decision was for antitrust law enforcement. This decision was in line with repeated federation membership mandate votes.

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Your federation continued its close cooperation with the committee. On July 11, speaking for the federation and for his own tire men, Mr. Burger called on Congress to order the Federal Trade Commission to try use of Clayton Act, seetion 2a. This part of antitrust law says: * The Federal Trade Commission may, after due investigation and hearing to all interested parties, fix and establish quantity limits, and revise the same as it finds necessary, as to particular commodities or classes of commodities, where it finds that available purchasers in greater quantities are so few as to render differentials on account thereof unjustly discriminatory or promotive of monopoly in any line of commerce This section of the Clayton Act became effective when Congress made the Robinson-Patman Act law in 1936, but it had never once been enforced. On July 17 Mr. Burger, speaking for Federation President C. Wilson Harder before the congressional Joint Committee of the Economic Report, at Washington, D. C. (your federation was honored by being the only small business organization invited to appear, and by being one of the 25 select organizations testifying before the group), repeated the earlier call for congressional orders on the Federal Trade Commission to use section 2a. This time, however, he asked the Congress to make a special appropriation of $250,000 for use by the Commission exclusively on section 2a cases for the benefit of all independents being hurt by monopolistic, unfair pricing practices.

On July 20 the Federal Trade Commission announced through the House Small Business Committee that it had agreed to see what could be done to eliminate price discriminations in the tire field under section 2a. On August 15 the Commission commenced work.

Your federation maintained close contacts on all phases of this case. Soon it found that the case was dragging because lack of funds were keeping the Commission from putting enough people permanently on the job. With this information, your federation appeared before the Independent Offices Subcommittee of the House Appropriations Committee, January 19, 1948, to ask that Congress give the Commission the funds it needed. Congress appropriated the needed funds. Interesting to note is fact that congressional action on this matter was in line with repeated federation membership mandate voting.

The Commission got underway again. Soon it issued special calls on the Big Four tire makers for more information on their pricing policies. The Big Four balked, threatened to fight the matter through the courts. The Commission fought back. Your federation supported the Commission. The Big Four surrendered, came through with the information.

Just recently, the Commission circularized all tire independents for information. Your federation's Washington representative counseled with the agency in the preparatory stages of this move. He helped the Commission get into contact with tire men over the Nation. Now the Commission is compiling and analyzing the information obtained. Soon it may be in a position to take definitive action on the case.

Your federation does not take all credit for this hopeful development. Through the whole matter it has worked closely with both the House Small Business Committee and the Federal Trade Commission. Without the active, sincere interest of both the committee and the Commission nothing would have been accomplished. But the fact remains that your federation has contributed tremendously to this, and that its assistance in the matter has been invaluable. For this statement we have testimony from the House Small Business Committee and the Federal Trade Commission themselves.

During the life of your federation there have been more major antitrust case prosecutions in defense of small, independent business than at any other time in history. Your federation does not say that it alone has been responsible for this development. However, it is significant that as your federation grows larger and its operations broaden, and as its program gets wider recognition, concern over small, independent business is getting greater, and more action is being taken. You judge for yourself.

In a recent broadcast, federation Vice President Ed Wimmer made a very important distinction when he said: "The Socialists and Communists always condemn monopoly in virtually the same terms employed by the true liberal who loves social, economic, and political freedom as laid down in our Constitution and Bill of Rights, but the Socialist and Communist, unlike the true liberal, wants to nationalize-take over, the monopolistic enterprise the bigger the monopoly the easier his job."

Mr. BURGER. At the same time I would ask permission of the chairman to insert in the record a copy of a message recently sent to the President of the United States for his consideration as to present high executives in the Federal Trade Commission or any other that may be appointed by the President and confirmed by the Congress for their attention and consideration. I ask that permission.

Mr. RIEHLMAN. Without objection, it will be inserted in the record. (The message to the President referred to is as follows:)

[From the Cincinnati Enquirer, Sunday, November 7, 1948]

ALONG BUSINESS FRONT-SMALL-BUSINESS GROUP SEEKS TRUMAN STAND ON ENFORCEMENT OF ANTITRUST MEASURES

The National Federation of Small Business, Inc., yesterday called upon President Truman to define his attitude on the enforcement of antitrust laws for the protection of small business in a telegram dispatched from the closing session of a 3-day annual meeting of the group's division managers at the Terrace Plaza. The telegram, signed by C. Wilson Harder, president, read:

"No candidate for appointment as a Federal Trade Commissioner should be considered for the job unless he states in writing to the President of the United States, and the confirming committee of the Senate that, without qualification or mental reservation, he stands for full, complete, vigorous, and impartial administration and enforcement of all the laws entrusted to the Federal Trade Commission by the Congress for administration and enforcement.

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"Further, no present Federal Trade Commissioners should be permitted to hold their office unless they are willing to submit a declaration in writing to the President as to whether he, without qualification or mental reservation, is for the full, complete, and impartial enforcement of laws committed by the Congress to the Commission for enforcement, and can satisfactorily show that they have been and are now performing their job in accordance with such declaration. "Due to the declaration of both political parties in the recent campaign, for allout vigorous antitrust enforcement program * I am requested by the director in charge of the Washington office and the vice president in charge of public-relations program during this annual division managers' meeting to wire this message to you and ask for your cooperation so that we in turn can notify small business of this Nation the attitude of the present and the new administration on this major subject. May I look to hear from you? Thanks." Mr. BURGER. In this statement, it is our hope that our statement will not be considered our personal views and opinion, but, on the other hand, we honestly believe the views and opinions are not alone those of the members of the National Federation of Small Business, but also the views of all far-seeing efficient small business of the Nation, and by Congress paying heed to these timely warnings, and adopting such a policy, we believe there will be a future for small business of this Nation, and through this the Nation will prosper, the public will profit and, believe it or not, good big business will also gain, and finally, the youth of this Nation will know that they will not end up as a nation of employees.

Mr. RIEHLMAN. Any questions, Mr. Ballinger?

Mr. BALLINGER. I was going to ask Mr. Burger one question. Mr. Burger, you would prefer criminal penalties first, is that it? Mr. BURGER. By all means.

Mr. BALLINGER. Well, I mean, you are somewhat acquainted with the intricacies of basing point systems, and so forth. If you had criminal penalties, you would have to try those before ordinary laymen who would not be particularly versed in the intricacies of such problems, and therefore, probably your chances of conviction would be reduced.

Mr. BURGER. To answer the question, if we are going to get respect for the antitrust laws, as we see it, it is in the minds of the people we visit and talk with, they are all of the same opinion that fines mean nothing. So to get respect for the law by all, even at the low or high level, it would be the thought of the federation or its members, as the first recommendation, jail sentences. If the Congress would not go for that, then we would be satisfied with the second recommendation. Mr. PATMAN. Mr. Chairman, I have known Mr. Burger almost 20 years. I have known him to be a real true, sincere, genuine friend of the small business, and especially independent business; and I think we can well afford to give very careful consideration to his views, because I know he is on the side of independent business and against monopoly, and he has consistently talked that way for all of these years that I have known him.

I think the National Federation of Small Business is fortunate in having a man like him to represent them.

We do not have too many genuine friends of small business in the country. I mean, we have organizations, we have a lot of frontsat one time I made a little investigation of the different organizations that claimed to represent small business, and I was surprised to learn how few of them could really be expected to do what they claimed that they were doing. They were just false fronts for big business. We had one, known as the Cornstalk Brigade, organize the farmers in the Middle West, and propagandize the Congress to do things against the farmers. They were used as fronts.

So it is always refreshing to have people that we know to be true and genuine friends of small business appear before our committee. I will certainly give consideration to what you say, Mr. Burger. Mr. BURGER. Thank you, Mr. Patman.

Mr. RIEHLMAN. Any other questions?

I agree to a great extent with what Mr. Patman has had to say in respect to Mr. Burger. I have only known him for the last 2 years, but I know that he is a true friend of small business.

Mr. BURGER. Thank you very much.

Mr. BALLINGER. Mr. Lyle Jones.

STATEMENT OF LYLE W. JONES, DIRECTOR OF THE WASHINGTON OFFICE OF THE NATIONAL SMALL-BUSINESS MEN'S ASSOCIATION, WASHINGTON, D. C.

Mr. BALLINGER. Give your full name to the reporter.

Mr. JONES. Lyle W. Jones. I am the director of the Washington office of the National Small-Business Men's Association, 1737 DeSales Street NW., Washington, D. C.

Mr. BALLINGER. You have statement you wish to make?

Mr. JONES. I would like to say, Mr. Chairman, that Mr. Emery would like to have been here today, but he is on tour with the Forrestal orientation committee, and so I am, with your permission, going to read a statement that he made before the Capehart committee a few days ago.

Mr. RIEHLMAN. That is the statement by Mr. DeWitt Emery?
Mr. JONES. That is right. [Reading:]

Whenever some national matter comes up which we have reason to believe is of interest to our members, we check with them to find out how many are affected, in what way and what, if anything, they think should be done. Sometimes we don't check the whole membership that's a rather expensive proposition-but rather a representative sample of that portion which we believe is particularly affected. We divide our membership into four main classifications: Manufacturers, wholesalers, retailers, and service companies.

We felt sure that most of our members, particularly manufacturers and wholesalers, would be affected directly or indirectly by the Supreme Court decision on basing point pricing and in order to find out, we mailed the following letter on August 19 to the first 1,500 manufacturers and the first 1,000 wholesalers on our membership list:

"Recently a number of our members have written to us about the Supreme Court decision which knocks out the basing point method of quoting prices. However, the members we have heard from on this do not represent a large enough cross section of our membership to justify our deciding on a course of action, hence this letter to ask you to give me your views on this very important matter.

"I'd like to know particularly whether or not your company is affected, directly or indirectly, by this decision, and if so, in what way. Whatever information you give me will be held in confidence and will not be used except perhaps as part of a recap with which neither you nor your company will be identified in any way.

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