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Statement of-Continued

McDevitt, Peggy, American Booksellers Association, Inc.
McEwen, Robert J., S. J., associate professor of economics, Boston
College.

Mermey, Maurice, director, Bureau of Education on Fair Trade-
Nellis, Joseph L., National Association of Consumer Organizations,
Inc....

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232

136

23

291

Pelly, Hon. Thomas M., a Representative in Congress from the State
of Washington..

12

355, 540, 571

Adams, Walter, letter from, transmitting articles from Yale Law
Journal

328

Association of American Railroads, statement of...
Bureau of Education on Fair Trade:

321

Bankruptcies in the United States, 1953 to 1957, inclusive,
table_

39

Letter from Maurice Mermey, director. -

47

Total retail bankruptcies in United States, 1953 and 1957, table__
California Pharmaceutical Association:

40

Excerpts from article by Louis D. Brandeis, from Harper's Weekly,
November 15, 1931

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Consumers' Federation of St. Louis and St. Louis County:

Are We Heading for a Federal Price-Fixing Law? from Consumer
Reports, May 1958--

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Consumers Information Bureau, letters from Thomas F. Hall, Jr.,

executive director__

Cooperative League of the U. S. A., letter from Wallace J. Campbell..
Dale System, Inc., statement of Addison H. Verrill, president_
Davis, O. L., letter from........

District of Columbia Pharmaceutical Association, Inc., letter from
Harold C. Kinner, executive secretary-.

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General Federation of Women's Clubs, letter from Mrs. R. I. C. Prout,
president_

662

Georgia Pharmaceutical Association, Inc., letter from Charles Hall
Evans, chairman, board of directors, transmitting resolution.-
Greenawalt's, letter from Earl C. Greenawalt, Sr., president_.
Haring, Albert, letter from__.

Herman, Edward S.: Free and Open Competition, from Stanford Law
Review, March 1957___

672

675

655

618

National Association of Retail Druggists, letter from Herman S.
Waller, transmitting statement__

589

Pharmaceutical Society of the State of New York, statement of

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FAIR TRADE

TUESDAY, APRIL 29, 1958

HOUSE OF REPRESENTATIVES,

COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE,

SUBCOMMITTEE ON FINANCE AND COMMERCE, Washington, D. C. The subcommittee met at 10 a. m., pursuant to notice, in room 1334, New House Office Building, Hon. Peter F. Mack, Jr. (chairman) presiding.

Mr. MACK. The committee will come to order.

These hearings have been scheduled this morning not because of any interest of private organizations, but because of the concern that Congress has had in regard to the problems of small business. When I say "small business" I am not talking about some giant corporation such as American Motors, which is considered as small business by today's standard; I am talking about the really small-business men. I would imagine that he could even be appropriately referred to today as the "country merchant."

In the last 50 years we have seen our economy grow. We have seen small business become big business; we have seen big business become bigger; and finally we have seen the unions organizing and growing to keep the big business under control or to at least permit the employees of the giant corporations to have some bargaining power so that they could improve their social standard, their living conditions, and bring that top level of our economy into balance.

We have the small merchants, small business, or as I referred to them and I think appropriately-the country merchants who operate in towns under 10,000 population without any true representation in the economy and without any legislation of any kind.

It gives them a break when they are competing with or perhaps caught in the squeeze between big business and big unions. I am hoping and I think that many members of this committee are hoping that we can enact some type of legislation which will be beneficial to this very important and wholesale segment of our economy. I do not know whether the proposed legislation would do the job. But that is the purpose of the hearings this morning. We are going to give everyone who is interested in any of the bills an opportunity to testify.

This morning we are going to start hearings on H. R. 10527, which was introduced by the chairman of this committee, the Honorable Oren Harris.

There are also several other bills: H. R. 10770, introduced by our colleague Mr. Tollefson; H. R. 10847, introduced by our colleague, Mr. Pelly; H. R. 11048, introduced by Mr. Miller of California;

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H. R. 11216, introduced by Mr. Friedel; and H. R. 11264 introduced by Mr. Macdonald.

The first of the 4 bills are identical, and the last 2 bills are identical and differ only slightly from the aforementioned bills.

All of these bills would amend the Federal Trade Commission Act so as to equalize rights in the distribution of identified merchandise. They are commonly referred to as fair-trade bills.

In the 82d Congress this committee reported favorably on H. R. 5767, which passed the House and Senate and became Public Law 542 of that Congress. This law is known as the McGuire Act, and it reaffirms the intent of Congress in the Miller-Tydings Act; that the application and enforcement of State fair-trade laws including the nonsigner provisions of such laws with regard to interstate transactions shall not constitute a violation of the Federal Trade Commission Act or the Sherman Act.

This reaffirmation was made necessary because of the decision of the United States Supreme Court in Schwegmann v. Calvert Distillers Corporation in 1951, in which the Court held that the MillerTydings Act did not exempt from these Federal laws the enforcement of State fair-trade laws with respect to nonsigners.

The McGuire Act makes it clear that the Congress meant to let State fair-trade laws apply to signers as well as nonsigners. The nonsigner clauses in the State laws require a retailer to maintain the price set by the manufacturer, even if the retailer did not sign an agreement do do so.

Since the enactment of the McGuire Act, a number of State supreme courts have declared the State fair-trade laws to be unconstitutional. The pending legislation is designed to overcome the difficulties brought about by the nullification of State fair-trade laws.

The purpose of H. R. 10527 and the other pending bills is to set up a Federal resale price maintenance system. This legislation would make it illegal for a distributor of trademarked or brand-named goods sold in commerce, which are in free and open competition with articles of the same general class produced by others, to sell, offer to sell, or advertise such goods below the stipulated or minimum resale prices established by the manufacturer if the manufacturer gives notice of such prices by mail, marking the goods, by advertising, or by other public notice.

A copy of these bills, together with the reports of the executive departments or agencies, will be made a part of the record at this point. (The bills referred to follow :)

[H. R. 10527, 85th Cong., 2d sess.]

A BILL To amend the Federal Trade Commission Act, as amended, so as to equalize rights in the distribution of identified merchandise

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That it is the purpose of this Act to recognize the legitimate interest of the manufacturer or wholesaler who identifies merchandise manufactured or distributed by him in stimulating demand for his identified merchandise through effective distribution to ultimate consumers; to equalize rights in the distribution of identified merchandise, by affording the small manufacturer or small wholesale distributor of identified merchandise in free and open competition with articles of the same general class produced by others an opportunity to compete on more nearly equal terms with the large manufacturer or distributor who can afford to control the distribution of his merchandise

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