protection on prices, turn to merger. The big get bigger. The small get smaller, to the vanishing point.

And in the long run, the bigger the big get, the greater the need for Government control. This is not because bigness is bad. It is because bigness is powerful. Big power, economic or other, simply has to be controlled to protect the public welfare. And the more Government control, the more the American free enterprise system must yield, in one form or another, to the techniques of a controlled economy and of economic regimentation, always the inevitable forerunners of other aspects of statism.

If the objectives of the Harris bill are so sound and if the evils at which it is aimed are so dangerous, why the hue and cry in opposition? While the answer to that question is complex, it is clear. It will emerge from a little quiet, careful analysis.

Part of the opposition comes, of course, from the small segment of business interests which profit by bait and leader practices. Directly, as well as through propaganda fronts, they create a self-serving clamor by charging price fixing and consumer gouging. As to those who thrive on bait and leader practices, the less attention paid to the tumult and cry they raise and instigate, the sooner the truth will be reached.

When we analyze down to the bare bones the demands of the bait and leader practitioners, we find that they themselves insist upon the right to fix prices without restraint, unconscionably low prices on standard trademarked, well-advertised products and unconscionably high prices on unbranded or unknown goods.

There is another powerful source of opposition to accomplishment of the objectives of the Harris bill. For reasons that are obscure, I do not say invidious, it appears that many magazine and newspaper publishers editorialize against resale price maintenance. I have never been able to understand this. I still do not. I have yet to see any cutting of the newsstand price of any well-known magazine or newspaper. I suspect, and think you will agree, that any news vendor who undertook to make a practice of selling any nationally known magazine or newspaper at less than the price printed on its cover would soon be out of the business of handling it. You will agree, too, I am confident, that neither the elimination of such price cutting nor effective reformation would be challenged by Government agencies.

Opposition to accomplishment of the objectives of H. R. 10527 has been traditional on the part of the Antitrust Division and most of the members of the Federal Trade Commission. There can be no question of the integrity of this opposition nor its underlying good faith. But the wisdom of the opposition must stand or fall on facts. I am inclined to believe that the opposition of these Government agencies stems in part from traditionalism and in part from habitual, but erroneous, equation of voluntary price maintenance on trademarked commodities with completely different forms of price fixing, which do damage the free enterprise system. I shall have more to say about the latter in a moment.

There is a current of strong opposition to the fair trade idea among economic experts and teachers. That opposition is highly vocal, but by no means unanimous.

The views of the experts who attack voluntary resale price maintenance on trademarked products must be evaluated in the light of economic reality, not ivory tower theory. Upon that evaluation, they have one point on which they are absolutely right. They tell us, and it is true, that if a manufacturer of a trademarked product is permitted to establish a standard resale price and that if he does so, the retailer whose cost of doing business may be lower than that of some of his competitors cannot pass the savings on to the consumer as to that particular product.

That is true. Nothing is gained by denying it. But it is not the complete truth. It is also and equally true that the economic havoc and ruin I have described is the direct result of bait and leader practices. It is also and equally true that there is no effective protection against bait and leader practices except along the lines of the remedies provided by H. R. 10527.

It is incidentally true, it seems to me, that there is nothing basically wrong nor economically unsound in permitting the more efficient retailer, to a degree at least, to make more profit than the inefficient. Greater profit is hardly an inappropriate reward, in our free enterprise system, for greater efficiency or service or know-how.

But whether or not there be agreement upon that, I submit that, in any case, the lesser public good must yield to the greater. The adverse social and economic consequences of bait and leader practices completely outweigh any disadvantage in permitting voluntary resale price maintenance on competitive trademarked products.

But this is not the only answer to the argument of the economic experts and teachers who attack the principles underlying H. R. 10527. I have already pointed out that precisely the same market result is achieved by large chain retailers with respect to the goods they sell. I know of no statutory law either guaranteeing their efficiency or requiring them to pass savings on to consumers. And I am far from convinced, having seen many examples of incredible waste in big business operations, that low operating costs are the exclusive product of large scale operations, whether in retailing or manufacturing.

I have pointed out, too, that resale price maintenance is obtained by the industrial giants among manufacturers through establishment of their own retail outlets or through the device of consignment. Therefore, in addition to the social gain which flows from permitting resale price maintenance on trademarked products as the only effective remedy against bait and leader practices, it has also the social gain of equalizing competitive opportunity on the part of smaller independent manufacturers and retailers.

The clinching answer to the contentions of the economic experts who oppose the objectives of the bill before us goes yet deeper. It lies in the fact that the important competition, the competition which in the end really protects the consumer, is competition between manufacturers.

It must never be overlooked that measures such as the Harris bill do not require the American Clock Co. or any other manufacturer to establish any price whatever. It is up to each manufacturer to decide whether or not he wants to take the risk of establishing a resale price on goods identified by his own trademark.

If he elects to take the risk, he must reckon with competition. This is because he cannot avail himself of the rights offered unless there is competition. If the resale price established is too high, competitors will take business away from him; if it is too low, he will face bankruptcy. The Harris bill does not undertake to repeal the law of supply and demand nor the necessity of reckoning with competition.

Under the safeguards of these measures, if the American Clock Co. voluntarily undertakes to establish a price of $10 on its electric clock, it can do so only in the face of competition. The existence of fair and open competition is an express requirement for the right to exercise the privilege. If the American Clock Co.'s $10 price is uneconomic because it is based upon excessively high production or distribution costs or for any other reason, one or more competing manufacturers will rush in to provide an equally good product at a lower price.

I repeat, for emphasis, that the measure before us denies the privilege of voluntary resale price maintenance to any trademark owner unless, in exercising it he is willing to face the relentless, constant pressure of effective competition.

Underlying most of the opposition to accomplishment of the objectives of H. R. 10527 is a most unfortunate misconception which attends the term "price fixing." The phrase is psychologically odious. But we must be guided by reason, not by epithet or emotion.

The plain fact is that there is always price fixing in any economy. Some types of price fixing are bad. But that does not make all price fixing bad. Indeed, there can be no sale or purchase of anything unless a price is fixed. Every seller has to fix a price at which he will sell; otherwise there can be no trade.

The price fixing which is bad, antisocial, and uneconomic is price fixing by combinations. If competing manufacturers get together to fix prices on their competing products, then you have destruction of competition. Then you have a beginning of monopoly, if, indeed, not monopoly itself.

Nothing of this sort is involved, permitted, tolerated, encouraged, or condoned by H. R. 10527. The opposite is true. Price fixing by combination or on monopoly products is expressly prohibited.

It is not my function here to dwell upon technical, legal points in the particular phraseology or details of H. R. 10527. Its direction is sound, healthy, and good. So is its substance. Moreover, this committee has its own counsel upon whose functions I would not trespass. Merely by way of the most tentative suggestion, offered to evoke consideration, criticism, and improvement, I attach, marked appendix 1, the rough draft of a measure which it is hoped may suggest useful lines of a somewhat modified approach to accomplishment of the important goals of H. R. 10527. In this connection, I would underscore the tentative character of the draft and that my purpose in offering it is for no more than exploratory consideration.

Truth is not tarnished by the passage of time. The evils against which H. R. 10527 is aimed are neither new nor novel. Nor, in my opinion, is there anything very new or novel in any current exposition and analysis of these evils, particularly in the thoughts you have been kind enough to permit me to bring to your attention.

The most effective articulation of the whole problem still remains, in my view, that made many years ago by Louis D. Brandeis. His views and those of his esteemed colleague, Justice Oliver Wendell Holmes coincided. In 1913, prior to his ascending the Bench of the United States Supreme Court, Mr. Brandeis wrote an article whose truths are as sound today as they were nearly half a century ago. Reading them, I think you will revere him as a true prophet. For the convenience of the members of the committee, there is attached as appendix 2 extensive quotation from the article in Harper's Weekly to which I have referred.

In conclusion, having in mind that the end objective of H. R. 10527 is to provide independent manufacturers with a means of protecting their good names as symbolized by their trademarks against injury, suggest that Shakespeare put the whole thing in a very few words: *** he that filches from me my good name Robs me of that which not enriches him,

And makes me poor indeed.

Now, with respect to Mr. Gwynne and the Federal Trade Commission, for whom I have the highest regard, I think it not unfair to state that his views about this measure were, if I may say so, a little confused. I would like to set the record straight at once.

Mr. MACK. Mr. Weigel, I appreciate that you have rebuttal to make to the statement of the chairman, and I will permit you to do so. But we are limited on time this morning, and I hope that you will not consume too much time.

Mr. WEIGEL. I certainly will not. And if I do, Mr. Chairman, if you but hold up your hand, I will leave in the middle of a sentence if

necessary.

It is a very simple thing. The Harris bill is somewhat long, but its first sections are concerned with shoring up the McGuire Act in aid of the State fair-trade legislation. Its succeeding sections introduce a new note into the law if enacted. They bring into play two powers of the Congress. One of them is the power over interstate. commerce. The other is the power that Congress has with respect, in a sense, to trademarks and their protection.

The idea of the second section of the law is that if an independent producer of trademarked commodities gives notice that those commodities are to be resold, either at wholesale or retail or both, at a designated price determined by the owner of the trademark alone, then the power of Congress is brought into play.

I would like at this time briefly to answer a question that I think was put by Congressman Alger or Congressman Avery about States rights. I think it was Congressman Alger.

This law does fortify States rights, for this reason: Under the present law, if your State of Texas, Congressman Alger, had a fair trade act, which it does not, as you know, but if it should in the exercise of States rights want to have a fair trade law, that law could be nullified, in effect, as a result of Supreme Court decisions, by mailorder houses operating in the District of Columbia, for example, or in Missouri, and flooding your State with goods at bait and leader prices, defying State policy.

So this statute, if enacted, would shore up States rights in that

sense.

This

I think I will conclude, because there are so many witnesses, with trying to clear up some misconceptions about this term "price fixing." "Price fixing" has an odious sound. None of us likes it. But we have to be guided by reason and not by epithet or emotion. seems oversimple. It is overlooked so much. But you realize, every time you have a purchase or a sale, you have a price fixing. No seller sells without fixing a price at which he will sell, and no buyer buys without fixing the price at which he will buy.

You have still another type of price fixing. The most vocal opposition to this measure comes from those who want to use the trademark, not the commodity, to set what is the effective market price on commodities which they have no real interest in, at their own figures, because everyone knows that the lowest price, whether it be below cost, whether it yield a profit or not, becomes the fixed market price at the retail level or at the wholesale level.

Then, there is a third form of price fixing, which is the bad form that leads to monopoly. That is when competing manufacturers get together and on goods that should be in competition with each other, fix prices. This is unlawful, and this is not countenanced by H. R. 10527.

I have seen what has happened to small business-and my definition of "small business" would be a little more generous than the one that was made yesterday. In a retail area I would say that today you have a small business when you have a volume anywhere from a million dollars a year on down to $25,000, in the economy in which we live. And I would say that at the manufacturing level in these astronomical budgetary days, you have a small business when you have a volume of a hundred million or less, down to $25,000. That is my definition of a small, independent business. It includes the little fellows.

Mr. MACK. I would like to say that you are entitled to your opinion, but as I mentioned yesterday, it is all relative. The ones I was talking about would not be particularly the million-dollar businesses, what we refer to as millionaires, but it would be the ones who have a business investment of perhaps $25,000 to $100,000 with much of that borrowed. That is small business.

Mr. WEIGEL. Yes, sir. And that is the great foundation of the pyramid of our economy. I am including them and not neglecting them.

I think, Chairman Mack, that in a question you were asking of Chairman Gwynne of the Federal Trade Commission, you may have been getting at what I think is the important thing about this measure. If the great retail chains, having as many as a thousand stores, some of them, throughout the country, want to establish an absolute price that nobody can touch, in every one of these stores throughout the country, on their own private brands, they can do it. They do not need this law, they do not need Miller-Tydings, they do not need McGuire, they do not need the State fair trade act, so that they fix prices all over the country simultaneously at their own discretion every day, day in and day out. Now I am not talking about small business.

Another great group with large financial resources which day in and day out fixes prices all over the country and cannot be touched by the law is the manufacturer who operates his own retail outlets. You