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PARAGRAPH 423—BRUSHES.

TESTIMONY OF WILLIAM CORDES, TREASURER OF THE FLOR

ENCE MANUFACTURING CO., FLORENCE, MASS.

The witness was duly sworn by the chairman.

Mr. CORDES. Mr. Chairman and gentlemen of the committee, I have a brief that I have already presented to your honorable chairman, but have another copy if you prefer it. I would like to supplement it by a few brief remarks.

This afternoon in a statement that was made by Mr. Holton, representing some importers, regarding the brush industry, he referred specifically to my company on page 5 of his printed brief, in which he stated that we were shipping into Canada Prophylactic toothbrushes at a less price than we were selling them at in America. I simply wish to state that perhaps Mr. Holton made this statement with partial knowledge only. He says here that we sell the goods in America for $23.25 and in Canada for $21. He forgot, or perhaps he did not know it, that there is a discount from that $23.25 of $3.75. We get a net price of $19.50 in America, and we sell the few brushes which we export at the same price abroad.

Mr. HARRISON. Let me interrupt you a moment. Is not your rate, instead of being $23, as a matter of fact $27 per gross to the jobbers in this country?

Mr. CORDES. To jobbers, less 20 brushes that we give as a discount, and less 20 brushes that we give to the retailers as a discount.

Mr. HARRISON. Twenty-seven dollars per gross is the price of toothbrushes to the jobbers ?

Mr. CORDES. That is the price.

Mr. HARRISON. From that you deduct the bonus, which amounts to 20 brushes ?

Mr. CORDES. Yes, sir; or $3.75. Mr. HARRISON. Supposing that the jobber does not sign your selling agreement, does he get that bonus ?

Mr. CORDES. No, sir.

Mr. HARRISON. It is given only to the jobbers if they agree not to sell below a certain price?

Mr. CORDES. A minimum price.

Mr. HARRISON. So you have a selling agreement with all the jobbers to whom you sell

, and unless they agree to that they do not get the bonus of $3.75 ?

Mr. CORDES. Yes, sir.

Mr. HARRISON. So your price is $23.25 net to the good, wellbehaved jobber?

Mr. CORDES. Our jobbers all behave.
Mr. HARRISON. I judge they all sign the selling agreement.

Mr. Cordes. We have never been obliged to take anybody off that
list. We have never refused to sell anybody.
Mr. Harrison. You never blacklisted any of your jobbers ?
Mr. CORDES. No, sir.

Mr. FORDNEY. Even though they violated the agreement and sold below the minimum ?

Mr. CORDES. We have never had occasion, because they have never gone below the minimum,

PARAGRAPH 423—BRUSHES.

same.

Mr. FORDNEY. They have to be good or they can not get the goods ?
Mr. CORDES. No, sir; anybody gets the goods.
Mr. FORDNEY. Then why do you have that agreement ?
Mr. Cordes. To maintain the price. If a jobber does not sign the

CORDES agreement, he buys as a retailer, and the retail price is exactly the

Mr. FORDNEY. You do not help the jobber out very much, do you?

Mr. CORDES. He sells the goods at $27 a gross and gets a profit of 14 per cent.

Mr. FORDNEY. But you say you will sell to the retailer at the same price.

Mr. CORDES. Yes, sir.

Mr. FORDNEY. If they sell below a certain price, you do not discriminate, although you give them to understand you will if they do not live up to that agreement ?

Mr. CORDES. We simply speak to them.
Mr. FORDNEY. And they behave ?
Mr. CORDES. Yes, sir.
Mr. FORDNEY. The child learns his lesson and knows it well.

Mr. CORDES. We have never taken anybody off that list and never have refused to sell to anybody. I would not refuse to sell them under any circumstances. I do not think that would be fair.

Mr. FORDNEY. Why do you make the agreement?

Mr. CORDES. The agreement is simply to keep them from slashing the prices all to pieces.

Mr. FORDNEY. But if they do slash prices to pieces you will forgive them and kill the fatted calf ?

Mr. CORDES. They simply say, “We will not do it any more.”
Mr. FORDNEY. Oh, "We will be good now.”
Mr. CORDES. Yes, sir.

Mr. Hull. This kind of trade agreement does not exist in other lines of business, does it?

Mr. CORDES. I do not know, I am sure; perhaps it does.

Mr. FORDNEY. If any man in the manufacture of lumber or steel or cotton or wool should make an agreement of that kind, he would be before the Supreme Court in 15 minutes. Why are not you there? That is a violation of the Sherman antitrust law.

Mr. CORDES. If it is, I will stop it right off.

Mr. KITCHIN. He is not there because the Republican administration would not enforce the law against him. [Laughter.]

Mr. FORDNEY. We will wait and see what the Democrats do. I will watch that. [Laughter.]

Mr. CORDES. I do not think it is fair to make this a political matter. I want to be fair. If it is not right, I will fix it so that it will be right. I do not propose to violate any law. I never have violated any law.

Mr. FORDNEY. There has been case after case before the Supreme Court involving an agreement of that kind as being in violation of the Sherman antitrust law. Mr. CORDES. The matter has never been called to my attention in

In fact, I can not find an attorney that will interpret that in that way. I have had this matter before several attorneys, and they tell me we are entirely within the law.

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that way.

PARAGRAPH 423—BRUSHES. Mr. FORDNEY. The Tobacco Trust was punished for that very same thing, and the Rubber Trust—they have been after the Rubber Trust, but I do not know whether they got them.

Mr. CORDES. My understanding is that if you can prove that I am violating the Sherman Act or discriminating—but I am not discriminating

Mr. FORDNEY. My dear friend. I do not have to prove it, if you will admit you have an agreement of that kind. The Supreme Court has repeatedly decided that it is an agreement in restraint of trade and therefore is in violation of the Sherman antitrust law.

Mr. CORDES. Has that any relationship to the question of establishing the price of an article or the tariff on it?

Mr. FORDNEY. Your price that you give as a minimum price to the merchant or retail man has nothing to do with the tariff.

Mr. CORDES. That is simply a statement that I was trying to make. I could not see why Mr. Harrison asked the question, because all I was trying to show was that we get the same price here that we are getting elsewhere.

Mr. Harrison. Tc turn your thoughts to pleasanter paths—for we do not want to embarrass you, and do not desire to embarrass any person--I seriously asked the question about your prices here and in Canada for the reason that you have suggested that a witness this afternoon "s mistaken when he said that the prices to the jobbers were cheaper in Canada than in the United States on the prophylactic toothbrush. You have just testified that all the jobbers who were good—and you said they were all good-get your toothbrushes at $23.75 a gross. Is that correct?

Mr. CORDES. $23.25; yes, sir.

Mr. HARRISON. $23.25. At what price do you sell them per gross to jobbers in Canada?

Mr. CORDES. We sell the brushes in Canada at $27, I think the price is, and the duty brings the net somewhere in the neighborhood of $21.

Mr. HARRISON. Then $21 in Canada and $23.25 in the United States

Mr. CORDES (interposing). Mr. Harrison, on top of that we have to give the retailer 20 additional brushes; we carry a liability on our books, for every gross we send out, of an additional 20 brushes that the retailer gets, which is another reduction of $3.75.

Mr. HARRISON. The jobber in Canada does not get a discount, does he ?

Mr. CORDES. No, sir.

Mr. HARRISON. But your jobbers' price per gross in Canada is $21, counting out the duty ?

Mr. CORDES. Yes, sir.

Mr. HARRISON. And it is $23.25 to the good jobbers in the United States ?

Mr. CORDES. Yes. But what am I going to do with the other 20 brushes that I have charged against me a liability that go to the retailer? They are provided for and it is an additional discount. I do not get that in cash.

Mr. HARRISON. But I am not interested, for the purposes of this question, in your activities as a distributing agent; but as a manu

PARAGRAPH 423–BRUSHES. facturer it is a fact that your prophylactic brushes per gross are sold for $23.25 in the United States to jobbers ?

Mr. CORDES. Yes.
Mr. Harrison. And $21 per gross, duty off, to Canadian jobbers ?
Mr. CORDES. That is right.

Mr. HARRISON. Therefore the witness this afternoon seems to be well informed when he made that statement?

Mr. CORDES. I do not think he was wholly right. I sell them with that other handicap for which you do not give me credit.

Mr. HARRISON. I think in the further process of distribution I can see the point; but just as a manufacturer, selling to the jobber, and assuming that your activities end there, it is true that your price is less to the jobber in Canada than to the jobber in the United States.

Mr. CORDES. Your viewpoint and mine are wholly different. I do not see how it is, because I am başing my statement on the fact that I am not getting the money. I am only getting $19.50 per gross net here. That is all I am

getting. Mr. HARRISON. No; I think you started with $27 per gross as your price, and then the discount to the jobbers brought it down to $23.85?

Mr. CORDES. Yes.

Mr. HARRISON. For the purpose of discussing the attitude of the manufacturer toward the tariff, his price to the jobber is the only thing which we are warranted in taking into consideration. We have no right to assume the manufacturers are also their own selling agents and to pursue the brushes through to the retailer. Mr. CORDES. I do not think that is fair.

Mr. HARRISON. I am not trying you. This is not a court of law and I am not pronouncing judgment on you; but you questioned the accuracy of the statement of a witness, and I think you have yourself proven he was accurate in making the statement.

Mr. CORDES. So far as he went, but I want to have it accurate as to the rest of the proposition. I only get $19.50 a gross.

Mr. HARRISON. Have you a selling agreement with the retailers ?
Mr. CORDES. Yes.
Mr. HARRISON. And they get a discount if they are good ?
Mr. CORDES. Yes, sir.

Mr. HARRISON. And it is pretty ironclad arrangement you have, is it not?

Mr. CORDES. No; it maintains a minimum selling price of 25 cents, to which we were forced to come down in competition with foreign manufacturers. They made it impossible to sell the brush beyond that. Twenty-five cents is the retail price. We say to them, “If you do not sell at less than 25 cents, we have to stand for that other 20 brushes," and it makes the brushes net us $19.50 a gross, and you can not figure it any other way.

Mr. HAMMOND. Do I understand the brushes are worth $23.75 a gross?

Mr. CORDES. Yes, sir.

Mr. HAMMOND. And you sell to the American jobber for $27 and then you hand him $3.75 in brushes ?

Mr. CORDES. Yes, sir.

Mr. HAMMOND. You sell to the Canadian for $21, and you hand him 20 brushes ?

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PARAGRAPH 423-BRUSHES.

Mr. CORDES. No, sir.
Mr. HAMMOND. How do you get down to $19.50 ?

Mr. CORDES. Because we go to the retail dealer in the United States and hand him 20 brushes. I think that is very clear.

Mr. HARRISON. Do you give 20 brushes to your customers too? Mr. CORDES. Hardly.

Mr. HAMMOND. Then you turn back 20 brushes to the wholesaler and you turn to the wholesaler 20 more brushes for the retailer? Mr. CORDES. No; we send the brushes to the retailer himself.

He sends us a certificate found in every box of brushes, and when that certificate comes to us we send him the brushes for it. The jobber does not have anything to do with that distribution of the retailer's 20 brushes.

Mr. HAMMOND. That makes the $19.50 you really get out of these brushes sold in the United States ?

Mr. CORDES. Yes, sir.
Mr. HAMMOND. You sell the same brush for $21 in Canada?
Mr. CORDES. Yes, sir.
Mr. HAMMOND. Do you return any brushes to the Canadian jobber?
Mr. CORDES. What do you mean by returning them?

Mr. HAMMOND. Do you distribute these 20 brushes among the Canadian jobbers ?

Mr. CORDES. No; we do not.

Mr. HAMMOND. So there are no certificates in the boxes you sell in Canada?

Mr. CORDES. No, sir.

Mr. HAMMOND. Then, according to your statement, you get $19.50 for brushes sold in the United States and $21 in Canada?

Mr. CORDES. Yes, sir; that is right. That was what I was going to say. The gentleman said, “In the neighborhood of $20 or $21. I claim we sell them the same practically the world over.

Mr. Hull. I do not understand exactly about this trade agreement. Does this extend to other rival businesses here and elsewhere ! Do they maintain the minimum price?

Mr. ČORDES. What do you mean by other businesses ?

Mr. Hull. Other rival businesses. I understood you to say a moment

ago

that you were obliged to fix this on account of the action, I think you said, of the foreign trade.

Mr. Cordes. I say, fix the retail price.
Mr. HULL. Do they fix the retail price in other countries?

Mr. CORDES. I do not know about that. I do not think so. We have no jurisdiction over them, and do not try to have. In fact, we do not have any jurisdiction over any of them. If a retailer does not want to sign this agreement, and does not want to keep up the prices, he can do as he pleases. He can give the brushes away.

Mr. HULL. Do other concerns, engaged in the business of manufacturing, fix the same retail price?

Mr. CORDES. I think there are such in various lines; yes. • Mr. HULL. Does that extend generally over this country?

Mr. CORDES. I think so; yes, sir.

Mr. HULL. Is that through an understanding among you and other

Mr. CORDES. Absolutely not.

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