must compete, and that competition will bring prices down to reasonable levels. Under fair trade there will be such competition. The only purpose of the law is to cut down small-business mortality. mortality among competitive outlets, from the levels which would certainly otherwise be reached.

This, gentlemen, concludes our testimony on the fair-trade issue. On behalf of our organization we thank you for your attention. We s hope sincerely that we may have your support in this worthy objective. The CHAIRMAN. Thank you, George. We are very glad to have heard your testimony.

Mr. Henebry, you are going to be our last witness today. We had hoped we could get to you before the day was over. We understood you wanted to testify today.

STATEMENT OF LEO F. HENEBRY, PRESIDENT, AMERICAN NATIONAL RETAIL JEWELERS ASSOCIATION, ROANOKE, VA.

Mr. HENEBRY. Yes, sir, and I was anxious to get back home tonight. My name is Leo F. Henebry. I am the owner of Henebry's of Roanoke, Inc., Roanoke, Va., retail jewelers. I represent the American National Retail Jewelers Association, of which I am president.

The American National Retail Jewelers Association was organized in 1906 and represents more than 5,000 retail jewelers in the United States.

I hope the committee will not judge the interest of the retail jewelers of America by the length or brevity of my statement. I will simply put myself in the position of the visiting minisiter who, having asked how long he should speak, the pastor told him he could speak as long as he wanted, but just to remember that there were no souls saved after the first 20 minutes.

The CHAIRMAN. I wish that all witnesses would learn that little maxim.

Mr. HENEBRY. We wish to go on record with the Senate Committee on Interstate and Foreign Commerce to the effect that we are in favor of the basic merchandising principles which underlie the fair trade laws.

At their annual convention in August 1951, the members of the American National Retail Jewelers Association adopted the following statement regarding fair trade:

The American National Retail Jewelers Association has always believed in the basic merchandising principles which underlie the so-called fair trade laws. We have strongly felt that a manufacturer who builds quality and value into his product, who advertises such product to the consumer, and thus builds up a demand for it, is entitled to protection from the retailer who would attempt to turn this demand to his own advantage by unfair competitive means. At the same time, we have felt that the retailer should have protection from the manufacturer who, while paying lip service to fair trade, either deliberately or carelessly permits his product to be sold at cut prices. In the first case, the manufacturer is hurt because any offering of his product at less than the established price tends to lower the esteem in which it is held by consumers in general. In the second case, the retailer is hurt because the fact that someone also offers the product at a lower price than he does tends to make the consumer think that his prices on all items are too high. The loss-leader technique of merchandising is too well known by all of us to require further elucidation-it should suffice to point out that a fair traded item provides the predatory merchant with an ideal loss leader. as long as he can get away with selling it at a cut price. We, as an association have al

as it was administered, was perfect, but because it seemed to offer more benefit than harm. We feel that under the fair trade laws, as they stood before the recent Supreme Court decision, provided everything that we could reasonably ask for in the way of legislative sanction for orderly and honest distribution. The fact that, in some cases, manufacturers, wholesalers, and retailers chose to abuse the privilege conferred by these laws should not be considered as a condemnation of fair trade-the blame must be placed on those who were responsible for the abuses. We feel that the correction of these abuses is a problem for industry to solve, not for Government.

We recognize that the Supreme Court decision of May 21, 1951, which invalidated the so-called nonsigner clauses in the various fair-trade laws insofar as they apply to interstate commerce has made these fair-trade laws largely unworkable. In order that there may be a clear understanding of the position of this association in relation to the whole question of fair trade, we hereby set forth the following objectives:

1. We strongly favor amendment to the Miller-Tydings Act, so as again to validate the nonsigner clauses in the various State fair-trade laws. Toward this end, we will give our full support to the bill known as the 22 Lawyers Draft, proposed by the American Fair Trade Council, and we will strongly urge our individual members to enlist support for this bill

2. Pending passage of such an amendment, we will urge all fair-trading manufacturers to take whatever steps they legally can toward orderly distribution of their products, and we will encourage cooperation by our members toward this end. 3. By all means that are legally open to us, we will continue to encourage our members to cooperate with those manufacturers who evidence a sincere desire and a firm determination to maintain their fair-trade prices.

4. We will endeavor to correct any situation which comes to our attention wherein any fair trade manufacturer, either willfully or through neglect, fails to enforce the maintenance of his resale prices.

5. We invite the cooperation, in this program, of all segments of our own industry, and of all other industries which are interested in making fair trade work as it should.

We believe that this program, if given the necessary broad support both within the jewelry industry and without would make fair trade really mean what its name implies. It would not be fair trade for the manufacturer only, for the wholesaler only or for the retailer only; it would truly be fair trade for all.

Small business needs fair trade in order to survive. The restoration by Congress of effective fair trade is essential to the well-being of American small business.

The absence of effective fair trade is subjecting the small-business men of the country to a process of erosion. Under cover price wars continue. The nature of competition today requires fair trade more than it did at the time fair trade was conceived.

Thousands of small-business men, through letters and telegrams to their Congressmen and Senators, have explained their need for effective fair trade, in order that they may survive. The issue plays a very real part in their day-to-day lives.

Resale price maintenance is the guiding principle of fair trade. No product may be fair-traded unless it is in free and open competition with similar products produced by others. This safeguard against monopoly is not always found in other forms of legal resale price maintenance.

Resale price maintenance is used to protect a trade-mark's reputation as well as a manufacturer's channels for mass distribution. The fair-trade laws have the same purpose and operate in the same way. Fair trade is needed particularly by smaller manufacturers who, in the interest in keeping prices down for the consumer, find it more economical to sell through wholesalers and through thousands of independent retailers, including retail jewelers. These inedpendent retailers and wholesalers comprise the backbone of small business in

America. They need the protection of fair-trade laws if they are a have an even chance to compete with large business.

Fair-trade prices must bid for the customer's favor. They must compete with a wide array of other products of a similar type. Co sumers make repeat purchases of fair-trade products, which means that they prefer fair-trade prices and products rather than competing prices and products. Mrs. Consumer has the final word on pre because she is free to choose among competing items. She al determines which price is right by what she buys and by what st does not buy.

The fair-trade laws restrain the unfair competition of retailers wh use price tricks and price juggling to confound the consumer. Dur the 20 years of fair trade, the consumer has purchased fair-traded g in increasing volume and in the face of wide competition-an obvio proof that the consumer regards fair-trade prices to be fair. Ext sive research shows that fair-traded prices have resisted inflate better than any other prices in our economy. In the two decade of fair trade, efficient small, medium, and large retailers have flourishe side by side. In this framework of growth, fair trade has helped protect that precious right to work for one's self which is basic to American free enterprise.

The American National Retail Jewelers Association is firm in belief that legislation should be passed at the earliest possible date which will without question legalize the so-called nonsigner clase in the fair-trade laws of the various States.

To this end we favor the adoption of H. R. 5767, together with tha so-called home-town amendment to H. R. 5767 which reads as follo

(To be inserted on p. 3, line 18, after the period, in H. R. 5767.) "Whenever by contract or agreement described in subsection (2) a stipist or minimum resale price may be established for a commodity in any Sta Territory, or the District of Columbia, where such a contract or agreement lawful, it shall be an act of unfair competition, actionable at the suit of person damaged thereby, to willfully and knowingly, in interstate commerce sell or (2) have transported for sale or resale or (3) deliver pursuant to a sa otherwise deliver, such commodity in such State, Territory, or the Distric Columbia, where such a contract or agreement is lawful, at less than the p or prices so established in such contract or agreement. Any person, firm, er e poration injured in his or its business or property because of the violation of subsection (4) shall be entitled to sue for and have injunctive relief aa threatened loss or damage by a violation of this subsection (4) in any State Federal court having jurisdiction over the parties."

We believe that without the "home town" amendment H. R. 577 will not adequately protect the small retail merchant. A rec Federal court decision, now widely known as the Wentling decis ruled in effect that a retailer in one State could freely invade by radio, or television-with ruinous prices on popular products, 4 markets of communities of any other State, and be untouchable the laws of his own State.

Therefore, the American National Retail Jewelers Associa recommends the adoption of H. R. 5767, together with the so-cal home-town amendment to H. R. 5767.

I thank you, sir.

The CHAIRMAN. We thank you, Mr. Henebry.

We will recess now until 10 o'clock tomorrow morning.

(Whereupon, at 4:45 p. m., the committee recessed, to recony:

RESALE PRICE FIXING

TUESDAY, JUNE 3, 1952

UNITED STATES SENATE,

COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE,

Washington, D. C.

The committee met at 10 a. m., pursuant to recess, in Room G-16, United States Capitol Building, Washington, D. C., Senator Edwin C. Johnson (chairman) presiding.

Present: Senators Johnson (presiding) and Capehart.

Also present: Halford G. Davis, professional staff member.
The CHAIRMAN. The hearing will please come to order.

Mr. Leo J. Heer, vice president, National Retail Furniture Association.

STATEMENT OF LEO J. HEER, VICE PRESIDENT, NATIONAL RETAIL FURNITURE ASSOCIATION, WASHINGTON, D. C.

Mr. HEER. Senator Johnson, my name is Leo J. Heer. I represent the National Retail Furniture Association. I have given the stenographer a copy of our formal statement, which I should like to file for the record, and then discuss a few of the primary points by way of emphasis, if that is satisfactory.

The CHAIRMAN. That is more than satisfactory. We will be pleased to have you handle your testimony in that way.

Mr. HEER. The merchants whom I represent deal in home goods, home furnishings, big-ticket items, big ticket in the sense that they are heavy in weight, they are relatively high in price compared with a large number of items that are subject to fair-traded prices, generally speaking. We deal in such things as wood and upholstered furniture, sleep equipment, floor coverings, major household applicances, and similar home goods. We represent the National Retail Furniture Association, and I speak for the retailers who sell about 80 percent of all the furniture stores' dollar volume of that type of goods in the United States.

We recognize that this is a highly controversial subject and because of that recognition we made an effort to get the feel of retailers of all volume classifications, large, medium, and small, the different types of stores, that is as to the quality of goods, whether it is low-priced, middle-priced, or high-priced merchandise. Our sampling survey indicated that there is a strong feeling that an effective fair-trade law is favored by approximately 80 percent of those merchants. Twenty percent, for various reasons, not going along with the substantial majority, but that a substantial majority of 80 percent indicated that they do feel that a strengthened fair trade is required in the interest of consumers, in the interest of stability in the portion of the country that they represent.

Now as to the amount of fair-traded goods handled by these merchants, I think it is particularly pertinent, because of the arguments that have been advanced by opponents of fair-trade laws, we did check the volume of home goods affected by fair-trade prices. Fundamentally and basically, of course, we recognize that items. should not be fair-traded unless they are in competition with other similar goods. Aside and apart from that, I want to emphasize that in home goods there is only from 10 to 20 percent of the typical merchant's inventory fair-traded, and it probably runs closer to 10 than to the higher figure.

There are three basic points that I would like to discuss this morning. On the first point, that is restoring the effectiveness of the nonsigner clause in State fair-trade laws, I shall not dwell. You have had adequate testimony placed before you. It is present in the conclusions of various congressional committees, and on the point of the need to restore the nonsigner clause we simply adopt the views that have been presented, feeling that they have adequately demonstrated the need for it to take place.

The two principal points that I wish to dwell on are the points that are absent from the bill now before you for consideration.

Point No. 1, the interstate shipment of goods from one State into a fair-traded State without adequate protection for the maintenance of that price. We strongly urge that such a provision be incorporated in any legislation that may be recommended by your committee.

The second point, we have noted almost a complete absence of testimony before your committee on the point as to the need for a mutual responsibility on manufacturers as well as retailers in the observance and enforcement of fair-trade laws. As some of our merchants have put it, an absence of the responsibility to enforce by manufacturers by a statutory provision simply makes sitting ducks, if you will, of the law-abiding retailer who observes the requirement of a contractual relationship, or in the event of a reinsertion of the nonsigner clause, the failure to recognize the responsibility for abiding by a price simply makes of the retailer who does observe that responsibility a pawn in the hands of the price violators.

Now, for the purpose of bring some of these points to you, not in theory but based on experiences of retailers, we have selected at random some samples of questionnaire comments, and I could incorporate the entire list of questionnaire answers, which would simply be repetitious, so I have selected at random some comments of retailers based on previous experience as to the need for this two-way street. and we would like, on the point of mutual responsibility on the part of the manufacturers, to give some of their comments as to how they feel concerning this important issue.

The CHAIRMAN. I would like to know a little more about that responsibility. Responsibility to whom?

Mr. HEER. Responsibility on the part of the manufacturers. By that, Senator, we mean this: We feel that fair trading confers a privilege on the manufacturer to protect a vested interest that he has in a product. In return for that privilege accorded to him by the Congress as a special exemption from the laws we feel he has also then a responsibility to enforce that price, so that he is discharging the re