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should be grade B, can produce only a hopeless mess. Possibly you could convict a man for putting grade A on his can if he consistently put up only grade C products. I do not believe you ever could convict a man for using grade A if his product consistently was grado B or even if it were occasionally grade C.

If passed, the secretary will have three courses before him-all of them bad:

(1) Try to make every one live up to his-that is, Secretary of Agriculture's—idea of what grade A means, which will involve po end of litigation.

(2) Be lax in enforcement, letting the unscrupulous induce the public by a grade A label to think the quality of their goods superior to what they are.

(3) Be partial—that is, use litigation as a threat against those who de not accept his “voluntary inspection service.”

4. Would injure consumers.

We object to the grading plan, fourth, because the grading provision would injure consumers by grading down.

The Secretary cannot by edict control the quality of a crop either in 1 year as compared to another, or as to normal differences in various sections of the country. He will have to make grade A low enough so that practically all canners in all seasons in all parts of the country can get a consequential part of their crop under grade A. The practical effect of grade standards would be a grading down to the minimum set for each grade. 5. Would threaten existence of newspapers

and magazines. We object to the grading plan, fitfh, because the plan for food standards accompanied by "voluntary inspection" and "publicity" threatens the very existence of newspapers and magazines.

The plan proposes to substitute government grades for advertised brands and to substitute gorernment publicity for manufacturer's advertising. The immediate objective is to apply this to food advertising, the next step presumably is to apply the plant to drugs and cosmetics which are already included in the voluntary inspection provisions and the ultimate aim, I presume, is to apply the plan to all advertising.

Newspapers and periodicals quite universally are sold for less than they cost; they depend upon advertising revenue not only for their profits but for their existence. So essential is this advertising revenue that a loss of even a minor percentage of their advertising revenue would put most publications in the red, and the loss if long continued would force many newspapers and magazines into bankruptcy.

In a brief to the N.R.A., the periodical publishers presented evidence that approximately 90 percent of the periodical publishers were operating in the red. They showed that unlike most industries it would be impossible for them to pass increased labor costs along to others. However, they agreed to accept the burden of increased labor costs in the hope that N.R.A. would bring them increased advertising revenue.

If on top of those increased labor costs, this Bill, especially through this grading provision, brings them material loss of revenue, they are ruined.

In this situation, you face not an academic question of whether government publicity is preferable to commercial advertising; you

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face the hard and alarming fact that the operation of these provisions would be quite certain to throw many publications into bankruptcy.

The whole American systein of merchandising and of publishing is based on manufacturers' advertising.

In a letter to Edgar Kobak, president of the Advertising Federation of America, President Roosevelt said-we quote from that letter:

THE WHITE HOUSE,

Washington, June 16, 1955. Moreover, I wish you would say that I hope the high standards which have made good advertising an economic and social force of vital importance to us all will be continued. Your cooperation will be valuable to the restoration of improved levels and Aow of trade. It also will help business and industry to return to better times. By doing these things you will be serving your country and Government.

FRANKLIN D. ROOSEVELT. In a letter sent September 29, to leading manufacturers and advertisers throughout the l’nited States, Gen. Hugh S. Johnson said:

Aggressively promote your products to the public.

There is no longer any reasonable doubt that the public is beginning to shop again, and to look toward replacements for its wornout possessions,

American industry must help the public to find the goods it needs.

The modern method is advertising. The American public looks to advertising for news of good merchandise and good values.

There has never been a time when the public was so alert for vew's as now. Events have moved so rapidly that people would be completely ignorant of what is going on if they did not closcly follow the press.

This tremendous public interest in news can be capitalized by American industry. And the way to do it is to place the news about a good value or a good product side by side with the other news of the world.

The canned goods industry has been builded by manufacturers' advertising. Before manufacturers' advertising, many people believed products in tin cans were poisonous. The advertising of Campbell, of Heinz, of California Packing Corporation, of Libby, McNeill & Libby, and of many other manufacturers, wholesalers, and retailers have builded great markets for canned soup and beans and fruits and vegetables, creating thereby large markets for farm products. It is this advertising which, under the grading plan, is the first subject of attack. If advertising in these lines be curtailed, it is inevitable that markets will decline and growers as well as canners and publishers will suffer.

For any legislation which will curtail this type of advertising, the publishers of the l’nited States, I feel safe in saying, are unanimously and strongly opposed.

6. Will injure the recovery program.

Finally, we object to Senate bill 1944 because we believe it would work against the success of the national recovery program.

Senator McNARY. Is that the Copeland bill or the Tugwell bill you are talking about now?

Mr. Parlin. I am still talking about the Tugwell bill, if you call it that. I don't know what you call it. That is what we call it. We insist on calling it that. (Laughter.)

Now, we are still objecting to these provisions which would produce that which is the proposition of standards. We have no objection at all to your McNary-Mapes amendment; that is all right. We will not come down and say one word. You will never find us opposing that. Extend it as far as you want.

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The only thing we are arguing against is to establish a minimum standard and establish 3 or 4 or 44 or any other standards above it and try to enforce them.

Finally, we object to these provisions because we believe it would work against the success of the national recovery program.

The publishing industry itself employs more than 100,000 workers and any shrinking in advertising revenue will throw many out of employ: ment. Furthermore, the publishing industry uses several hundred thousand tons of paper and many thousands of tons of ink.

Publishers will buy less paper, less ink and less of other supplies and thus additional thousands now employed in making paper, ja making ink and other supplies are likely to be thrown out of work.

But more serious than either or both of these facts, business will lose its stimulation; sales for advertised brands of food; we believe, will decline; farmers and growers, we believe, will find their markets curtailed; many now employed in the food and farming industry are likely to be out of work. The total unemployment resulting from the bill are likely to run into tens of thousands and again may 1

say

that while many will have suffered no one will have benefitted.

May I add that in my opinion no government publicity directing the public to buy foods by grade A, grade B and grade C can compensate for a lessening or discontinuing of manufacturers' food advertising with the appetizing displays of its color pages.

This is a time when we need to rebuild American prosperity. Manufacturers' advertising is a prime essential to expedite the movement of goods, to enable the reemployment of idle men and to stimulate prices for farm products. The provisions in this bill for grading and for voluntary inspection work are against this purpose. In our opinion they are the most

dangerous provisions in the bill. We believe they would produce chaotic conditions in merchandising and in newspaper and magazine publicity.

If all other objectionable provisions in this bill were removed and the grading and voluntary inspection features alone were left, publishers will would be strongly opposed to the bill.

We strongly urge

1. That authority to make food standards be limited to minimum standards.

2. That the voluntary inspection service be eliminated. If it is necessary to have some method or, rather, as was suggested, a laboratory for drugs or something, find another way to do it. Do not set up a bureaucracy that will keep itself up, get its own feeds, and never depend on Congress, and if it runs for a hundred years they would never have to go back to Congress to enforce it. You ought never to abrogate that degree of Congressional power. 3. That the publicity section-I am not very sure on this one;

I am not very sure whether that publicity section carries with it the authorization to spend United States money for paid advertising to promote these grades. I have a little difficulty in reading it in, but I found this there after reading a long, long while, and I am not sure it is not there, and what I suggest is that we make it sure by putting an amendment in there providing that no Government publicity shall be spent for promoting the advertising brands or standards above the minimum standards.

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The CHAIRMAN. You did not even give a cursory reading because you are a little doubtful. It was by a cursory reading that you found the other.

Mr. PARLIN. It was not a cursory reading. I told them I thought the bill was all right the first time I read it, and after I read it the third time I had a few doubts, and now I am dong here to tell you we think it is the most vicious bill from the standpoint of the advertising business that was ever concocted.

The CHAIRMAN. Mr. Parlın, please don't read it again because you would shoot the author at sunrise.

Mr. PARLIX. I am not a man of personal violence myself. I will leave that to the others.

Now, we have in addition to this gone through this bill section by section for particular objections. Some of these you might say were out of our realm, but, as a matter of fact, everything is in our realm because anything that adversely affects manufacturers adversely affects us, and, hence, I think we would be competent to offer testimony on that ground on anything here, but we will just file that because most of them have been covered, and I do not ihink we need to go in there except that I would like to look at section 17 for a moment, the section on penalties. That begins on page 23.

We get into it on no. 2 there, which says: The receipt in interstate commerce of any food, drug, or cosmetics and 3. The dissemination of any false advertisements by radio broadcast, United States mails, or in interstate commerce for the purpose of inducing, directly or indirectly, the purpose of foods, drugs, and cosmetics.

I do not think we have any ground for objecting to being in there, but I will call attention on page 24 to section (d).

I am not one who ever lost any sleep thinking that the Secretary would refuse to call for the information and that we might get in jail. Some people get a little worried, but we did not; that is just one of the things that we will not do. (Laughter.)

But, meanwhile, there is one thing in here that causes me some worry. I am not an attorney, and I may be all wrong, and if I am wrong I will forget it. Ther cleaned up the wording of the section, and I have nothing to say about it except this:

By that provision No. 3 back there, as I understand it, if we disseminate a piece of advertising that is declared by a court to be false, we are then guilty, and that this merely exempts us from criminal prosecution, but leaves us still liable under civil prosecution. That is, if there was an occasion which somebody won a case where we had put an advertisement in there, any of our publishers, I am talking about the whole 150 of them, if any of us put an advertisement in there and the court decided that that was wrong, they would have the right to bring a civil suit against the publishers for running that. If so, I think we ought to be protected on that, but I do not know just how.

The CHAIRMAN. You would be liable now, would you not, without any kind of new law?

Mr. Parlix. I assume that we have the general cominon law' and statutory law of linbility, and we have all got to face it now, hut whether this makes a new one, the trouble with this one is that this would prove us guilty without our defense. They already went into court and proved it false, and we were not there, we were not a party

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on that.

case

to it, and they found somebody guilty, and that is prima facie evidence that we were to blame, and they can start new suits all over the country.

I don't know what you can do about it, but I thought I would call it to your attention.

(Laughter.)

Now, there are one or two of these other provisions, such as the penalties, that I would like to speak of. I do not want to talk about there being too severe. We believe that, but somebody else has talked about it, and I will not bother you by taking your time on that.

Everybody realizes that in (b) that is too severe.

I believe, Senator, that no one ought to be prosecuted for running an advertisement until he has been warned that he is going to be prosecuted except in the most flagrant and most violent cases of endangering the public health. The man ought first be told that the product he is advertising, or the kind of copy he is using, is going to lead to prosecution if he does not quit.

The CHAIRMAN. That was suggested by a definite amendment.
Mr. PARLIN. That is fine. Thank you. I will say nothing more

Now, this section (c) providing for a heavy penalty, Senator, should be eliminated, for this reason, that it makes test cases too dangerous. I have not heard anybody state that, and I do not know whether any one has. The judge has no option if the judge finds the defendant guilty, and he is going to be wilfully guilty to bring a test

-the judge has no option, he has to fine him $1,000 and send him to jail for 6 months. That shuts out test cases, and on any new legislation like this, we ought to get every opportunity for test

May I also say just one thing about (e)? This says: No dealer shall be prosecuted This sounds all right if you cut out everything after "section", namely, "if he establishes a guaranty or undertaking signed by the person residing in the United States from whom he received the article of food, drug or cosmetic."

Now, there are 700,000 dealers affected by this, and just think of the 700,000 dealers- I suppose some of them have 10,000 items and maybe some have 30,000 in their stores. You may figure some way of getting the wholesaler to do this, but is it plain common sense to hold the dealer, and by the dealer I mean the wholesaler or retailer?

I am very cognizant of the fact that provisions similar to this were in the earlier act, but that does not answer the problem. I do not think it ought to be in the act. I do not think any dealer ought to stand the danger of being sent to jail for the crime of the manufacturer. He ought to take the responsibility of labeling his goods and marking them right, and unless the dealer willfully after notice continues to sell something injurious to the public health or contrary to the public morals, I think the dealer should be exempted.

If the dealers knew what the real significance of that is you would get so many wires you would not know what to do with them.

There is just one other phase to this, and that is its corporate inatter in (b) on page 26. “Whenever a corporation”.

The CHAIRMAN. I want to call your attention to the fact that the matter you spoke of just now is in the present law.

cases.

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