bills that have for their purpose the prevention of misleading state

ments.

The Merchants' Association has for many years had for one of its important purposes the promotion of honesty and truth in merchandizing. It has taken an active part particularly in the Legislature of the State of New York in promoting bills having that purpose. It has been particularly identified with the introduction and passage of the bill to prevent misrepresentation in advertising for the express purpose of protecting the public against misrepresentations by retail dealers particularly. It has likewise taken an important part in securing amendments to the weights and measures acts in the State of New York, in which quantities and qualities and statements on labels, and so forth, enter. It has sought likewise to secure an extension of the penal laws of New York in such manner as to make oral misrepresentation more easily preventable and punishable and in general it has striven in every practical way to raise the standards of merchandizing and to protect the public. It has no specific interest, no direct interest in the textile industry. Its interests are those of all classes of merhants and of the public. It is very keenly concerned in securing legislation which will bring about that result, namely, the protection of the public. It strongly objects to legislation of such a nature as shall seriously and harmfully interfere with the ordinary and necessary courses of business. It believes that the less governmental interference there is with business processes the better, and that such legislation should only be resorted to when there is a clearly demonstrated necessity for it and an equally clear showing that the results of any projected legislation will be beneficial.

The Merchants' Association has for one of its most important committees its committee on commercial law, which comprises 26 members selected to represent the most important classes of industry, men that are experienced in trade usage and in trade customs, and that committee during a number of years, beginning specifically in 1913, has given very careful consideration to the large mass of legislation directed toward protecting the public through the medium of branding bills. In 1914 there were, if I recall right, 13 or 14 bills before Congress for the purpose of protecting the public by requiring branding in different classes of commodities-some of them comprehensive and all embracing measures directed to specific needs. The merchants' association committee at that time went into the matter very fully and very thoroughly. It held numerous hearings. It carefully examined experts in the manufacture of numerous classes of commodities; it invited the public. It invited the people who had made specific complaints as to cases and frauds and in general exercised every care as to the probable effects and results of the legislation then pending. It reached the conclusion as a result of the protracted and careful study of the subject that the principal result of all of the branding bills which were then pending would be very seriously to interfere with and possibly to disrupt important branches of manufacture, and as to the particular bills pending in the State of New York the effect of them would be to practically drive out of the State certain important lines of manufacture which could not be carried on if a single State, namely, New York, were subject to restrictions by reason of a State law which could not apply in other States.

The most important conclusion reached by our committee and which in their opinion was decisive was that the projected branding bills would not afford the public any substantial protection; that their effect would be simply to erect a misleading standard by which the public would be inclined to judge the value of the products which they sought to buy; that as regards textiles in particular a distinction based solely on the character of the fibers involved would convey no useful information that would enable the purchaser to determine for himself whether or not the fabric would have great utility or would be a desirable fabric by reason of the fact that there is such a very wide range of qualities in fibers; that the mere statement that the fabric contained only a specified fiber or a certain percentage of a specified fiber would not enable the producer to determine for himself whether the fabric was a valuable one or whether it was comparatively worthless. The further conclusion reached by the committee was as to the effect, not only upon the industry but upon the public, of the use of the word shoddy as one of the determining elements of value. The word shoddy conveys opprobium. It is universally considered by the public to denominate a worthless product. The public has little or no knowledge of the fact that there is a wide range of shoddy; that many materials of great excellence, admirably suited for the purpose for which they are intended contain shoddy; that the cost of those materials is less than the cost of the high-grade virgin wool would be and that if the use of shoddy were discontinued and only virgin wool substituted in fabrics the public would be deluded into believing that the fabric composed entirely of virgin wool is necessarily superior to that containing shoddy; that as a result of that belief on the part of the public the average consumer would refuse to buy an article of great excellence well suited to his needs, valuable in itself, and fully worth the price asked for it, would refuse to buy such a fabric and demand a virgin-wool or pure-wool fabric of much less utility than a fabric containing shoddy.

For those reasons the effect of such branding bills thus adopted would be to inflict great harm upon the textile industry without in any way benefitting the public and enabling them to discriminate in such a way as to benefit themselves.

I allude to these matters without going into the technical side of it at all to indicate to you that the merchants' association has given very great care and study to these proposed measures from the point. of view of a desire to do anything which will adequately protect the public, and its studies lead it to believe that bills like the French bill will not bring about that result.

Mr. BARKLEY. You are familiar, are you, with the operation or the effect of the British merchandise marks act in-protecting the public against frauds?

Mr. DE BERARD. I would like to say that at the early stage of these inquiries the merchants association's committee, being informed of the British merchandise marks act sent to England and not only obtained copies of the British act but also copies of the preliminary reports which were made as a basis for the passage of that act and which contained the court decisions in connection with it. As a result of the studies of that act, the merchants' association caused that bill to be reprinted and made a wide distribution of it throughout the business community and has repeatedly recommended to this commit

tee when the matter has been pending before Congress legislation based essentially upon the principles of that act. The merchants' association approved and recommended the passage of the Rogers bill, I think, in 1914, and later, the Rogers bill having failed of action. by Congress, the merchants' association indorsed the Barkley bill, as it is satisfied and believes that great steps in progress will be made if Congress enacts a bill similar to either the Barkley bill or the Rogers bill. Mr. DEWALT. When you speak of the merchants' association, of what particular branches of trade is your body composed, generally speaking?

Mr. DE BERARD. It is composed at the present time of about 6,400 firms in every branch of business, trade, and manufacture.

Mr. DEWALT. It is not confined to the textile trade?

Mr. DE BERARD. It is not confined to the textile trade and never regards any pending measure from the standpoint of simply the selfish interest of any industry that is concerned."

Mr. DEWALT. Then I understand you to be speaking generally for the interests of the mercantile association regardless of any particular trade or industry.

Mr. DE BERARD. That is correct. We are speaking simply from his standpoint of what we believe to be desirable legislation in the cause of honest merchandising and protection of the public.

Mr. BARKLEY. Are you able to put into the record the varicus countries outside of Great Britain and her dependencies which have adopted any laws similar to these misbranding bills to which you have referred?

Mr. DE BERARD. I am not. Our committee has made no investigation as to similar laws in other countries except in so far as regards trade-marks and patent rights, to which we have given very considerable attention, but that is under another committee, of whose action I have no immediate knowledge.

The CHAIRMAN. I think another witness will cover that ground. Mr. DEWALT. Did not your association take any action in regard to any of the proposed measures?

Mr. DE BERARD. Our committee, as I stated, began in 1913.

Mr. DEWALT. I mean any definite action by passing resolutions or anything of that sort.

Mr. DE BERARD. Our procedure is this. Our committee makes a careful examination extending over months and occasionally over years of the specific matters with the purpose of determining whether a proposition should be indorsed and then whether or not the principles are properly carried out by pending legislation. That action. was taken in 1913 to 1914, by our committee on commercial law It was reported to our board of directors, the report was reviewed. and the report was approved and instructions were given that the merchants' association oppose these pending branding bills and support the Rogers bill. The matter has since on various occasions been brought up again, and the previous action reaffirmed, with the instructions that the association oppose the French bill and other bills and support the Rogers or the Barkley bill.

Mr. DEWALT. Is that practical unanimity or was it by a decisive majority or a strong opposing minority?

Mr. DE BERARD. It was entirely unanimous. There was no opposition whatever to the adoption of the principles of the British mer

chandise marks act as a principle which should govern Federal legislation in this country.

The CHAIRMAN. We will hear now from Mr. Newell.

STATEMENT OF MR. P. S. NEWELL, SECRETARY OF THE ASSOCIATION OF COTTON TEXTILE MERCHANTS OF NEW

YORK.

Mr. NEWELL. The French bill and the Rainey bill, known as the "Truth in fabric" bills, which are intended to cause the branding of fabrics containing wool, do not directly affect the members of the association which I represent, inasmuch as their dealings are almost entirely in fabrics made of cotton.

When these "Truth in fabric" bills were first introduced, the association appointed a special committee to investigate the subject and recommend what action should be taken by the association. The members of this committee were technical men in the sense that they were thoroughly familiar with conditions and methods of manufacturing and marketing of cotton textiles. After a careful investigation, this committee concluded:

That while the proposed legislation did not directly affect them as cotton textile merchants, it did affect them indirectly because they represent an important branch of the textile industry, and any legislation which would affect other branches of that industry, such as woolen, worsted, and silk, as drastically as the proposed French and Rainey bills, would certainly react upon the textile industry as a whole.

That the association should go on record as favoring legislation which will give to the ultimate consumer the greatest protection from fraud and deceit, and that such legislation should cover all textiles, and not woolens and worsteds only.

Therefore, in line with the recommendations of its fabric committee, the association wishes to go on record as being opposed to the French bill and the Rainey bill, and in favor of a bill substantially like the Rogers bill or the Barkley bill. In other words, the association believes that the principle of the British merchandise marks act is the one which will actually give to the ultimate consumer the protection which is the object of the proposed legislation. That is all I wish to say in that connection.

The CHAIRMAN. We are very much obliged to you. We will hear from Mr. Lee next.

STATEMENT OF MR. RICHARD H. LEE, COUNSEL, ADVERTISING CLUBS, NEW YORK CITY.

Mr. LEE. The association of which I happen to be counsel is interested in a movement to make advertising more trustworthy and to protect reader confidence in advertising. In our movement we have the headquarters of the national body located in New York, and there are about 125 advertising clubs throughout the country in which we have approximately 100 vigilance committees who give their attention to the question of "truth in advertising."

We had a proposition, very similar to the one now before the committee, to face at the beginning of our movement to clean up advertising, which began a number of years ago. At that time

practically the same objections were raised in our movement which are now being raised to the "truth in fabric bill." The advertisers were afraid that if we went into a movement of that sort and pointed out to the public that some particular piece of advertising was unbelievable, the public would fose confidence in all advertising. The newspapers were very much afraid that in our movement we would destroy advertising space, that is, we would destroy copy which would have gone into the papers, and, of course, from a selfish standpoint, they were anxious to have their space occupied, but we found that the public was discriminating. You can go to the public with a matter of this sort and the public will understand.

In the prosecution of the Emerson Motors fraud, which was probably the most widely advertised promotion fraud ever attempted in America or any other nation, we were compelled to go into practically every American home to offset the evil influence arising from their advertising. At that time stockbrokers, who dealt in motor stocks, stated to me that they were afraid if we went into the Emerson Motors matter that the public would not be able to discriminate between the Emerson stock and legitimate motor stocks, and that in our endeavors to protect the public and to prevent their buying Emerson stock, we would destroy confidence in all motor stocks. However, we went through with the matter. The Emerson Motors Co. was prosecuted. The public was protected. The promoters were indicted, tried, and convicted, but the public understood, and confidence in motor stocks generally was not disturbed.

We have had a number of prosecutions of this sort which have been incidental to our work, the latest being the prosecution of the Pan Motor Co., of St. Cloud, Minn., the biggest stock-jobbing fraud in the history of the country in point of dollars. This company was so thoroughly advertised that they were able to sell $9,500,000 worth of their stock-all of it west of the Mississippi River, and they were prosecuted, and Pandolfo, the promoter, convicted and sentenced to spend 10 years in Leavenworth penitentiary, yet the public understood, and to-day we number the investment bankers and more reputable brokers of America among those who support our work. From our experience I am inclined to believe that the result of the passage of the "truth in fabric law" will bring about a very different effect from that which the textile manufacturers, who have appeared before you, have stated they believed would arise from its passage. I do not believe that the wool growers of the country are going to get the big bulk of the benefit from this act if passed. I am of the impression that the bulk of the benefit will go to the textile manufacturer. I think if the bill is properly drawn along constructive lines, such as have been discussed before the committee, and is properly enforced, it will take from the shoulders of legitimate business in the textile industry a class of competition with which no honest man can compete.

The associated advertising clubs have for a number of years been having a great deal of trouble with the term "all wool," and we are absolutely helpless in the situation, as the term "all wool" as far as it goes is truthful, but it is my impression that the term "all wool" has been so much misused throughout America that, though perhaps many of the textile manufacturers will not agree with me now, I think they will come to agree sooner or later that the use of the