Mrs. WILEY. Thank you, Mr. Chairman. I think I made all the points I wanted to make. Thank you very much.

The CHAIRMAN. Now, because the Senate will be in session, it may be necessary that this hearing be continued this afternoon in the committee room where we were yesterday. We will not be as comfortable there as here, but we have to give some attention to our duties in the Senate.

Upon second thought, I think we may be able to arrange to continue the hearings in this room.

(Thereupon, at the hour of 12 o'clock, the hearing adjourned to 2:30 o'clock the same day, Wednesday, Feb. 28, 1934.)

AFTER RECESS

The CHAIRMAN. It is rather doubtful if many of the members of the committee will be here this afternoon, at the risk of the votes being more important than this work here. I am entirely willing to proceed with the hearing.

Of course, as you know, the testimony or statements are being taken, and will be read by the other members of the committee. If there is anyone here who does not want to be heard until we have a larger attendance, of course that person need not make the state

ment now.

I will call upon Mr. Parlin, first.

SUPPLEMENTAL STATEMENT BY CHARLES COOLIDGE PARLIN IN BEHALF OF THE NATIONAL PUBLISHERS' ASSOCIATION

Mr. PARLIN. Since some of the testimony given at this hearing appears to have created an impression that publishers in some manner are responsible for the failure of S. 2800 to exempt all forms of advertising from prosecution, may I say that the National Publishers' Association is not responsible for the fact that exemption of section 17 (d) is limited to publishers, advertising agencies, and radio broadcast licensees, and that they are not responsible for the phrase "other than by radio broadcast" in section 17 (e). We have no objection whatever to all forms of advertising receiving the same exemption from prosecution which publishers receive. I am confident that no member of the committee of the National Publishers' Association has at any time intimated to any person a desire for any privilege under this bill not enjoyed by all advertising media. I am confident that Mr. Campbell will support me in this statement. I also ask permission to file a brief, covering some other points which have been raised in this testimony.

The CHAIRMAN. All right.

Mr. PARLIN. This brief is on grades A, B, and C, and is as follows: Since a suggestion has been made to have the grading feature of S. 1944 restored, I ask permission to file the following brief in opposition to that statement. While I do not question the sincerity of those who spoke in behalf of certain consumers, I respectfully call attention to the fact that the publication of the National Publishers' Association, with 50,000,000 circulation, are fully conscious of our responsibility to the many millions of consumers to whom our publications go, and it was in behalf of these many millions of consumers, as well as of industry, that we protested against the grading provisions at the hearing on S. 1944.

At that hearing we stated:

"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 of 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 still would be strongly opposed to the bill."

We reiterate that statement as part of our present testimony, and state, in behalf of the millions of consumers to whom our publications go, the following six reasons why the quality grade plan should not be reinserted in S. 2800.

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First. Uniform grades cannot be made. Crop conditions vary in one section as compared with another and in one year as compared with another, and manufacturers differ in their ability to produce good merchandise. Hence, grade A would not mean one grade-it would mean many different grades. For example, for many years packers have offered their canned goods to the wholesale market as fancy, choice, and standard. But, as a matter of fact, fancy" has always meant many different qualities, and the buying of "fancy" in the wholesale market calls for much knowledge and experience. Large wholesalers, such as Sprague, Warner & Co. and Reid, Murdock & Co., employ highly trained and experienced men to buy canned goods for them-men who know crop conditions in various sections of the country and know the ability of various packers to produce.

When a consumer buys the brand of a big distributor, he has in the distributor's brand the guaranty of that skilled buying. When he buys the brand of a manufacturer, he has in the manufacturer's brand the guaranty of that manufacturer as to the quality of his goods. When the consumer attempts to buy grade A for himself, without knowledge of crops, without knowledge of producers, and without guaranty of a manufacturer or skilled buyer, he is likely to be disappointed.

Second. Grade A will have to be made low enough for canners in all sections to get a consequential part of their pack under grade A. Political pressure would make it impossible to make grade A high enough for only a few to enjoy the benefits of that grade. There will be a tendency for manufacturers to manufacture down to the standard set for grade A. Thus, consumers would be injured by getting poorer quality.

Third. It is characteristic of American buying to want good quality. Hence, the demand for grade A would be strong; it would be difficult to sell grade B and might prove wellnigh impossible to sell grade C. Unfortunately nature in producing a crop produces a considerable amount of fruit which when packed must of necessity be grade C. Under this condition it would be in the interest of every manufacturer to get as much of his pack as possible under grade A and to avoid putting grade C so far as possible on any of his merchandise. The line between grade A and grade B in most classes of foods could not be a sharp one and there would be a great temptation for manufacturers to hunch over the line and to put grade A on goods which really merited only grade C. This would obviously injure buyers.

Fourth. The maintenance of grades A, B, and C will rest on Government policing, and with 45,000 food plants, adequate policing will be impossible.

It would not be in the interest of any individual manufacturer to maintain the quality of grade A. It would be in the interest of manufacturers to produce as cheaply as possible goods which they mark grade A.

We seriously doubt whether in the case of most products a manufacturer could even be convicted for putting grade A on grade B goods. Hence, the unscrupulous would "hunch over the line and the inevitable tendency would be to grade down. This would work to the detriment of the consumer.

In contrast to this, commercial advertising constantly tends to improve the quality of merchandise. A manufacturer who advertises a brand sets up a standard which he must protect. He needs no policeman. He is his own policeman. As he continues to advertise quality he not only maintains but tends constantly to improve his quality, and even those competitors who chisel under in price are constrained to keep their quality somewhere within range of the brands they undersell. This has, in our judgment, been the primary influence

in producing the marvelous development in quality merchandise which has taken place in our day and generation.

Fifth. Facing that which I believe is bound to happen, namely, a breakdown of enforcement of grades A, B, and C, the Government quite inevitably will bolster up its enforcement with some form of "voluntary inspection" by putting inspectors in plants, to be paid by the manufacturer. This will not be voluntary, but when some manufacturers accept inspectors, all will soon be obliged to follow. With 45,000 plants this plan will foist an impossible army of inspectors and an intolerable expense upon the food industry. There will be accusations of graft and favoritism. The plan ultimately would have to be abandoned or a complete bureaucratic control of the entire food industry set up. Sixth. Government grades would tend to discourage manufacturers from establishing reputation for their own brands. Many manufacturers are likely to find it more profitable to manufacture down to the lowest level possible to mark as grade A than to make and advertise a better quality.

This will cause injury to consumers and loss to the industry. Whenever a manufacturer through advertising sets up a standard for himself, he must manufacture up to that standard, for it is a well-recognized principle of advertising that no one can afford to advertise a food product unless he can win and hold repeat customers, and repeat customers cannot be held unless the product measures up to its advertised claims.

For example, advertising has been the principal factor in building markets for canned goods. It accomplished this in two ways-first, as manufacturers set up standards through advertising, they improved the quality; second, public appreciation of the tastiness and value of canned goods grew. If advertising of manufacturers and distributors be curtailed, quality would be lessened, markets for canned goods would decline and growers as well as manufacturers would suffer.

Advertising got the cat out of the sugar barrel, converted bulk goods into packaged form and changed unsanitary food shops into attractive and wholesome grocery stores. When manufacturers attractively advertised the sanitary and appetizing qualities of their packaged foods, the public would no longer tolerate unsanitary and unappetizing sales methods. Advertising has produced the finest food factories in the world. While credit is due to Federal and State Governments for good work on insisting that all factories live up to minimum standards of sanitation, it is advertising for the most part which has produced the exceptional factories that are a credit to American food manufacture.

Advertising furnishes the hope, the ambition, the forward look for business; it is the most powerful instrument which can be used to restore life to industry and to get men back to work. On the other hand, anything which would discourage legitimate advertising would dishearten industry, slow down factory wheels and throw men out of employment.

The CHAIRMAN. I called Mr. Draper this morning. He was not present. I will be glad to hear him now.

STATEMENT OF NORMAN DRAPER, OF THE INSTITUTE OF AMERICAN MEAT PACKERS

Mr. DRAPER. My name is Norman Draper, and I am the Washington representative of the Institute of American Meat Packers, which is a nonprofit trade association, the headquarters of which are in Chicago. In that association are some 350 meat-packing companies, located in every State in the United States. The meatpacking industry finds a lot in the Copeland bill with which it is heartily in favor. As a matter of fact, we like the whole bill, because we think it will correct a lot of abuses which have crept into advertising, in labeling, and also correct other practices that we do not think are good in any business, or that are good for the community as a whole.

However, the meat-packing industry operates under what is known as the meat inspection act, which has been on the statute

books since 1907, and under that act the meat packers are in effect licensed with respect to their entire operations in meat-packing plants, their labeling of products, what they may use in connection with those products; and we can see where there might be a conflict of jurisdiction between certain portions of the Copeland bill, and the Meat Inspection Act which has been on the books for so long, and for that reason we have had up with the Department of Agriculture the matter of the preparation of an amendment to this act, which would have the Copeland law, when it becomes a law, apply to the meat-packing industry, as to everybody else, in all of its provisions, with the single exception as to where certain things may be already covered by the Meat Inspection Act, and we hope that that amendment can be inserted in this law before it is passed.

The CHAIRMAN. Just what language do you propose to provide for the acceptance?

Mr. DRAPER. We have suggested several sorts of language, Mr. Chairman, and each one of them, the lawyers of the Department or somebody else connected with the Department has suggested that we had not covered it exactly, and so we rather feel that maybe we might leave it to them to draft some language that would have the effect that we are seeking, and I think that they will undertake to do that. We are in a peculiar position in this business. We cannot put a label on any meat product unless it is approved in advance of its use. Everything on it, everything on the label and on the can and on all meat and meat-food products, and the products are prepared in the first place under the immediate supervision of inspectors of the Bureau of Animal Industry, and then we can not even use labels, or do anything else without their approval, that we must obtain here in Washington, and we simply do not want to run, in the future, into a conflict of jurisdiction over the identical subject.

I think that is all I have to say on the subject, Mr. Chairman. The CHAIRMAN. All right. We will give that particular matter attention, Mr. Draper.

Mr. J. D. Miller.

STATEMENT OF J. D. MILLER, REPRESENTING THE ILLINOIS WHOLESALE GROCERS' ASSOCIATION AND THE CHICAGO WHOLESALE GROCERS' COUNCIL

Mr. MILLER. Mr. Chairman, I represent the Illinois Wholesale Grocers' Association and the Wholesale Grocers' Council of Chicago. I desire first to call attention to paragraph (e) of section 2 where 66 interstate commerce " is defined as commerce between any State or Territory, and any place outside thereof."

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We feel that that is an improper definition of "interstate commerce" and suggest an amendment by scratching out the words, after the word "Territory " in line 2, as follows:

And any place outside thereof.

The CHAIRMAN. You mean in line 21?

Mr. MILLER. In line 21; yes. Our reason is that foreign countries will doubtless buy goods according to their own laws, and this restriction may tend to interfere with the business of the citizens of the United States as to foreign trade.

I now call your attention to page 4, section 3, line 14, which says: If it has been prepared, packed, or held under insanitary conditions whereby it may have become contaminated.

I am referring to page 4, section 3, beginning at line 12.

Now this is a criminal statute, and we feel that the words "may have" should be eliminated, and in lieu thereof insert the word "has"; so that no person may be subject to conviction merely on the matter of suspicion.

I next call attention to page 8, paragraph (c), line 3. Under this provision

The Secretary is hereby authorized to promulgate regulations exempting from any labeling or packaging requirements of this act food, drugs, and cosmetics which are, in accordance with the practice of the trade, processed, labeled, or repacked in substantial quantities at establishments other than those where originally processed or packed, on condition that such articles are in conformity with the provisions of this act upon removal from such processing, labeling, or repacking establishment.

This paragraph relates to the relabeling of merchandise shipped by manufacturers and packers to distributing points for relabeling, and it merely says that the Secretary is authorized to promulgate such a regulation.

Inasmuch as this relates to business of very large volume, we feel that he should be required to make such a regulation, and therefore ask that in line 3, page 8, the word "authorized" be stricken out, and in lieu thereof insert the word "required."

We next call attention to paragraph (a) of section 7, page 8, under

which

A food shall be deemed to be misbranded if its container is so made, formed, or filled as to mislead the purchaser, or (2) if its contents fall below the minimum standard of fill prescribed by regulations as provided by sections 11 and 22.

Merchandise which is shipped and handled will necessarily be reduced in volume, very much, of the merchandise, and it would appear to be slack-filled, when as a matter of fact it is not, and we suggest that either the "minimum" be removed or, if it shall be desired to retain it, that an amendment should be added to that paragraph, for which purpose we suggest the insertion, at the end of line 24, of the following words:

Provided, That suitable tolerance shall be allowed for reduction in volume of the product resulting from transportation or other handling.

And this is a criminal law, and we know this committee-we know that Congress does not want to convict innocent persons, but we have a clause in this law that, for a second offense, there are very severe penalties, and that paragraph as written would be liable to be violated at any time, unless amended.

We next call attention to page 9, paragraph (e), which reads as follows:

A food shall be deemed to be misbranded—

(e) If it purports to be or is represented as a food for which a minimum standard of quality has been prescribed by regulations as provided by sections 11 and 22, and (1) its label fails to bear, if so required by the regulations, a statement of a standard of quality in such terms as the regulations specify, or (2) it falls below such standard.