Mr. TRIPENY. If the automobile has merit to it and it is a good automobile, as you mention, I do not think he would have a bit of trouble finding an agent.

Mr. HILL. He does have trouble when it is a new article, as witness one of the newer automobile manufacturers is having trouble now.

Mr. TRIPENY. He has not had any trouble putting a distributor in this territory-the one you are referring to-and I think I know what it is.

Mr. HILL. In some places they have canceled out, as you know.

Mr. TRIPENY. Perhaps these fellows did not do what they wanted. They want a man to build a garage and to put a lot of money into a garage.

Mr. HILL. Here is the thing I am trying to see and work out. You take your implements, the same situation exists. The local man and the small, independent businessman has not the money to go out and pioneer a whole field. He cannot do it. Yet that is exactly what you are going to say he must do if you prohibit the big company from going in there.

Mr. TRIPENY. I think, if he is fair, Mr. Hill, he will not find any trouble finding a distributor in a territory if a manufacturerMr. HILL. He is putting out an entirely new article.

Mr. TRIPENY. I know what you are referring to. I know what automobile you are referring to.

Mr. HILL. Let us get away from the automobile.

Mr. TRIPENY. Take your drug business. Take the manufacturer, the wholesaler, and distributor. They manufacture a lot of prodAll right, they come into this town and want more business. They set up this drug store or that drug store. Then he is in there with direct competition from the manufacturer to the retailer.

ucts.

Let us take your liquor business. Of course, the State has a monopoly on that. Take the wholesale beer business. They will not let a man wholesale and retail beer. They have a State law to that effect. You cannot wholesale and retail beer. Of course, that is under license.

Mr. HILL. Let me ask you this question, and maybe Mr. Patman can answer it. If a State wished to pass a law prohibiting any manufacturing firm from operating a retail business, how long would that hold good in court?

Mr. PATMAN. May I suggest, Mr. Hill and Mr. Chairman, there is a precedent for that in the packers and stockyards consent decree. At one time the packers were getting into the retail and distribution business very rapidly, and they were enjoined. Finally they were stopped permanently, and they are stopped now. The packers cannot engage in retail distribution for the reason it was tending toward the creation of a monopoly.

I think any legislation in that direction, either by the Federal Government or by any State, would have to be predicated upon the theory that it was stopping monopoly. I know you have to consider the across-the-board and the whole economy, everything, phonograph needles, locomotives, and everything else, something to eat, durable goods, and all that. But the case, as you mentioned, Mr. Hill, I think would be the exception, not the general rule. I am a strong believer in separating manufacturing from retailing for the purpose of preventing monopoly. I think that is one of the next steps that can be and must be taken.

Mr. FORISTEL. As a matter of fact, the Pullman case is a good example of separating manufacturer from operation.

Mr. PATMAN. Yes; that is a good example.

Mr. HILL. My questions come from the fact that, in thinking along this line, what we have to do if you are going to prohibit the peoplethe rank and file of our customers-from buying these goods just as cheaply as they can be bought, then you are going to be in difficulty again.

Mr. TRIPENY. I believe in letting them buy as cheaply as possible.
Mr. BALLINGER. But they do not buy as cheaply as possible.
Mr. HILL. Do not say everything.

Mr. TRIPENY. As far as cost of distribution is concerned, if you will take the independents and the chains and the surveys that have been made, you will find that the cost of distribution is practically the

same.

Mr. PATMAN. At one time I believe that some of the automobile manufacturers wanted to get into the retail business, but the National Association of Automobile Dealers was strong enough to stop that in its beginning. Now the manufacturers are not trying to get into that business at all. If they have some dealer who is put out of business for one reason or another, or goes into bankruptcy, or his business liquidated, I do not believe you will find where any manufacturer is seeking the opportunity to go into that business locally. They want to stay out of it because the sentiment was built up against it so strongly at one time and they will not attempt it again.

Mr. HILL. There is another element that enters into it. I think the records will show that the little independent groceryman or druggist, or automobile dealer or hardware dealer, can do business just as cheaply as anyone. It is a question of management and the ability of the individual operator. Is that not true?

Mr. TRIPENY. That is true.

Mr. HILL. There is no reason why an implement company should not be able to establish a store in Casper if there is not a local man in Casper with the managerial ability to operate that store.

Mr. BALLINGER. You have this very serious problem where the manufacturer is combined with that operation. That is, the profits of manufacturing are used to subsidize a retail operation and to lay down prices to the consumer which, while it looks very advantageous to the consumer, results in a terrific destruction of competitors on the retail front. That problem exists all through American industry. It is in the oil business, tire business, grocery business, in the truck businesseverywhere an unintegrated retailer cannot compete against an integrated retailer.

Mr. PATMAN. In a recent case tried at Danville, Ill., involving the grocery trade, the testimony showed conclusively and undeniably that 29 percent of the stores of this particular national chain were operated at a loss at all times over a period of years. You see, they could do that because they had got a tax reduction on it. That is the reason we should have a law that would prevent them from getting a premium to destroy the independent merchants. Suppose somebody wanted to go into business in competition with Mr. Tripeny and sell at a loss until they put him out of business. The answer is they have a tax deduction for that. The Government is, as a mater of fact, subsidizing a national corporate chain to put these independents out of business.

Mr. BALLINGER. Mr. Tripeny, would you be in favor of having the Federal Government explore the possibilities of preventing sales below

cost?

Mr. TRIPENY. I would.

Mr. BALLINGER. To see what can be done about it?

Mr. TRIPENY. Yes.

Mr. BALLINGER. Of course, sales below cost, if it eliminates competion, are forbidden under existing law, under the antitrust law. Mr. TRIPENY. Yes.

Mr. BALLINGER. The complaints I have been receiving are three in kind. The first is, there are no penalties after they are convicted. Secondly, there are not enough appropriations to properly survey the field to find out whether people are selling below cost or not. Something might be done along that line.

Mr. TRIPENY. I think that would be very good if you can get the Federal Government to investigate that.

Mr. PATMAN. I am strongly in favor of the independent merchant's getting a fair margin of profit. With this high national debt, over $250,000,000,000, there is only one way we can pay it off with honest dollars, and that is to get a high national income. A high national income in this country is impossible without good wages, good farm prices, and a fair margin of profit for the man who does business. Mr. TRIPENY. That is right.

Mr. BALLINGER. The point is this, when you get into these sellingbelow-cost cases. I saw this when I was with the Federal Trade Commission. It happens very quickly. Inside of 6 or 7 months the man is out of business. In the meantime the Government is still investigating. They make their finding but he has been put out of business by selling below cost. Then you take 3 or 4 years to go through the courts. When you get to the Supreme Court the little fellow has passed out completely.

Mr. TRIPENY. Yes. If you could speed up the investigation it would help.

Mr. BALLINGER. Speed up the judicial processes.

Mr. PATMAN. There is another great objection. Where there is involved a regulatory law, they commence to investigate and it takes months of time, sometimes years. Then they will go before a grand jury or file a civil action. It takes a long time to get the case on the trial docket. After it has been on a trial docket for some time, why, then, they finally get to trial. They have motions for a new trial and that all takes a lot of time. There are all kinds of delay. It is appealed to the circuit court of appeals. It is finally set down for argument and argued. A motion for new trial is filed. Finally it gets to the Supreme Court years and years later.

The lawyers who are looking after this case for the private person, firm, or corporation will remain the same lawyers. They know all about that case and knew about it all the time; but during that time. the Government lawyers are changing all the time. They are going out and others coming in. New people have less interest in it. has even been known that they go out of the Government service and become associated with the firms on the other side.

It

So the small man does not have too good a chance under the delayed system that we have. If there were some way to speed it up I think that would be helpful too.

Mr. TRIPENY. That is what I mentioned, if you could speed it up. Mr. BALLINGER. I have not seen a case where the Government investigated selling below cost that it was able to save anybody before the judicial route had been run.

Mr. Chairman, if Mr. Tripeny wants to file his statement here for the association or add to what he has already said, would he be given that privilege?

Mr. STEVENSON. Yes. You may file anything you want to add or make any change or file any charts or anything else.

Mr. TRIPENY. I thank you.

STATEMENT OF DEAN GILLESPIE

Mr. BALLINGER. Give your full name.

Mr. GILLESPIE. Dean M. Gillespie.

Mr. BALLINGER. Are you representing an organization here?
Mr. GILLESPIE. No; I am not. I am representing my own company.
Mr. BALLINGER. You have a statement?

Mr. GILLESPIE. We have an organization, but I did not take it up with them at all.

Mr. BALLINGER. Proceed.

Mr. GILLESPIE. I want to talk about the conditions in the oil business. There are a good many small oil compounders or blenders who manufacture lubricating oils or compound lubricating oils and make greases. In fact, it has got to be quite a large business, to the extent that some of these small companies actually make some greases for the majors in some cases.

We have a plant in Denver that has been in business for about 25 years. We compound or blend lubricating oils and maks some greases. I will say that for many, many years our relations with the major companies have been very pleasant. They have always been fair as far as competition is concerned. I do not suppose there is any case in business where the big fellow has been fairer to the little fellow than in the oil business. They will sell us anything they make. Sometimes they have a policy where they will sell now at the same price, the small manufacturer, a quantity as cheap as the fellow who uses it in any quantity. Generally speaking, they have been fair. But at the present time we have a great gas shortage in the United States that is quite real.

Mr. PATMAN. You mean gasoline?

Mr. GILLESPIE. Gasoline. They are using that as a whip to make these independent dealers buy their lubricating oils and greases. They do not put anything out in writing on that, but when a dealer complains that they only give him so many carloads last month, that they are out, their pumps were dry, their customers were coming and could not get gas, they will say, "Well, what are you doing with this independent oil in here? How do you think our boss likes it for you to be selling an independent oil when we are furnishing your gasoline?"

That just scares the daylights out of them. The small dealer knows that they have not any right to do that, but he also knows that a truck or car pulls up to his station about the second or third time, he cannot get any gas, and starts going somewhere else. The result is they will quit buying from the independent.

It is a very serious proposition. Of course, if you go to those fellows and tell them they were doing that, they would deny it in all

probability. It may be that the boss never told the salesman to say that, but they do say it. It is hard to get at. But I do think it is a thing that can be gotten at. They are responsible for what their salesmen say. But the independent dealer with some kind of a major gasoline is not going to get his neck out naturally, because he is afraid they will cut him off entirely.

Mr. BALLINGER. Has not that situation already been handled by the courts recently?

Mr. GILLESPIE. Yes; they have it in court, but the thing is going on all the time.

Mr. BALLINGER. There is a California decision prohibiting a practice such as you have described.

Mr. GILLESPIE. Yes.

Mr. BALLINGER. Only in the district court.

Mr. GILLESPIE. Yes; but it is going on all the time in the Rocky Mountain States.

Mr. STEVENSON. You know that from your own experience?
Mr. GILLESPIE. Yes.

Mr. HILL. Has your company had any trouble from the suppliers of your materials for the blending of these oils? Mr. GILLESPIE. They are very fair about it. We have gotten oil from some very large concerns when I know they were in very short supply. They have been fair to us in that respect. However, it is bad, and could break a small concern very quickly.

Mr. HILL. What percentage of your grease and oil do you sell to filling stations that are handling gasoline and oil from other big suppliers?

Mr. GILLESPIE. I would say 20 percent.

Mr. HILL. Most all the gasoline comes from the major companies? Mr' GILLESPIE. In Denver we have; for instance, the Bay Petroleum. That is not a major but, as far as it is concerned, it is an effective as a major.

Mr. HILL. I notice the Bay Co. had power enough to send their president over to Norway as Ambassador.

Mr. GILLESPIE. Yes.

Mr. HILL. As Mr. Patman knows, a lot of the stations in Washington were short of gasoline and said they could not supply you, even this last spring.. Then you would get down to a big line station and ask, "Have you been short of gasoline?" And immediately they speak up and said, "No; we are a main-line station; we never have been short of gasoline."

Mr. PATMAN. That is a question of distribution and transportation down there. Transportation enters into it.

Mr. HILL. It is not only transportation, but they were giving the gasoline to other stations and where they had lessees they were cutting them down. That is what I have been told myself.

Mr. PATMAN. They look after themselves, of course.

Mr. HILL. That is what Mr. Gillespie is speaking about now. Mr. GILLESPIE. What I am talking about is a different thing, Congressman Hill. The thing I am talking about is they have got a distributor and this distributor is selling an independent lubricating oil which they do not like. They do not like that. They do not like that. We are not afraid, as far as competition is concerned.

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