disadvantage. If it is true that this is provided for in the RobinsonPatman bill, how can we go about correcting it?

Mr. FORISTEL. Your form for relief is the Federal Trade Commission. Write a letter to them stating the facts. That is all you need to do to take advantage of the relief afforded you by the law.

Mr. GREENBERG. We will follow that procedure and see what the outcome is.

Mr. BALLINGER. On the other hand, do not be discouraged if you do not get results, because we are getting a lot of testimony that things do not move as rapidly as they should with respect to enforcement agencies. That is one of the things we are looking into now.

Mr. GREENBERG. You see, by receiving this additional money it goes to offset their other costs of advertising. That is what it amounts to. It reduces their entire cost of doing business.

TESTIMONY OF FRANK BOSANEK

(The witness was duly sworn and testified as follows:)

Mr. BALLINGER. State your name.

Mr. BOSANEK. Frank Bosanek.

Mr. BALLINGER. Do you have a business?

Mr. BOSANEK. I am a retail grocer, one of those small boys.
Mr. BALLINGER. A partnership?

Mr. BOSANEK. Individual. I am located at 5140 South Twentyfourth. Omaha.

Mr. BUFFETT. This gentleman runs one of the best grocery stores in this part of the country and I am an old hand at the grocery business. Mr. BALLINGER. Do you have a statement you wish to make to the committee?

Mr. BOSANEK. Yes, I have.

Mr. BALLINGER. You may proceed.

Mr. BOSANEK. I have something I wish to bring to the attention. of this committee. I imagine it is one of those things you have heard before, but, nevertheless, these are some of the things that are working against the better interests of the individual merchants, such as myself, and some of those things that come up in connection with price policies.

We had something happen here just a short while back that was very detrimental and kind of raised my ire. That is the discounts of the soap companies. For some time we have been buying soap here on what we call a direct basis from these soap companies, Proctor & Gamble, Lever Bros., and so forth. We got the soap, 70 or 85 cases, delivered to my store. There was a 50 cents per case decline before the bill even came in. This 50 cents a case decline is something more than we make in profit anyway from selling a case of soap. In other words, we lost money.

When I called this to the attention of the soap companies they immediately told me, "Well, it is too bad. It is one of those things.

But, on an over-all basis you keep buying from us year after year and you will gain by it."

I have been buying from them for 30 years and I cannot see where I have made any gains. They always catch you on a down market. My contention is this: They do not protect me to the extent of 50 cents a case, but they do protect, as the majority of the soap companies tells us, anyone who has a warehouse or three stores. They are protected.

My basement is my warehouse. That is my point. I have to pay for this merchandise and place it in my basement so I can have it handy for sale. But a corporate chain or any individual that has three or more stores is entitled to the 50 cents per case rebate.

Mr. BALLINGER. Let me ask you a question. One of the ways in which the independent grocer has been battling the chains is for a group of merchants such as yourself to set up a buying corporation that will buy for them so as to get the maximum discounts. Once they are able to obtain the maximum discounts a considerable part of the advantages enjoyed by the chains disappear. In Washington, one of our most aggressive independent outlets has its own central buying

agency.

Mr. BOSANEK. That is a cooperative?

Mr. BALLINGER. No; it is not a cooperative. Each store is owned and controlled by the buyer. He runs it himself on a strictly individual basis, but his buying agency happens to be on a cooperative basis. Mr. BOSANEK. I am an independent.

Mr. BALLINGER. Do you have such a buying outfit out here?

Mr. BOSANEK. Yes; they have a cooperative buying group here, but I do not believe in cooperative buying. I believe in getting in on the ground floor and doing my own buying.

Mr. BALLINGER. Each one of you could buy some stock in a proprietary corporation.

Mr. BOSANEK. Perhaps that could be done. I am trying to get at some of the evils these national companies are putting upon the independent. We are fast disappearing from the scene.

Mr. BUFFETT. Do they make any explanation of the fact that they allow a discount for three stores or warehouses?

Mr. BOSANEK. They claim they are a central warehouse and they are entitled to it. I say, "Why am I not entitled to that 50 cents?" I sell the soap; I stock it.

Mr. FORISTEL. It is a saving to them in bookkeeping, is it not? If they had to send it through a hundred outlets it would cost more. Mr. BOSANEK. I do not think so.

Mr. FORISTEL. Isn't that the excuse that they use?

Mr. BOSANEK. Yes; but that is not the fact. I have heard statements made by some of the leaders in the industry that if this soap is distributed-this is hearsay, of course, from men like yourself and myself talking business. They say this, "When this order comes through from the chains or the bigger stores all we have to do is to pack the soap in one package and ship it." Is that fair? Those are things we have to put up with. That is being done.

Mr. BALLINGER. I think that amounts to a discount to the larger buyer.

Mr. BUFFETT. That is regardless of quantity?

Mr. BOSANEK. That is right. And if there are two stores in this system, each one having 5 or 10 cases, all they have to do is send the truck down there, bring it to the warehouse, and get 50 cents a case the next day, redistribute it back. That is not fair. That is the situation we are running into. I know because I got burned on these 100 cases of soap and I am pretty hot about it. I have a legitimate complaint very definitely.

I think, if that is all on the soap matter, I have another thing to bring up, if you do not mind.

Mr. BALLINGER. We have run into this complaint before.

Mr. BOSANEK. I imagine you have. I have another one here and I refer to the discounts of the H. J. Heinz Co., which is a national or international company. They come into us and they say, "We want you to sell an item of merchandise." Now we can't buy a truckload of merchandise. I am just a little retailer. If I buy five to nine cases I can get a 3-percent discount. Would you like to have this in its entirety?

Mr. BALLINGER. Yes.

Mr. BOSANEK. If I buy assorted five to nine, it is 3 percent; five to nine of one kind 4 percent.

If I buy 10 to 49 assorted cases of their products, it is 4 percent, If I buy that same amount in a straight lot I will get a 5 percent discount; 50 to 99 assorted I get 6 percent; if I buy 100 or over I get that same 6 percent for assorted. If I buy a truckload I get 8 percent, which is 20,000 pounds. That is 8 percent, which is the maximum until you get into a carload lot. Of course that is 10 percent.

Here is the way I look upon this, Mr. Chairman. We will take the largest corporate chain here in this section, Safeway. They claim that 4 percent is their warehouse cost of doing business, yet they are allowed 8 to 10 percent in their purchasing which, of course, gives them a 5 or 6 percent advantage over a merchant.

I recognize that Heinz & Co., this manufacturer here of course is interested in my business, but they are interested in the other man's business because they are going to give them an extra 4 or 5 percent discount. Now, as I said, I cannot buy a truckload of merchandise. Mr. BALLINGER. You are raising a very interesting problem. You do not claim that the discounts being given for the larger quantities is unlawful in that they are excessive, do you?

Mr. BOSANEK. They are, I believe, excessive.

Mr. BALLINGER. They could be justified by savings in cost. That is the way it has to be justified under the Robinson-Patman Act. They say by selling you 10 cases they will give you a certain discount, that by selling another fellow 50 cases they can save so much money and they are entitled to give him the discount.

Mr. BOSANEK. Are they entitled to give that?

Mr. BALLINGER. Yes, under the Robinson-Patman Act. All discounts that can be justified by savings in cost can be passed on. But you are raising an interesting point which has come into these hearings at several points along the line, namely, do we not need to go a step further and impose maximum quantity discounts beyond which they cannot go?

Mr. BOSANEK. That is perhaps the one I should raise.
Mr. BALLINGER. That is the one you want to raise.
Mr. BOSANEK. Yes.

Mr. FORISTEL. That is provided in the law, although it has never been set by the authority who has the right to set it.

Mr. BOSANEK. They claim they can do a warehousing business on 4 percent and here they are getting 8 or 10 percent.

Mr. BALLINGER. The committee has not passed upon that. I have not made up my mind. Take the railroad industry, there was a time when the sky was the limit on discounts. The discount at one time was a trainload. In other words, you could get a discount on a trainload. They tried that for a year or so and it wrecked so many people that they had to abandon that because there were only a few shippers who could get that discount. They dropped down to carload shipments and said that that is as far as we can go, a carload shipment is within the reach of any small shipper. He can get the maximum discount and that fixes him up. Nobody can get any more of a discount and everybody will have a chance to live. If that same theory is applied to the railroads, perhaps it ought to be applied in the grocery business. There should be a maximum discount that could be available to all members of the industry.

Mr. BOSANEK. This is an excessive discount, as you bring forth.

Mr. BALLINGER. It is not excessive. Excessive is unlawful. It is a discount which could be justified under the existing Robinson-Patman Act but which, nevertheless, may result in the destruction of many small operators and which, therefore, should be approached from the other standpoint of whether there should not be a maximum quantity discount.

Mr. BOSANEK. We recognize the fact these kind of things are fast pushing fellows like myself out of business. There is no question about that. It is one thing after the other. We have to resort to committees such as this to try to help us out because I cannot do anything myself.

I have one other thing, and I will not take too much of your time. That is the milk situation. I do not know what to do.

The same Safeway system advertises in the newspaper that they. will continually sell milk 1 cent a unit under the existing wagon price, which the dairies themselves set. My contention is this: Is there some understanding between the dairy industry and these corporate chains that this policy is being set? They are following a practice that we are going to sell a cent below the wagon price.

Mr. BALLINGER. Do you not fix the price of milk in this State?
Mr. BOSANEK. I cannot answer that.

Mr. BALLINGER. Is not the price fixed by Government authority? Mr. BOSANEK. The farmer angle is set by the Government, is that right?

Mr. BUFFETT. I am sure that is.

Mr. BOSANEK. We are out on our own.

Mr. BALLINGER. The other complaint is that they fix the price for the store at the same price as delivered at home, allowing no opportunity for the man at the store to get more of the business. He has less cost; he has no distribution cost, and they make the sale at the same price as the home delivery. In the city here the big chain stores can sell at a penny less.

Mr. BOSANEK. They claim they do meet that same competition. We sell the same as the chain store on that. The dairy comes around and says that milk should be sold at 20 cents a quart. The wagon price

is 20 cents. The chain price or our price is 19 cents. The dairy says you can sell for 20 cents. The chain store comes out and says, “I am going to sell for a penny under."

How does this thing work? Am I helping to pay for this houseto-house delivery that the dairies put forth when they make up this schedule of prices on this milk?

Mr. BUFFETT. What is the delivered price at the house?

Mr. BOSANEK. Twenty cents.

Mr. BUFFETT. Your cost is based on a similar price?

Mr. BOSANEK. I don't know.

Mr. BUFFETT. That is what you want to find out?
Mr. BOSANEK. That is what I want to find out.

Mr. BALLINGER. Do you sell to the homes?

Mr. BOSANEK. Yes.

Mr. BALLINGER. You do not have a delivery cost?

Mr. BOSANEK. No.

Mr. BALLINGER. You want to know why they are so close together? Mr. BOSANEK. Yes.

Mr. BALLINGER. It ought to be cheaper in the store.

Mr. BOSANEK. It should be, we think so.

Mr. BUFFETT. That is something to look into. The dairies have never furnished you with any information about their delivered cost per quart?

Mr. BOSANEK. No. I suppose if they did they would give me what they wanted to give me. You gentleman can get it. I cannot get it. That is all I have.

(Witness excused.)

TESTIMONY OF HARRY ZENTS

(The witness was duly sworn and testified as follows:)

Mr. BALLINGER. State your name and the name of your business. Mr. ZENTS. Harry Zents. Harry Zents Grocery Co.

Mr. BALLINGER. Have you any statement you want to make to the committee?

Mr. ZENTS. Well, the gripe I have is against the big soap companies. They go out here and they make a price to the wholesale grocery, a carload price. Lever Bros., Colgate-Palmolive-Peet, and Procter & Gamble have price lists printed 5-case lots, 10-case lots, 100-case lots, and carload lots.

Mr. BALLINGER. They jump that precipitously?

Mr. ZENTS. They may have another one. I will not say for that definitely, but they have that schedule along the line. Then they put their own salesmen out on the streets. They do not compel the jobber, but if the jobber wants any business he has to take it on the 100-case basis, which is 3 percent over the carload basis. So that is the way they sell their soap.

Then we have in between a little wholesale house and he will not bother me any. But what does bother me is the soap companies themselves. They will buy this soap here and this particular party has three stores of his own. The result is he gets an advertising allowance, he owns his soap for from 5 to 20 cent less than I do. There is not anything I can do about it.