The testimony of small independent fuel-oil dealers of Chicago and others revealed conclusively that a restraint of trade existed to the extent that suppliers, while cutting the dealer's supply off because of the short supply of fuel oil, in many instances continued to sell and install new burners, take on new business, and in some cases offered to supply the dealers' accounts at a commission per gallon with the oil that rightfully belonged to the dealer.

An investigation into the records, we are sure, will show that while limiting the dealers' supply by 30 to 35 percent, these same suppliers have increased their direct sales by the same margin.

This resulted in black-market prices. Dealers were given the option of "take or leave" what oil was made available in many instances by these same suppliers and others at prohibitive prices, which in turn had to be passed on to the consumer, while at the same time these same suppliers continued to supply their accounts and new accounts at regular prices.

Prices for the same grade of oil varied from 14 to 24 cents per gallon to the consumer.

I mean consumers in Chicago running into the hundreds of thousands, not just thousands. So they are interested in getting oil also along with the independents. This condition will never be forgotten by the consumer for the simple reason that two families living in the same house under the same roof have to pay two different prices. One family buys from a major company, or a jobber with delivery trucks of their own, receiving their supply at a cost of 14 cents per gallon, while the other, buying from an independent dealer who, in many instances, buys his supply from those same companies, has to pay prices up to 24 cents per gallon, a penalty of 10 cents per gallon for patronizing an independent fuel-oil retail dealer.

To further their intent in their determination to wipe out the independent dealer and carry out their policy, these suppliers, in addition to limiting the dealers' supply and limiting his margin are now bent upon the attempt to price the independent into obscurity.

A look into this field reveals a complete disregard for the welfare of millions of our American people. The consumer now is paying a penalty of 112 to 212 cents per gallon for patronizing the independent fuel-oil dealer.

It is obvious that no other business on which the public is directly dependent such as electricity, gas, telephone, or other public utilities would be permitted to operate with such little regard for the health, safety, and comfort of the American people.

Important as this may seem, however, from the standpoint of independent business, the independent fuel-oil dealers feel and know they owe not only a debt of gratitude to their people but rather it is their responsibility to see that their customers are protected and not harmed in any way, shape, or form by these same selfish groups who, under the guise of better able custodians, would tend to wipe out the very things that have made this country what it is today.

In my conclusion, I would like to suggest a specific remedy for such conditions that I have outlined. It is simply this: A complete divorcement and I mean just that-between the manufacturer, producer, distributor, at least in such basic industries as oil, steel, and others who are doing the same things. Let each segment of industry keep

in their own back yard. Let the manufacturer manufacture products, the wholesaler, jobber, and distributor stay in his business, and the retailer stay in his.

I would suggest that Congress create a law or laws making these things absolute so that we could maintain free competitive enterprise at all levels in all industries.

However, in order to protect the independent fuel-oil retailers until Congress reconvenes in January 1949 from being cut off entirely from his source of supply or so reduced that he is forced out of business that a complete grand-jury investigation be instigated at once of all phases of the oil business from the producer down to the retailer and actually find out who is who and who is doing what.

We thank you.

(Witness excused.)

STATEMENT OF FREDERICK A. WAND, ON BEHALF OF NATIONAL FEDERATION OF SMALL BUSINESS, INC.

Mr. BALLINGER. What is your name?

Mr. WAND. Frederick A. Wand, division manager, National Federation of Small Business, Inc.

Mr. BALLINGER. You have a complaint you wish to make to the committee?

Mr. WAND. Yes. I have a statement.

Mr. Chairman and members of this distinguished committee, the Central States division of the National Federation of Small Business, Inc., has thousands of members residing in the States of Illinois, Indiana, Ohio, and Michigan. Our members are of the opinion that this distinguished committee has done an outstanding job in Washington and we are determined to give more and more support to your work in the future. Without small business committees operating in Washington during the war years, a large number of small-business men would have been forced to close their doors. Our membership in a Nation-wide poll voted overwhelmingly in favor of continuing the Small Business Committees in both House and Senate as permanent standing committees. Small-business men favor having Small Business Committees in both the House and Senate.

Should the country go into another depression, the only thing that would save us from a socialistic form of government are the Small Business Committees. Small-business men are a part of our large middle class. They are the individuals who give their time serving on school boards, Red Cross committees, and all other activities for betterment of their towns and cities. They work unselfishly to bring more industries to their towns and cities.

As soon as pay rolls are increased, the chain stores move in, pay the lowest wages in the town and ship out their money to Wall Street. The only hope of small business against this condition lies in the Small Business Committees.

Automobile manufacturers have always relied on independent businessmen to handle the retail end of their business. During World War II dealers had no cars to sell but they kept their auto agencies open and spent their entire time servicing cars in order to keep them operating during the critical war period. Many of them put on their overalls and worked in the shop. Some of the agencies were closed

during the war due to the death of the owners or for other reasons. When car production was resumed at the end of the war, a number of agencies that had been closed during the war were opened by men who had been working in the general offices of the car manufacturers. In many instances these men were given preference in the distribution of the new cars as they were operating on limited capital and had to make sales in order to keep operating. The older dealers were forced to grin and bear it. One manufacturer of a popular priced car has recently brought out a streamlined model and placed a set of modern type springs under the car. Dealers greeted the new model with a great deal of enthusiasm. However, within a very few days, company representatives started calling on the car dealers, demanding that dealers carry nothing but the parts manufactured by the automobile manufacturer. They cannot purchase a few storage batteries from a friend with whom they have been dealing for years without taking a chance on losing their franchise.

Dealers also complain of being compelled to accept cars loaded with almost every conceivable kind of an accessory. When the veterans' organizations urged Congress to pass the GI bill of rights they entered the field of economics as the GI bill provided for loans to veterans who desired to go into business. One member of your distinguished committee made a speech in the House of Representatives entitled "Veterans Outlook for the Future," and had inserted in the Congressional Record the Legion resolution to protect veterans who desire to go into business. The resolution was adopted by the Department of Illinois of the American Legion. I refer to this particular resolution as I served as chairman of the resolutions committee that drafted the resolution.

When the present business boom has subsided and veterans are being driven out of business by the chains and monopolies, it is my humble opinion that your committee will be receiving the moral support of several of the veterans' organizations. They are competing for membership and will not overlook this opportunity to assist veterans who have gone into business.

We had a similar experience in the American Legion during the closing months of World War II. I sponsored a Legion resolution providing for World War II veterans to be admitted to membership in the Legion while still serving abroad in the armed forces. I was chosen as a delegate to the Legion convention and instructed to have the resolution adopted by the Illinois Department of the Legion and then presented to the national convention.

When the resolution was presented before the resolutions committee, at the State convention, several unthinking Legionnaires of World War I shouted it down. At that time I made the statement that the Legion national executive committee would adopt the resolution at their November meeting. This action was taken in November at Legion national headquarters, as I had predicted, because the Legion was losing many prospective members to other veterans' organizations. The same thing can happen on economic issues when the welfare of veterans is involved.

Small-business men are very much interested in H. R. 5818, introduced in the Eightieth Congress by Congressman Ploeser and supported by Congressman Grant, to allow tax exemption for small

business. This bill will permit small-business men to lay up a surplus for bad years and will enable them to keep their help employed during a depression.

In conclusion, I desire to thank this committee for the privilege of appearing before you at this time, and also thank you for the splendid work you have been doing for small business.

STATEMENT OF GEORGE N. KOTIN, ON BEHALF OF CHICAGO AND WISCONSIN LEATHER AND FINDERS ASSOCIATION

Mr. BALLINGER. Give us your name.

Mr. KOTIN. George N. Kotin, 77 West Washington Street, Chicago, Ill.; attorney representing the Chicago and Wisconsin Leather and Finders Association.

Mr. BALLINGER. Do you wish to make a very brief statement?
Mr. KOTIN. Yes; very briefly.

Since testifying in Omaha, Nebr., last week, I would like to say to the committee that, of course, it is a treat to be here this morning because it was worthwhile listening to Mr. Quinn and his excellent treatise and to the other complaints which made me feel at home because they are so similar to what goes on in the leather and finders industry.

Chairman PLOESER. You do not mean that misery loves company, do you?

Mr. KOTIN. It sort of makes you feel that way.

I would like to say that I can see clearly the tie-in between what Mr. Quinn said this morning as to the power of these monopoly monsters and what actually occurred to us. In Omaha we had three witnesses, competitors and one man, who testified and sort of said everything was rosy there. After I left the hearing I talked to this gentleman and to the other three and I find their testimony was merely because of the fear of being driven out of business by this particular competitor. They had just finished a couple of price wars in the last couple weeks where one of them was selling with tie-in sales and using discriminatory discounts which he receives for the purpose of choking off his competition throughout the area.

Mr. BALLINGER. What tie-in sales?

Mr. KOTIN. He was selling laces. He had some kind of a tie-in with shoe laces and he was able to get business that way. Then he used the names of certain shoe repairers in his advertising he would buy from and got the business that way. The whole thing is so tied up. You will find there are certain people, a certain small group, who because of the edges that they get from their suppliers, the large fellow can use them to crush his competition. That is going on and is going on today, with the result, Mr. Chairman, I honestly believe that unless something is done to enforce the Robinson-Patman Act in all of its aspects and to do away with this discrimination, you are going to find 68,000 individually owned shoe repair shops in America who are going to be relegated to a condition worse than they were before the war; living back again in their basements. That is, outside of the 1,200 finders who are choked to death finally.

In our industry you cannot get a word said or published about the Robinson-Patman Act, as I previously said.

I have found a copy of a letter I had written to the finders and shoe repairers of America merely discussing their rights under this law, the triple damages and other features of the law, merely a discussion of the legal aspects. This letter I wrote on January 15, 1948. Not a single publication in the industry would publish this letter. It must not be known. The Robinson-Patman Act must be a secret in the industry because the big fellow so decrees that it must not be known. I thought I would give you a copy of the letter because a certain witness said the reason it was not published is because it was too much publicity for me. There is none whatsoever in the letter and I would like the record to show that.

Chairman PLOESER. The letter will be made a part of the record. Mr. KOTIN. This letter dated January 15, 1948, is as follows:

To the FINDERS AND SHOE REPAIRERS OF AMERICA:

JANUARY 15, 1948.

GENTLEMEN: I am addressing this letter to you as counsel for the Chicago Leather and Finders Association and the Wisconsin Leather and Finders Association whom I have represented for the past several years.

Since the lifting of price controls our associations found that our industry was presented with the many problems which had beset us during the years preceding the last World War and the setting of price controls under the OPA. In making a study of the principal evils of our industry we find there are about 1,200 finders throughout the United States and about 68,000 independently owned and operated shoe repairers throughout the country. We find that a small percentage of the shoe repair operators, perhaps even less than 5 percent, and a small percentage of the finders, approximately 5 percent, have for years been enjoying discounts and a favored buying position, which is not enjoyed by the great mass of the finders and shoe repairers. We find that certain suppliers of merchandise are giving discounts to certain finders which have no relationship to costs savings and that these discounts are substantially as high as 25 percent, and the mass finder is paying one price for his merchandise, but the favored few are getting the benefits of a price discrimination which we believe are forbidden by law. We find that certain finders are selling their merchandise to certain favored shoe repairers at prices as much as 25 percent lower than the prices at which the same finders sold the very same merchandise or similar merchandise, to their mass shoe repair customers. This discount puts the favored buyer in a position where from time to time he will use his favored buying power in his competition with others so as to permit him to undersell his competitors because of this advantageous purchasing power.

We recognzed that this price discount evil had resulted in serious harm to the mass shoe repairer and the mass finder and therefore the Chicago and Wisconsin Leather and Finders Associations requested me to make a study of the law to determine what, if anything, could be done to stop these practices in price discriminations. As a result of the study which I have made I have recommended to the associations and to the industry at large that these unlawful price discriminations could be legally attacked by adherence to the provisions of the Sherman antitrust laws, which are a part of the laws of the United States, particularly, the Robinson-Patman Act. The purposes of the Robinson-Patman Act are four in number, namely:

1. To prohibit discrimination in price or terms of sale between purchasers of commodities of like grade and quality.

2. To prohibit the payment of brokerage or commission under certain conditions-dummy brokerage.

3. To suppress pseudo-advertising allowances.

4. To provide a presumptive measure of damages in certain cases.

The act provides a general prohibition against price discrimination where either or any of the purchases involved in such discrimination are in commerce, and where the effect of such discrimination may be substantially to lessen competition, or tend to create a monopoly in any line of commerce, or to injure, destroy or prevent competition with any person who either grants or knowingly receives the benefit of such discrimination, or with customers of either of them. It must be understood that quantity discounts may be given, but they must be based upon the difference in the cost of manufacturing and distribution.