Mr. BALLINGER. Is there any reason for having any time period between first and second runs? Would 1 day be enough to run it first run, then begin on the next day and start it second run?

Mr. SULLIVAN. I would not go that far.

Mr. BALLINGER. Well, how far would you go? We are looking for an answer to the problem.

Mr. SULLIVAN. The main basis for all the evil in this motion picture proposition is the unfair competition and on this basis, where a man that has a certain group of theaters succeeds in buying a picture for one of those theaters in competition with a substantial competition; not based upon competition between those theaters, but based on the buying power of the individual who operates a circuit.

Mr. BALLINGER. You mean he pays more?

Mr. SULLIVAN. He pays less.

Mr. BALLINGER. He pays less?

Mr. SULLIVAN. The circuit pays less because of his buying power. Going back to the specific incidents in the Muskogee market, if that was an independent operating there and not the man who operates a hundred theaters in Texas at the time he would have trouble in getting pictures. He could competitively negotiate. It does not make sense that they are serving that second run at $35 flat a picture, when I am offering them 35 percent of a potential revenue of $150. It just does not make sense on the face of it, but the fact remains that the distributors know they are serving 100 theaters in Texas and they dare not antagonize this circuit and sell us in Muskogee because they will lose business in Texas.

Mr. STEVENSON. It is the same old story of where the big money comes in.

Mr. SULLIVAN. Yes.

Mr. BALLINGER. Are you against chain motion picture houses or chain stores?

Mr. SULLIVAN. I would be against free enterprise and individual initiative if I said a man could not grow to certain proportions. What is a chain store? Two stores is a chain. I am saying if he operates that chain on a competitive basis, that is fair. He can get as large as he wants to.

Mr. STEVENSON. As long as there is no discrimination about it?
Mr. SULLIVAN. That is right.

Mr. STEVENSON. Your story is very interesting. It has been very illuminating to me.

Mr. SULLIVAN. I would say the motion picture business itself is the only trouble and there is the situation which prevails in our industry. I do feel there has been a tremendous amount already been given our district. I am thankful to the Department of Justice for their attitude on this thing. The only thing is that I hope and pray that they do not get finagled into another consent decree and softened.

Mr. STEVENSON. For the benefit of you and the rest of the businessmen who have been here this morning, I want to say that the Small Business Committee of the House of Representatives has been putting plenty of heat on the Department of Justice and the Federal Trade Commission to enforce the laws that are already on the books. Their excuse was that they do not have the appropriations from the Congress to carry out the prosecutions efficiently and successfully. So through the efforts, the advice, and the prodding of this committee, the Eight

ieth Congress appropriated $400,000 more to the Federal Trade Commission alone in order to enable them to enforce these decrees and to prosecute these violators more efficiently. You do not hear anything about that in the political situation.

Mr. SULLIVAN. I commend you for your accomplishments.
Mr. BALLINGER. No further questions.

Mr. STEVENSON. We thank you.

(Witness excused.)

TESTIMONY OF ROBERT W. EDWARD

(The witness was duly sworn.)

Mr. BALLINGER. Give your full name for the record.
Mr. EDWARD. Robert W. Edward.

Mr. BALLINGER. What is your business?

Mr. EDWARD. I am an automotive supply salesman.

Mr. BALLINGER. Representing what company?

Mr. EDWARD. Johnson Brothers Auto Supply Co., Wichita, Kans. Mr. BALLINGER. You may proceed.

Mr. EDWARD. One of the first things is, I have a letter here from a customer of mine that I would like to read.

Mr. STEVENSON. What is the date of it?

Mr. EDWARD. He did not date it, but I will give you the date of the postmark-Oct. 5, 2 p. m., 1948, Buffalo, Okla.

Mr. STEVENSON. That is right up to the minute.

Mr. EDWARD (reading):

About three months ago some of the big boys from Phillips came around and said those things have got to go or you go. I told them I had only what the public demanded and if I couldn't continue to sell them, I'd go. So I did. Those things I referred to were items such as Fram filters and cartridges, casite, rust master, Warners liquid solder, Mazda lamps, bulbs, and so forth. In other words, nothing but what had Phillips on it or was handled by them.

That boy has been checked out.

Mr. BALLINGER. In what area? Is it in Wichita?

Mr. EDWARD. He is from Buffalo, Okla.

Mr. BALLINGER. When was he checked out?

Mr. EDWARD. They checked him out. It has been about 60 days ago -45 to 60 days.

Mr. BALLINGER. Because he refused to sell tires, batteries, and accessories of Phillips?

Mr. EDWARD. He sold all their lines, but he had some other lines in there that were competitive to their lines.

Mr. BALLINGER. They would not allow anything to be sold that was competitive with their lines?

Mr. EDWARD. That is right. Then I have lost hope on several different items I have been selling a lot of because when he comes around the man tells me his company now has that and they will ship them and he is not allowed to buy from me.

Mr. STEVENSON. That is not what we call free enterprise.
Mr. EDWARD. That is the kind that has got a halter on it.

Mr. BALLINGER. From how many filling station operators have you heard such a complaint, say, in the last 2 months?

Mr. EDWARD. I would say I heard it from 20 to 25.

Mr. BALLINGER. In Oklahoma?

Mr. EDWARD. In Oklahoma, Kansas, and Texas.

Mr. BALLINGER. How long have you been with this company?
Mr. EDWARD. Fifteen years.

Mr. BALLINGER. In your opinion, has this pressure been getting greater?

Mr. EDWARD. Greater and greater all the time.

Mr. BALLINGER. Where do you put your finger on where it begins? How long ago did the pressure begin?

Mr. EDWARD. It has been since the war.

Mr. BALLINGER. Since the war?

Mr. EDWARD. Yes.

Mr. BALLINGER. Before the war this pressure did not exist?

Mr. EDWARD. That is right.

Mr. BALLINGER. The market was free?

Mr. EDWARD. I could go into a filling station, a Phillips 66, or a car dealer or truck and implement dealer; I could sell him battery cables, I could sell him spark plugs, I could sell fan belts, but in most cases that is direct, and I am out.

Mr. BALLINGER. It has been getting worse this year?

Mr. EDWARD. That is right.

Mr. BALLINGER. No further questions.

(Witness excused.)

TESTIMONY OF JOSEPH SANDERS

(The witness was duly sworn.)

Mr. BALLINGER. Give your full name for the record.

Mr. SANDERS. Joseph Sanders; I am a retail grocer, 5112 MacArthur Street, Oklahoma City.

What I want to discuss is the dairy business. They seem to be manufacturers, wholesalers, and retailers. Before the war we were paying 8 cents a quart for milk and selling it for 10 cents.

Mr. STEVENSON. Buying it for 8 and selling it for 10?

Mr. SANDERS. Yes. That gave us about a 20-percent mark-up, which was very nice. Their retail trucks at that time were selling for 11. They allowed a penny difference between the stores and the retail trade.

But since the war the present price now is 182 cents a quart. Their retail wagons and trucks are selling it for 20 cents a quart. It is 1712 cents-excuse me.

Mr. STEVENSON. How do you mean, by their retail wagons?

Mr. SANDERS. The larger dairies that operate here. Their present wholesale price is 1812 cents a quart. There is 2 cents over that for retail, which cuts us down to about 712 to 10 percent profit now. I meet the competition with the chain stores and sell it for 112 cents a quart and at 1 cent under their retail trucks.

Mr. FORISTEL. Your complaint is not against the dairies so much as it is against the discrimination in price that the chain stores are buying cheaper than you are?

Mr. SANDERS. That is true, but these companies wholesale and retail. It looks to me like they can control the market and the markup on what we got to get.

If they go out on their retail and set a price of 21 cents and you try to top that and make your mark-up in the store what you should sell the milk for, you cannot do that.

Mr. FORISTEL. What do you mean? They retail it? They sell to retail outlets?

Mr. SANDERS. The big companies, Borden's and Gold, some of those will run retail trucks around town and also sell it to the grocery stores. Mr. FORISTEL. You mean retail trucks selling to retail outlets or delivering to homes?

Mr. SANDERS. They deliver it to the home at the same price we will sell it for, which is on a very low percentage now, since it kept going up a penny at a time.

Mr. FORISTEL. That takes the business away from you. If the price is the same at home as at the store, nobody wants to go to the store.

Mr. SANDERS. That is right. Every time it goes up a penny, from 8 cents. They will publish it in the paper the next morning and that is the first we will know about it. We read it in the paper and the driver comes around and says that the wholesale cost is up a penny a quart; therefore, we go up a penny. We followed that on through from 8 cents a quart to 182 cents a quart and still make the same 212 cents a quart or 2 cents. It cuts your mark-up down to about 10 percent or less.

Some of the fellows are getting 5 percent discount or maybe more; I have never been informed as to how much you have to sell to get that discount.

Mr. FORISTEL. Is the price of milk in this city set by a State agency? Mr. SANDERS. It seems to be fixed by the dairies.

Mr. FORISTEL. Is the price of fluid milk fixed by State agencies? Mr. SANDERS. I think it is.

Mr. FORISTEL. From then on the pasteurized milk is sold supposedly on a competitive basis?

Mr. SANDERS. Each time one dairy goes up, they all come along the same morning with a raise.

Mr. FORISTEL. They refuse to establish any differential between the price sold to the retail store and what it is sold for at the home? Mr. SANDERS. That is right.

Mr. FORISTEL. They draw the prices so close together that there is practically no choice?

Mr. SANDERS. If they sell it to me for 1812 cents a quart and sell it retail, off the retail trucks of some dairy for 21 cents, that gives them a 22 cent a quart mark-up. If one truck can handle about 300 quarts a day, that would give them about $7.50 a day to pay this man and operate a truck. Can they do it on that?

Mr. FORISTEL. One more question. What is the price to the home? Mr. SANDERS. 21 cents a quart.

Mr. FORISTEL. And the price to the retail outlet is 1812 cents? Mr. SANDERS. That is right. There are 22 cents difference there, but some of the stores get a discount on that. They have never offered that to me. I do not know how much you have to sell to get that discount. But there are some of the fellows who are getting it. They sell twice as much milk as I do. Maybe we don't sell enough. Mr. FORISTEL. All dairies sell at the same price?

Mr. SANDERS. No.

Mr. FORISTEL. There has never been a dairy out of step with the general prices?

Mr. SANDERS. No. They are set along the same time. The same morning that one goes up, they all go up.

Mr. FORISTEL. Who is the price leader in this territory, if you know?
Mr. SANDERS. I just would not know.

Mr. FORISTEL. Who, do you recall, has announced a price rise?
Mr. SANDERS. They all announce it at the same time.

Mr. FORISTEL. At the same time?

Mr. SANDERS. We read it in the paper and we go out to the stores the next morning, the drivers come in and tell us that milk is up.

Mr. STEVENSON. It is just simply another illustration of where the ultimate consumer is paying the bill. I sure sympathize with the babies and the mothers.

Mr. SANDERS. Well, what about the extra percent that some of the boys are getting and I am not? You know that some individuals can

get an extra discount that the chains can get, too. Mr. BALLINGER. Why are the other fellows getting the extra discount?

Mr. SANDERS. That is what I have not found out.

Mr. BALLINGER. Is it because they buy more milk than you do? Mr. SANDERS. I doubt that. They probably put more pressure on them.

Mr. BALLINGER. I can understand their giving a discount if they buy more milk, but if you are buying the same amount of milk and they are getting a discount that you are not getting, it is a violation of the Robinson-Patman Act.

Mr. SANDERS. What if they don't come in and offer me that deal, that if I would sell so much milk I could have the 5 or 10 percent, or whatever it might be? They never mention it to me.

Mr. STEVENSON. Why don't you mention that to them?

Mr. BALLINGER. Under the Robinson-Patman Act, he doesn't have to mention it to them. They have to give a discount on proportionately equal terms to everybody who is selling their product.

Mr. STEVENSON. They are not observing that act.

Mr. SANDERS. There are lots of fellows in this town that are getting discounts. They get it in the form of a check each month.

Mr. BALLINGER. A kick-back?

Mr. SANDERS. That is made up to balance accounts. I could tell you some of the fellows who are getting it, but rather than putting the bee

on someone

Mr. BALLINGER. Will you furnish the committee with a list of such places confidentially?

Mr. SANDERS. That are getting the discount?

Mr. BALLINGER. Yes.

Mr. SANDERS. I could.

Mr. BALLINGER. Send that to us in Washington, to the Special Committee on Small Business.

Mr. SANDERS. I could send you some of them.

Mr. STEVENSON. It will not be put in the record.

Mr. SANDERS. You could check on the canceled checks and ask them how that balances the account. If I get it right, that is the way they receive the checks.