Now, we have to contend in the retailing of our shoes-our retail price is only 14 per cent above what it was in pre-war days-our employes make double the money that they did in 1914, and it costs us to manufacture shoes 50 per cent more than it did then. Those are some interesting figures. The consumer is paying 14 per cent more, the labor cost per pair, on account of increased efficiency, is 50 per cent greater, although labor is receiving 100 per cent more. Now, on account of selling a popular-priced shoe we have to make a stronger guarantee with our shoes on account of the suspiciousness +hat comes with the price, and we give an absolute guarantee of asonable service. There isn't any concern that stands back of its shoes to any greater extent than we do, and in 1923 the entire cost of the policy claims for the retail end of our business, was one-fiftieth of 1 per cent. In other words, the loss on account of that guarantee, whether the customer was right or wrong, was less than one-twelfth of 1 per cent per pair of shoes!

The CHAIRMAN. You mean if the customer was dissatisfied with a shoe you make no talk about it at all, but just take it back and give him another pair?

Mr. HAZZARD. Yes, sir; we simply give him another pair. And on those take-backs all that it amounted to was one-fiftieth of 1 per

cent.

The CHAIRMAN. Was that figured on the cost or the selling price?

Mr. HAZZARD. That is actual loss to the company on the basis of their selling price. Of course, they have got the profit in the shoe, that is actual loss.

Further than that, there is this point, that if there is an error in the factory; for instance, if the shoe is spoiled in manufacturing, through no defect in the leather, it becomes a factory charge. But that has nothing whatever to do with substitutions.

For instance, when you come down to the question of insoles-if you want to pass these around [exhibiting shoe insoles]. This is an insole that is made with what we call a combination leather inner sole. Here is one that we call a straight Goodyear. That would be 100 per cent leather and Gem insole which would be a substitute [indicating].

When you come down to the counter, I have before me here a fiber counter, and also I have a leather counter. I wet those two so you can see what your leather is, and you can see what your fiber is. On this counter business just listen to this. Here is a letter written by a financially responsible representative of a house that makes that particular counter. I had them write me this letter. It says:

As per your request of April 11, we are inclosing you a copy of our guarantee: "We hereby guarantee three line counters to outwear any shoe in which they are used, and agree to pay the full cost for all shoes returned to us when such counters by actual wear have failed in this respect.'

And I defy anybody to find a man making a sole leather counter, I don't care what the grade is, that will give that guarantee on a sole leather counter. He says he can not do it, because they vary, and some of them will go wrong. The substitute on the other hand, has got an absolute guarantee to replace the entire shoe free of cost if that counter goes wrong in that shoe, and that is what they call "substitution" and "fraud on the consumer."

Now, in the outer soles:

There is what you would call a couple of poor leather outer soles [indicating]. You may not know much about leather, but I guess you can see that. There is a composition sole [indicating]. That composition sole will outwear any two pairs of leather soles that you could get out of the best part of the best hide that is made. Before we commenced using that sole we put them on the shoes used by the traffic policemen up in New York for two years, and we have received practically no complaint from the wear of that sole, and the best leather sole that we could put on those shoes would not stand up with those great big, heavy, New York traffic fellows that are moving around on that concrete and cobble stones all the time. Here is one of the peculiar things. We have what we know in the shoe trade as "pancake"-not like you use with sirup, but it is taken from the skivings and the floor sweepings, the most inferior part of the leather. That is put into a big square pan, and then they take a daub of paste and spread it around through these skivings and build it up, and when they have built it up they cut it out into lifting. Now, that is 100 per cent leather. I argued that with a fellow who puts that in because I told him it was not 100 per cent leather; it was 50 per cent paste, but that is supposed to be 100 per cent leather. That is used entirely in the base of the heel, where no wear comes. For instance, I have one of the heels here. It is simply put in this place here [indicating] where there is absolutely no wear on the shoe. It doesn't increase the wear, no matter what you put in there, but in order to get by the branding "100 per cent leather" he puts that skiving in there as part of the shoe. When it gets wet the tendency of that paste is to swell up.

Wherever you use leather board-and when they tie the can on to the dog's tail, it always gets on to poor old leatherboard—that is made really from leather which is ground up, but there is also some wood pulp in it, but it is perfectly practical to use it in certain places but it is called a substitute. That piece there is pancake [showing]. You can see it is just built up leather, and a man could use it and still call it "100 per cent leather."

Here is a heel that is made with what we call a substitute heel; that is, it is made with leatherboard rand, but good leather top where the wear comes. That heel there is made with pancake underneath with pieced leather lifts and tops which is 100 per cent leather. This is a 100 per cent leather heel, and this is a substitute heel [showing].

Now, I will just take one other substitution, and that is the question of rubber heels. Ten years ago rubber heels practically were not put on in any way except in the cobbler's place. We started in New York putting on rubber heels, and people thought we were crazy, but to-day over 90 per cent of all men's shoes sold are equipped with rubber heels. Does anybody want to stand up here and say that the putting on of rubber heels, which is a substitute, has been detrimental to the consumer? If it is, why are 90 per cent of them using rubber heels to-day? The public buy them that way. They know they have rubber heels, as they are very evident on the shoe. Before rubber heels were put on shoes extensively by manufacturers people used to have them put on by taking some of the leather off the heel

and having the rubber put on, but they had to go to a cobbler to have that done.

Our attitude on branding is this: We have no objection to a law which will insist on the branding of a shoe, or any other article, being a correct representation-that is, that it will not be misleadingbut the question comes in of forcing the branding of every shoe, where the forcing of that branding will not in any way determine the quality of the shoe, but will make it decidedly misleading.

The CHAIRMAN. Mr. Hazzard, unless the committee thinks to the contrary, the Chair would feel that you have made a very good, clear statement of your point, and it might be that in the few minutes we have left you would rather have some questions by the committee. Mr. HAZZARD. I am all through, Mr. Chairman.

The CHAIRMAN. I don't want to shut you off, but it is getting near the time for adjournment.

Mr. HUDDLESTON. I would like to ask a few questions. Would the interest you represent object to a law requiring that the manufacturer should put his name on his product?

Mr. HAZZARD. As an individual, no; but as representing the trade as a whole; yes.

Mr. HUDDLESTON. Why would you object to that?

Mr. HAZZARD. Because let me go back the consumer gets his guarantee from the integrity of the man that he purchases from. That is the retailer. That is as far as he goes. That retailer is supposed to know shoes. It is his business to buy shoes of a quality on the basis of which he sells them, and he should not be tied down to any particular brand of shoes. As long as he buys a shoe and sells it from his store, his store sanctions the quality, and he should be free to buy an unbranded shoe or a shoe branded with his own name, or any way he wants to.

Mr. HUDDLESTON. Do you not think the consumer is entitled to the protection of the manufacturer's name?

Mr. HAZZARD. Probably you might be able to argue it that way, but the question is, have you the right to insist on it? That is, if you are going to do that, you have got to go through on everything. Mr. HUDDLESTON. Would it not be an assurance of quality if a man could be permitted to know that a certain manufacturer had made a certain shoe?

Mr. HAZZARD. Absolutely so, but my opinion is, from experience, that that assurance should come from the dealer that sells them to him.

Mr. HUDDLESTON. But a man buys a pair of shoes in this store to-day and in another store to-morrow, perhaps never two pairs in the same place. He has no recourse against the retailer except to go elsewhere to trade. If he can go into a store in New York or Washington or elsewhere and ask for a pair of "Hazzard shoes," we will say, he would have some assurance of quality.

Mr. HAZZARD. There isn't any question in regard to that part of it, but there is a pretty big question here and that is-for instance, let me illustrate this: Take Tiffany. Tiffany has worked up a wonderful reputation in jewelry under the name of "Tiffany," not. under any manufacturer's name. That word "Tiffany Tiffany" carries with it the guarantee of Tiffany, and that is good will. Just the minute that you turn around and require the manufacturer to brand,

you take the good will away from that merchant, and when you have done that you have despoiled him of some of his world's goods, and it is a question whether you have a right to.

Mr. HUDDLESTON. It occurs to me that if the interests of the producer and those of the consumer are served, we are not under a very high obligation to respect the interests of the intermediary, which are in conflict with those primary interests.

Mr. HAZZARD. I think, as I stated before, you are under obligations to the minority not to sacrifice the minority unjustly.

Mr. HUDDLESTON. Not "unjustly"; certainly not.

Mr. HAZZARD. The question is, if a man has built up his good will and his name through years of giving good merchandise and all that, whether he should not have the integrity of that name and not have to pass it on to a manufacturer.

Mr. HUDDLESTON. The right to impose upon or to deceive can never become a vested right.

Mr. HAZZARD. NO..

Mr. HUDDLESTON. No one is bound to respect it.

Mr. HAZZARD. But let us get back to the good President's remark the other day when he said, "You can not legislate elimination of vice, but you can develop good."

The CHAIRMAN. I think you have gone far enough to get the witness' point on the questions without argument. We have only two minutes left.

Mr. COOPER. May I ask the witness one question? It is not a fact that most everyone knows what brand of shoes they are buying to-day in any store? I have a certain brand that I go in and ask for always.

Mr. HAZZARD. There are plenty of shoes branded with the name, and if a man is really afraid of getting stuck it will be no trouble for him to buy the brand of shoes he wants. The brands are nationwide. He can buy them in any city, town, or place in the United States.

Mr. LEA. As I understand your argument, if the main purpose to be accomplished is to protect the ultimate consumer against deception, then marking the ingredients of the article is not any protection of that character, because ingredients do not mean quality? Mr. HAZZARD. Yes, sir.

Mr. LEA. Therefore, in order to protect him, you would have to give a guarantee of the construction and the workmanship and the material?

Mr. HAZZARD. Yes, sir.

1

Mr. LEA. I presume that, broadly speaking, there are two methods of doing that. One would be for the Government to establish the standards and prosecute the dealer for failure to comply with them? Mr. HAZZARD. Yes, sir.

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Mr. LEA. And the other would be to put inspectors in the factory and give a certificate before the product goes on the market?

Mr. HAZZARD. And the latter would be impracticable, and the former was worked out at the time of the war, when there was a program of conservation, and they tried to work on the plan you spoke of and gave it up as absolutely useless. That is water that has gone over the dam. It has been investigated and has proved absolutely useless.

Mr. LEA. In regard to this last point raised by Mr. Huddleston, is it not a fact that if the local dealer chooses to brand his shoes with his own name instead of the manufacturer's name, he loses the benefit of the good reputation of the manufacturer on account of preferring to build up his own reputation?

Mr. HAZZARD. Yes; but the thing is that he buys a great many unbranded shoes, particularly to-day, and he has got to do it on the open market. He has got to buy from jobbers, he has got to buy here and there-pick up what he can. You take the women's shoe trade to-day; a man who is associated with me, a very big producer of women's shoes, made the direct statement, and his factory runs thousands of pairs of shoes a day, that they didn't have a single style of shoe going through the factory at that time that they were making three weeks ago. If anybody can anticipate that situation and get a brand on a shoe, he is going some. dealer has got to go out and find some jobber where he can buy it, and that will be an unbranded shoe. If all the people handling a shoe put their brand on it you might have a half dozen different marks, and they would mean nothing to the consumer unless it was an established brand.

The

The CHAIRMAN. Does the committee have any objection to running overtime a little while?

Mr. BURTNESS. I have just a couple of questions. Mr. Hazzard, shoes were very high during the war, much higher, in fact, than most commodities, relatively. Was that caused by the manufacturers using more or less leather in any way?

Mr. HAZZARD. No, sir. Am I at liberty to continue talking as long as the committee wants to sit here, Mr. Chairman?

The CHAIRMAN. Yes, sir.

Mr. HAZZARD. You go into the Hotel Biltmore, and you pay 40 cents for a cup of coffee; you go down to Childs-if you go thereand you pay 10 cents, and you get as good a cup of coffee or better. Thirty cents of the price in the Biltmore is for service. You go to an opera house and go up in the balcony, and you see the same play for, we will say, a quarter, for which you paid $5 in the orchestra. Now, the man that goes to the Biltmore has no right to kick on 40-cent coffee; the man that goes into the $5 space on the floor of the house has no kick coming on the price that he pays on the floor. If you have gone to the shoe people whose expense and overhead is very high, and who are catering to a certain class of trade, and you wanted to pay that money, you didn't have to, but you paid it because you wanted to.

And let me tell you one other thing: The trouble with the ordinary consumer is that he determines the quality by the question of price, because he doesn't know quality, and tags won't help him any. I can take the same shoe and put it in two stores, one beside the other, and I can put on one 50 per cent more price than I do on the other, and I will get people in there that will pay 50 per cent more, who won't go in and buy it at the other price, and then they come out and meet me on the street and cuss the retailer.

Mr. BURTNESS. Were there less substitutions for leather in the shoes made for the Army than there usually are in the general run of shoes?

Mr. HAZZARD. No, that has been fairly constant. And I would say this, that the substitutions to-day are a great deal better than