unhappy about what the Commission was doing in carrying fom^ard some of its
important work. Instead of helping the Commi.«sion, he hindered it and finally he
was removed from office. Then the Commission moved on in succeeding years to
add to its illustrious record of public service. However, as the years have i)assed,
there has been additional criticism of the Commission from both without and
within. It is my hope that not only this criticism should be investigated, but, as
I have said earlier, an investigtaion should be made of tho.se who express the



12

criticism and tlieir motives for malving it and the justification or laclc of justi-
fication for their criticism. If this Committee will undertake to do that it will be
rendering a public service and perhaps in doing so will be assisting this great
agency, the Federal Trade Commission, to continue as a champion of the public
interest.

Let me summarize: We now have a national public polic.v of antitrust. It pro-
vides for the maintenance of free and fair competition in order to preserve a free
and competitive enterprise .sy.stem. An integral part of that public policy is the
Congressional objective underlying Section 2 of the Clayton Act. a.s amended by
the Robinson-Patman Act, "to halt the gradual demise of the small businessman"
and to preserve "an organization of industry in small units which can effectively
compete with each other." Moreover, the Congress in 1058, when it enacted the
permanent Small Business Act (15 U.S.C.A. 631). made it clear that —

"It is the declared policy of the Congress that the Government should aid,
counsel, assist and protect insofar as is possible, the interest of the small business
concerns in order to preserve free competitive enterprise. * * *"

Among those who are proclaimed as advocates for the interests of consumers
are some who would say that this policy is not in the interest of the consumer.
With that point of view I disagree. My record as an advocate for the consumer is
one of which I am proud. I have fought for and supported proposals for truth
in securities, truth in fabrics, truth in packaging, and quite recently legislatioii
for truth in lending. I have helped enact laws such as those prohibiting the sale
of dangerously flammable fabrics, and other legislation for the protection of the
public. I consider that what I do in the interest of maintaining free and fair com-
petition for businessmen in the marketplace is in the interest of the consumer.
The consumer benefits from an effective antitrust policy. It is this policy which
provides for eflSciency and for keeping prices down to reasonable levels in the in-
tere.srt of consumers. Yon can't have competition without competitors and you
can't have efficiency and low prices without competition. I do not regard our laws
which provide for all of this as being laws for "business protectionism," but in-
stead I regard them as laws which provide for the enhancement of the public
interest, including consumers.

In conclusion, let me say that we should do nothing to weaken any of our laws
designed to preserve and promote free and fair competition in the marketplace.
Instead, we should act to strengthen those laws. I repeat, in order to determine
what we should do, we must look at the facts and not restrict our consideration
to the arguments of special interests and those representing special interests. I am
confident that when you have heard from representatives of small business inter-
ests from throughout the nation and from others who know what the facts are
about the use of business practices and the economic significance of those prac-
tices, you will find that these arguments now being made against our public
policy of antitrust are without merit. Again, I congratulate you upon undertak-
ing this task and request that you follow through on it.

Mr. DixGELL. Were there any questions for Mr. Patman?

ATr. Smith.

Mr. Smith. I have one, but it is ^oino; to take so long to answer it
that I better ask him on tlie floor sometime.

Mr. DixoELi.. Mr. Conte.

Mr. CoxTE. Mr. Patman, you mentioned on several occasions that
von felt the FTC was doing a good job, "a wonderful job," and special
interest groups were attacking it because of this. Do 3-ou think Naders
Raiders are a special interest group?

Mr. P.\T:\r.\x. Xo; T don't think they are. I have l^een very mucli im-
pressed with ]Mr. Nader. I don't know anything about him, but I have
])een impressed with the way he has courageously pursued things. That
always interests me, and I know it interests the gentlemen. But of
course the fact that they do so much, you could certainly find ways,
find certain things to criticize, just like your record and mine. xVs hard
as we try to keep a good record, we are open to criticism, you know,
and they can always pick out something.

Mr. CoNTE. Thaiik you, Mr. Dingell.



13

Mr. Patman. I commend the cliairman for his statement opening
this meeting-. It was a wonderful statement.

Mr. DiNGELL. Thank you, Mr. Chairman.

Mr. Corman.

Mr. CoRMAN. Thank you, Mr. Chairman.

Mr, Chairman, I know we sometimes liear that Laws passed decades
ago have lost their usefulness or their importance. I wonder if you
could comment on the importance in today's economy of the survival of
the small competitive businessman and whether or not continuation
of the philosophy of the Robinson-Patman Act is necessary today.

Mr. Patman. Yes, sir ; I believe it is more necessary than ever. You
see, there was quite a campaign went on for this law. You talk about
marches on Washington. On March -i, 1936, they had a meeting here
at Constitution Hall and practically every State'was represented, and
every section of the country. It was really an outpouring of sentiment
from the grassroots. And that gave it the greatest s])ur and caused its
enactment during that year, 1936. I think the need for it now is really
greater. You have so many different ways of cheating and defrauding
people in business life, especiall}- the small businessman who is so
helpless and un]-)rotected in many ways, that we must have every
possible way of helping the small businessman, because he needs it,
and he is so important to this Xation. If something is not done — I
think high interest has caused more trouble in this country than any-
thing else, and it was deliberately done by a few peo])le — if we don't
roll back these interest rates, we are going to have a real dejiression.
I remember the depression Mr. Hoover said was named for him, the
Hoover Depression, which was verv serious. When it started certain
big corporations — I still have the files on them — sent to their share-
holders, and said we are not paying dividends. We are going to retain
our earnings for the purpose of buying up the divested properties of
our competitors.

Wasn't that cruel? But true. And they did it. They bought up
divested properties of their com])etitors. And now, with this start of
conglomerates and the boarding house reach of the banks to reach out
and buy anything, not related to banking, you know it is a danger to
small business people, more so than ever before. So we have got to pro-
tect them in every way on earth. Whatever you do, do not weaken or
destroy this good law that so many people entered into and practically
the whole Congress. AMien we finally passed it on the floor of the
House, I asked for a division, and it just looked like everybody stood
up, and those opposed, 18, stood up out of the whole house after a long
debate and much lobbying effort on the part of the people who op-
posed it. The Senate was practically unanimous. So it had the support
of the Nation at that time and I believe now it would have the same
support it had then.

Mr. CoRMAN. Thank you, sir.

Mr. DiXGELL. Mr. Chairman, there is one question. The Chair has
frequently heard the charge that the Robison-Patman Act is anti-
competitive. Do you feel this ?

Mr. Patmax. Oh, no. It preserves competition, and comi^etition
makes lower prices. It is just that simple.

Mr. DiNGELL. Mr. Conte.



.S6-13S — 69 — pt. 1-



14

iVrr. CoxTE. I hate to dioress, Chairman Patman, hut you have
hrouivht ill interest rates liere and one-l>ank lioklino; companies and a
lot of other areas that don't necessarily affect the Robinson -Patman
Act wliicli certainly has a fjood basic underlying premise in tryino; to
provide assistance for our Nation's small businessmen.

Let me ask you, What do you su,2<rest should be done to control in-
flation ? You are opposed to high interest rates.

Mr. Patmax. Oh, there is a perfect way of stopping inflation. "We
are all op]iosed to inflation. It is bad and will finally destroy the coun-
try if you don't stop it,

Mr. CoNTE. How then do you control it ?

Mr. Patmax. There are known, proven ways of stopping inflation
but there is no known, proven way of stopping depression once it
starts. Therefore, it is necessary that we start on inflation.

Mr. CoNTE. How do you do it ?

Mr. Patmax. Now, Mr. Martin, of course, of the Federal Reserve
Board, ho has honestly l^elieved — I give him credit for being honest in
his belief — that if he raises interest rates every year for 17 years, that
that will retard or stop inflation, but it is shown to be just the opposite.
My \'iow]ioint is, whenever you raise interest rates you raise the prices
of everything including goods on the slielves for sale. It is just as il-
logical to say that you can stop inflation by raising interest rates as to
say that you can stop a fire by using gasoline instead of water.

Mr. CoxTE. It is absolutely illogical

Mr. Patmax. Now, then, I can tell you how to stop it. Unless infla-
tion gets to be of the ruinous type, you cannot get Congress to pass
laws taxing too much unless the public sentiment is for it. It would
be difficult for Members of Congress to do it. But if and when the
inflation becomes of the type that prices are going out the roof and
looks like it is going to be uncontrollable, Congress can pass a laAv
to siphon off the excess purchasing power and pay it on the national
debt. Tliat wav it will help in two ways.

Mr. Cox-^TE. Yes : but vou can't get Congress to do this.

Mr. Patmax'. It will help the people in stopping inflation. It will
help the ]")eople by saving them interest on the national debt which is
$1 8 billion this year.

Mr. CoxTi^.. ]\[r. Patman, that sounds great and it is wonderful, but
( 'ongress has refused to do it.

Mr. Patmax. Of course. Congress will always be reluctant to do it
until ]irices become ruinous or inflation goes out of the roof. But there
is a way to stop it and we know it. It can be done. It used to be that
inflation was too much money chasing too few o;oods.

Well, that is not true today because we do have, not adequate pro-
duction in every line but fairly adequate production, at least to the
extent tliat it is not too much money chasing too few goods now. But
right now it is too much money in the economy, and it is unnatural
for the Congress when things get ruinous or dangerous to siphon off
money and pay it on the national debt. But if you don't do that, my
dear friend, we are going to go over the side toward a depression, and
you cannot stop that. Then a few people can buy up this country.

Mr. CoxTE. Mr. McChesney Martin has said we could cut defense
spendinc: by $10 to $15 billion dollars. We had the defense appropria-
tion l)ill up in the House last Wednesday, Thursday, and Friday. We



15

could not get enough votes to cut it $10 or $15 billion to keep warm in
a tele])hone booth.

Mr. Patman. Well, the shoemaker better stay with his last. Mr.
Martin knows a lot about these secret meetings down at the Federal
Keserve, but he doesn't know

Mr. CoNTE. Where then do we take this money out of the economy?

Mr. Patman (continuing) . Much about this.

Mr. CoNTE. Where do you suggest we take this money out of the
economy ?

Mr. Patman. I said if inflation becomes ruinous or becomes un-
controllable — it has not reached that point.

Mr. C'oNTE. It is pretty much uncontrollable right now.

Mr. Patmax. Oh, no, it is not. It is nothing like it was at the be-
ginning of World War II. I went through that and I was for the
OPA, and I was just one of a few for the OPA. Congress voted for
it because they kind of had to, you know, control things, but it was
never popular. But prices got out of hand worse, preceding World
AVar II, than tliey are right now, I think.

Mr. CoxTE. Well, you talk to some of the older people back home
who are on social security and fixed incomes and you will find that
inflation is uncontrolhible right now.

]Mr. Patmax. It is bad now. And it should be stopped and deterred,
but to increase interest rates is not a deterrent.

Ml'. Coxte. You agree it should be stopped ?

Mr. Patmax. Yes, sir.

Mr. Coxte. Then I ask you the way to stop it, and you say cut down
expenditures. But the Congress refuses to cut down expenditures.
They want to increase expenditures. How do you do it then?

Mr. Patmax. Well, of course, that is just one way. The way to do
it, if it becomes bad is through taxation. That is a sure, known, proven
way.

Mr. CoxTE. You are going to get this Congress to pass higher taxes?

Mr. Patmax. Well, you cannot do it right now because it has not
reached the point to where they are willing to do it. But it can reach
that point. And if they do. they can stop it with one act of Congress.

Mr. Coxte. Thank you, Mr. Chairman.

Mr. DixGELL. Were there any further questions?

Mr. PIortox. Yes.

Mr. DixGELL. Oh, ^Ir. Horton. I beg your pardon.

Mr. Plorton.

Mr. HoRTOx. Mr. Patman, you are in my judgment a real champion
of the small businessman, and especially in view of your authorship
of this very important bill designed to protect the small business-
man against the large competitor. Do you feel that any changes are
needed to make the bill more effective to accomplish that purpose?

My. Patmax. I don't know of what is proposed now, but may I
humbly suggest that all kinds of amendments were offered which if
accepted would have ruined the law entirely.

Mr. HoRTON. Well, we don't want to do that.

Mr. Patmax. That is the hardest fight we ever had, was keeping out
these dangerous amendments. I hope you study carefidly these amend-
ments, and I know you will, that are proposed. But I personally don't
know of one right now that I am ready to advocate, because it has been



16

years since I have had the time to give careful and adequate thouglit
and study to this, you know.

Mr. HoRTON. You would agree I am sure that there is a problem in-
sofar as the small businessman is concerned, especially in the 1969 and
1970 years. The small businessman today, I think you will agree with
me, is kind of iigliting upstream.

Mr. Patman. Sure, because of concentration of wealth on the other
side.

Mr. HoRTON. The conglomerates and everything else.

Mr. Patman. That is right.

Mr. HoRTON. Some of this has to do with the rules and regulations
that he has to comply with and the tax structure.

Mr. Patiman. Right.

Mr. HoRTON. And the refusal to permit small businessmen to have
some tax advantages, and this sort of thing.

Mr. Patman. Ajid may I add, the inducement to sell out at a big
price and without taxes.

Mr. HoRTON. That is right. All these things can make it tougher.

Mr. Patman. Yes, sir.

Mr. HoRTON. But I do sincerely feel that this act was designed to
help him, especially in his competition with large chains, the large
competition. And there is the feeling that at least it is not accomplish-
ing that pur]:)Ose, that it is not protecting him insofar as that large
competition is concerned. Do you feel that there are any changes that
ought to be made to make it more effective? Do you feel that there is
a failure of appropriate enforcement, that the law is all right but we
need more enforcement.

Mr. Patman. If we need more enforcement, of course, it should be
provided for, but don't overlook this fact. You know at one time I
tried to stop the national chainstores. I felt it was wrong to have one
concern all over America in 3,071 counties, and I got up a bill. And I
was helped in the preparation of that bill by Justice Brandeis and
Attorney General Jackson. They were wonderful friends of small
business. They contended that we could not depend upon a regulatory
law, because if you did it would be 20 years before the courts would
finally pass on it. During that time changes would be made. And Jus-
tice Brandeis said tliat the enthusiastic trust busters in the Department
of Justice, they would be out in a couple of years and then, of course,
they would have these cases in court year in and year out. The big law
firms that were representing these people, they stayed in business all
the time. They have been in the business, some of them, almost a hun-
dred years. They know all the tricks of the trade, and they are trying
to do something to hurt these laws that protect the small businessman.

So he suggested a tax law. And that was the law that we came near
passing, I'estricting ownership to 50 stores. But Ave didn't succeed.

That was a way not to have a regulatory law but to use something
that is effective.

Now, in the case that is going on right now, remember this, that
the people who have been fighting this law have been in business not
only since l^YMi but long before that. They stay up to date, and they
increase their opjjosition every time they get a chance, and they keep
the opposition before the pe-ople and before the Congress. But there
is no))ody out there ])roperly representing the little men — giA'ing them
the publicity and help that they should liave.



17

Mr. HoRTON. You are talking about the opposition to the bill, that
is, the opponents of the bill.

Mr. Patman. That is right; the people who have an ax to grind.

Mr. HoRTOx. Eight. I am not concerned about that here now; that
is not what I am trying to direct my attention to. What I am trying
to direct my attention to is to acknowledge, No. 1, that the small busi-
nessman is having a tough time. There are many factors, but one could
be that the statute has not given him the protection that he ought to
have, especially in the 1960's and 1970's. He is really fighting upstream
and having a tough time.

Mr. Patman. No question that he is fighting upstream and has been
for 30 years.

Mr. HoRTON. Eight. And so what I am trying to do is to find out
if there are legitimate ways in which we can change the bill to make it
more effective or if w^e can direct better enforcement t-o put him in
a better position to compete.

Mr. Patman. Yes, sir.

Mr. HoRTON. More and more small businessmen are closing up their
doors, and I think it is a tragedy. I think we have got to do something
to help to keep that small businessman in business. I know in my dis-
trict in Eochester several people have come up with good ideas. They
have started in and the whole goal becomes to get going and then get
somebody to buy them out because they don't feel they can compete.
They come up with good ideas but they just don't feel that they can
compete.

Mr, Patman. I commend your statement, and I am for any improve-
ment that w ill help tlie situation. I assure you of that.

Mr. HoRTON. I am glad to hear you say that.

Mr. Patman. Yes, sir, I certainly am. And if you gentlemen know
of anything that will help, I will certainly be for it.

Mr. Horton. Well, I hope these hearings will bring that type of
situation out.

Mr. Patman. That is the reason I am strong for these hearings. I
think it is a fine thing, wonderful thing.

Mr. DiNGELL. Just one brief question, ^Mr. Chairman, before you
depart. When you drafted Eobinson-Patman and when it was enacted,
was it your impression that it was a section of the antitrust laws for
tlie purpose of a suit by private individuals as opposed to action by
Government agencies?

Mr. Patman. Well, section 3, the part you refer to, I am sure, was
put in by Senator Borah of Idaho. He had advocated that for a number
of years himself, and when the Eobinson-Patman law came up he
got it made a part of the Eobinson-Patman law. And, of course, it has
been held, I think, tliat it was not a part of antitrust laws but that is
the way that it got in. The way the Eobinson-Patman law first started,
a fellow, a fine gentleman in my hometown, a wholesale merchant ap-
proached me this way. He said, suppose I buy one carload of merchan-
dise. I get the maxinnnn discount from the seller, and if I buy 10 car-
loads I just pay 10 times the price. Wliy can't we get sometliing estab-
lished that Avay on buying for the little man. If he qualifies according
to quantity or under the same and similar conditions. Then he would
be entitled to the maximum discount.

That is w^hat started the Eobinson-Patman law and that was written
into the original act. It applies to tires and things like that now, carload



18

limits. "Whenever you ^et n carload, that is the maximum discount you
can <2:et. That is the way it started. But, of course, it has been improved
upon in the course of the legislative process, at least I thought it was
improved upon.

Mr. DiNGELL. Mr. Chairman, we are certainly grateful to you for
being with us this morning.

?,rr. Patmax. Thank you, sir. Thank you very much.

Mr. DixGELL. Gentlemen, thank you for attendance. It is always a
privile2:e to have you here.
. Mr. Patmax. Thank you, sir.

' >.rr. DixGELE. Our next witness is a distinguished ]\Ieml>er of this
bodv, good friend of the occupant of the Chair, our colleao-de from
California, Hon. John E. Moss.

Mr. Moss, we are certainly ]n'ivileged to welcome you for such state-
ment as you choose to give. The Chair notes you have your legislative
assistant present with you and we would be happy to have him sit at
your side during j'our presentation to the committee.

TESTIMONY OF HON. JOHN E. MOSS, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF CALIFORNIA

Mr. Moss. Mr. Chairman. I want to first express my pleasure at the
opportunity of appearing before you as the chairman of this sub-
committee, and to see on the committee two colleagues of the minority
with whom I have had long association and for whom I have great
respect.

I think that the committee is to be congratulated for holding these
hearings, because they're most timely, far more timely than relief
under existing provisions of Robinson-Patman or antitrust laws. At
the present pace in my district, by the time relief is obtained proba-
bly another 50 or more sizable o]5erations will have failed. Since
1965, over 58 major independent businesses have closed their doors
in the grocery business. The main competitors in this area are the
Lucky Food Stores, who o]:)erate over 300 stores in California, Wash-
ington, Arizona, Iowa, Illinois: KOJart, a division of VMied Food
Stores of Detroit ; and Alpha Beta Food Stores, a divisi(;n of Acme
Food.

Their selling prices are rather phenomenal in many items. I will ask
to include in the record a list of the stores which have closed since
1965, and it should demonstrate the seriousness of the problem.

]\rr. DixGELE. "Without objection, so ordered.

^dv. Moss. And also I would like to show the selection of items priced
through the United Grocers, which is a very large wholesale crocery
organization, from which practically all of the grocery concerns do
some buying.

Mr. DixGEEE. "Without objection, that will be inserted in the record
at the appropriate time.

(The information referred to follows :)

STORES CLOSED — 1 9(i5

("iindy Cane Market, 3241 Fulton Avenue, Sacramento.

TJttle Oiant Market, Fair Oaks Blvd.. Carmichael.

Hansrtown Market, 159 Broadway, Placerville.

Wonder World, Florin Road, Sacramento.

Wonder World, San Juan & Greenback Lane, Citrus Heights.



19



STORES CLOSED— 1966

Best Buy Market, 3001 Franklin Blvd., Sacramento.

Bills Market, 3!»4t;> Sacramento Blvd., Sacramento.

Carolinas Market, 407 22nd Street, Sacramento.

Bi-Rite Market, 3438 Watt Avenue, Sacramento.

Bi Rite Market, 3020 E Street, Sacramento.

Bl Rite Market. ."901 Bmadway. Sacramento.

Bi Rite Market, 16th & S Streets, Sacramento.

Elgen Market, 10873 Folsom Blvd., Rancho Cordova.

Wonder Food Market, 4604 Franklin Blvd., Sacramento.

Farmers Market, Arden and Eastern, Sacramento.

Main Market, 501 12th Street, Sacramento.

Marconi Market, Marconi Avenue, Sacramento.

Safe-Save Market. Freeport Blvd., Sacramento.

Tuttles Market, 3247 Franklin Blvd., Sacramento.

Dunbar Market, 7720 Fruitridge Road, Sacramento.

Fine Food Market, Del Paso Blvd., Sacramento.