Senator HARTKE. He can't go over and tell this other man, right next door to him, who is selling the same item, if he wants to put it at a different price, he can't do anything about that, can he, even though it will be in competition to him?

Mr. COURTLAND. No, sir; he cannot change the price.
Senator HARTKE. This is what you call price fixing?
Mr. COURTLAND. Yes, sir; I would.

Senator HARTKE. The retailer is in a price-fixing position today, every retailer?

Mr. COURTLAND. No, sir; if he can lower the price to suit his personal desire for profit.

Senator HARTKE. I understand that. He has the privilege of making up his own mind.

Mr. COURTLAND. Yes, sir.

Senator HARTKE. Because he owns the store.

Mr. COURTLAND. That is right.

Senator HARTKE. And if the consumer doesn't want to buy there, he doesn't have to.

Mr. COURTLAND. Yes, sir.

Senator HARTKE. He can buy from next door, as long as there is a competitive market.

Mr. COURTLAND. Yes, sir.

Senator HARTKE. Now, what is the difference between that and this bill, except you are extending this to the manufacturer?

Mr. COURTLAND. If two retailers want to compete and one wants to lower his price and take 10 cents on a dollar as profit, he can do so. Senator HARTKE. For what?

Mr. COURTLAND. For whatever the item may be. Take a tie.
Senator HARTKE. All right.

Mr. COURTLAND. A tie that costs him 90 cents, and he figures he can stay in business with a 10- or 15-cent profit, so he establishes a price of $1 or $1.05. Now, if the manufacturer says you cannot sell this tie for less than $1.49, then these two retailers have no competitive angle at all.

Senator HARTKE. Now, we have store A and store B, side by side, and there is no law. They are both selling those same ties. Store A says, "I am going to affix," according to your definition, "a price of $1.05 on this tie." And store B says, "I am going to affix a price of $1 on this tie." Now, how is the consumer hurt by store A affixing a price of $1.05 on the tie?

Mr. COURTLAND. The consumer is not hurt, because you have two people competing for the business.

Senator HARTKE. Wait a minute. That is right. Now, what is the difference between that and when you take the label off of it and you sell the identically same tie in store A and store B without having the label on it? Is there any difference at all?

Mr. COURTLAND. That is a question I couldn't answer.
Senator HARTKE. He sells the same tie, took the label off-

Mr. COURTLAND. I don't think there is much difference. Some people buy a label, but normally there is not, in quality.

Senator HARTKE. No difference in quality. Now, when we put the label on in store A and sell it for $1.05, and take the same tie with the label off and put it in store B, how is the consumer hurt in that situation?

Mr. COURTLAND. He isn't, if he recognizes the value.

Senator HARTKE. Now, we take the tie in store A for $1.05 and take an identical quality in store B and sell it for $1. Now, how is the consumer hurt?

Mr. COURTLAND. He isn't hurt.

Senator HARTKE. That is exactly what you have in this bill. You have exactly the same thing on a national level from the manufacturer. Mr. COURTLAND. That doesn't exactly follow, sir.

Senator HARTKE. Why?

Mr. COURTLAND. If the manufacturer says you must sell this tie for $1.49, the consumer doesn't have the opportunity of shopping for the more advantageous price.

Senator HARTKE. He doesn't have the opportunity of getting the tie in store B, either. It is just identical quality merchandise, but he doesn't have the opportunity of buying the tie there because he doesn't sell it.

Mr. COURTLAND. He may desire the name.

Senator HARTKE. Now you are adding something to it. This is the crux of the thing. Why would he desire the name? Mr. COURTLAND. That depends on the individual.

Senator HARTKE. Why would he desire the name?
Mr. COURTLAND. Prestige factor, possibly.

Senator HARTKE. He wants something, and he is getting something extra; is that right?

Mr. COURTLAND. Yes, sir.

Senator HARTKE. What is he getting extra?

Mr. COURTLAND. The opportunity of boasting that he is wearing a $7.50 tie.

Senator HARTKE. He is wearing something other than the actual quality of the tie?

Mr. COURTLAND. That is right.

Senator HARTKE. That is right. And that is what is in this bill. If there is something besides the actual contents in the tie, that is what you are buying. Why shouldn't, then, the man be entitled to receive more if he is selling something more?

Mr. COURTLAND. But he doesn't receive any more, Senator. The manufacturer receives the same price on this item, when he sells that

tie.

Senator HARTKE. You are talking about the price now. I asked you whether he was getting anything more, and you said he was getting something more, he was getting the name, which he said was important to him.

Mr. COURTLAND. But this bill is not related to that phase. We are talking about the retailer and the profit where the retailer is concerned.

Senator HARTKE. I am trying to get what you mean by price fixing. I am getting back to this business, that there is no price fixing, when there is competitive merchandise and when it is a retailer doing it. Mr. COURTLAND. It is competitive where the individual item is concerned.

Senator HARTKE. Take one of your own members. Can't he refuse to take any item if it has what you say is a fixed price?

Mr. COURTLAND. Yes, sir.

Senator HARTKE. Would this drive your people out of business? Mr. COURTLAND. No, sir.

Senator HARTKE. What do you care, then?

Mr. COURTLAND. We don't think it is fair to the consumer

Senator HARTKE. Wait a minute. How is the consumer going to be hurt?

Mr. COURTLAND. Because of the fact that the prices will increase. Senator HARTKE. What prices?

Mr. COURTLAND. The prices of any name brand product that must be sold at a price that is fixed

Senator HARTKE. If you sell an identical quality piece of merchandise, the same as the name brand, what difference does it make to him? Can't you say this is just as good as the name brand tie?

Mr. COURTLAND. I believe they do.

Senator HARTKE. Why don't you do that? What difference does it make to you? You are worried about the consumer.

Mr. COURTLAND. True.

Senator HARTKE. If you are a good businessman and salesman, why can't you tell the consumer, "Here you are, a tie just as good as the name brand," but he says that he wants the name brand, and you say, "I don't sell the name brand." What is the difference? You mean you could not stay in business then?

Mr. COURTLAND. I believe our people would stay in business.
Senator HARTKE. Then what are you worried about?

Mr. COURTLAND. We do not think it is right for the manufacturer to establish the price that the retailer has to accept.

Senator HARTKE. What is wrong about it?

Mr. COURTLAND. Well, once the manufacturer is paid for his products, and there is no damage being done to the item concerned, we believe that the retailer should be privileged to make whatever profit he wishes, not to be dictated to by someone else as to how much money he must make, in order to sell that man's manufactured goods.

Senator HARTKE. What about the retailer in store A and store B again? We are right back there. In store A why should he have the right to dictate to the consumer what price he is going to have to pay for the merchandise in his store?

Mr. COURTLAND. If the same product is available next door for a lower price, the consumer does have the privilege of selecting what price he wants to pay for the same item.

Senator HARTKE. That is it exactly. You answered your own question again. As long as you have the same quality merchandise available in a competitive market from manufacturers, then there is no damage to the consumer?

Mr. COURTLAND. There isn't in this one respect. Your smaller manufacturer doesn't have the financial backing to spend millions in advertising to make his item known to the public.

Senator HARTKE. Now, coming back to advertising, as far as advertising is concerned, store A has a great big newspaper ad and store B doesn't have any. What difference does that make to the consumer? Mr. COURTLAND. I am talking about the manufacturer who makes his product known.

Senator HARTKE. What is the difference?

Mr. COURTLAND. You mean the difference in the product? There is no difference.

Senator HARTKE. What is the difference in the situation? Store A put in a great big newspaper ad here and even went out and hired some people to carry handbills all through the neighborhood.

Mr. COURTLAND. Right.

Senator HARTKE. OK. Right next door, the same quality tie at store B, but he didn't spend a cent for advertising. Now tell me how the consumer was hurt?

Mr. COURTLAND. The consumer is not hurt if he can shop next door. Senator HARTKE. That is it. Now, you said a while ago there were small manufacturers who couldn't spend the money for advertising. Well, store B couldn't, either. What is the difference?

Mr. COURTLAND. I don't quite understand your question, Senator. Senator HARTKE. Whatever you don't understand, you tell me. Mr. COURTLAND. You say, What is the difference? The difference in which, relating the two retailers with two manufacturers?

Senator HARTKE. That is right.

Mr. COURTLAND. All right. The manufacturer who advertises extensively builds recognition of his product. The American public is gullible where advertising is concerned, to an extent. So that this item, or these products, will become recognized by him and he takes in face value the advertising he reads about or that which he sees on television. Now, a small manufacturer, manufacturing an item that is exactly like this, and doing no advertising, will go out of business because nobody knows of his merchandise and nobody will buy it, including the retailer.

Where two stores are concerned, if you have the same item selling for the same price, and one store advertises and one doesn't, the one who advertises will naturally sell more and his profit will be greater. If the store that does not advertise lowers the price of the identical product with the same name, no one knows about it, and he won't sell any.

But when you go back beyond this point to the manufacturer who establishes the retail price, that is the point at which we are concerned. We believe that if two stores are buying something from any individual, manufacturer, or producer, and wish to make a markup or a profit through which they can remain in business and show a profit, they should be able and allowed to establish this increased selling price, to fit their own situation.

Now, a person who is in a very busy intersection, and doing a gross business of several million dollars can afford a lower markup and still do very well economically, where a person at a location in a smaller town, say, where his potential for sales is much lower, cannot lower his prices normally, not only because he has no competition, because the town cannot support two identical stores or three, but because of the fact that his gross sales are low and his profit must be greater in order to exist, to meet his overhead and normal living expenses. So quantity is the deciding factor.

We believe that the retailer should have the privilege of determining the selling price to the consumer. The consumer will benefit if two competing merchants selling the same identical item, one through efficiency can afford to sell it for 10 cents less than the other, through

inefficiency or high wages or whatever the reason may be, so that the person who, with our so-called free system of enterprise, can lower a price and still make a profit, remain in business, he will do more and sell more and grow and become larger.

This is how your so-called chains have grown. A store with x dollars of overhead and operating expense has found it is less than x dollars when you have two stores.

Senator HARTKE. Mr. Courtland, let me make it clear that I don't expect you to abandon the principle for which your organization was established. I just want to get a few facts. Maybe we can do it a little differently.

You do want to sell name merchandise; do you not?

Mr. COURTLAND. Yes, sir.

Senator HARTKE. And you want the privilege of fixing your own price; is that right?

Mr. COURTLAND. Yes, sir.

Senator HARTKE. Rather than having the manufacturer fixing the price?

Mr. COURTLAND. Yes, sir.

Senator HARTKE. Now at the same time you want the privilege of selling equal-quality goods in competition with those name goods; is that true?

Mr. COURTLAND. Yes, sir.

Senator HARTKE. And there isn't any question that you could handle the name products with an established manufacturer's price, and still have similar items right next to it on the counter; is that true?

Mr. COURTLAND. Yes, sir.

Senator HARTKE. If that were true, assuming that were true, you could tell the customer that this is name goods and it sells for an established price, and this is a different product, equal quality, selling at a lesser price.

Mr. COURTLand. Yes.

Senator HARTKE. And if the customer has confidence in your establishment, and if he believes you, he certainly then could save himself some money, according to this, by buying the product which does not have an established name. Is that true?

Mr. COURTLAND. Yes, sir.

Senator HARTKE. So, as far as he is concerned, as long as he has confidence in his retail establishment, there isn't any reason for the consumer to be damaged. Is that not true?

Mr. COURTLAND. That is true. There is no reason for it.

Senator HARTKE. And the contention you make, then in substance, falls down to one basic thing: You are saying that because of the advertisement which has gone into the quality name, and whatever goodwill he has been able to establish in that name, that the consumer may still want to buy another product. Is that right?

Mr. COURTLAND. This is possible.

Senator HARTKE. So, really, there is something more than just quality of the goods that he is after. Is that true? He wants that name, doesn't he?

Mr. COURTLAND. Yes, sir.

Senator HARTKE. Why shouldn't that name be entitled to something more, if the mnufacturer feels it is entitled to?