Mr. WILLIAMS. Our price is three thirty-nine.

Mr. Davis. Is the price that you have designated uniform to wholesalers throughout the United States ?

Mr. WILLIAMS. Except for the difference which is occasioned by freight or costs it is practically uniform.

Mr. Davis. You sell f. o. b. New York, don't you? Mr. WILLIAMS. That is right, f. o. b. our warehouse in New York. We also sell f. o. b. warehouse in Chicago, and f. o. b. warehouse in San Francisco.

Mr. Davis. And the only difference you make is what the transportation and warehouse charges are in

Mr. WILLIAMS. I think that is correct.

Mr. BERGE. You said a moment ago that in your dealing with Macy's you did not have a definite binding contract, but that they followed suggested prices. Is that generally your policy in New York State? I thought that you entered into definite contract agreements with most of your

Mr. WILLIAMS (interposing). We do. We have in existence fairtrade contracts, but not everybody, for varying reasons, will sign the contracts.

Mr. BERGE. Are there many people that you let off as lightly as you do Macy's?

Mr. WILLIAMS. As a matter of fact there are many dealers in New Your State who have not signed contracts. If you were to sign up the retail dealers throughout the entire State of New York, you would have to tie up thousands of retail dealers and that is practically impossible. That is probably one of the current weaknesses of the fair-trade acts.

Mr. BERGE. In other words, you tie some of them up and you don't tie all of them up.

Mr. WILLIAMS. We sent contracts to everybody. I have forgotten how many thousand we sent out, but we didn't discriminate between one dealer and another. We sent them to Macy's and to everybody.

Mr. BERGE. If the little fellow didn't want to sign the contract, would you do business with him?

Mr. WILLIAMS. If he maintained price, I believe we would.

Mr. BERGE. Then those who don't sign the contracts are cautioned to observe the suggested price. If they don't observe the suggested price, you stop doing business with them.

Mr. WILLIAMS. Not necessarily. As you know, these fair-trade acts have a provision in them that nonsigning retailers who are notified of a price maintenance program are bound as well as those people who do sign.

Mr. BERGE. I am aware, generally, of what the laws provide, but I was wondering how you enforced your rights under the laws, whether you enforced them equally with respect to all retailers or whether you would wink at violations in certain cases and insist on strict observance in others.

Mr. WILLIAMS. No; we do not discriminate. As a matter of fact, that, as I indicated before, is one of the difficulties with the fair-trade acts in their present status, and you have many court decisions which have indicated that fact both here and in

Mr. BERGE (interposing). Would you want to state, then, that it is your uniform policy to cease business relations with price cutters in States where you have taken advantage of fair-trade laws?

Mr. WILLIAMS. No; I stated that that was not our uniform practice, or wasn't

Mr. BERGE (interposing). Then you don't treat' all retail dealers alike?

Mr. WILLIAMS. The conclusion is not a fair one to draw. You are trying to prove that there is a discrimination which we don't

Mr. BERGE (interposing). I am not trying to prove; I am trying to

Mr. WILLIAMS (interposing). It is a matter of business judgment. There are some people who cut prices who are notorious for it.

Mr. BERGE. Macy is notorious for it.
Mr. WILLIAMS. That is not right. I don't think Macy's is.

Mr. BERGE. According to fair trade laws, they were_generally known as a large outfit who cut prices pretty generally. I suppose, though, it could be a rather serious loss of business if any of the national brands refused to do business with them, but what would be your policy with respect to a smaller dealer who for one reason or another didn't observe your suggested price? Would you uniformly cut them or would you make exceptions? If you would make exceptions to permit violations in some cases, what would determine in which cases you would make exceptions and permit price cutting ?

Mr. WILLIAMS. As a matter of actual practice, it isn't as uniform, at least as classifiable, as you would like to make it. Price wars break out sporadically. The customary procedure is to approach the dealer and request him to maintain the resale price. Usually, if he does everybody else does, and in most cases that is the way it works out. Some of them may not, and on the basis of sound judgment you pick out half a dozen people and sue them.

The VICE CHAIRMAN. You would do a whole lot if you would pick out a big profit like Macy's and go right after them. That would be some warning. How big do they have to get to permit you to sort of let them drift along?

Mr. WILLIAMS. We don't bring suits against these retailers on the basis of size.

The VICE CHAIRMAN. Taking a big concern like Macy's, if it breaks over doesn't that put the little competitor at a very great disadvantage?

Mr. WILLIAMS. Well, I don't know, frankly. I think probably in the immediate vicinity, yes; but take New York City with five boroughs, I don't know whether people from Brooklyn would go over to Macy's to buy Scotch whisky for 5 cents a bottle less. The carfare would be in excess of that. I don't know. As a matter of fact, if I may digress a minute, it seems to me that you are trying to ask me a question with respect to fair trade acts which is not answerable. It is one which is the subject of study by Harvard University. There have been several books written on the subject. Weigel has written a book on fair trade acts.

a

The VICE CHAIRMAN. Yes; I know; a great many books are being written that nobody ought to read, I expect. But the point is, looking at it from the standpoint of monopolizing business, if you

forced the little fellow to observe these resale prices and then you let a big concern like Macy ignore those prices that you compelled the smaller man to observe, how can he stay in competition ?

Mr. WILLIAMS. I think that is a misstatement. The VICE CHAIRMAN. Will you correctly state it? Mr. WILLIAMS. I don't think Macy is the only large dealer in whisky. I think there are other large dealers in whisky and consequently it is not a choice between Macy and Mr. Jones. There are other competitors in New York that probably sell as much whisky as Macy & Co. We do not sue on the basis of size.

The VICE CHAIRMAN. Do they observe your sales price?
Mr. WILLIAMS. In a good many cases they do; yes.
The VICE CHAIRMAN. In other cases they don't ?

Mr. WILLIAMS. We go after them, regardless of their size. We don't choose a little retailer; as a matter of fact, I don't think that would be effective. The value to us would be less if we picked a man who was small and was not known.

The VICE CHAIRMAN. Well, do your small retailers to a considerable degree refuse to be governed by your resale schedule?

Mr. WILLIAMS. No; as a matter of fact, I think the desire for price maintenance emanates from the small retailer, and as a consequence it is to his own advantage to maintain the margin of profit.

The VICE CHAIRMAN. With the hope, I suppose, that the people he is buying from will insist that the big man do it, too.

Mr. WILLIAMS. We try to.

The VICE CHAIRMAN. Couldn't you be rather effective if you just didn't sell to R. H. Macy & Co., if they didn't observe it? I don't suggest it is good policy; I am just trying to get at it.

Mr. WILLIAMS. Again I state that R. H. Macy & Co. are not the only large

The VICE CHAIRMAN (interposing). They are the only ones we are asking about right now.

Mr. WILLIAMS. They are one of them.
The VICE CHAIRMAN. Which others violate?

Mr. WILLIAMS. I am not in the distribution end of the business, but I know that there are a number of large department stores in New York and there are a number of large retail stores who do a large whisky business.

The VICE CHAIRMAN. And they do not observe the resale price? Mr. WILLIAMS. They do in most cases.

The VICE CHAIRMAN. How do they get into this picture we are talking about?

Mr. WILLIAMS. Macy's do observe it. If you went to Macy's now and ordered a bottle of Johnnie Walker Red Label you would pay $3.39 plus 3 percent retail sales tax.

The VICE CHAIRMAN. They are observing it?
Mr. WILLIAMS. Yes, sir.

Mr. Buck. The point is, if they don't observe it you won't let them have the whisky?

Mr. WILLIAMS. Well, we adopt these other methods first. We have found Macy's rather cooperative, to be frank.

Mr. Buck. The point is, if you undertake to sell your whisky on a resale price maintenance basis in New York you do it clear through?

Mr. WILLIAMS. Yes.

Mr. Buck. Therefore, if one does not observe the price, whether he be under contract or otherwise, you stop letting him have the whisky?

Mr. WILLIAMS. Eventually, if he doesn't adjust his price.
Mr. BUCK. Yes; of course.

Mr. WILLIAMS. Of course, there are a lot of these intermediate steps that we go through.

Mr. Buck. So long as we are talking about theory—and I am not one who indulges in very much of that—is it your opinion that the resale price maintenance insures stability of the retailer?

Mr. WILLIAMS. It is a step forward, I believe. I think it is something which the retailers have wanted for many years, and now they have it. I don't know how successful it is going to be. It is in process of development.

Mr. Buck. In other words, you think except for the resale price maintenance some retailers who are now in business may be out of business?

Mr. WILLIAMS. That is quite likely.

Mr. BUCK. Do you think it is fair and equitable to the consumer that he support more retailers than might be necessary in a trade?

Mr. WILLIAMS. I think it depends upon your economic viewpoint. On one occasion we had the N. R. A., which was for the continuation of everybody in business, and price maintenance. That is one economic philosphy. On the other hand, you have the true competitive system, which is another.

Mr. Buck. I want to correct you on the N. R. A. I don't believe that was the purpose.

Mr. WILLIAMS. I mean my experiences with it, which were rather limited, lead me to believe that price maintenance programs were encouraged.

Mr. BUCK. That is all that I have.
Mr. BERGE. I just want to pursue one point just a little further. I

a am still not quite clear as to the uniformity of your policy with respect to violators. I take it that you don't enforce the agreements as to all of them, but I am not clear as to whether you don't simply because it is impossible to do so, because there are so many of them, or because you think there are some instances where it is not necessary to enforce, or good practice would permit you to frown on violations.

Mr. WILLIAMS. Let me preface my remarks by stating that the courts in New York and the courts in Illinois have both stated, on occasion, that the condition of price maintenance in some cases was chaotic: that it would be impossible for a producer or an owner to sue everybody that cut price, particularly at a time when it had become promiscuous.

As to our particular procedure, we approach it very practically. We get complaints from retailers who state that John Jones is cutting price; they feel it because he is in their immediate section; they say, "Well, why don't you have him maintain price?"

We go over to him and say, “John Jones, why don't you maintain the suggested price as you have agreed to in your contract ?”

John Jones says, “All right,” or he may say, "No.". If he says “no,” the probability is that we bring an injunction suit and make him raise his price.

Mr. BERGE. Do you always bring injunction suits?
Mr. WILLIAMS. No; again it is a matter of

Mr. BERGE (interposing). Would you ever quit doing business with him because of that?

Mr. WILLIAMS. We haven't had that situation to date, so I can't answer it.

Mr. BERGE. I don't care to press it further but just to make this comment and see what your reaction to it is. Other witnesses have testified that the whole purpose of this was to protect the retailer, that the philosophy had been adopted that it was in the retailer's interest to have the distributor or the manufacturer look after him.

Accepting that for the moment, I don't see how it can work to the retailer's advantage unless you maintain a vigorous policy with respect to all violations. I suppose that we either have to consistently pursue one philosophy or the other, and if this is good for the retailer, if you are going to do your duty to the retailer, you have to pretty vigorously enforce it as against Macy's and the big retailers and also the little ones, and if there is any discrimination in enforcement it seems to me that it fails in what you yourselves state to be the purpose of it.

Mr. WILLIAMS. I would like to make this preliminary statement: I think that you have not fully stated the purpose. Most of these acts have a declared purpose of protecting the trade-mark. At least, that is the basis of the acts, to protect the marks, and that is the basis on which the Supreme Court passed on the two cases that it heard. That is the fundamental purpose of the act; it is not exclusively the protection of the profit margin of the retailer.

Secondly, I don't think that we discriminate. You imply in your statement that we discriminate between one dealer and another, which we do not.

Thirdly, as I stated originally, the fair-trade acts, in my opinion are in the evolutionary stage and there are various forms. În Wisconsin, I believe, an administrative board regulates the extent to which you can fix prices; in New Jersey you have a situation where you file your price with the liquor-control commission, which enforces that price; in Rhode Island and Arizona, under the Liquor Act, or by regulation of the commissioners, they have definitely fixed the mark-up to the retailer. I think it is, respectively, 40 and 50 percent in Rhode Island and Arizona. So you see that the exact purpose and the philosophy behind the fair-trade acts is not too clear. They are in the state of development, in my opinion.

METHOD OF DETERMINING RETAIL LIQUOR PRICES

Mr. Buck. At this time I would like to offer for the record a price list of this company for the New York area as of November 1, 1938, and ask that it be submitted for the record.

(The price list referred to was marked "Exhibit No. 426” and is included in the appendix on p. 2716.)

Mr. O'CONNELL. A little while ago I understood you to say that your price to distributors was about $25.34 a case.