Page 293 294 295 296 297 298 STATEMENT OF WALTON HAMILTON, ATTORNEY-Continued Government suits under Sherman Act are given preference, but trials themselves subject to long delay. Triple damage suits hindered because plaintiff can't find enough information with his resources to be able to go to court. Once in court, he can use discovery procedure but needs resources to afford it. Purpose of triple damage suit not merely windfall to plaintiffs. If he succeeds, he recovers his costs but not the expense incurred in building up a case. Almost impossible for small litigants to bring such suits against large violators. Results achieved in Government case are prima facie proof in private suit. However, frequently Government doesn't bring suit or nolo contendere and there is nothing to be used. Small-business men are hesitant in bringing suit for fear of reprisals. The private antitrust suit is really a public action. Triple damages Hesitancy on part of judiciary to impose jail sentence because of He gives example of difference in attitude when Government brings Perhaps plaintiff by triple damage is unjustly enriched, but Congress felt need of an incentive to get individual to bring suit. In private suits, equity injunctions should be framed to protect whole public in light of what was revealed at the trial. Damages should be triple what the plaintiff suffered. Conclusion of Hamilton: "One, the inquiry in court I would have as broad as the violation; two, I would limit the damage to compensation for his injury; three, I would have the decree framed, the decree as affecting future behavior, framed in such a way as to protect the public." In addition, the Government can bring a criminal action, an equity action, and law allows a private suit even where the Government brings action. In addition, would bring public tort action against defendants, as proposed in the O'Mahoney bill. In United States v. Cooper, Supreme Court decided that Government was not a person entitled to sue under section 7 of Sherman Act. Several years later, State of Georgia brought suit for triple damages, and Court decided that State is a person and can sue in tort, while United States Government is not. Arnall brought the suit for Georgia. Would like to see penalties increased. He would allow maximum He thinks jail sentence provisions largely rhetorical in the present Page 299 299 300 301 302 303 304 STATEMENT OF WALTON HAMILTON, ATTORNEY-Continued May lose sight of consumer. Many people opposed to so-casieu special court for patents, because judges would become specialized patent lawyers; as patents involve whole economy, you need wide range of experience. Some of the most eminent men in the United States Supreme Court have been country lawyers. Being opposed to things established does not mean going wild. It means a clean-cut analysis, clean-cut objectives, knowing what your goal is, and moving toward your goal. from there. STATEMENT OF LAZARE TEPER, of ILGW He is director of research of ILGW, which has 405,000 members. He is Industry was demoralized. Jobbers encouraged excess number of con- Contractor today is important method of production, but collective Exhibit II shows that 60 firms had dollar volume in excess of $4,000,- Largest of the 1.6 percent did not exceed $25,000,000. This refers only Largest firms, according to exhibits III and IV fall in classification of Page 305 306 307 308 STATEMENT OF LAZARE TEPER, OF ILGW-Continued Competition is keen. Most of corporations are family-owned. Few resort to public financing. No barriers to enter field. Mortality was high in 1930's with about one-third of contracting and one-fifth of jobbing and manufacturing establishments going out of business in course of year. Recently, mortality has been less than number of new businesses. TNEC concluded: "The industry, in each of its stages, is actively TNEC studies concluded that on over-all basis textile industry was Statistics show largest four firms in industry turned out more than 75 percent of the total output of 16 products and between 50 and 75 percent of 34 products. War gave impetus to concentrate because of OPA regulations; shortages; taxes. Earnings because of low capitalization subject to high excessprofits tax; high personal taxes discouraged withdrawing of profits. Some owners preferred to sell and pay capital gains. Purchasers could buy at high prices because high capitalization reduced excessprofits tax. Some concerns deliberately bought up low profit mills to off-set taxes incurred for high profits earned in other activities. Exhibit VIII shows the expansion of the principal textile corporations. Increase in sales volume may be explained only by consolidations which took place. Before war, only 9.5 percent of cotton broad goods sold through outlets owned or operated by the mills. After war, 75 percent of cotton fabrics were sold by integrated organizations. One of largest integrations is Textron, which controls substantial percentage of all fabrics used in ladies' underthings, also produces underwear and blouses on its own account. Burlington Mills formerly sold 90 percent of output of converters; now converts 90 percent of goods itself. Everything Burlington does reminds of what elephant said: "Everyone He now quotes superlatives in Fortune article regarding Burlington. 309 This integration in suppliers has led to numerous abuses. Uniformity of prices, tie-in sales, etc. One large producer of wool fabrics refuses to sell his fabrics unless they are made up into garments to sell above a certain price. Exhibit IX demonstrates that textile industry has been able to command prices completely out of line with costs. Profits in 1948 represented 15 cents out of every sales dollar. He doubts that manufacturers in garment industry will combine to meet these combinations of suppliers. There are too many manufacturers. Competition exists in the ladies' garment industry. Mergers in textile industry are baneful to the Nation. As far as resistance to retailers, some arrangements were worked out, but they were challenged by Federal Trade Commission. No decision as yet. 310 He lists sources of his statistics. These statistics are accepted by the manufacturers and the industry. True competition is rapidly diminishing among retail distributors, with devastating effect upon manufacturers. "The most important influence on the apparel markets is exercised by department stores, chain stores, and mail-order houses. These aggregations of purchasing power dwarf the manufacturers." Page 311 312 313 314 315 316 317 STATEMENT OF LAZARE TEPER, OF ILGW-Continued Sales volume of Montgomery Ward was $1,211,956,000. Volume of More than one-third of department store's business is in products of When business group has mass purchasing power and can exact tribute We want to permit small-business man to exist. Many similarities fixing in women's garments extends to retail level. Not prepared to You will find some loss leaders. Cut-rate stores were found to have huge mark-ups. May find pricing of trade-marked article on competitive basis. But in case of dresses, stores won't have an identical stock. In New York market alone, dress industry turns out average of 75,000 different dress designs per year. So two competing retail outlets might not have identical dresses on their racks. Actually there is a great uniformity of prices among larger stores. There is competition among smaller stores, and the best service to consumer. Dr. Teper can testify with greater impunity than can the manufacturers. There used to be strife in the industry between labor and employers but cooperation now. He is not out for all he can get out of the industry; otherwise would be on strike all the time. Monev is not only consideration-hours of work, conditions, sanitary facilities, etc. But union's policy is not one of getting everything it can without regard for the economics of the situation. Nor are manufacturers anxious to get every dollar out of consumer. Otherwise they would consolidate. Last strike in coat and suit industry was in 1926. Last strike in dress industry in 1933. Price of clothing in relation to incomes has constantly decreased. "Ladies' wool suits which in 1914 required an average worker to work 37 hours in order to earn enough to buy it, in 1948 only required 11.4 hours of work." Page 317 318 319 320 321 327 328 329 Statement of Lazare Teper, of ILGW-Continued This is the best way to determine relative costs and is not finding of Large-scale establishments also operate jointly for buying purposes. Mutual Buying Syndicate buys for 66 department stores. Fernfield Association buys for 191 apparel stores, etc. Combined purchasing Estimate that "close to 75 percent of the total volume in women's Cf. These buying offices can insist upon special concessions such as dis- AMC admitted to have induced discriminatory prices by means of If manufacturers testified as he did, might face reprisal from retailers One remedy is to subpena them. Another is to hold closed hearings so committee could protect witnesses. Mr. Celler says it is a serious problem, hopes that Teper will tell manufacturers the hearings are open for them and committee will help them against reprisals. Charts placed in the record as exhibits to talk. HEARINGS, MONDAY, JULY 25, 1949 STATEMENT OF EVERETT M. KASSALOW, CIO Today, trying to suggest a method or approach. Later, should like to submit detailed suggestions. CIO believes concentration of outstanding importance. Danger of ever-increasing Government regulation. Failure to control during past few decades seems to point to increasing regulation as only alternative. Many investigations but no action. TNEC; Economic Concentration and World War II, Senate Committee Print No. 6. Should not in this investigation attempt to retrace TNEC. Can be little question over bulk of data revealed in TNEC reports. We should reexamine recommendations of TNEC, which have gone unnoticed by the Congress. These proposals can form nucleus for an effective program, especially on price maintenance laws, trade associations, and patents. Calls attention to Walton Hamilton's TNEC Mongraph No. 16, on ineffective history of Government program. He hopes this committee will give action, not merely investigation. Previous investigations including TNEC have tended toward an overlegal approach. Tendency to search for collusion. Must give equal emphasis to another line. Many large corporations are in a strong national policy forming position. |