that, notwithstanding the fact that I have spent many thousands of dollars in furthering the plans and details, there was no charge whatsoever to them as a commission in any way, shape, or form.

Now, the wholesale trade in Philadelphia, they have their arguments among themselves. What they want me to do is act as a general manager for the whole market, to manage the real estate and see that everything is carried through, see that machinery is kept in order, and so on, and it would be a management contract with them. That is the only way we would be remunerated for all that we have done, and that has all been put in a letter.

Mr. HOPE. So you expect, if a corporation is set up, to build a market and operate a market in Philadelphia, your organization will be retained for compensation as the manager of the operation? Mr. CUSTIS. We expect it because that is their wish.

Mr. HOPE. Do you have an agreement with them to that effect? Mr. CUSTIS. Individually, just an understanding.

Mr. HOPE. You have no written contract?

Mr. CUSTIS. No.

Mr. HOPE. You believe they understand, if this market is built, your firm will take over the management of the operation? Mr. CUSTIS. That is absolutely correct.

The CHAIRMAN. It is now 12 o'clock. We will have to recess until 2. (Whereupon, at 12 noon, the committee recessed to reconvene at 2 p. m.)

AFTER RECESS

The CHAIRMAN. The committee will be in order.

Mr. Abel Banov, of Philadelphia, Pa., will you come up and sit down.

STATEMENT OF ABEL BANOV, EDITOR, FOOD TRADE NEWS, PHILADELPHIA, PA.

Mr. BANOV. Gentlemen, I want to point out that I am the editor of the food-trade newspaper in the city of Philadelphia, and I think there are a number of details which I can possibly clarify that were brought up in the last day and a half. There is considerable concern on the part of Mr. Hope and Mr. Hill about the actual tangible benefits coming to the farmer.

Well, now, to understand the immediate benefits to the farmer, I think, is rather simple, inasmuch as anything that is done to reduce the selling price at retail of fresh fruits and vegetables by the ordinary laws of economics should be inclined to increase the consumption of these commodities. I know right now, from my own experience in the city of Philadelphia—and I am confident that this is typical— that there are areas where the consumption of fresh fruits and vegetables almost is nonexistent, and certainly negligible, because of prohibitive prices.

If the gentlemen of this committee and, obviously, they are concerned with the welfare of the farmer-can visualize the effect on the consumption of farm products, notably those which are marketed in the fresh stage, they can easily understand that, by increasing the demand at the retail level, that does not merely trickle through, but it permeates through to the farmer by increasing the consumption of his

products. Perhaps the price he gets may not change, but certainly the volume of the demand will, I think, markedly benefit the man on the farm.

The question also comes up as to why cities or counties do not set up their own bond issues to establish markets of this kind. I know from the experience in Philadelphia and the experience of a number of large cities that the city itself is not the sole beneficiary of a market of this kind, and in the particular case of Philadelphia-and this applies, I am sure, to Washington and to, no doubt, Boston and St. Louis and any other big city near a State line-that retail operators, the retailers from numerous cities and numerous States, patronize these markets. In the case of Philadelphia, all of south Jersey, the better part of the eastern half of Pennsylvania, and all of Delaware, and I believe even places as far west as West Virginia, patronize the Philadelphia market.

The interstate nature of this problem, I think, is clear cut, not only because of the fact, as was brought up, that the produce brought to these markets comes from the far-flung States of the Union. I think that is self-evident. The trucks carrying these things, and trains carrying them, pass through numerous States and pay licenses to numerous States. A sizable number of States are involved in virtually every transaction that takes place on practically any market in the country. To ask a city like Philadelphia, for instance, to bear the brunt of the establishment of a market would be something that Philadelphians are a little "leery" of doing. I hope I have touched on that adequately. I just wanted to clarify that point.

The CHAIRMAN. I am glad you mentioned that, because that is the very thing that makes me feel that this is a national problem, and one which Congress should deal with, especially when you consider the things that you have just said. There is no reason for us to expect New York City to provide a market place for the producers who come to that market from other States or to provide a market for the consumers of other districts in other States to come in to purchase their supplies. If the Federal Government will demonstrate an active and effective interest in the problem, to the extent of being willing to underwrite the building of new facilities, then I can easily see how the people in Philadelphia, New York, and other cities might be induced to go into the proposition.

It is easy for me to understand why they have not up to now. Many questions have been asked why these cities have not gone forward. I think you have touched the milk of the coconut when you say that the interest is so broadspread and so widespread that they just have not been willing to undertake to do it themselves.

You are familiar with the situation in Philadelphia's Dock Street Market; are you not?

Mr. BANOV. Yes.

The CHAIRMAN. Is it not your belief that the facilities there could be greatly improved?

Mr. BANOV. Vastly so.

The CHAIRMAN. And the sale and distribution of perishable commodities might be dispatched more efficiently?

Mr. BANOV. Yes, sir, and so much so that I would like to use your question there as a means of getting into this second phase of the direct, and I mean extremely direct, benefits to the farmer, not only

in the immediate present, meaning the immediate future after this market is established or the markets are established, but a direct benefit to the farmer in the form of protecting him against the possible creation of a tight little group of marketers who can dictate the prices. which those farmers are going to get later on.

To substantiate what I mean by that, I would like to introduce the situation in Philadelphia because I believe here you have a little cosmos, a little laboratory study of what the marketing situation is then throughout the country, and you have even more; you have a laboratory study of what the future may bring because the trends. are definitely forming in Philadelphia.

Philadelphia is a notoriously tough food district. It is behind in most respects, behind most cities in most respects, but in the marketing of food, both canned, packaged, and fresh, it is a couple of jumps ahead. The way this thing is shaping up in Philadelphia, which I think is very pertinent here, as an indication of the trends in marketing of produce, particularly, is that because of these horse-and-buggy facilities which are existent in Dock Street the little independent retailer is reaching the point in those cases, the innumerable cases where he has not already reached it, where he is hopelessly unable to compete on fair terms with the large chain marketing organizations, notably the A. & P., the American Stores, the Food Fair, and Penn Fruit Co., all of them very fine, smart, clean competitors thus far.

Now, in Philadelphia-and this is also indicative of a trend—in Philadelphia the little retailer some years back found that he could not compete with the rising menace of the chain marketing organizations, and he established himself in food-store associations which were organized along cooperative lines. They were known as retailerowned warehouses. The grocers formed an association, an ordinary club, let us say, which they called an association, and this association set up a corporation, a cooperative organization which was incorporated, to help them buy their packaged goods on a basis which would permit them to compete with any kind of marketing organization, chain or otherwise.

To get back up to the subject, I merely introduce that as background; but, to get to the subject of produce marketings, these associations of small corner grocers have found in several instancesand I will be glad to name them if you gentlemen wish-that they are so incapable of competing with the chain organizations in the Philadelphia market that their wholesaling companies-that is, the wholesaling companies controlled and owned by these grocers-were forced, although reluctantly, to set up their own produce companies, their own wholesale produce companies.

I am bringing up to date the situation in Philadelphia and how that indicates a trend in the future; and in other cities, as the chain competition gets more intense and as chain facilities are provided for direct reception of produce, it will be necessary for other retailers to do likewise or else go out of business. I mean the signs point to the fact that this kind of cooperative wholesaling of merchandise, not only produce but merchandise in general, is heading that way.

Here is a situation. If these retailers go out of business, and you have three or four or five chain organizations plus one or two or three, as the case may be, cooperatively owned wholesale produce companies, you have a little tight control set up which can dominate the distribu

tion of farm produce. I hope you follow me. It is a little bit involved. Do you follow me?

In other words, and might I say in this period of revolution-I guess it is almost revolution; I think it is past the evolutionary stage-this period of revolution in the marketing of fresh fruits and vegetables, unless something is done and rather quickly, you just are liable to find that the farm interests which you gentlemen have responsibility for protecting are liable to find themselves dominated and at the mercy of a tight little group of purchasers of their commodities. In my very humble opinion, the measure which is up here, H. R. 8320, is one of the most potent antidotes or preventives for this condition.

I think that then gets back to the question there of the farmer's interest-direct interest-in the measure. I want to go to another topic which has to do with my reaction to the bill, and I am speaking now-I happen to be a merchant, too, but I am speaking as an editor who was asked to come here and as such was given an opportunity to look over the bill rather carefully, and I want to point out a few things that I think would serve as an improvement in the bill, but avoid certain pitfalls which this bill may make possible.

The particular subject that I have in mind is that of the possible creation of monopoly at the market level. I spoke of one possible monopoly and what effect that could have on farm prices, and now I want to speak of another monopoly, not so much on the effect it has on the farmer but the effect it may have on the consumer and the retailer, the grocer, who is my main interest at this particular stage.

When you set up markets such as this bill envisions, you are setting up in one comparatively small area an organization which we can hope will stay clean; and, as long as there is a Federal loan or a Federal-insured loan coming under the scrutiny of the Department of Agriculture, I think we can be sure that it will be clean. But say 40 years; let us look at the theoretical case of 40 years from now. I believe the bill provides for 40-year amortization. Let us say that 40 years from now the Government's very, very shadowly controlbecause it has no actual control, I would not want to use the word "control"; but let us say very shadowy connection with these markets which will be set up under the bill-has been removed, and there is no control. There is nothing there to stop or tighten a tight-knit little group from taking control of one of these markets and restraining trade in produce, setting price.

The CHAIRMAN. Let me interrupt you there. Would you not think, though, that the local marketing authority in the city might step in and exercise control?

Mr. BANOV. Well, sir, I think you are right, but there is nothing in that bill which provided for the approval of one of these facilities if, and only if, there is a marketing authority.

The CHAIRMAN. No, no; that is true, but suppose even a private corporation were organized for the purpose of obtaining a loan with which to build a market. As you said, the Secretary of Agriculture can exercise very little, if any, control over the operation. The fact of the business is that he would exercise no control over the operation. Mr. Hill's remarks to the contrary notwithstanding, I think anybody that reads the bill or has read the bill will know that it is not contemplated the Secretary will get into the marketing business at all. We only provide certain covenants to be contained in the

trust indebtedness. Do you not think that the fear that you have might be taken care of by a local marketing authority?

Mr. BANOV. I know in the case of Philadelphia there is none.

The CHAIRMAN. But the chances are that the cities will create a marketing authority. I think they have one in New York, do they not?

Mr. BANOV. I believe so.

The CHAIRMAN. Some sort of authority.

Mr. BANOV. I believe so.

The CHAIRMAN. Suppose what you said is actually possible, as the years come and go, the facilities that we are now talking about might come into the ownership of a small group of people who acquire the interests. But in the event that should happen, it seems to me that the localities of the cities involved could take care of the situation there.

Mr. BANOV. I would like to get back to a practical example. I am of the opinion, and I am of the same opinion that you are.

The CHAIRMAN. Before you make the statement, is not the situation that now exists one which would lend itself to exactly the same abuses that you are talking about, wherein Dock Street or Washington Market, it is entirely possible that a rich and powerful small group might acquire those properties and exact enormous and unreasonable rents from the occupants, and I suppose that in some degree that is true right now.

Mr. BANOV. Correct, yes, sir.

The CHAIRMAN. Where people are being required to pay five, six hundred dollars for half of a store, as was brought out yesterday. That is a burden it seems to me that ought to be removed from our distribution system. It is a burden that is being borne by the producers and the consumers, and some of these leeches and bloodsuckers that are just parasites on this system ought to be removed, and that is our purpose, that is, to put this marketing business on a high plane and hope that it might be kept clean, as you say, and that the rents will be reasonable, and the bill only contemplates such rents as will be necessary to amortize the loan over a given number of hears. So what you fear might happen under this bill likewise could happen with no bill at all.

Mr. BANOV. That is true, sir. The only thought I had was this, that when right now in most cases, as the marketing of produce is rather a far-flung proposition, you have many diverse elements now that might be a little difficult to get together. I still say that the menace is there, and I think you are correct; when you set them up in one little area restricted to comparatively few blocks, actually functioning under the marketing corporation there, where you have the machinery. Previously there has been no machinery for monopoly. There is no machinery for them getting together either formally or informally and setting up control. When you set up a corporation, such as is visualized, which is permitted by this bill in the case of private operation, I think you are making it a little easier to take place. I am not offering that as an objection to the bill.

The CHAIRMAN. I know that.

Mr. BANOV. I am merely pointing out that I think as long as we acknowledge the fact that there is a little danger in there, that some clause could be inserted at the pleasure of the committee, of course,