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to make it mandatory, to make it a condition, to spell out one of those conditions which would be a preliminary to approval by the Secretary that in the by-laws of any organization seeking to set up a market, particularly a private organization, than in its by-laws, under which it is incorporated, that there be included a provision that some impartial body, either appointed by the city or by the State or by the county or however would be the pleasure of the committee, would be set up to make sure that anyone who has a quarrel with the possible monopolistic behavior of the members of this marketing coi poration, would have a hearing and would have a chance of getting some rectification for the injustice which might prevail. That is just one of the thoughts.
I want to also point out that probably one of the most powerful organizations in the Philadelphia area, actually covers the three-State area, is called the Food Distributors Association of the Philadelphia
It includes executives of the large chains, of the larger grocers associations, and of the large retailing organizations. In fact, it deals with anybody, wholesale or retail, who has to do with distribution, and individually the sentiment for this bill is pretty favorable.
I know my newspaper did quite a bit of propagandizing for this bill before it was introduced, when we merely heard that it was going to be introduced. We had practically to turn the paper over to the subject, because we thought it was that important, and we did sway sentiment I would not say sway—we aroused a bit of sentiment that had become dormant through so many hopes that had been raised, and dashed to nothing through the years, and that the sentiment is there for a bill of that kind, but the distributors would not go on record, as being in favor of this bill because after lengthy deliberation at an executive session of the executive committee, they decided that they did not want to risk setting up a monopoly at a new market to replace the situation now which, as the chairman pointed out, does have prospects of monopoly, too; in fact, it is not prospective, it is actually there.
There is one particular commodity I know, it is I understand true in Philadelphia, also true throughout the country, that there is a monopoly in at least one commodity, and there is no reason why that cannot be applied to other commodities, both to the detriment of the farmer and to the detriment of the consumer and the retailer.
Mr. ANDRESEN. What commodity do they have a monopoly that you refer to?
Mr. Banov. I understand on good authority that there is a control of the marketing of bananas in the Philadelphia market. I know that the price does not come down very much. I know that from my own personal experience, and I know that the price of that particular commodity in Philadelphia is rather high. And I understand, I
I would not want to say it is a positive fact, because I have not conducted an investigation into it, but I understand on good authority that there is a monopoly in bananas in Philadelphia, and I understand also beyond.
Mr. ANDRESEN. Is that because the United Fruit Co. deals through one group or do they sell it themselves?
Mr. Banov. They deal through what I guess you might call“chosen instruments." If I were to go into the wholesale business today or tomorrow, I could not, even though I spent all of the money necessary to set up the appropriate equipment, I could not handle bananas from United Fruit, nor can anyone else in business now who is not among the chosen instruments. That is the way I understand it.
In fact, it is even more than a mere understanding, but I do not want to go on record as making it as a positive statement.
Mr. ANDRESEN. Does this organization that now handles bananas, do they auction off the bananas?
Mr. Banov. No, sir, it is all private sale. There are a few organizations, I do not know the number, not a single organization.
Mr. ANDRESEN. That would not change under legislation of this kind.
Mr. Baxov. No, I do not think it would. I brought that up as indication that monopolies are possible, and there is not too much that the city of Philadelphia can do about it. Do you see my point? Although there is antitrust legislation which should take care of my objection and the objection of the Food Distributors Association, nevertheless it has not been invoked, not successfully; I don't know whether it has been tried, but not successfully invoked.
Mr. ANDRESEN. There might be a limitation on the amount of space that would be available to rent to people who wanted to go into the wholesale business of fruits and vegetables so that certain ones would be shut out of that market, not being able to get facilities to do business there.
Mr. Banov. You mean a new market. That is one of the other things that I want to bring out. That is another point. One of the
I things that we had in mind not only in setting prices, but also in excluding would-be wholesalers, there is a provision in the bill for 25 percent spare parts, let us say, in other words, you have to have spare land equivalent to 25 percent of the market. If you have 40 acres,
. you have to have another 10 acres left over for expansion. But I consider that another one of the weaknesses of the bill. There is nothing spelled out in there saying just how a newcomer can come in. Let us say there is a room for 100 wholesalers in the market.
Let us say the city of Philadelphia or Kansas City or any city that sets up one of these markets, expands to the point where it can use more than 100 wholesalers and let us say that there are some ambitious men who want to get into the business and feel that they can contribute something to the marketing of produce and yet if there is only room for 100 down there, this 100 with entrenched interests can keep out the newcomers unless they want to build a competing market, which would not have much of a chance, of course, of competing with an old established market like this would be.
The CHAIRMAN. You are practically under the impression that the merchants will acquire fee simple ownership of the stores in the marketing facility. I think what we have in mind is that the marketing authority or the agency in control of the property, in custody of the property, would rent these stalls or stores for reasonable rents, rather than to sell them outright. In the event they sold them outright, paid the fee simple rights to the stores, then as you say, a few might exclude some other worthy merchant. But if it is only on a rental
. basis, it seems to me that the authority in charge of the property would see to it that all worthy applicants would be taken care of, even if an extension of the marketing facility were necessary.
DEVELOPMENT OF TERMINAL MARKETING FACILITIES
Mr. Banov. That is all right on paper. That principle you mention there I think sounds very fine if we had any way of assuring posterity that that marketing authority keeps clean.
The CHAIRMAN. Of course, that is something nobody in this generation can tell about how clean the people 40 years from now will be. We will assume that they will be as good as we are, and carry on.
Mr. Banov. I kind of think that that is a very, very noble assumption, and I am inclined to feel the same way, but
years have reason to doubt that that always takes place. I think that it should not be too hard to engross something in this legislation which would provide, as I suggested before, I do not think it is too hard to do, and I am not too acquainted with what the operation of a committee of your kind is, but I should not think that it would be an insurmountable obstacle to place in this legislation, a clause providing that any private organization or even any municipal authority that wants to get either funds or have funds insured under this bill should have certain things in their bylaws which would give the protection that we have been talking about.
The CHAIRMAN. I think that when you submit the plans to the Marketing Division of the Department of Agriculture for approval and require that space be left for expansion, that that could be taken care of in the event that applications were filed for an increase in the loan to finance the expansion. But I doubt very much if the committee would be justified in trying to spell out anything in the nature of bylaws, because we would be justly criticized by Mr. Hill for turning over too much power to somebody
Mr. Banov. I could see some justice in that objection if the bylaws invoked Federal control of the authority or of the organization, but I am not visualizing any kind of Federal control. I think that the bylaws could specifically say either city or State, and keep it within the State, keep it intrastate. As I say, I am not acquainted with the ways these things work, how you would proceed to set it up.
Mr. ANDRESEN. Do you think that the legislation should provide any control over rents, the charges for these different facilities?
Mr. Banov. I am rather inclined to think that the ceiling ought to be put on it or else you are liable to have a continuation of the present situation. You are liable to have a group getting control of this market unit, let us call it a marketing unit for want of a better name, in setting prices, rents, at prohibitive figures.
The CHAIRMAN. You could not afford to set a rent ceiling on a property that will be operated over a period of 40 years. How could you possibly foresee what the circumstances would be 25 or 30 years from now unless you have some flexibility, unless you leave it to the authority that owned the property, to adjust rents so as to compensate for changes in our economy. I am afraid we would be going too far if we undertook to fix ceilings like that. I do feel that the rents should be reasonable and should be in such an amount as then would retire the loan to meet the payments as they fall due.
I think that when that plan is submitted to the department of the Government charged with the responsibility of making the loan that would be to acquire the property at that time.
Mr. Banov. There is no appeal possible the way it is set up now. There is no machinery provided there for appealing injustices in the operation.
The Chairman. Yes; you can. You can appeal to the authority in charge of the property. I was just visualizing the thing controlled by public-spirited officials or men in the city who would see to it that fair treatment was accorded every applicant for a store, and he could appeal to them and submit the grievances and applications to them. Certainly you would not want them to have to come to Washington and go through some Federal bureau to air out their grievances which may be of an entirely local character.
Mr. Banov. The appellate body that I am talking about would be a local one. It would be some local body, I mean actually the State of Pennsylvania, and I am sure most States have some kind of marketing authority working under the State Department of Agriculture.
Mr. ANDRESEN. Is it your contention that the rents being charged now are too high?
Mr. Banov. I think, yes, sir; on the basis of what we heard yesterday, I think that would be a very fair conclusion.
Mr. ANDRESEN. What do you do about it now when you rent a piece of property or negotiate for the rental of a piece of property, if you think it is too high? What do you do?
Mr. Banov. Right now you just either accept it or you do not accept it. That is, of course, what the situation would be later on. But after all we are asking the Federal Government to rectify the status quo, not perpetuate it.
Mr. ANDRESEN. The ideas I understood back of this legislation were to improve the facilties so that you could more expeditiously get these perishable products from the producer to the wholesaler and at cheaper prices to the people, and better food, and the Government was to guarantee the cost of the financing of the project. I never had any idea that anyone contemplated that the Government would go in and regulate how all of this should be handled, excepting to lay down certain specifications to get a modern and up-to-date structure.
Mr. BANOV. Yes, sir. May I answer that. I do not visualize Federal Government regulation at all. Maybe I made myself unclear there. I am not talking about Federal regulation of the local market. I am only suggesting that the bill provide that anyone who is going to be granted funds under the bill or under the legislation, with the funds made possible by this legislation, have some provision in there in their articles of organization which would not at some future time exclude anybody who wanted to use these facilities for the conduct of a legitimate wholesale operation.
Mr. ANDRESEN. Don't you think that will all depend upon the capacity of the facility there, whether or not they can take in others?
Mr. Banov. All right, sir. Where there is 25 percent additional space provided, which would be available for additional facilities.
Mr. ANDRESEN. In order to get capital to build additional space to take in new ones, you would have to charge enough rent so they could lay up something, rather than go and make another loan.
Mr. BANOV. That is correct. That would be all considered under the head of fair rent.
Mr. ANDRESEN. I am assuming that if this bill is enacted into law, there will be some kind of a public authority created in, say, the city of Philadelphia or in that area.
Mr. BANOV. Yes, sir; but my objection is that it is all an assumption. As I say, I am not officially representing any retailers, I am only mirroring the sentiment of an organization which would not go on record in favor of a bill which the individual members personally have a feeling of sympathy for. They do not like assumptions. Í mean they would rather have some way, I would rather be able to go back to them and say, "Gentlemen, this bill as amended assures you that in any future time there will not be a monopoly in the wholesale produce facilities of Philadelphia.”
Let us take a theoretical case. Let us take a practical case that could arise. Let us say 75 people are involved in market X. I do not refer to Philadelphia because at Philadelphia as such in this case it is only one of many considerations. Let us say that 75 people went to set up market X. Let us say these 75 people are stockholders in this company. They are entitled by virtue of their being stockholders of one store in this market. Let us say that 40 years from now their heirs and assigns still have these places, and they decide it would be nice if these 75 people could continue to have this market, to run this market without any further additions. Suppose these 75 would by this time have become quite chummy, meeting together in organization meetings, and so forth, board of directors, they have become quite chummy and have set up a sort of an informal way of maintaining their exclusive right to this market, and even perhaps setting prices. Right now all we are doing is assuming that the public can go to the city authorities and demand that the situation be changed.
The CHAIRMAN. You can go further than that if this act is still in effect. Here is a group, all they have to do is to organize and come to the Government and set up another market. There is nothing exclusive about this act.
These others could come in and show there was a need for an expansion, that 10 or 15 men have been excluded from the market, and the authority then existed, refused to provide for an extension, the 10 or 15 men you are talking about could come to the Government and show the necessity for it, if they could establish their eligibility, and get another loan and build another market.
Mr. Banov. Then you are getting back to the split market.
The CHAIRMAN. You would not necessarily be a split market. The Government might compel that they build nearby the one established.
Mr. Banov. How about the 25 percent additional land? That is under the control of these 75 men.
The CHAIRMAN. That would not preclude the possibility of increasing a new application. I think you are seeing some things that might happen that probably would never happen. If you will look at the eligibility provision at the bottom of page 5, it reads:
(j) “Eligible borrower” means any municipality or political subdivision of a State, public agency, or instrumentality of one or more States or municipalities, public corporation or board, or private corporation engaged in operating a single public wholesale market facility which meets the eligibility requirements of this Act.
It seems to me that in all probability some public agency or some municipality would be the applicant, rather than private corporations. It is entirely possible that the 75 men you refer to might organize themselves into a private corporation and acquire a site and make an application, but even if they did that, if it was set on a sound basis, and they built the facilities approved by the marketing experts, and