Evening star., 1919-12-29
TRADE Commission
STARTS NEW PROBE
The Question of Guarantee
Against Decline in Price
Being Investigated.

OF vital interest to business through
out the United States and fundamen-
tally to the consumer is q brand-new
investigation that has just been
started by the Federal Trade Commits
sion into a growing business prac-
tice against which extensive COM
plants have been filed-the question
of guarantee against decline In
price.
In about two months the Federal
Trade Commission expects to have a
big hearing at which all parties in
terested can participate-growers
manufacturers, producers. wholesale
and retail merchabts. jobbers and
consumers In the meantime the
commission has sent out many thou
sands of copies of a letter to all
chambers of commerce and trade or
ganizations throughout the country.
to all trade journals. cooperative
buying associations and national farm
organizations. asking for an express
sion of opinion on this trade practice
of guaranteeing against decline in
price.
The interest of the Federal Trade
! Commission is for the consumer.
whose rights seem to be threatened.
according to some complaints. by the
| fact that this practice leads to STOP
page of the natural flow Of commod-
tiles in the channels Of trade.
Two Methods Used.
There are two ways in which the
prices are now guaranteed-one by
the manufacturer against any de-
cline he may make in the price and
the other against a decline in the
| market price There is serious douet
| IN the minds of the Federal Trade
Commission whether the same gem
eral principle can be applied on per-
goods.
AS an Illustration of how the COM
plants have come to the Federal
Trade Commission. One soap jobber
complained that a manufacturer had
refused to guarantee the price against
decline though it was common prac-
tice in the trade. The manufacturer
admitted ii, said IL was the belief of
the jobber that this was his right. but
the manufacturer believed il ''unjusti-
fable merchandising" He argued that
when the title to the goods legally
passes he did not think that he should
be forced to assume the hazard of
the other fellows business. Then he
brought in the question which has
| most deeply interested the commits
sion. He said that he believed this
practice leads to stoppage Of the
natural flow of the commodities
through channels Of trade. For ex
ample, if Il man buys on a rising mar
ket and is assured against any de-
cline in price his natural avarice
leads him to hoard the goods on his
shelves until he can get the better
price. The natural tendency of mer-
chandising is to keep goods moving
| and to clear the shelves instead of
boarding.
Wide Injustice Feared.
The investigation in regard to the
practice in merchandising soap and
several other commodities has con-
vinced the commission that there may
exist "A practice very harmful to bust
ness and 20 the interests of the con-
sumers. Because this practice has
spread so widely through many lines
of goods, and it is impossible to make
particular investigation on each
commodity, the commission decided
to make "A big general investigation
and bring to Washington for a pub
lie hearing directly before the commits
sion all parties at interest desiring
to be heard.
The purpose of the preliminary let
ter il so that the parties to the CON
troversy may have in advance gen
eral summary of the arguments for
or against the questioned trade prsLc-
tice and be ready to answer them
IL possible.
an administrative body which has ex-
perts investigating the economic and
legal side of "forestalling following
complaints regarding unfair trade
methods Already complaints have
been issued in several industries
against this practice. and the big
hearing is planned here so as to dis
pose of the entire question in com
prehensive way and to obviate in
terminable controversy