Evening star. [volume] (Washington, D.C.) 1854-1972, 1927-07-31
CLASH ANTICIPATED
IN RESALE PROBE.
Interesting information for
Consumers and Merchants
Should Result.

In undertaking a broad investiga
ton of resale price maintenance. the
Federal Trade Commission has thrust
Its hand into a hornets nest OF mer'
ehandising controversy.
Who will be stung by the results re
mains TO be seen, but the consumers
a, the Nation and the merchants
should receive much interesting infor-
s.ation from this inquiry regarding the
niements in the cost of living and the
cost OF conducting business.
The investigation will bring into the
amen Immediately clash or interests
between the chain stores ana the oe
nartment stores on the one hand ana
The multitude Of independent dealers
an the other. with side excursions or
inquiry into the ALLEGATION or the COSY
~ national advertising, the effects or
nr;ce maintenance or lack of 1t upon
manufacturers, wholesalers and re-
teilers. and other factors Of outstand-
ing importance in the economic struc'
ture.
I'm launching its inquiry. which Is
FOR the expressed purpose OF laying tne
facts before Congress to assist th9
lawmakers in considering future legis'
lAtton on the subject, the commission
has acted on its own initiative ohoer
its general powers. But the commis-
sion recently has had before 1t num-
her of complaints charging Unfair
methods in maintaining resale prices
The courts have held that manu-.
Sacturer or dealer may refuse to seu
his goods 10 any speelnc person OF
,N.1g
nowerful concerns having merchandise
which Is in strong demand from con
sumers have succeeded in maintaining
a hxed resale price for their goods by
declining further supplies to those
who have cut the price. Various forms
Of the agency system in distribution.
whereby fixed resale prices have been
preserved. also have been held legal.
But agreements are illegal and the ma
3ority of merchandise sells in an open
market. -
Various bills. have been introduced In
Congress to ). permit producers OF
branded goods to- enter into contracts
with merchants which will stipulata
the price at which the wares shall
he sold at retail. The so-called Kelly
bin was the subject of heated hear.
ing before the House interstate and
foreign commerce committee in the
last Congress, but no report was sub
mitted on it. The Federal Trade Com
mission at one time recommended price
maintenance under certain conditions.
Center of Controversy.
Merchants associations Of many
communities are on record in favor or
price maintenance legislation. The in-
dependent dealers charge they are be-
ing injured in competition with chain
stores and other large organizations
which sometimes offer trade-marked
merchandise, whose nationally adver'
tised retail price is we'll known to the
public. at cut prices as a leader.
Many manufacturers also support
price maintenance on the ground that
sales OF their product are reduced by
cutting prices because Of consequent
consumer distrust of the price usually
asked. The American Fair Trade
League has as one of its chief aims
legislation to legalize contracts as to
resale prices.
On the other hand, the chain stores
and other large outlets oppose such
Hesitation. The leading organization
IN opposition is the National Retail
Dry Goods Association, representing
several thousand department stores
and speciality shops. The opposition
contends that to permit resale price
fixing would relegate the retail mer-
chant to a position of mere agent and
reduce his ability to serve his COM
munity. Farm and labor organiza-
lions are on record against price
maintenance.
Whether the consumer does or does
not save money by cut-price sales in
the long run Is one of the centers Of
controversy in this subject upon which
the commission probably will be given
considerable data. The Chain Store
Economic and Financial Research Blu.
reau recently announced that as the
result of q study Of figures for some
10000 units It was found that in 1925
such stores sold 8 per cent of their
merchandise at a loss and rs per cent
at only cost plus overhead.
The commissions study will include
costs, profits and margins on compel
ing price-maintained and non-price-
maintained merchandise, including the
relation of advertising expense. and,
all in all, has undertaken an inquiry
which promises to develop the utmost
interest for general consumers as we'll
ms for business and industry.