Evening star., 1936-03-27
BILL HELD. PERIL
TOMASSPRODUCER.
Robinson.Patman Measure
Seen as UnstabiIizing
Influence.
BY DAVID LAWRENCE.

Questions that 60 to the heart OF
American marketing customs and prac-
tices affecting nearly every line of
business in which there are wholesale
and retail operations have been raised
by pending bills in the House and SEN
ate, which If enacted, may substantial
ly increase prices to the consumer,
transform the businesses Of many COM
panies now manufacturing in large lots
to mass buyers and perhaps throw into
unemployment q number Of concerns
that will be unable to compete with
virtual monopolies.
Like a good many pieces Of legisla-
ton that start out with a commend
able purpose and to correct an evil
practice, the Robinson-Patman bills
now before the House and Senate may
work out to the advantage of the big
chain stores and enable them to reap
even bigger profits than before. Like
wise, the independent merchant who
Is clamoring for anti-chain store lagis-
lation may find himself forced to pay
higher prices for his goods because
the wholesaler will have legislated
himself into preferred position.
Then there is provision which
affects every business that sells with
the freight cost included. In other
words, if manufacturer in New York
City Is in the habit Of selling at a
uniform price to any retailer in Penn
sylvania or Connecticut, irrespective
of what the freight charges might be
to different points in those two states,
he may now be compelled under the
new legislation to charge the actual
freight to every city to which he con-
signs his products and thus find
himself unable to compete with a
manufacturer in Pittsburgh who hap
pens to be nearer the cities in ques-
ton.
Perils Established Areas.
Theoretically, this gives the manu-
facturer nearest to the market an
advantage but it cuts down the volume
Of the competing manufacturer who
formerly enjoyed that market and in
evitably produces less employment in
one region. In the end the second
manufacturer may gain and be able
to increase employment, but, in the
transition period, established busi-
nesses in the first area may find
themselves so handicapped as to be
unable to continue their operations,
depending on where the largest pro-
portion of their volume happens to
be sold.
But there is another aspect Of the
proposed legislation which is more
far-reaching in that it will affect
consumer prices even more broadly.
The so-called quantity discount would
now be left to a Federal Government
agency to decide. 1t may well be
questioned whether Congress can dele
gate such power to the Federal Trade
Commission or any other agency or
whether Congress has the constitu-
tional authority to define what is or
is not quantity discount.
For if Congress has the right to
gay what shall be quantity discounts
N the case of any commodity, It
would appear to have the right to fix
the price to the consumer There is
no price-f1xing power in the Federal
Government except in businesses
AFFECTED with public interest" like
railroads. The Supreme Court has
held again and again that the food
business, for instance, was not con-
trollable as public utility and neither
Is the clothing business, however i'm
portant both articles might be to the
individual, and that even the States
may not have the right to classify
those businesses as public utilities,
though recently milk was added to
the States power of control.
Sets Burden of Proof.
The Robinson-Patman bill endeav-
ors to give the Federal Trade Com
mission the right to examine the facts
at proper hearings, at which manu-
facturers would have to justify the
differentials they give in quantity
sales. They would have to prove, for
instance, that the savings they make
through selling to one buyer are in
accordance with the discount they
have given. They then would be
obliged to sell at the same price to
small buyers as to mass buyers.
To test the validity of such a pro-
cedure in the courts might take con-
siderable time. Hence the mass buyers
would promptly make arrangements
with certain manufacturers to sell
only to them. The independent
merchants would find themselves un-
able to buy in small quantities from
these large producers because there is
nothing in the legislation that would
prevent producer from selecting his
own customers. On the contrary, the
only violation Of the act would be in
price discrimination as between buy
ers. To avoid any charge of discrimi-
nation, the sales would be made to
mass buyers only and prices would
be uniform as between two sets of
such mass buyers.
Many Of the large chains would go
into the rubber manufacturing busi-
ness, would increase their factories in |
certain articles that are known as
staples and generally speaking the
mass buyers would become even more
1ntrenched than they are today.
Until these factories were built.
however, the prices would shoot up-
ward and the independent merchant
would find his prices increased and
hence the public would be compelled
to pay sums estimated by some Of the
witnesses before Congress as running
well over $3.50, 100000 year.
Another Bars Rebates.
There is one measure known as the
Brah-Van Nuys bill which does not
attempt Government regulation Of
prices or quantity discounts but wisely
limits the extent of Government power
at this time to the question Of pre-
venting fraudulent use Of any dis
count or rebate. Thus so-called "ad-
vertising allowances" or charges for
use of counter space or show-windaw
displays have, in some fragrant cases,
been really in the nature of rebates |
from basic prices and are recognized
as an unfair trade practice. The |