Outmoded Distribution
♦
System Keeps Prices Up
Businessmen Seek to Streamline Methods of
Finding Customers and. Moving Goods
to Bring the Costs Down
By Dorothy Carew.
NEW YORK.—American businessmen, famed around the world for
efficiency in production now are applying the same techniques to an
outmoded distribution system in an attempt to arrest soaring costs and
prices.
The average consumer will reap the benefits if those tactics succeed,
for more than half the price he pays for goods today is claimed by a
uuuiuuuuu rnacmne wrucn nas us
roots in the horse-and-buggy era.
Mass production cuts manufac
turing costs almost miraculously,
but at the same time volume output
put a strain on distribution that
boosted that phase of costs higher
than ever before.
The problem is not—as is popu
larly supposed—simply one of elimi
nating the oft-maligned ‘‘middle
man.”
Buying Public Cagier
Business and industry are looking
long and hard at everything from
warehousing to the retail counter
since American consumers have
ceased thronging stores to buy any
thing they can lay their hands on.
During the war and,immediately
Latin Rubber’s
R
Future Bright
U. S. Scientists Assist in
the Development of
Plantations
By James BTrchfield
Natural rubber — the substance
that has played such an important
role in the development of modem
American economy—is returning to
its native home in the Western
Hemisphere.
Under the guidance of Agricul
ture Department scientists who
have worked in co-operation with
our Latin American neighbors, the
co-operative natural rubber pro
gram has emerged from the nurs
ery stage. Throughout Brazil, Co
lombia, Costa Rica, Guatemala,
Haiti. Honduras. Mexico and Peru
about 29,000 acres of field plantings
of the hevea trees, which yield the
best rubber, have been established
in government demonstration areas,
on coffee, banana and other plan
tations and on nearly a thousand
small farms.
The co - operating governments
are establishing central nurseries
and are modifying and co-ordinat
ing their farm credit, colonization
a lid extension programs to meet
the requirements of the long-term
»crop.
Research Continues
The Agriculture Department,
having aided in establishing again
the culture of natural rubber in
South America, maintains staffs of
scientists and technicians in various
Latin American centers to con-;
tinue research and to train local
workers.
tin addition to assuring the
United States of a supply of natu
ral rubber at her own back door,
thes South American co-operative
program is raising the economic
level of the Latin countries, and is
affording the means of a program
of diversified agriculture for thous
ands of small farmers.
Dr. E. W. Brandes, in charge of
the rubber investigations for the
Agriculture Department, says that
rubber plantings of from 5 to 10
n AvAr An email fo v*v»e mill ri H A
a profitable long-term enterprise to
the Latin American farmers and
will help build a diversified and
permanent agriculture in the
tropics.
For the first three years after the
trees are planted, he says, such food
crops as com, rice, beans and
manioca can be grown in the 20
foot spaces between the tree rows.
After the 10th year, the farmer will
be assured of from 1,000 to 1,600
pounds of latex per acre per year
from bud-grafted resistant hevea
strains.
Impetus of Machine Age
Although the elastic qualities of
the sap of the hevea trees was
known to American Natives when
the first white man set foot on
Sduth American shores, it was not
until after Charles Goodyear first
vulcanized rubber in 1839 that its
economic importance began to grow.
For a long time after Goodyear’s
discovery, rubber played a minor
role in our economy, with this coun
try using little more than 3,000 tons
a year. However, after 1911, when
II IV. n fK V. *1IVVIIW»*IMWV*W*I
earnest, our use of natural rubber
increased until by 1939 the United
States was importing more than
500,000 tons a year, mostly from'the
East Indies.
During the early history of rubber,
latex was gathered from the wild
hevea trees that grew wild in the
South American jungles. This early
story of rubber is one of disease,
death and human slavery.
Later, rubber plantations were
developed in the East from hevea
seeds smuggled out of South Amer
ica, and under the watchful eyes
of British scientists and rubber
planters these plantations developed
to the point where it was no longer
profitable to tap the native v^ld
trees.
War Spurred Efforts
Rubber «as forgotten in South
America, until the coming of World
War II left the United States high
and dry, its Eastern source of rubber
cut off by the spreading Japanese.
It was then that our scientists be
gan the tremendous effort of again
producing “natural rubber in South
America.
This work has been carried on
by both Government and private
scientists, until now there have
been developed strains of hevea that
appear to be able to withstand
attacks from the devastating leaf
disease.
.Ironically, scientists believe that
South America, which gave to the
east its start in the rubber busi
ness, the area where natural
> rubber in the future must be grown,
w
afterward the trick was to pro
duce as much as possible. You
could sell almost anything, no mat
ter what It cost.
Now the question is how to
sustain production at Its present
high level. Costs are mounting on
all sides, and at the same time shop
pers are looking more closely at
price tags.
Industry has studied production
costs for a long time. They have
been whittled down through mecha
nization, scientific methods of man
agement and elimination of ineffi
ciencies of operation.
Now costs and methods of han
dling goods from the purchase of
raw materials through the retail
sale of finished products to con
sumers are getting attention.
Because of confusion as to just
what constitutes distribution, the
United States Chamber of Com
merce adopted this definition:
"Distribution is the term used in
American business to embrace all
the activities employed in finding
customers for goods' and services
and in moving goods, both geo
graphically and through the chan
nels of trade.”
Distribution Too Costly
The 20th Century Fund, private
! nonprofit research organization.
found that In the last prewar year,
1939, the consumer was paying 59
cents out of every dollar spent on
goods for these activities. This, it
decided, was too much.
“Taking the field of distribution
as a whole, the process undoubtedly
; costs too much, but how much too
much it is impossible to say,’’ the
fund's report said. “We can say
with confidence that there is waste
in distribution, but we cannot re
duce it to a percentage figure.”
Business and industry are out to
discover where that waste is and
to eliminate it, particularly since
distribution costs have headed up
ward again since the war.
Some students of the subject see
distribution as the key to a number
of knotty problems.
"For several years we heard on
every hand the cry ‘production is
the answer.’ * • • Now we are
beginning to feel the weight of the
load that has been laid on our
marketing machinery. Today dis
tribution is the answer,'’ said Don
Francisco, vice president of J. Wal
ter Thompson Advertising Agency.
Writing in the National Retail
Dry Goods Association Publication,
Stores, Mr. Francisco said:
“For the long .run, prices can be
reduced in the face of a high level
of coats only if the efficiency of
both production and distribution Is
increased.”
Stating that “the important figure
is not the ratio between production
wuu uic buvai
which the consumer must pay,” the
advertising executive said innumer
able articles which carry a seem
ingly heavy sales and advertising
expense show a gradual reduction in
the purchase price of the finished
article.
The Ad Man’s Views
Advertising, he added,, must con
tinue to be an important factor in
reaching the millions of families
that have moved into higher in
come groups, offering an enormous
new potential market for all kinds
of goods.
Mr. Francisco warned, however,
that “the elimination of waste calls
for continuous advertising to a
carefully selected audience—not ex
travagant, stop-and-start effort, or
campaigns that are spread too thin
to be effective.”
Fenton B. Turck, president of
Turck, Hill & Co., engineers, and
chairman of the American Society
of Mechanical Engineers’ Distribu
tion Committee, estimates that con
sumer prices could be reduced an
average of 22 per cent through ap
plication to distribution of engineer
ing principles used in production.
“With efficiency in distribution
added to efficiency in production,
our national economy should be on
a sounder basis than ever before in
history,” Mr. Turck said.
Production and distribution are
so closely related, economists say,
that mass output could not exist
without the means of mass distribu
tion. By the same token our vast
distribution system would bog down
if goods were not prodded in
volume.
The relationship between the two
factors is explained this way:
As Economists See It
When a cobbler made a pair of
shoes from materials produced lo
»»»*« uuiu vttvut w a vuovuutoi
who came into his shop and ordered
them, distribution costs were negli
gible. Later machinery enabled him
to make more shoes at a lower cost
per pair, but he had to have the
means of selling the additional shoes
in order to enjoy the benefits of
increased production. As his mar
ket expanded he could increase his
volume of output. To reduce pro
duction costs it was necessary for
him to increase his distribution
costs.
Under the present system, where
production of goods is centralized,
both raw materials and finished
products must be moved, stored, ad
vertised and sold got only once but
often many times before they reach
the ultimate consumer.
For this reason some economists
say more efficient distribution is the
logical way to reduce prices. They
see lowered prices as a means of
increasing sales, which in turn
would support a high level of pro
duction. And only through high
production, they explain, can unit
manufacturing costs be kept down
in the face of high wages.
(Distributed by the Associated Press.ij
Political Evolution*of J a v cT*
Analyst Says Facts and Claims Are at Variance in Dispute Between Netherlands
Government and the Republic of Indonesia
!l;
By Lothrop Stoddard
In order better to understand the
significance and the equities of the
dispute between the Netherlands
government and the regime known
as the Republic of Indonesia, the
latter’s status and character should
be clearly defined.
The title assumed by this regime
has sweeping implications, because
the term “Indonesia” has often been
used to describe the whole of the
Dutch East Indies. Indeed, the
spokesmen of the Indonesian Re
public claim to represent a Na
tionalist movement extending to all
parts of the Dutch colonial empire
in the Orient. But such claims do
not square with the facts, which
do not lend themselves to so simple
an interpretation.
That a movement has long existed
voicing discontent with Dutch colo
nial rule and aiming at native self
government or even eventual inde
pendence of Dutch authority, is
indisputable., But this “Nationalist”
trend arose on the island of Java
and has always been predominantly
Javanese in character. Now Java
is unquestionably the most populous
and economically the most impor
tant part, of the Dutch Indies. But
it is merely one portion of a very
much larger whole, embracing a
wide variety of lands and peoples
widely different from each other.
Indeed, their chief organic connec
tion has come about through three
centuries of Dutch colonial rule—
which means that the common tie
is not native but foreign; not some
thing indigenous but imposed from
outside.
A Vast Archipelago
This hist.ftrir is Mne/nnllv
important when we remember that
the Dutch Indies are not a solid
block of land like British India
but a vast archipelago of thousands
of fclands, great and small, stretch
ing along the equator for more than
3,000 miles, with an average breadth
of some 500 miles. That Is an east
west distance from New York to
San Francisco, and a north-south
distance almost half-way between
the Canadian and Mexican borders.
Although much of this belt is water,
the land portion aggregates 735,000
square miles—thrice the size of
Texas, with a population exceeding
60,000,000 according to the census
of 1930.
It was nearly three and a half
centuries ago that a trading corpo
ration was formed in Holland called
the Dutch East India Co. They were
a canny group of merchants aiming
to tap the legendary wealth of the
“spice islands,’* which for ages had
been the source of such luxuries as
nutmegs, cloves and pepper. Oust
ing the Portuguese, who had al
ready obtained footholds, and freez
ing out the English who tried to
muscle in, the Dutch presently ob
tained the monopoly of the spice
trade. But those Dutch traders
were severely practical men. They
had no idea of founding an “em
pire.” What they wanted was to do
a profitable business. So they in
terfered as little as possible with
the natives, leaving local affairs in
the hands of the chieftains who
ruled the various islands and there
by perpetuating the differences in
languages, religions and customs.
Only in a few of the smaller spice
islands like Ambolna, where the
Dutch made their early settlements,
did they deeply influence the lives
oi tne inhabitants. Much later
Dutch authority was extended over
the larger and more populous is
lands such as Java and Sumatra.
Population Blossomed
The amazing development of Java
dates back only a grille more than a
century, when the luxury trade in
spices declined and was replaced'by
quantity-produced tropical staples
such as' coffee, sugar and rubber,
grown on big plantations. The fer
tile soil of Java made it the center
of Dutch enterprise which, in turn,
made it an agricultural gold mine
and stimulated its population over
tenfold—from about 4,000,000 at the
beginning of the 19th century to
44,000,000 in 1930—all on an island
with an area of only 50,000 square
miles, Just a trifle larger than New
York State. Java is thus today one
of the most densely inhabited areas
in the world. But this swollen pop
ulation can be supported only ty the
marvelously efficient Dutch skill
and enterprise that has brought it
forth.
It is interesting to note that, even
in Java, marked differences exist
among the native population. The
true "Javanese” occupy the middle
portion of the island and are the
most numerous element. But the
western end of Java is inhabited by
the Sudanese, a people with a con
trasting temperament and culture
who have already registered a pro
test against the Javaneee-run “Indo
nesian Republic." The inhabitants
of Madura likewise have a diverse
individuality. Where sympe£iy for
the republic has been shown in other
islands, it can be traced largely to
Javanese immigrants; because the
Dutch have for many years encour
aged emigration from over-popu
lated Java to less developed parts of
the archipelago, such as Sumatra,
which Dutch enterprise has been ex
ploiting along similar lines.
Return of Dutch Welcomed
The Jajianese conquest and oc
cupation of the Dutch Indies were
a powerful impetus to Javanese
nationalism, which the Japanese
deliberately fostered. But they did
not get the same results in the
"Outer Islands,” as the Dutch term
the territories lying north and east
of Java. There, the return of the
Dutoh after the collapse of Japan
was generally welcomed, and Dutch
authority has been in most cases
amicably re-established.
The Dutch government realized
that a return to the colonial past
was impracticable. So they evolved
a plan for what may be termed “im
perial federation,” in which the
Indies would be grouped in a series
of local autonomies heading up into
a dominion which, in turn, would
be linked to tne Netherlands itself
and the Dutch possessions in the
Americas through the common tie
of the crown. In this federation
the Indonesian Republic was to
have its place alongside at least
two other autonomous units in the
Indies—the Outer Islands (collec
tively termed "the Great East")
and the Dutch pari of Borneo.
Both those projected states have
already signified their approval of
the plan, the Netherlands govern
ment having pledged Itself to set up
(the over-all dominion administra
tion not later than the beginning
of the year 1949. And representa
tives of both are now on their way
to Lake Success, there to register
before the Security Council of the
United Nations their Indorsement
alike of the dominion plan and
of the imperial federation idea. The
only portion of the Dutch Indies
which has not been ^consulted is
the Dutch portion of the huge yet
primitive island of New Guinea,
thinly inhabited by frizzy-haired
savages incapable of political con
ceptions of any kind. Dutch New
Guinea is seemingly to be a sort of
“Rijksland” or federal territory
until it has been more developed
and civilized.
United Support Doubted
The Javanese nationalists thus
appear to be the only notable re
calcitrants to a plan for political
evolution that has been generally
hailed by competent observers, as
a progressive and constructive solu
tion of the problem presented by
the postwar Dutch Indies. It com
bines satisfaction of desires for
local autonomy with continued
Dutch guidance and participation
in native political and economic
apprenticeship.
Indeed, there is much evidence
that the present leaders of the
"Indonesian Republic” do not have
the united support even of the
Javanese element, to say nothing
of the protesting Sudanese and the
Madurese, who have made little or
no resistance to the recent Dutch
reoccupation of their territory. Be
sides those native elements there
should be considered the strong
Chinese and Arab minorities—com
mercial groups who have suffered
greatly at the hands of the Java
nese extremists and whose con
tinued prosperity depends on the
restoration of order and economic
stability.
The short and stormy life of the
Indonesian Republic has been char
acterized by a periodic weeding-out
of its more moderate supporters by
increasingly radical and irrespon
sible elements. It is those extremists
who are chiefly responsible for the
repudiation of agreements originally
made with the Dutch authorities,
the violation of truce terms, and a
general irresponsibility springing
either from unwillingness or in
ability to make any villd com
promise.
It would seem to be a pity that
so many critics, here in America,
of the "police action” recently
taken by the Dutch authorities do
not reveal a sounder basis for their
strictures. A careful reading of the
respective cases put forward by the
contestants should tend to show a
striking contrast between the me
ticulously factual and well-docu
mented Dutch presentation and
that ef the Indonesian regime,
which seems to rely too much on
theoretical abstractions and windy
denunciation.
This does not mean that the
Dutch authorities have always been
wise or tactful. But they do seem
to have shown prolonged patience
in face of repeated and cumulative
provocation. It is to be hoped that
the facts of the case will be now
fully set forth before the world and
that it will be upon a factual basis
(hat the matter will be settled.
A Civil Service Success Story
Internal Revenue Bureau
Chief Started as a
Stenographer
By Larston D. Farrar
In an era when most top Gov
ernment jobs are political appoint
ments or are filled by men drafted
from private business, it is a rarity
to find a Federal agency headed by
a “career man."
George Jeremiah Schoeneman, re
cently appointed United "States
commissioner of internal revenue,
is an exception to the rule that de
partment and bureau chiefs in the
Government are “brought in,”
rather than “moved up.”
The new commissioner started
work as a $900-a-year stenographer
in the Post ^Office Department on
July 1, 1911. He has been in the
Government ever since and his des
ignation by President Truman as
internal revenue commissioner at
$10,000 per annum capped 36 years'
service to the day—July 1, 1947.
Lesson in Democracy
That Mr. Schoeneman did come
up through the ranks is a good ob
ject lesson in the democracy of gov
ernment. But the commissioner is
not the kind ol person who goes
around telling his fellow workers
how they, too, can be successful.
Mr. Schoeneman is the only per
son with that surname in Who's
Who, the latest issue of which car
ries the following biographical data
about him:
“Schoeneman, George J., U. S.
Govt, official; b. Newport, R. I„ Mar.
4, 1889; s. Charles and Catherine
(Shea) S., student pub. schs., New
port, R. I., m., Lorena Rouse; chil
dren—Ruth (Mrs. Chas. W. Adams),
Bettymae (Mrs. Robert M. Moore).
Began in Post Office Dept., 1911; sec.
to mem. Fed. Reserve Bd„ 1919-20;
in charge Collectors’ Personnel. In
ternal Revenue Bur., 1920-24; asst,
dep. commr., Accounts and Collec
tions Unit, Internal Revenue Bur.,
1924-29; dep. commr., 1929-44; asst,
commr. Internal Revenue, 1944-45;
administrative asst, and President
Truman since May 9, 1945; liaison
officer for personnel management,
since May 21, 1945. Home: 1600
Noyes dr., Silver Spring, Md.”
If it's true that cold facts can be
used to cover warm personalities
then Who’s Whio is as guilty of
hiding Mr. Schoeneman's real life as
a biographical book could t>e.
His Early Life
Left out are the facts of George
Schoeneman's beginning and his
early life, namely that he was born
in Newport Harbor Lighthouse with
out benefit of trained nurses or any
of the “modern conveniences” which
greet most Americans as they enter
this world.
That’s why a headline writer put
down “From Light House to White
House” when Mr. Schoeneman was
appointed a special assistant to the
President.
Many is the storm he experienced
in those early days that taught him
a nor’wester can make lif^Just as
GEORGE J. SCHOENEMAN.
miserable as a calm sea and a
bright sun can make it pleasant.
One time, in 1898, the wind was so
terrific that the waves broke the
windows of the lighthouse, filled the
cistern with salt water, ruined the
the food in the kitchen 20 feet above
the regular waterline and marooned
the Schoeneman family for three
days and nights without water or
nourishment.
“The United States almost lost
a potential Internal revenue com
missioner that time,” he says now.
with a smile. “Perhaps a lot of
folks will be saying that it would
have been best.”
He lived In that lighthouse for 20
years—until he followed his older
brother, the late Charles R. Schoe
neman, to Washington in 1911, to
become a stenographer in the Post
Office Department.
Mr. Schoeneman feels today that
his life in Government has been a
series of "good breaks,” but remem
bers the first such opportunity as
being the one that seemed to help
him most.
Post Office Appointment
“I remember it very well, even
after the years,” he recalls, “Albert
S. Burleson had just been appointed
Postmaster General during the Wil
son administration, and he called
ior a personal stenograpner. mere
were 25 stenographers detailed to
the department headquarters at the
time and, of course, every one of
them wanted to be chosen for the
place at the Postmaster General’s
right hand, so to speak.
"After the competitive exams and
after interviews with each of the
25 stenographers had been held by
the new official, I was chosen for
the post. That was my real be
ginning in Government service. And
that's why finally, I suppose, I got
this new post for which I feel so
deeply honored.”
In other words, Mr. Schoeneman
always has made it a point to be
around, and qualified, when oppor
tunity knocks.
Likewise, when other opportuni
ties opened, he was Johnny-on-the
spot, and bigger men believed that
the job would be done right if they
“let George do it”—George Schoene
man, that is.
On May 11,1944, he was appointed
assistant commissioner of temal
One of Few ‘Career Men’
to Head a Federal
Department
revenue, holding his position until
May 8, 1945, when he was appointed
administrative assistant to the Pres
ident, He was gven additional per
sonnel duties In the White House
later in the same month, serving In
these capacities until September 11,
1945, when he was named special
executive assistant to the President.
"Being the boss of men who are
going up isn't essential in going
higher in Government yourself, but
it helps,'' Mr. Schoeneman says
now, the hint of a smile playing
about his mouth. "When I was
deputy commissioner In charge of
the Accounts and Collections Unit,
there were two pretty good collec
tors out in ihe field whom I had
to contact rather regularly.
One Was Hannegan
"One of them was cQllector at St.
Louis—a fellow by the name of
Robert E. Hannegan. The other
was collector In' New York—a gen
tleman known as Joseph D. Nunan.
“Bob Hannegan later became com
missioner of internal revenue and
was my boss. Later, he resigned to
become Postmaster General and Joe
Nunan became commissioner of In
ternal revenue, and he, too, be
oame my boss until I came over to
the White House.
“Now that Joe has gone out to
practice law, it’s pretty much of a
coincidence that I should succeed
him.’’
Some observers recalled, too, that
Mr. Schoeneman was a logical
cnoice in view oi me iact mat ne
had met Mr. Truman even before
the President was nominated for
the vice presidency at the Demo
cratic convention in Chicago in
1944. Senator Truman and .Mr.
Schoeneman became Arm friends
via the “reception” route in Wash
ington; hence, Mr. Schoeneman was
called into the White House almost
as soon as Mr. Truman took office
after the death of Franklin D.
Roosevelt.
While the office of commissioner
of internal revenue is looked upon
as “political,” In that the President
can appoint his own man and gen
erally chooses some one high in his
own party, the truth is that Mr.
Schoeneman’® appointment was
about as nonpolitical as any Mr.
Truman could have made. While
no doubt proadministration in sen
timent, Mr. Schoeneman never has
won his promotions in Government
through political connections and
never has had any ostensible party
connections. He is noted for his
nonpolitical outlook on tax ques
tions in particular.
Tax men anticipate few changes
affecting the general taxpayer to
come from Mr. Schoeneman. But
they know that he has a passion for
seeing that Uncle Sam gets his Just
dues, and that he may be expected
to exact the last dollar due the
Government under the tax laws.
(Br special arrangements with Tun,
Commerce Clearies HonampubUcatlon.)
' §
FTC Is Internally Upset
By Policy Disagreement
Five-Man Board Splits Over Motion That
Would Alter Procedure to Achieve
Fair Trade Practices
By Henry Lyen
A rift has developed* in the Federal Trade Commission over what
the trade periodicals are calling "the Mason-Truman doctrine.” The
internal split broke into the open dramatically during a Senate subcom
mittee hearing and bids fair to continue until some action is taken by tho
five-man FTC board on a motion by Commissioner Lowell B. Mason.
This motion would alter the policy of the FTC on co-operative pro- *
CftdlirM In Afihisvimr foil* - ■ -- ... ..— —
practices. Why the motion had not
been acted upon when the Senate's
Finance Subcommittee heard Mr.
Maeon’s testimony has not been ex
plained, but Commissioner William
A. Ayres, recently confirmed to
serve seven more years, has de
clared in a formal statement that
if Mr. Mason does not call up the
motion for disposition, he will do so
as soon as practicable after Mr.
Mason returns from his vacation.
Thus has grown up two opposing
camps within the FTC. One group
has declared it must be the policy
of the commission to stop “playing
cops and robbers with business.”
The trade papers are professing to
see an alignment" of Commissioners
Ayres, Ewin L. Davis and Robert E.
Freer as reflecting a majority view
opposed to the ideas of Commis
sioner Mason. Chairman Garland
S. Ferguson is the fifth member of
the board. This is purely conjec
ture, although in his statement Mr.
Ayres spoke as for "the majority of
the commission.”
A Surprise Move
Mr. Mason has been contending
for a long time in articles and ad
dresses, as well as before the Senate
hearing, for a revision of policy
whereby greater use would be made
w|»v»i»V4lw W4HMV W444V4 V44VV>U
and of stipulations, thus de-empha
sizing what he calls "hit or miss”
prosecutions. Many persons were
surprised that Mr. Mason took his
actual motion before the Senate,
since he represented only himself,
as he expressed it, and since policy
matters are usually decided by the
PTC without benefit of public kibitz
ing. His testimony in the hearings
no doubt contributed largely toward
the run on the printed copies of
the hearings even though they did
concern the other independent
offices as well as the-PTC.
In the end, Mr. Mason’s private
recommendations for earmarking
large funds to implement the motion
were not granted by the committee
although it did express Itself in sym
pathy with the general aims.
As concerns that expression of
general agreement, Mr. Ayres de
clared himself not opposed to co
operative trade practice conferences
and proper Use of stipulations. His
statement follows:
"There apparently has been con
siderable' misunderstanding con
cerning the position of the majority
of the commission with respect to
trade practice conferences and stipu
lations. Certainly there has been
misunderstanding concerning my
position. Those procedures are not
new in our operations. They have
long been used and their value in
obtaining a co-operative and wide
spread observance of the laws we
administer has been fully estab
lished. I have vigorbusly supported
the use of those procedures, and
shall continue to do so.
Mr. Ayres’ Statement
"Experience has proved, however,
that the effectiveness of those pro
cedures has definite limitations. Be
cause their force lies primarily in
the moral conscience of those who
enter into agreements with the com
mission, they cannot be more ef
fective than the good faith of the
parties Involved. Obviously they are
not adaptable to all situations and
their use should never be permitted
as a means of evading or-delaying
the effectiveness of the laws we ad
minister. There are situations in
which the legality of their use in
volves serious questions. They can
not fully replace formal adversary
proceedings, and an effort to dis
credit or weaken our statutory ad
versary processes constitutes a
frontal attack upon the laws in
trusted to our jurisdiction.
"A motion has been pending be
fore the commission for several
months proposing certain changes
in our statement of policy on co
operative procedures. It has not
yet been voted on. I have been
ready to vote on it since it was of
fered, however, and I am confident
that it could have been brought to
a vote at any time. I consider that
the subject is of great Importance,
and that the commission’s position
should be clarified as soon as pos
sible. If the sponsor of the pend
ing motion does not bring it to a
vote promptly upon his return from
vacation I shall ask for a full con
sideration of the matter, and shall
make specific proposals thereon,
which I have been ready to offer
for some time. Until I have made
my proposal* to the Commission,
however, I do not feel free further
w uwwiuoc uicu ucwiid eAccpi to say
that they involve certain important
differences from the proposals which
have been made.”
Mr. Mason’s Motion
Mr. Mason’s motion reads, in part:
“I move that the commission
adopt the following as a pultyic
statement at policy with reference
to trade practice conference agree
ments and stipulations:
“ ‘Upon the promulgation of trade
practice conference rules tor an In
dustry, an examination will be made
of all charges of law violations by
members of that industry * * *.
“ In the case of pending charges
which have not reached the formal
stage through the issuance of com
plaint, if a proposed respondent sub
scribes to the trade practice con
ference rules for his industry, and
if an investigation reveals that he
is, in fact, complying with such rules,
then to the extent that the pending
charges are adequately covered by
the trade practice coherence rules
the file may be closed without
prejudice. • • •
“-Tn case of outstanding formal
complaints not yet adjudicated, if
any respondent becomes a subscriber
to the conference rules and In fact
complies, the commission will en
tertain a motion to suspend without
prejudice those charges In the com
plaint which are adequately covered
by the trade practice conference
rules. • • • The right to institute
further action will be specifically
reserved.’ • • •
“I further move that the commis
sion amend its statement of policy
contained in subparagraph (b) of
its statement of policy of December
11, 194d, to read:
Policy Cited
“ ‘Wherever the commission has
reason to believe that any person
has been ertgaging in practices vio
lative of the provisions of the acts
administered by the commission,
and that the interest of the publio
will be more expeditiously served by
so doing, it may withhold the issu
ance of a formal complaint and ex
tend an opportunity to execute a
stipulation, satisfactory to the com
mission, in which the proposed re
spondent, after admitting the mate
rial facts, agrees to cease and desist
from and not resume such practices.
It is not the policy of the commis- .
sion thus to dispose of matters in
vnl vincr inUnf tn Hafrcud A
or the false advertisement of fo is,
drugs. de\ ices or cosmetic* wt ch
are inherently dangerous or wh >re
injury is probable.' • • •
“The adoption of the policy, rec
ommended will require as a matter
of internal policy that there be a
constant and continuing check of
compliance by subscribers to trade
practice conference rules. It will be
Imperative that any subscriber or
nonsubscriber who engages in law
violations contrary to the trade
practice conference rules for his
industry be promptly and vigorously
proceeded against by way of com
plaint.
“This is necessary to the success
of the expanded program because
without it the rules lose force and
prestige in the industry, and the
door will be open to an easy route
for avoiding compliance with the
law. The trade practice policy will
effectuate mass compliance rather
than permit mass evasion of the
law. • • •”
Clash of Philosophies
According to Mr. Mason’s testi
mony before the Senators—he did
not appear previously because he
“did not agree with the present
methods’’ of spending funds—the
policy President Truman took to
Congress for the PTC in 1946 has
not yet been implemented although
funds were earmarked in a supple
mental bill to bring about a new
deal in PTC relations with business.
The extra funds permitted only the
creating of a /salaried staff ready
to go when the policy was adopted
by the commissioners jointly.
As Mr. Mason sees it, two dom
inant philosophies in government
strive for ascendancy. One of these
he sees resting upon the "totalita
rian principle of authority by force,”
and the other upon "the democratlo
belief In authority of assent." In his
letter accompanying his motion and
testimony before the Senators, Mr.
Mason deplores the "lack of prog
ress in Government-business re
lations," and blames "hit-and-mlsa
Individual prosecutions.”
This method, he says, "monop
olizes the entire effort of govern
ment; none other Is allowed to
compete with It.”
He cited a passage from a recent
article In Nation's Business In which
he said that "Government takes
university of noncompllance so
for granted that in filing complaints
little effort is made to hide the fact
that determining who shall be sued
Is like playing ‘pin the tall on tha
donkey' with everybody blindfolded.
Including the spectators.’*
Businessman Confused
"No one has challenged that
statement,” he told the hearing. “Is
it any wonder that the businessman
la confused? I am Inclined to think
the error is too big for a few super
brains In the bureaus of Washington
to remedy. It’s time Industry
stopped leaning on Government for
its virtue and developed some moral
self-reliance of its own.
“The Federal Trade Commission
can set the pace for the protection
of the consumer, prevention of ex
competition through this program,
or we can drag along, hiding our
failure in a busy routine of hit-and
miss prosecutions, winning individ
ual legal battles but losing the cam
paign to strengthen our economy
through common understanding and
acceptance by business of what is
fair in commerce.
“Trade-practice conference and
cease-and-desist orders both seek
one common end, namely, the elimi
nation of unfair methods of com
petition, whether it be discrimina
tory pricing, misrepresentation or
any other act subject to the scrutiny
of the Federal Trade Commission.'*
Mr. Mason refuses to believe that
industry-wide rules cannot be drawn
specifically enough to fit into the
FTC picture.
"When we have the benefit of ad
vice from a whole industry through
a conference instead of legalists
forensics in a single litigation, we
will be able to decrease confusion
and give birth to directions that will
have more practical value in the
marts of trade than those contained
in an order against flpe individual.*