Mr. MICHENER. Each side has the same objective. Your objective is, as a labor organization, to get all the money out of the industry in the shape of wages that is possible; and I take it that the manufacturer, on the other hand, who is human just like you are, wants to get all the profit that he can get out of the industry for his take-home pay. Is that not right? Mr. TEPER. I would not agree with that statement, sir, for a couple of reasons. If the union was as simple-minded as that first statement would imply, in other words, that it would be solely interested in getting the maximum out of the industry without regard for the consequences, then, because our industry is pretty well organized, we would constantly strike against the employer to get higher and higher wages. We do not do that. We do take account of the economic realities. In the process, we try to discover what we can do for our people, our members. We certainly do not want them abused. We want them treated fairly. The whole thing, however, is not necessarily a matter of wages. It is a question of other contractual obligations, of the right of employers to discharge workers without cause, of hours of work, of decent working conditions, of proper sanitary facilities in the plants, and so on. Collective bargaining covers a multitude of things, but the union's policy is not one of rule or ruin, not one which is designed to get out everything it can get, every last dollar it could get without regard for the economics of the situation. If the union were to disregard realities, I do not think it could survive, and I do not think the industry could survive. As to the manufacturers' policy, I do not believe that they, too, are anxious to get every last dollar that they could out of the consumer. If they wanted to do that they would consolidate and form one large corporation among themselves and operate as a monopoly. They do not do that. Instead, they are competing against each other. The CHAIRMAN. Have there been any strikes in the industry of late? Mr. TEPER. Well, in the ladies' coat and suit industry of New York, for example, the last strike took place in 1926. The CHAIRMAN. None since then? Mr. TEPER. In the dress industry the last market-wide strike took place in 1933. Mr. MICHENER. The strikes should be on our part as consumers. There has been no strike, but there has been a gradually and continuing and an ever-present cost increase in the cost of production which has been largely the wage, the pension, and the retirement costs which the consumer must pay. Mr. TEPER. There is no question that prices of a lot of things during the war period did rise. But if you look at things over a span of years, you discover that prices of clothing in relation to the incomes of American people have been constantly lowered. The National Industry Conference Board, which is predominantly an employers' organization, a large employers' research organization, in its publication the Conference Board Management Record, for March 1949, published a study on the cost of clothing, 1914 to 1948. This study tried to find out what were the real changes in the cost of clothing. Accordingly, it compared the prices of clothes by relating them to the average wages paid in American industry. Here is what they found: That ladies' wool suits which in 1914 required an average worker to work 37 hours in order to earn enough to buy it, in 1948 only required 11.4 hours of work. Similar findings are shown for other articles of women's garments. Mr. MICHENER. Do those figures, of course, take into consideration the change from 1914 to 1948 in your industry's method of manufacturing? You use machinery now. You turn out by mass production, and there is very little hand work. It costs me and my family, for instance, to have a dressmaker come to the house and make my wife's clothes or the children's clothes, more than it does to buy the machinemade articles which you can purchase at any department store. Mr. TEPER. I am glad to hear you say that, because I think the cost of making clothes at home is much greater today than the price of the same garments when purchased in the stores. Mr. MICHENER. So do I. Mr. TEPER. But, as you can see, this illustrates the very problem under discussion. Over a period of years price levels for all goods have been changing. In order to evaluate whether the price changes of a specific article were reasonable, one cannot isolate them from the rest of the prices, since the incomes of the American people have also been changing. And, so, the best standard of judgment is obtained when we determine how many hours one has to spend at work in order to buy an article. Once this is done we find that a substantial drop in the cost of women's clothing expressed in terms of the hours of work needed to earn their price did take place, a drop of about 30 percent between 1914 and 1948. These are the findings not of a union study which attempts to glory in the fact that its labors on behalf of garment workers did not unduly increase the price of clothing. These are the findings of the largest manufacturers' research organization in the country. Mr. MICHENER. I am through, Mr. Chairman. The CHAIRMAN. Dr. Teper, we do not want to hasten you, but the House is in session, and I hope that you can save as much time as you are able. I do not wish to hurry you along but try please to finish your statement shortly. Mr. TEPER. Yes, sir. I will now continue with my prepared statement: Even when one takes a look at the specialty shops, for instance, the stores specializing in the exclusive sales of women's wear, we find that concentration is reaching gigantic proportions. Lerner Stores Corp.'s dollar volume reached $125,966,000 in 1948. In the same year the Grayson Robinson chain did $72,712,000; Lane Bryant, Inc., did a volume of $54,526,000, and so on. These figures only tell a partial story of concentration of economic power. In many instances, large scale establishments operate jointly for buying purposes. In other instances, they may buy jointly only in part, but agree among themselves on joint policies regarding their purchases. The largest combination of this type is a group of 32 department stores which own cooperatively the Associated Merchandise Corp. A group of these stores, seven in number, are otherwise united through complete or majority stock control in the hands of the Federated Department Stores. The buying power of the stores operating through the Associated Merchandise Corp. is represented by the combined dollar volume of sales which reputedly approximates $1,200,000,000. An equally important grouping of large department More combines, including R. H. Macy's. City Stores Mercantile Co. May Department Stores Marshall Field. Kaufman of Pittsburgh, O'Nelle of Akron. Meler & Franks of Portland. Oreg., and others is represented by Affiliated Retailers, Inc: the stores belonging to this cooperative buying enterprise reputedly have an annual busiLess volume of $1.140.000.000 Frederick Atkins, Inc., another cooperative venture, buys for 35 department stores, with a combined annual dollar volume of $400.000.000. A substantial volume of these buying organizations is in women's wear. In addition to these varieties of concentrated buying through offices wholly owned and controlled by the stores, numerous retailers do their buying through resident buying offices, which operate on a fee basis, payable to them by the stores. In the case of this group of buyers, the individual dollar volume of business done, or for that matter, the combined purchasing power as represented by the sum total sales of the separate stores is not generally available. One can appreciate, however, the magnitude of their operations when one considers the number of stores for whom these various buying offices purchase. Mutual Buying Syndicate buys, for example, for 66 department stores, who gross approximately $400,000,000 a year. Fernfield Associates buy for 191 apparel stores: Arkwright, Inc., buys for 126 department stores (four of these stores had a combined dollar volume in 1947 of $48.032,405); Jack Anstendig buys for 127 apparel stores; Independent Retailers Syndicate buys for 94 department stores; Kirby Block & Co. buys for 148 department stores; Felix Lilienthal & Co. buys for 166 dry goods and apparel stores, and so on. Even if one were to assume that on the average the stores represented by these resident buyers do but a quarter of a million business per year, their combined purchasing power, as represented by these groupings, is terrific, certainly when compared with the volume of the individual garment manufacturer. Even though not all purchasing is done by the stores which own cooperative buying offices or deal through resident buyers, the role of group buying in the total picture is important. One informed estimate obtained by the research department of the ILGWU indicated that close to 75 percent of the total volume in women's wear passes through the hands of the buying offices. The Buyer's Manual issued by the National Retail Dry Goods Association notes: Since the buying power of even the larger department stores, when considered in terms of individual departments, is more restricted than the buying power of a group of stores, it is obvious that in some lines an individual store operating its own New York office cannot buy to the same advantage as can a group of stores operating through the same office.13 The concerted pressure exerted by group buyers is clearly demonstrated by their purchasing policies. Commanding a large purchasing power and controlling the buying policies of large and important stores, group buyers are in the position to issue edicts when to buy and when not to buy. Thus we find that one of the large buying offices, Kirby Block & Co., recently announced in the trade press that it would restrict its purchase of garments to a fraction of its actual needs. This is not an isolated example. In industry such policies would be clearly declared as in restraint of trade. In retailing it 1 National Retail Dry Goods Association, The Buyer's Manual, 1937 edition, pp. 341 f. Women's Wear Daily, June 3, 1949. goes unchallenged by the law. In addition group buyers are in a position to determine the amount of garments to be purchased and the price to be paid. A recent announcement by the buying office of Frederick Atkins, Inc., instructing its buyers to pay in the future $11.50 instead of $12.50 for a dress to retail at $19.95 clearly demonstrates this fact.15 In other words, they offer a dollar less to the manufacturers, but the retail price of the garment to the ultimate consumer was going to remain unchanged. Furthermore these buying offices have the power to insist upon special concessions of one kind or another such as discriminatory discounts, special advertising allowances, the right to return seasonal garments at will, the right to buy on consignment, the right freely to cancel orders, et cetera. These and other demands on the part of group buyers, if granted, would place the manufacturers of ladies' garments in a vulnerable position and subject them to a squeeze which they would be unable to withstand and which, more often than not, would force the manufacturer into insolvency. The kind of pressures exercised on garment producers, in an overt or covert fashion, are illustrated in a complaint filed by the Federal Trade Commission against the Associated Merchandising Corp. and its affiliated stores.16 This complaint was unopposed by the respondents and a cease-and-desist order was issued in 1945. The allegations of the Commission deserve the attention of this committee because they are typical of many practices exercised even now by strong buyers against the weak manufacturers. Associated Merchandising Corp. admitted to have knowingly induced and received discriminatory prices special allowances or discounts on their purchasesknowingly induced discrimination in price in favor of respondent members by selling them * * * * by means of merchandise * at lower prices or with higher allowances or discounts than those accorded to stores not belonging to respondent members, but which in competition with the stores of respondent members These discriminatory allowances took— * are the form of rebates on the purchases * * during a specified period, which is usually a year at the end of which period the sellers paid this rebate to Associated Merchandising Corp. based on the total aggregate purchases This rebate was then distributed to the respective stores according to the amount * * purchased from the particular seller * Only if a manufacturer agreed to grant such special and discriminatory allowances or discounts then, and only then, is he approved, classified and designated by Associated Merchandizing Corp. as a "preferred resource." At the same time, Associated Merchandising Corp. attempted to induce its affiliated stores to confine to said preferred resources, all of their purchases-of which they were a source of supply and urged these stores to "give preference" to the merchandise 15 Women's Wear Daily, May 23, 1949. 16 Federal Trade Commission Docket No. 5027. * purchased from such preferred resources and not to "push" for the resale of comparable goods *which they have purchased from other sources of supply." The Associated Merchandising Corp. case is far from unique even though it is one of the few to see the light of day. The significant thing, however, is that when garment manufacturers, in self-defense against the predatory practices of large retailers, adopt certain rules of business conduct with a view to give equality of treatment to all their customers, the Federal Trade Commission goes up in arms and charges them with restraint. The antitrust laws should be applied to curtail big business engaged in monopolistic practices. This legislation was never intended to victimize the small-business men who for their own protection and preservation adopt a code of conduct to enable them to have their small enterprises operate successfully in spite of large concentrations of capital which flank them on both sides. V. CONCLUSION As a representative of the workers of the women's garment industry, the International Ladies' Garment Workers' Union has a deep concern for its welfare. Let me quote what one of our vice presidents, Mr. Julius Hochman, had to say on this subject: the tens of thousands of workers whom our union represents draw their livelihood from the manufacture of dresses. When the industry is in a healthy condition and work is plentiful, they earn a living and feel secure. But when the industry is sick and there is not enough work to go around, the income of the workers shrinks and their difficulties multiply. The state of the industry is therefore not something remote and foreign to the workers but something on which their very bread and butter depends.18 Only a healthy industry can provide decent working conditions for its workers. This concept underlies the thinking of the leadership of the ILGWU and of its membership. It is an outgrowth of soundly established relations between workers and employers. It is a byproduct of maturity achieved over years of living together. That is why we are concerned with the ability of our industry to compete. That is why we are anxious to see the spirit of fair play prevail between manufacturers and their workers, between manufacturers and their material suppliers, between the manufacturers and retailers. That ends my statement, sir. The CHAIRMAN. I was interested in what you said before, that if the manufacturer or jobber or cutter were in your place and testified they would not testify uninhibitedly. They might be fearful of coercion and reprisal. That is a very dangerous situation. From what source would those reprisals come? Mr. TEPER. From both retailers and textile interests, sir. I remember a hearing held during the NRA days on the question of trade discounts. The representative of the code authority, its counsel, testified at that time-that was in 1935-that he could not get a single manufacturer to come and testify about his problems because they were fearful of being blacklisted by the retailers. The CHAIRMAN. We had a similar situation to that not so long ago when there was a bill before this committee called the design copyright bill. I tried, oh, with all the power within me, to get some of the 17 Findings as to the Facts and Conclusion, in the matter of Associated Merchandising Corp. et al., Federal Trade Commission Docket No. 5027. 18 Julius Hochman, Industry Planning Through Collective Bargaining (1941), p. 8. |