Business: Victory for Fair Trade?

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Like Rumpelstiltskin, who stamped his foot into the ground and tore himself in two, the Administration last week was ripping itself up the middle. It split over the question of whether Congress should pass a new Fair Trade law permitting manufacturers to force all retailers to observe their minimum prices. Both the Department of Justice's trustbusters and the Federal Trade Commission are dead set against Fair Trade. They call it a price-fixing device which would reduce competition and probably raise many prices. Secretary of Commerce Charles Sawyer is for it.

Loophole to Plug. Last week, called before a House Commerce subcommittee considering the pro-Fair Trade bill of Connecticut Democrat John A. McGuire, Sawyer testified that the law is necessary to protect smaller retailers from unfair competition. After his testimony, both the subcommittee and the full committee approved the bill. It would legalize the "non-signer" clause—i.e., permit a manufacturer to bind all retailers to the prices set in an agreement with any one of them.

It was this power, embedded in 45 states' fair-trade laws, which the U.S. Supreme Court outlawed last May on the ground that Congress had never intended to let Fair Traders have it. The court's decision set off a series of price-cuttings by big mass merchandisers (e.g., Manhattan's Macy's and Gimbels) and "discount houses." Ever since, retail druggists, hardware dealers and thousands of other small merchants had been clamoring for Congress to plug this price-cutting loophole.

Umbrellas to Mend. While the Commerce Committee was giving them what they wanted, a Judiciary subcommittee headed by Brooklyn's anti-Fair Trade Emanuel Celler held hearings on a similar bill. Witness Rivers Peterson, managing director of the National Retail Hardware Association, cried that the small retailer is entitled to protection "from exploitation on the part of the predatory price-cutter," just as labor is protected by minimum-wage laws. Retorted the American Farm Bureau Federation's Matt Trigg: Such devices provide "an umbrella for the inefficient" and are inconsistent with a free, competitive economy. Echoed Q. (for Quentin) Forrest Walker, economist for Macy's: "The simple truth is that no group fights for price-fixing privileges except to make prices higher than they would be under free and open competition." Then Celler's group surprised everybody, delighted the Fair Traders. It also tentatively decided to okay a bill approving the non-signer clause. (This week the Budget Bureau wrote Celler that "enactment of the legislation would not be in accord with the program of the President.") Outraged, Macy's took ads in Manhattan to blare: "'Fair Trade' is a misleading title. The real title is Price-Fixing.' "

Congress still has to act, but with four of its members already sponsoring separate bills to back Fair Trade, and with the Fair Traders themselves lining up solidly behind McGuire's bill, it looked as if the opponents would have a hard time keeping a tougher Fair Trade law from being passed.