Mr. COOLEY. You may give them to the clerk. They will be filed with the committee report. (The surveys will be found in the files of the committee.) Mr. COOLEY. With how many stores are you associated? Mr. COOLEY. Do you use stamps in all of the stores? Mr. COOLEY. From what sources do you obtain them? Mr. COOLEY. Do you have any stock in any of them? There is not a bit of connection between us and the S. and H. other than we purchase the stamps from them. We made the survey on our own. We had these copies made up at our own expense. S. and H. had nothing to do with it at all. In fact, I would say that today is the first they know of this, of these surveys and what we have done. There is absolutely no connection between us other than we purchase stamps from them. Mr. COOLEY. You think that the users of stamps are actually involuntary? Mr. GALUB. I believe nothing can be further from the truth. We are free agents in a free economy. If we felt that stamps were not doing a good job and that we were not competitive and that we were doing both our consumers and ourselves good, there is no power on earth that says that we have to stay in stamp issuing. There are just as many large chains in our area that do not give as do give. And even if there were more the advantage of a good merchandising program, whether it be stamps or any others, has to benefit an organization if it is aggressive and does the job right. Mr. COOLEY. In other words, you would not hesitate to discontinue the use of stamps in any one or more of your stores if you thought that it was in the interest of good business to do so. Mr. GALUB. That is right. We feel that it is in the interests of good business not to do so and that is why we are promoting them at all times. Mr. COOLEY. We thank you very much for your statement. We are very glad to have had you with us. Mr. GALUB. Thank you. (Without objection by the chairman the following statement was submitted to the subcommittee and is inserted in the record as follows:) STATEMENT OF HAROLD S. RAAB, EXECUTIVE SECRETARY, TRADING STAMP INSTITUTE OF AMERICA Mr. Chairman and members of the committee, my name is Harold S. Raab, and I am executive secretary of the Trading Stamp Institute of America. I am a member of the New York bar, associated with the firm of Patt & Heimowitz, of this city, and have been, for some time now, an active participant in the various aspects of the trading stamp industry. I should first like to express my appreciation to the members of this committee for permitting me to say the very few words I shall say upon the general subject at hand. Because I feel that an inquiry of this nature must receive highly specialized and factual knowledge and information which I, in utter frankness, am not prepared to give, I have asked Dr. Charles F. Phillips, an economist of great stature in this country, to present our point of view to the committee. We are happy that Dr. Phillips has accepted this assignment, and we are confident that the results of his research and analysis will be of great importance to all of you. I feel, however, that I cannot resist making some general observations before you, for trading stamps are a subject very close to me, and the major source of my livelihood and the livelihoods of thousands of men and women like myself who are devoting their lives to our business and who regard our services as a vital factor in the promotion of American business and industrial prosperity. Our group, the Trading Stamp Institute of America, is a trade association of trading stamp companies operating in this country. Although not yet entirely representative of the entire industry (having come into existence only this past summer), its membership includes many of the fine and reputable companies engaged in the promotional business of providing a trading stamp service, as well as those companies which supply our industry with the tools of our trade. Because our life thus far has been brief, our knowledge is limited. We have not yet had time to set up the facilities to enable us to gather the information so necessary and vital to a clear understanding of all the problems, or an intelligent appraisal of all the questions involved here. Accordingly, my own remarks shall be very brief, and I shall leave the expressions of opinion, fact and judgment to those more informed and better qualified than I. We understand that this committee is presently engaged in an inquiry to determine the factors responsible for the spread between the prices that are paid to the farmer for his goods and the prices that are paid for these goods when they reach the hands of the American housewife. Trading stamps might well be one of the factors-hence the inquiry. We do not know whether every other factor in this highly complicated question will be considered. To mention but a few of the factors, there are the costs of newspaper advertising, radio, television, parking space, register tape plans, rents, labor, and the general inflationary cycle which now grips the Nation, and indeed the entire world. Surely those factors, as well as innumerable others, must be considered as contributing to the cost of distributing the farmer's product. I am not an economist or a food merchant, and I limit myself to very simple and obvious observations. These may, however, add to the general fund of knowledge sought by the committee, and may aid in the decisions that will, after deliberation be reached. First, I would say, that if the question before the committee is: "Does the use of trading stamps by food markets raise food prices?"—the question should be: "All other relevant factors being equal, does the use of trading stamps in food markets raise food prices?" For all must agree that the price that any merchants receives for his goods, under our American competitive system, is depends upon a host of factors, all of which combine to create the price he posts. His competitive situation, whether strong or weak, must have an important bearing on his pricing policy. Can he purchase his goods, his labor, his space, his equipment, as wisely and as economically as his competitor? Does he offer similiar combinations of identical lines and services and over the same period of time during which price comparisons are made? Does he use the same cost-plus pricing policy as his competitor? In short, only when everything else is equal, can we know whether trading stamps or any other promotional device, whether newspaper ads, larger electric signs, babysitter service, or hula-hula shows on his parking lot will force him to raise his prices. We know that if I were to appear before this committee, as some of the antistamp proponents have done before other groups, and may do here, with a basket of food bought at a stamp-giving store, and a basket of food bought at a non-stamp-giving store, or, indeed, with 5 or 10 such food baskets, and attempt to prove the validity of my argument by price comparisons, it would prove nothing more than that I had shopped carefully, and that I had little respect for the intelligence of this committee. Surely an approach that is more objective and scientific than this is necessary in an inquiry of this nature. I trust that the committee will bear with me if, at this point, and because it is relevant to the question before you, an answer is made to the charge that food prices are now at an all-time high because of trading stamps. The fact is that the Consumer Price Index of the Bureau of Labor Statistics showed a 2.3percent increase in food prices in 1 year (July 1957, report). No stamp antagonist has ever pointed out that among those businesses and services not using trading stamps, the following price increases occurred: 3 percent for housing, 6.3 percent for transportation, 4.3 percent for medical care, and 3.6 percent for other goods and services. Is it not to the credit of the food industry, the largest single user of trading stamps, that its increases during this period of inflation aré far less than the others? To further clarify this, it must be noted that the food-price index combined food away from home (which was considerably higher), with food at home (food principally bought at food markets), and raised the food-price index well above what it would have been had food at home alone been used. We in the trading-stamp industry are happy that stamps have now rightfully taken their place alongside the other services furnished to the American consumer. Any form of advertising promotion is paid for out of the profits the merchant makes for the service he renders. Trading stamps, in addition, give the consumer something tangible for the merchant's advertising expenditure, and both classes, merchant and consumer, benefit from this tool. I quote from Marketing Research Report No. 147, United States Department of Agriculture, page 4: "The spreads between wholesale costs of premium items to well-established stamp companies and the list retail prices of these items apparently are such that the value of stamps to purchasers of food in exchange for premium merchandise may equal or exceed costs of these stamps to retailers." Prof. Harvey L. Vredenburg, formerly of Indiana University's School of Business, now at the State University of Iowa, has published an extremely informative treatise on trading stamps which, I am sure, most of the committee has read. In it, he has pointed out that if, as a food merchant, you are not using trading stamps, then an effective advertising policy might be to slant your advertising to "not giving trading stamps means lower prices." I am sure that Professor Vredenburg did not mean that this was the fact, but was merely pointing out the various methods used to counteract their promotional effect. Opponents of trading stamps have seized on this competitive tactic, without regard for its truth, in the same manner that many advertising agencies extol the virtues of their soap powders, toothpastes, reducing pills, and sleeping pills. Exaggerated advertising slogans and nothing more. I trust that the members of this committee will agree with me when I say that there is no power on this earth that could have made the American housewife save stamps unless she knew it was to her advantage to do so. We can, I believe, take somewhat judicial notice of the native intelligence and thrifty buying habits of the women whose hands are on the purse strings of the American pocketbook. Many studies have concluded that 1 out of 2 American families save stamps. It is a paradox in terms to state that the stamp saver, who, by the very act of saving stamps, represents the frugal and thrifty shopper, would make purchases without carefully considering the prices she pays for her goods. We refuse to believe that one-half of America's families are dupes and fools. The advantages of the trading-stamp program, used effectively, have been proven by time and in the American market. Only selfish or uninformed partisans would attack it. We trust that this committee, engaged in an inquiry of great importance to the consumer, and indeed to all groups, will weigh very carefully the testimony it receives here today; that it will separate fact from illusion, specifics from generalizations, and truth from fiction; that it will realize the remarkable promotional tool we place in the hands of America's retailers, is basically no different than any other means of advertising done to attract and hold business volume. Our industry fills a vital and necessary need to the advantage of the American consumer. Mr. COOLEY. We shall now hear from Mr. Bildner. STATEMENT OF JOSEPH BILDNER, PRESIDENT, KING'S SUPERMARKET, IRVINGTON, N. J. Mr. COOLEY. Do you wish to make your statement or file a statement? You have a prepared statement, Mr. Bildner? Mr. BILDNER. I have a prepared statement. I do not want to file it this way. I would like to read it, but I can file it. First I would like to make a couple of comments, if I might, on some of the previous testimony. Have I your permission? Mr. COOLEY. Yes. Mr. BILDNER. Thank you, sir. The farmer from Salinas said, when you thanked him for coming here at his own expense, he said the drought was good and the weather in New York in July and August "made it possible for me to make this trip.' If the weather was good in New York and if he sends his lettuce he will not worry about the inefficiencies of our warehouse. I want to stress the importance of weather on prices. It has nothing to do with inefficient marketing operations. The opinions expressed here are my own. I am a member of the New Jersey Food Merchants Supermarket Institute, the NEAFC and I am, also, a member of the Food Industry Alliance for which Mr. Unterberg spoke and he does not represent my opinion nor do I believe he represents many other members of FIA. We operate eight markets doing $10-million business in northern New Jersey. I am the president of King Super Markets. Our food prices are always attributed to the retailer. Sometimes the word "middleman" is used. The consumer thinks the retailer is the middleman. The food retailer, the wholesale groceries, the co-ops are constantly making efforts to bring their costs down, and they do, and these savings are always passed on to the consumer. The statement was made here yesterday-and I hope it is not part of the record-for the charts to be displayed in stores showing the price per pound for the various cuts of meats. The implication is that some merchants are dishonest. Most merchants bend over backwards to give more than honest weight. We have automatic weighing scales. We have scales that weigh the meat automatically and price it automatically-and so do most of the finest merchants all over the United States-and these machines are constantly coming into more and more use. Mr. Ogren's presentation was very excellent. pares one I would like to collaborate with him. in that I do not agree. The next time he preThere are some things On pages 9 and 10 of his paper he speaks about the price of eggs from the farmer to the area in New York, and states: Where from 1 to 4 more firms of various types may handle the same eggs before they reach consumers, high marketing margins on eggs are a result of the failure of many firms in New York to adopt the more streamlined methods and technological advances in egg handling already in common use in some other cities. He is using too big words for me. The farm-to-retail-price spread on large grade A eggs in 9 large cities averaged 22.8 cents per dozen in 1956, compared with an average of 29 cents in New York. And I would like to see anybody that can sell eggs in New York City and get 29 cents above the price paid to the farmer. I do not agree with Mr. Ogren on this. Mr. COOLEY. He did not say 29 cents above price paid to the farmer. Mr. BILDNER. He said the spread, the price the consumer pays and what the farmer gets, is 29 cents, on page 10 of his report. Mr. COOLEY. That must be an error, I believe. Mr. OGREN. That is what I figured. This was the year's average. This includes the total spread between what the farmer gets, and these are some of the eggs that come from the Middle West. There is transportation and handling and sundry charges, in addition to the wholesaling cost in this market, plus the retail market. So it is more than the retail market. Mr. COOLEY. I see, then. Do you differ with that? Mr. BILDNER. I do not agree with what he said here. I do not like the use of averages, although sometimes I use it myself, because Dr. Wilcox told me the other night one of the statisticians went swimming in a lake that had an average of 4 feet of water, but he drowned, and the statistician was 6 feet high. [Laughter.] I do not like some of the prices here. Anybody that does not understand, wait for me after the ball game. I do not like the retail price of cabbage here attributed to a 50-pound sack and the price is $2.76. By that I mean, there is no such thing as getting a bag of cabbage from a farmer and it weighs 50 pounds. By the time we trim it, I think that 36 pounds is nearer the weight. I question some of these weights. I question the 54-pound box of apples applied to Hudson Valley. No such thing. I think that the weight is nearer 44 pounds, whereas the Delicious State apple 44 pounds, I will accept that. I do not like his method of illustrating costs. I do not doubt the figures. The figures are all good. What I do not like is that grower received an average of $1.87 per wirebound box and the average retail price is $8.48. Immediately uninformed people subtract the difference. I would much rather that he would start with the grower price and continue in the table showing each cost and then showing the total cost on the bottom. I presume it was because he tried to save paper. There is another statement that was made here yesterday. The statement was made that there is a wide variety of price on similar quality merchandise. What appears to be similar to the eye of the average shopper is only one person's idea. Prices may vary as much as $2 a box on California oranges, according to the size in demand at that time. Eating quality, I have seen honeydew melons that looked alike and the price was $2 difference, one tasted sweet and the other tasted like a cucumber, but they were similar in appearance. New York smoked hams do not taste the same as the Virginia Smithfield hams. Minnesota wild rice may be similar to brown rice, but the difference may be a dollar and a half a pound. Maine lobsters may look like Jersey lobsters. What I am trying to get over to you is not to accept something that says "similar." This is very similar to a lot of dollar ties. This cost $7.50. This is a Countess Madras. I am very fortunate. Believe me, I only wore this tie to impress you gentlemen. This is a $7.50 tie. This is similar to many dollar ties. I only wear this on special occasions. Now I would like to come to Washington sometime and conduct for all of you a cutting test showing the various kinds of tomatoes and peas, and I can do a very, very good job on that. |