Mr. BANZHAF. I think they have power to establish some rulings and regulations now, do they not?

Senator NEUBERGER. Evidently the Chairman of the Federal Trade Commission does not think that.

Mr. BANZHAF. Then I would submit I believe there are plenty of cases to indicate the contrary.

Senator NEUBERGER. You say production costs and consumer prices would be increased by passage of this law. If you intend to conform to fair advertising and full information, why does that increase production cost? What do you do differently?

Mr. BANZHAF. I thought you were going to ask a question like that, so before I came down I asked our production people and our accountant to give me a quick rundown on what the increased costs would be on the example I cited, the baby food jar, since this was something specifically I could deal with. As you see, it is a pretty scribbled down note, but I believe I can get the sense of it to you.

If we assume we have to make assumptions, of course, assume a production run of 20,000 jars of baby food. Now, assuming we do require uniform weights, whatever, and in these different sizes, or we will assume that the standardization requires 10 sizes, two different quantities-you have to make those assumptions. If we went from there, we will say a jar size to five different sizes, for example, would increase the cost of making job changes alone by 10 percent. If you went to 10 sizes, we estimate it would be between 15 and 18 percent.

Now, because we have here either 5 or 10 different sizes, we have shorter production runs. This would cost us somewhere between 2 and 4 percent in the manufacturing efficiency alone.

Then we would get a substantial increase in inventory if we had five sizes instead of one. We would estimate that the increase in inventory would be between 2 and 211⁄2 times. If it were 10 sizes, the increase in inventory would be 312 to 4 times.

Now, you may not be aware, Senator, but when you make a glass jar you have molds out of which you make them. You have to have one mold you are running and one in backup in case something fails, so if you had five sizes it would require eight more molds. If you had 10 sizes it would require 18 more molds, and each mold costs $2,500 apiece.

There is another thing, too. The curtain sizes would have to vary, depending on how many sizes you have, which would mean an increase of some 2 to 3 percent.

Then there is one final factor. When you have a one size in this case, talking about a jar which is compared to the alternatives here, we can bulk palletize them. You would not be able to do that if you had to have several sizes. I do not know what the saving would amount to, or added cost, but we could estimate that as a rough totaland this is an example it would increase the cost of the packaging alone to the packer, which has to be passed along to the consumer, by about 20 percent.

The packer has similar problems; that is, his filling lines may run up to 800 units a minute. They are high speed. If he has a lot of job changes, you have I would guess, similar costs.

It is not inconceivable that the increase in cost in this example could run to the consumer as high as 30 percent, which would be a significant increase in cost.

Senator NEUBERGER. You have argued about increased production costs, and yet that this bill would reduce the competitive factor. People want to make an interesting display, so it seems that whenever they want to compete or they want to originate a new design it does not concern them about the cost. Here is a variation in a glass jar. It is obviously meant to succeed-get a grip on it, and so on. Consequently, without this law manufacturers are going into expensive production to bring about variety. So it does not inhibit them then. Would you be able to suggest an amendment in case this bill passes that would not affect the baby food production specifically?

Mr. BANZHAF. Offhand I cannot suggest one.

Senator NEUBERGER. I think it would be possible to do that in order to meet some of the complaints that you have.

Mr. BANZHAF. Then would you not have to go item by item through the whole thing to get a whole lot of

Senator NEUBERGER. Not where you have a standard jar of this type. What was the position of the chamber of commerce when all of these specific item laws which you have set up as evidence were promulgated? Did the chamber of commerce support all these?

Mr. BANSHAF. I could not answer that question.

Senator NEUBERGER. The history of one or two that I know very well is that they opposed. Did the chamber of commerce support the present regulations that we are working under in this Food, Drug, and Cosmetics Act?

Mr. BANZHAF. That I cannot answer either.

Senator NEUBERGER. It is interesting that industry comes up and opposes this kind of legislation when we propose it. Then it becomes law and they begin to use it as an argument why we should not make another change. I remember particularly on the Oleomargarine Act which you now cite as an example of one that was a good idea, I take it because it was a specific item.

Senator Morton.

Senator MORTON. Mr. Banzhaf, you talked about the fact that the automobile industry is in the hands of perhaps five or six large companies. Mr. Ford did not start that way, did he?

Mr. BANZHAF. He sure did not. He started as a bicycle manufacturer, I believe.

Senator MORTON. Is not the fact that the reason for it is that it is a highly specialized job and because we are getting good cars and getting them cheaper than we otherwise would in having a multiplicity of manufacturers that we had in the teens or early days of the automotive industry?

Mr. BANZHAF. I am certain of that.

Senator MORTON. This is a natural phenomenon.
Mr. BANZHAF. Certainly.

Senator MORTON. Of course, the person who builds a better mousetrap does not have to sell it to somebody. If he has a better mousetrap the whole world will beat a path to his door.

Mr. BANZHAF. The thing you will find with the preponderance of large companies is that they started small and got there perhaps because they had the patronage of the marketplace buy what they did. Senator MORTON. Your company is a diversified company today? Mr. BANZHAF. Yes, sir.

Senator MORTON. If there had been an awful lot of Government regulations, would you not still be just making corks for whiskey bottles?

Mr. BANZHAF. Well, I am quite sure we would have been out of business long ago.

Senator MORTON. Of course, is it not true or perhaps you do not know this, but is it not true that in those countries who have completely controlled economies today, namely, the Communist countries, that we are seeing a loosening of regulation because of the fact that they realize they must meet the consumer's needs?

Mr. BANZHAF. There is no doubt of this. I think that it is very interesting in countries all over the world, especially in Russia and I believe in Czechoslovakia very recently, that the concept of the free market and free market economy is now employed rather extensively and rapidly because they found that standardization, which sounds so good in theory, does not work in practice, that you do not bring to the public the benefits that they thought they would.

Senator MORTON. Is not one of the causes that we attribute to the overthrow of Mr. Khrushchev or to his retirement, involuntary, the fact that the Russian housewife wants less control over the marketplace?

Mr. BANZHAF. I think so. I think that this is best exemplified in the utter debacle of his farm policy, which is the food portion of this, which instead of employing the free market system as we have here, they found that by controlled production they were not getting anywhere. As a matter of fact, I think something like, as I recall, 80 percent of many of the things like meat products found their way on the market out of the little family plots that they had allowed them, not the collective farm.

Senator MORTON. Is it also true that it requires 50 percent of the population of Russia to produce the food for Russia, and here some 7 percent, I believe, which I think speaks pretty well for our system? Mr. BANZHAF. Yes.

Senator MORTON. I think the fact that a real decision is finally made in an open market by the intelligent women of America, who spend most of the money, is reason for our affluence.

Mr. BANZHAF. There is no doubt of that.

Senator MORTON. Thank you.

Senator NEUBERGER. Do you think they are going to have cents-off sales in Russia then?

Senator MORTON. They would be better off if they did.

Senator NEUBERGER. I learned something today. I did not know that the Armstrong Cork Co. made anything else besides very fine flooring. What else do you manufacture?

Mr. BANZHAF. Many things. We make glass packaging, plastic packaging. We make various industrial products-products for the shoe and textile industry. We make acoustical materials. We make siding materials for homes. We make fiberboard products of various kinds. We make home-care products.

Senator NEUBERGER. Is it all under the name of Armstrong Cork Co.? Mr. BANZHAF. Yes.

Senator NEUBERGER. You did not buy up any little entrepreneurs? Mr. BANZHAF. Well, to be perfectly frank with you, Senator, we have had a few acquisitions along the way, but we have not done very well with them. I think you will find that our product line has been almost entirely internally generated.

Senator NEUBERGER. Would you make jars like this one?

Mr. BANZHAF. Yes, and the caps.

Senator NEUBERGER. In other words, you can set your machinery to make all kinds of jars and bottles?

Mr. BANZHAF. Not all kinds but most kinds.

Senator NEUBERGER. Whatever the manufacturer suggests?

Mr. BANZHAF. Correct.

No other questions.

Senator NEUBERGER. Thank you. Senator MORTON. Just one more. We talked about this grocery field, chainstore against the independent. Is it not true that a great many women today continue to shop at the independent grocery store because of credit, because of delivery, and realize they are paying a higher price than if they go into a supermarket, where they have to drive their own car, use their own gasoline, haul the groceries home rather than have someone deliver them? I wish my wife to go to the cheapest store in the world, but it is more convenient to get on the phone and say, "Send me so and so." I know we are getting rooked, but that is all right.

Mr. BANZHAF. You are right.

Senator MORTON. We are paying for a service. If we are willing to pay for it, it is our business.

Mr. BANZHAF. You are right.

There are a great many.

Senator MORTON. She does her shopping by telephone. What difference does it make what the package is:

Senator NEUBERGER. The next witness is Mr. Paul S. Willis.

STATEMENT OF PAUL S. WILLIS, PRESIDENT, GROCERY
MANUFACTURERS OF AMERICA, INC.

Mr. WILLIS. Since 1933, I have been the president of the Grocery Manufacturers of America, Inc., whose offices are located at 205 East 42d Street, New York, N.Y. Prior to that time, I was vice president and general manager of the Comet Rice Mills. Having spent all of my business life in the food industry, I am, therefore, quite familiar with many of its operations, all the way from farm to table.

GMA is a nonprofit organization, established in 1908. One of its original purposes was "to assist in the enactment and enforcement of laws which, in their operation, should deal justly and equitably in the rights of the consumer, retailer, jobber, and manufacturer".

GMA's membership includes some 300 manufacturers who operate several thousand factories and produce many of the products which are on the grocery shelves of the food stores throughout the country. Products such as dairy, cereals, meat, bakery, coffee, tea, canned food, frozen foods, soaps, detergents, cleansers and polishes, tobacco and cigarettes, soft drinks, animal food, and many others-all of which are now considered by the homemaker as part of the grocery basket. Our members employ some 2 million people, and, as stated, operate

factories in all parts of the United States-many of them are located in your home States, and in many foreign countries.

Because food is important to everybody, and because GMA represents the manufacturers whose primary job is to supply food and grocery products, we have, therefore, always been actively interested in protective consumer legislation. From the public standpoint we consider the Federal Food, Drug, and Cosmetic Act our most important law on the books.

One of GMA's primary jobs has always been to work with government officials in the enactment of appropriate food legislation that would provide adequate protection to the people, and to promote compliance with same. That goes all the way back to the very beginning of the Food and Drug Administration. GMA worked in fine cooperation with Dr. Harvey W. Wiley, who was the original sponsor and administrator of food and drug legislation, and all of his successors in that office.

Officials of the Food and Drug Administration and other interested government agencies are familiar with our constructive cooperation throughout the years in furthering sound protective laws, in their enforcement, and in industry's compliance.

We have cooperated with State legislatures to enact State laws which would conform with the Federal Food, Drug, and Cosmetic Act. We have supported the numerous efforts over the years to provide adequate appropriations which would enable the administrators of the act to employ enough capable people to administer the law effectively.

I am now talking about the Food Law Institute, in order to establish some of the things we are doing specifically in the interest of trying to help ways of enforcing our present laws.

FOOD LAW INSTITUTE

To promote educational facilities and encourage greater knowledge about food laws, GMS in 1949 created the Food Law Institute. Its primary purpose is to promote the development of essential knowledge about the laws of food, both here and abroad. The institute is the acknowledged leader in providing basic information about the food laws, and in furthering their sound and uniform development.

In 1949, the FLI established a National Center of Graduate Instruction at the New York University Law Center, which is now recognized as the academic headquarters for teaching food law. Annual registration averages more than 40 students. Most of them are in some way engaged in the administration of food laws. Some have joined the Food and Drug Administration, the Department of Justice, and the Federal Trade Commission.

NUTRITION FOUNDATION

In 1941, GMA organized the Nutrition Foundation as a sincere expression of the food manufacturers' interest in scientific progress and human health. The basic purposes of the foundation are:

(1) The development of a comprehensive program of fundamental, research, providing basic information in the science of nutrition; and