But perhaps I am missing the point. What relation has this information to the bill before us now?

Mr. CARSTENSON. There is plenty of room, plenty of room to worry about profit and so forth, plenty of room for standard packaging without damaging the industry in terms of prices or the consumer in terms of raising the prices to the consumer.

Senator PEARSON. Then in the research of your organization have you accepted as a fact that this bill will require increased cost of the product?

Mr. CARSTENSON. No, we have not. We think there is plenty of room in the profits, and in the spread here to allow for a great deal more to the consumer without increasing the cost, and we also feel that there is a great deal of room there for the farmer, too.

Senator PEARSON. I don't want to put words in your mouth. From that is it your interpretation that if this bill were passed that there is going to be an increased cost to the producer, but that, even so, he has plenty of spread in there to take care of it if it exists?

Mr. CARSTENSON. I think there will be initially some increased cost to the producers, so that when they transfer, to get a different kind of machine to fill the 10-ounce or the-they change packages fairly rapidly, so I don't think with the time delay included in the bill that there will be much cost. But I think there will be a little more cost to the chainstore and to the food companies to make it a standard brand.

I don't think it will be very much. I think it is going to be just in the transfer over. After that I don't think there will be any cost. Senator PEARSON. And nothing we do here really will have any effect on what the farmer receives for his production.

Mr. CARSTENSON. In the long run, perhaps. In the short run, no. Senator PEARSON. The point is that when you show this great spread between consumer prices and prices received by the farmers, we can look at it two ways. We can say the consumer prices are too high, or we can say the farmer, the price the farmer receives is too low, and you and I know that is so.

Mr. CARSTENSON. Both are true.

Senator PEARSON. Both? On what basis? The table you put in the record in your statement?

Mr. CARSTENSON. When you look at the price spread and the profits and you look at what the farmer is getting, we are having to subsidize this. If the farmer got a little bit more out of this consumer dollar

Senator PEARSON. You and I would be happy about it.

Mr. CARSTENSON. Right.

Senator PEARSON. I am interested in the farmer receiving more for his product, but I don't know if I am in the position to determine what is a fair profit for any of our industries.

Mr. CARSTENSON. I won't ask you to make that judgment. All I am saying is that the practices in the industry as a whole-and this is just one part of the total practices are such that it is going to need the attention of Congress in many different directions. And we hope that the food commission that has been set up by the Congress, will come up with some more answers to what can be done in this area of food marketing practices.

Senator PEARSON. I am just concerned about considering, in relationship to this bill, a determination of Congress as to what is a fair profit.

Mr. CARSTENSON. I am not asking you to do that. You asked my opinion of whether you thought it was too high.

Senator PEARSON. Yes.

Mr. CARSTENSON. Yes. But what I am saying is that the practices of the industry are such that it is going to require a great deal of scrutiny by Congress in many different committees, and we will need much further study. The food commission I think is a very excellent step.

Senator PEARSON. There is going to be difficulty doing this. As you point out, many committees will have to look at it.

I make reference to the chart used in your testimony. Do you have it before you?

Mr. CARSTENSON. Yes.

Senator PEARSON. I am not talking about the spread between consumers and farmers. I am talking about this chart, showing gross profits, net profits, and net profits to the stockholders' equity. Have you got that before you?

Mr. CARSTENSON. Yes, I have.

Senator PEARSON. There is a considerable spread here, isn't there? Let's look at net profits. Before I seek to develop that, tell me, across the scale here, in reference to gross profits, net profits, or net profits to the shareholders' equity, which of these columns is the vital one? Which should we refer to when we are trying to judge whether or not the industry has capability of absorbing increased prices?

Mr. CARSTENSON. I would say the net profits are probably the most meaningful. You have to take into consideration the volume of sales. Senator PEARSON. What is the significance of this net profits to the stockholders' equity?

Mr. CARSTENSON. This is a percentage worked out on the basis of the net profit and in relationship to the investment that they have. Senator PEARSON. As you say, the net profit is the meaningful part? Mr. CARSTENSON. That is the meaningful part.

Senator PEARSON. Look at the spread. I see in the first 16.3, the next 2.5.

Mr. CARSTENSON. This is in 1963. In 1964 it went up.
Senator PEARSON. Safeway, 44.8.

My point is, not only am I concerned about the Government's determination as to the level of profits but how we are going to use these figures meaningfully when they vary that much.

Mr. CARSTENSON. The purpose of the chart is to show that there is room, without driving anybody out of business, to repackage these products, and that there is room in the profits of the company to take up that slack. This won't be a real hardship on these companies. It may cut their profits slightly. They aren't going to have to turn around and ask for a major price increase in order to repackage anything in standard brands.

Senator PEARSON. That looks true in some cases, but not in others. John Morrell has 2.5

Mr. CARSTENSON. That is $2.5 million. It is now $4.7 million in 1964. There is room there so that John Morrell or other companies

won't go broke because they have to change the size or make a major change in the advertising.

Senator PEARSON. That is all. Thank you.

Senator Bass. Thank you very much, Mr. Carstenson.
Mr. Fraser, of the United Auto Workers?

VOICE. He is making a telephone call.

Senator Bass. We will at this time hear from Mr. Robert Fay, president of G. A. Bisler, Inc., for the National Paper Box Manufactures Association.

STATEMENT OF ROBERT J. FAY, PRESIDENT, G. A. BISLER, INC., NATIONAL PAPER BOX MANUFACTURERS ASSOCIATION

Mr. FAY. Members of the Senate Commerce Committee, gentlemen: I would like to read this telegram and excerpt from it that I received. It is self-explanatory. It is from Norman Baldwin, executive director of the National Paper Box Manufacturers Association, Beverly Hills, Calif.

Be it resolved, That we, members of the National Paper Box Manufacturers Association in convention at Los Angeles on May 13, 1965, have heard and approve the statement of fellow member Robert J. Fay prepared for presentation before the Senate Commerce Committee in opposition to S. 985, and therefore adopt it as accurately reflecting the official position of the rigid paper box industry.

As probably the oldest and most assuredly a respected and necessary segment of the packaging industry, I speak for the National Paper Box Manufacturers Association and all the manufacturers of rigid paper boxes throughout the country when I express opposition to the Fair Packaging and Labeling Act, S. 985, and urge that you reject this new and unneeded proposal for Federal control of the packaging industry.

Our very existence on the packaging scene is contingent upon the opportunities of designing and producing boxes of unique shape, appealing design, and affording at the same time the protection necessary to the packaged product.

Since our business is localized as to area because of its setup nature, any type of standardization or restrictions as to design or individuality would conceivably destroy our market.

We realize, in opposing this bill, that we are placed in the same position as anyone who opposes Mother's Day or who must answer the question, "When did you stop beating your wife?"

While the legislation currently bears the name "Fair Packaging and Labeling Act," it is and has been constantly referred to and described as the "truth in packaging bill." Therefore, since its proponents are setting themselves up as advocates of truth in packaging, we, in opposing, become the advocates of untruthful packaging.

We, in this industry, have our fair share of those who indulge in malpractice, misrepresentation, and deliberate deceit as has every other line of endeavor conducted and conceived by human beings. We admit to this fact but take comfort in the knowledge that it comprises a very small segment of our industry.

We also know that every product, introduced to the consuming public, deceitfully and deliberately misrepresented, died in the market

48-222-65--41

place and the perpetrating company suffered the irretrievable loss of good name.

The American consumer is not stupid. Any student of human needs and relations knows that nothing happens until something is sold. Original and appealing packaging has been instrumental as nothing else in bringing to attention of the consumer, a product of immense benefit to him and which, if drably and unattractively packaged, he might probably have passed by.

Destroy the novel, the original, or the appealing presentation of a product by restricting the packaging to standardization, by putting a nameless, faceless wrapping on it and you destroy the main line of communication between the producer and the consuming public. Destroy the individuality of the packaging and you destroy the image. As an example of image, I suggest to you the Whitman Sampler. With a painstaking adherence to rigid standards of quality and by expending countless dollars over an 80-year period, the Sampler has become one of the best known and most easily recognizable packages in the confectionery field.

Some years ago the company instructed us to change the background color on the box from buff to white. The change was rejected by the public, many complaining the package was not a genuine Whitman Sampler; others that the package was faded having been in display windows too long. Needless to say, the change was not continued.

Few will disagree with the statement that the attractive heartshaped boxes on Valentine's Day, receive as much favor from the recipient as do the contents. Few will not agree that to restrict the packaging at holiday times would be to remove an indefinable something from the pleasure of the adult and the wonder of children.

Among the intelligent American public, any who engage in deceptive practice pay the price of the axiom, you cheat me once, shame on you; you cheat me twice, shame on me.

The word "deception" has varying degrees of meaning and does not always mean the same thing to all people.

We cannot turn away from the facts of life. Each of us wants to appear before his fellows with his best foot forward, so to speak. That is why usually no less than six proofs are taken in the selection of one's photograph.

The clothes we wear are chosen with the same care. A slightly built man will select a suit whose coat has padded shoulders, or the bald man wears a toupee so carefully and skillfully made it cannot be discerned.

A member of the fair sex, perhaps not as richly endowed by nature as she would like, might wear an article of apparel popularly called falsies. A person running for public office will submit to the makeup artist before appearing on television.

All of this, gentlemen, is deceit; the degree, however, is decided by our fellows. Since humans practice this art of presentation regarding themselves, it surely follows that these same humans will aspire to present the products of their minds and labor and ingenuity in the best light.

Certainly, then, the package should be just as free of unfair restriction as the product it presents and the product itself should not be penalized for being presented in its most favorable light.

If, however, in the presentation of a product, gross and deliberate misrepresentation and deceit are practiced, we have existing acts and commissions, the Food and Drug Act, the Federal Trade Commission Act, various State laws dealing with weights and measures, all of which have and are continuing to deal with any unfair or deceptive acts of practices in commerce.

In order to pursue a course of experimentation, originality, and change, we cannot survive in our present numbers and strength when our expression and individuality have been stifled by Federal control. Mandatory regulations are at least stated; discretionary regulations by Federal agencies are unthinkable.

We have been making boxes of the gift type, principally for the confectionery trade, since 1872, and have served and are serving some of the finest names in the industry.

Never once have we been approached by any of these producers where even a word could be construed as a suggestion of deceitful merchandising or packaging either in content or presentation.

Why, then, we ask, should an entire industry, proud, progressive, and overwhelmingly truthful, be impaled upon the spear of Federal supervision and interference because of the alleged malpractice of a few producers and on the demand of some consumers for a new legislation, the existence of whom no real evidence has been presented.

The practitioners of misrepresentation and deceit, few as they are, will go the way as have all the others of this type. Their products will gather dust on the shelves as the American consumer rejects them for what they are.

Senator Bass. Thank you very much, Mr. Fay.
Senator PEARSON. I have no questions.
Senator Bass. I have only one question to ask.
package?

Mr. Pearson?

Have you seen this

Mr. FAY. Yes. That is a folding box, Senator, which we do not make. It, nonetheless, is a folding-view package, as it is called.

Senator Bass. When it is sitting up and when the consumer sees it on the shelf, it looks like it has a lot of candy in it. When you turn it up like this [indicating]

Mr. FAY. That's right.

Senator BASS (continuing). That looks to me like one of the gimmicks that ought to be run out of the market.

Mr. FAY. I agree, wholeheartedly.

Senator BASS. It appears to me that people in the industry, in the package business, if they don't want to run a noose around their neck, which some think this will be, it appears to me they should start policing the industry, itself.

Senator PEARSON. Is that the way it is on the counter?

Senator BASS. Yes, that is the way it is on the counter. That is the way you read it. That kind of package is specifically designed as a flimflam. That is worse than the old handkerchief game with the money wrapped in paper.

Mr. FAY. Senator, that package will die. It will be condemned by the American consumer to a far greater penalty than any legislative action. That will never work.