A Voice for Consumers

...Because of inadequate appropriations most of its activities have been necessarily confined to the task of preventing serious health hazards...

...But no great new bureaucracy need be established in order to secure this professional personnel...

...After nearly two years of inquiring into the matter, it is not surprising that people are beginning to ask us what we are planning to do about the problem...

...Steel, while National has the largest cold-rolled sheet capacity in the industry...

...As in steel, the automobile manufacturers are just as willing to raise prices when sales are low as they are when people are standing in line at the dealers' doors...

...Both Bethlehem and National Steel, for example, appear over the years to have been generally more efficient than U.S...

...What would be the specific functions of this new agency...

...on the other hand, we find that their production and employment have fallen...

...There is reason to believe that it exists in other industries as well...

...Much of it already exists within other parts of government concerned with consumer problems...

...But certainly the upward movement of prices in the midst of substantially unused capacity cannot be permitted to continue indefinitely...

...Steel's price increases on those products in order to stay competitive...

...We have heard testimony from the nation's foremost economists specializing on the subject...

...These booklets, issued on a great variety of home activities, have become the basic consumer information sources for not only the Department of Agriculture but the whole of the federal government...

...For a variety of reasons, including some unfortunate judicial decisions, inadequate appropriations for the anti-trust agency, and, in my opinion, the misguided belief of many liberals that monopolists, for some unknown reason, would be beneficent in their despotism, the fight to prevent the rise in concentration has been largely lost...

...The pricing objectives of both Ford and Chrysler clearly appear to be either to match General Motors' prices or, if they choose to announce first, to anticipate price increases which will be satisfactory to General Motors...

...the Tariff Commission is constantly caught between one group of producers urging a tariff increase and another group opposing it on the grounds that such action would impair the ability of foreign countries to buy their goods...

...Although my views on this matter are preliminary and certainly subject to change, there are at least two major functions a Department of Consumers could properly undertake: (1) it could serve as an advocate of the consumers' interest at all levels and stages of government, and (2) it could provide a centralized and probably more sympathetic home for a variety of activities directly affecting the consumer which are now performed elsewhere in government...

...In this particular instance, however, I believe the gains would far outweigh any possible loss...

...Editors of women's magazines, "household-hints" newspaper columnists, and home service radio commentators have leaned heavily on this material for years...

...The incentive for saving would atrophy, thus impairing our ability to raise the capital necessary for future economic expansion...

...Like the present location of the Consumers Price Index in the Department of Labor, the present location of the Bureau of Home Economics must be regarded as largely an historical accident...

...In order to make any worthwhile contribution the agency would have to have a staff of expert lawyers, accountants, economists, and other professional personnel...

...Occasionally someone slips up...

...The record contains numerous instances of sealed bids for government contracts in which prices quoted by supposedly competitive producers were identical down to the thousandth of a cent...

...There has been a long-felt need to bring under one roof these consumer-oriented bureaus and divisions which are now scattered throughout a variety of different departments...

...Even those agencies whose principal function is to protect the public interest, such as the independent regulatory agencies, have all too frequently come to regard their role not as the protector of consumers, but as an umpire between contesting groups of producers...

...The most recent round of automobile price increases occurred in a year during which the companies will produce only slightly more than half the number of cars they made in 1955...

...With only a moderate increase in funds and personnel, it could tackle such problems as short-weighting, the substitution of cheaper igredi-ents, and misleading labeling and packaging...

...Steel's announcements of price increases invariably have been followed within a few days by every other steel producer...

...Perhaps the first step would be to transfer the Food and Drug Administration to the new agency...

...This is a question which is much easier to ask than to answer...

...It could urge that greater consideration be given to the quality of service rendered the consumer by private firms which have been granted the privilege of operating as a monopoly...

...Ford immediately revised its prices upward to the G.M...

...level...

...When Congress was considering legislation, it could present evidence before the appropriate Congressional committees on the effect of the proposed measure on consumers...

...Our steel hearings disclosed a history of steel prices rising at more or less regular intervals in "stair-step" fashion since 1947...

...Wherever it deemed such action appropriate, the agency could follow up its action at the lower levels of government with arguments to the Circuit Courts of Appeals and to the Supreme Court...

...The results of a constantly increasing price level would be appalling...

...What are some of these functions now being conducted in the Executive Branch of the government that need to be centralized in a Department of Consumers...

...This is not to imply that these are not appropriate subjects for these agencies, but it does appear that in their day-to-day work the larger issue of the consumer interest has gradually come to be overlooked...

...The Subcommittee was understandably puzzled by the explanations offered by Bethlehem and National executives as to why they have had to meet each of U.S...

...the Federal Power Commission is caught in a conflict between gas producing firms and public utility companies...

...For example, the price collecting agents of the Bureau of Labor Statistics could gather valuable information for the Food and Drug Administration, and Bureau of Standards personnel could do important testing work for the Bureau of Home Economics...

...Another interesting aspect is that U.S...

...The limitations imposed on production in order to support the higher prices would, in a period of large-scale expansion of our labor force, tend to swell the ranks of the unemployed...

...Yet, in certain respects, such as their failure to reflect the increasing cost and importance of consumer credit, they do not adequately reflect the true increase in the cost of living...

...The exact point in time when we will have to face up to this problem cannot be predicted, but barring some unforeseen development on the international scene which would require a rapid build-up in our military establishment, it cannot be far off...

...The work of the Bureau of Labor Statistics in compiling the Consumer Price Index, as well as its other price series, belongs more logically in a Department of Consumers than in the Department of Labor...

...the Federal Communications Commission spends much of its time trying to decide which of a number of rival applicants should be awarded licenses to operate TV stations...

...The fundamental reason the LaFollettes and men of similar vision and courage were vigorously opposed to the concentration of economic power was their conviction that monopoly would mean an economy of scarcity, characterized by exorbitant prices and unduly restricted production...

...the Interstate Commerce Commission tries to adjudicate the long-standing dispute between the railroads and the trucks...

...In making this proposal for rearrangement of functions, I wish to make it clear that I do not believe in governmental reorganization simply for the sake of reorganization...

...A noteworthy aspect is that the industry's prices have risen as frequently and as far during periods of recession and idle capacity as they have during periods characterized by huge backlogs of unfilled demand...

...Thus, the Civil Aeronautics Board concerns itself with disputes between large airlines and small airlines...

...The value of savings, life insurance policies, pensions, wages of unorganized workers and salaries of white-collar workers would be progressively reduced, causing particular hardship to our older citizens and, indeed, to all persons living on fixed incomes...

...Only by demonstrating a high degree of professional competence could the agency hope to secure the respect for its position which is a prerequisite for success...

...Certain parts of the Bureau of Standards, which are or properly should be engaged in testing consumer products, could appropriately be transferred to the new Department...

...Steel...

...While I am not advancing it as the complete solution to the problem, one step which can and should be taken is to provide in some way for effective representation in government of the consumer's interest...

...In trying to appraise the effect of conflicting price movements on consumers' living standards, Congress, as well as other parts of government, relies heavily on these indexes...

...Senator from Tennessee, is chairman of the Senate Anti-Trust and Monopoly Subcommittee...

...The Subcommittee on Anti-Trust ESTES KEFAUVER, U.S...

...We have witnessed the anomaly of price inflation during a recession...

...Ford took the lead in announcing prices on 1957 models, for example, with increases averaging about three per cent...

...The explanation for this singular phenemenon is the simple fact that the managers of our great corporations, when confronted with a decline in sales, apparently feel that the simplest and surest way to maintain profits is to raise prices...

...As we look at the American economy today and see industry after industry firmly controlled by the Big Two, Big Three, or Big Four, it is apparent that excessive concentration is something which is no longer merely a threat of the future...

...To this end, I intend to introduce legislation in the forthcoming Congress to create a new agency, a Department of Consumers, whose head would become a new member of the President's Cabinet as Secretary of Consumers...

...We have held lengthy hearings and issued comprehensive reports on administered prices in the steel industry and in the automobile industry...

...Prices that are excessively high result in a curtailment of consumption and deny the people the benefits of scientific and technological progress...

...Soon thereafter General Motors introduced its new models at prices which were slightly more than six per cent higher than in the previous year...

...It has the authority to conduct badly-needed research on the many aspects of new consumer products...

...The same is true of the Bureau of Home Economics of the Department of Agriculture, which is probably the oldest consumer protection agency in the federal government...

...There is no department to represent them in their capacity as consumers...

...They have also risen when unit labor costs have been falling as well as when they have been rising...

...The shifting around of government agencies like pieces on a chessboard is one of the more popular and enduring indoor sports in Washington, and it frequently results in the needless disruption of personnel with a resulting loss in efficiency...

...In a way the problem with which we are now concerned is the inevitable legacy of our failure as a nation to implement effectively one of the cardinal goals of the Progressive tradition, namely the prevention of monopoly...

...We have heard from representatives of business, labor, and consumer groups...

...It is charged with protecting the consumer against economic cheats, as well as health hazards...

...On the one hand, we find prices in concentrated industries, such as oil, steel, and automobiles, have been rising...

...it is a present reality...

...Although the present Administration has curtailed its activities, the Bureau of Home Economics should be able to continue its historical function of conducting research and tests on the basis of which its "How-To" pamphlets can continue to be issued...

...The automobile industry also provides an instructive example of price administration by a dominant producer, General Motors...

...We have pored through papers and reports and independent analyses of our own...

...In several product lines Bethlehem has greater capacity than U.S...

...We are now conducting research into the bread industry and into the manufacture of drugs...

...Similarly when it felt that the consumer was being exploited by monopoly, it could make complaint to the Anti-Trust Division of the Department of Justice, and in the trial of anti-trust cases could present evidence of the effect on consumers of the restraint of trade or attempt to monopolize...

...Second, instead of being situated within indifferent, if not inhospitable, departments, these agencies would be working within an overall department whose aim and...

...During hearings conducted by that agency on these and related matters, it could present evidence on the need for altering the nature of the advertising or eliminating the collusive arrangement...

...and Monopoly has already discovered this very pattern of behavior in three of our most important industries— oil, steel, and automobiles...

...the Federal Trade Comission becomes embroiled in disputes between big business and small business...

...The fundamental logic behind this proposal is that most of the other departments, including particularly the Department of Commerce, the Department of the Interior, the Department of Agriculture, and the Department of Labor, represent the American people in their capacity as producers...

...Steel, the dominant producer in overall steel production, does not appear to be either the most efficient company in the industry or the company with the largest capacity in certain particular types of steel products...

...Since, as a result of either the dominance of a price leader or some form of collusive arrangement, the normal restraining influence of competition has been all but eliminated, they are able to make their decisions stick...

...In carrying out its function of "advocate" for the consumer, the agency could, for example, appear before the Civil Aeronautics Board or the Interstate Commerce Commission whenever either agency was considering a rate increase and present evidence on its effect on consumers...

...What is happening in concentrated American industries today is exactly what men like the La-Follettes feared would take place if the trend toward monopoly was not halted...

...For one thing the work of each of the different agencies would contribute far more to the work of the others than is now the case...

...Thus, the very act of carrying out the second function of the agency would in itself provide much of the professional personnel needed to carry out the agency's first function...

...In all of these undertakings, its primary objective would be the same—to make the regulatory agencies and the courts forcefully aware of the effect of their actions upon the interests of 175 million consumers...

...According to all the economic textbooks, this is a combination of trends which simply could not take place, since, as everyone knows, when demand falls, prices are expected to decline...

...Production that is unduly restricted means curtailed employment and a failure to develop and utilize our resources...

...The FDA is charged by Congress with safe-guarding American consumers in the purchase of $50 billion of foods, drugs, cosmetics, and health devices a year...

...Today we find that these two evils are manifesting themselves simultaneously...

...When it felt that consumers were being deceived by false and misleading advertising or were being exploited by price-fixing conspiracies, it could make complaint to the Federal Trade Commission...