Return of Fair Trade

Bundled up in a bathrobe and pajamas, President Truman (see NATIONAL AFFAIRS) last week signed into law one of the most bitterly fought bills in the last session of Congress. The new law, sponsored by Connecticut Democrat John A. McGuire, legalizes tight Fair Trade price control in 45 states.* Under the law, Fair Traders who sign up with manufacturers to sell at minimum prices can force all other merchants in their state to observe the same minimums, whether they sign up or not. Thus Congress and the President had legalized the same mandatory signing clause which the U.S. Supreme Court had tossed out 14 months ago, pulling the rug from under Fair Trade.

Change of Mind. In signing, Harry Truman surprised almost everyone. During the long hearings before Congress, he had strongly protested Fair Trade as "not in accord with our program"; government agencies had damned Fair Trade as thwarting free competition and lower prices for consumers. Why had the president changed his mind?

Over & above the overwhelming congressional vote for the bill, the chief reason was politics. After Congress passed the bill, some 28,000 letters and wires poured into the White House. All but 200 urged the President to sign the bill. He knew that much of the mail for the bill was puffed up by the trade associations who had axes to grind--organizations of druggists, small grocers, liquor and appliance dealers, etc. But in an election year, Harry Truman is not the man to take any chance of losing such a bloc of small businessmen's votes, especially since consumers didn't seem to care or know enough about the bill to object. To try to justify his turnabout, Harry Truman said that "Fair Trade laws are no cure-all for the problems of small retailers," urged Congress to make a thorough investigation of the whole matter. Since Congress has adjourned, it can't act until after election.

Change of Prices. There is a big loophole in the new law: mail-order houses do not have to observe minimum prices in interstate shipment. So Fair Traders started a new drive to amend the law to bring them into line. Prices on many items sold by other retailers would undoubtedly go up as Fair Traders cracked down on stores which had been selling at cut rates (TIME, June 4, 1951 et seq.). However, many a manufacturer with overloaded inventories has found that the only way to lure customers in was to let retailers cut prices. While consumer items remain so plentiful, Fair Traders may have a tough time making the new law stick.

*Three states, Vermont, Missouri and Texas, are not affected because they have no state laws permitting Fair Trade prices. Other states can get out of the law by changing their legislation.

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