"Apparent Beliefs"

Congressman Gardner Robert Withrow of Wisconsin is a fourth cousin of Abraham Lincoln. Son of a Mississippi steamboat captain, he was born in La Crosse, Wis., 45 years ago, went to work after high school as a fireman for the Chicago, Burlington & Quincy R.R. Nineteen years later he had risen to be a conductor, got into the Wisconsin Legislature with the support of the Brotherhood of Railroad Trainmen. Next he acted as the Brotherhood's lobbyist in Madison, Wis. Then in 1930 he went to Congress as a Republican.

Now officially listed a Progressive, member of the House Committee on Interstate & Foreign Commerce, he is the father of a resolution to investigate the automotive industry. This was inspired in March 1937 by the predominantly Progressive Wisconsin Legislature, as a result of a State licensing law for automobile dealers which brought out the fact that certain features of the dealer business were interstate in character and therefore outside State regulation. Gardner Withrow's proposal was that the Federal Trade Commission investigate monopolistic features of the relations between automobile manufacturers and dealers. Congress passed the resolution last month and Franklin Roosevelt, always glad to investigate monopoly, quickly signed it.

Others besides Gardner Withrow had suggested prying into the dealer business. Year ago the National Automobile Dealers Association, to which belong 10,000 of the 45,000 U. S. dealers, petitioned FTC for a fair trade practice code. About six months before the American Finance Conference, a trade association of independent automobile finance companies, instigated a Department of Justice investigation of the trade practices of the four factory-affiliated finance companies which do 75% of the new car business. Charges of dealer coercion were presently brought against the "big four" in Milwaukee, but the case fizzled when the judge discovered the Department of Justice trying to arrange a consent decree on the side (TIME, Nov. 22, et seq.). Since then this particular phase of the tripartite dealer investigation has lain dormant. Last week, however, the other two simultaneously came to a climax in Detroit at the annual convention of the N. A. D. A.

This convention, attended by 850 dealers, was for the primary purpose of drawing up a fair trade practice code for submission to the FTC for approval and promulgation. FTCommissioner Charles H. March was on hand to help. But his place in the sun was definitely overshadowed by Gardner Withrow. With the FTC scheduled to begin its investigation of automobile monopoly five days after the N. A. D. A. convention ended, stocky, heavy-jawed Sponsor Withrow appeared in Detroit to explain it. What he had to say was the most vigorous tongue-lashing the automotive industry has had from a Congressman in many a day. Excerpts:

"The one great factor in the difficulties the manufacturers and retailers find themselves in at the present time involves the implications and repercussions attendant to the so-called contract that is entered into between the manufacturers and their retail outlets. It is a misnomer to say that this is a contract, because it is nothing more than a permit to do business . . . under the threat of cancellation. . . . This so-called contract is interstate in character. . . . Therefore, if those engaged in the automobile industry are to have relief, that relief must come from the Federal Government. . . .

"I am convinced that the manufacturers have been ruthless in pursuing their objective, which has been the selling of new automobiles regardless of the consequences and that the contract entered into by the manufacturer and the dealer is the most efficient weapon they have at their disposal in seeking their objective. . . .

"I am firmly convinced that as long as . . . [the manufacturers] . . . retain in the form of a contract the power to threaten, the power to cancel the automobile dealer out, just that long will these gentlemen force upon their automobile dealers unreasonable quantities of new cars. ..."

In thus hammering home the theme that "high-pressure salesmanship" of the manufacturers has contributed to the present automobile glut, Gardner Withrow several times used phrases direct from a press conference of Franklin Roosevelt's along those lines four months ago (TIME, Jan. 17). According to Mr. Withrow this forcing of the market amounts to more than 1,000,000 used cars a year and largely accounts for the annual mortality of from 17% to 25% of dealer establishments. His words brought cheers from the dealers, though a few of them voiced fear of "bureaucratic Government control."

Though the dealers thus took Franklin Roosevelt's word for it in one case, they repudiated him in another. He was largely responsible for getting the industry to switch its annual show from January to November four years ago; last week the N. A. D. A. recommended returning to the former arrangement on the ground that the present basis has accentuated the glut in used cars by counteracting the normal upsurge in spring sales.

As for the unfair trade practices, 24 of these were speedily agreed on and outlawed, the list ranging from defamation of competitors to tampering with speedometers. Only major point the dealers refused to concede was the price-fixing of trade-in values. This FTC is eager to forbid and may still do, but the dealers maintained that this stabilization of trade-ins was all that prevented ruinous price-wars.

Final excitement of the N. A. D. A. gathering was the annual banquet, graced this year by General Motors Chairman Alfred P. Sloan Jr. In a long speech he made only one oblique reference to Gardner Withrow's charges.

On the subject of Government regulation of the automobile industry, GM's boss had emphatic comment:

"My remarks would not be complete without taking recognition of the apparent beliefs of many of you that the satisfactory solution of our problem lies in superimposing the answer from without-- by Government edict, as against developing it from within--through the spirit of cooperation. On this we stand at the crossroads. . . . Government is essential to protect and develop our civilization. But let us have government by law-- thou shall or shall not--not government by edict. That means a stifling regulation --the direct road to regimentation. And when we start, there is no turning back. . . ."

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