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Abstract

  1. Top of page
  2. Abstract
  3. A “NEW DEAL” FOR CONSUMERS
  4. GRADING OF CONSUMER PRODUCTS: A CHALLENGE TO ADVERTISING
  5. THE ADVERTISING INDUSTRY'S REBUTTAL
  6. GRADING REVISITED: THE ECONOMIC NATIONAL COMMITTEE (1938)
  7. AMERICA AT WAR: VICTORY BRANDS AND PRODUCT STANDARDIZATION
  8. GRADING AND PRICE AND QUALITY CONTROL
  9. WASHINGTON AND GRADING
  10. CONCLUSION
  11. REFERENCES

This article explores the more than decade-long fight to establish quality standards for consumer products. Drawing on archival collections, trade publications, congressional hearings, and relevant secondary literature, it traces the ongoing debates over grading standards for consumer commodities in the 1930s and 1940s. It explores the arguments behind the creation of a mandatory grading system that would have aided citizens in their role as consumers, helped fight monopolistic tendencies during a severe economic depression, and supported government economic policies during a time of national crisis. While consumer advocates and a majority of the American public applauded the idea, advertisers, believing that the system would undermine their advertising claims, fought the proposals tooth and nail.

When the modern consumer society emerged at the turn of the twentieth century, it generated a profusion of new products, frequently leaving consumers bewildered about how best to navigate the new marketplace. A 1928 study found that American consumers could choose from 10,000 brands of wheat flour, 4,500 brands of canned corn, and 1,000 brands each of canned peaches, salmon, and tea. They could also select from 500 different brands of mustard and 300 brands of canned pineapple (Coles 1938, 6). Coming to the “rescue” when consumers were selecting new products and packaged varieties of old staples was the newly created advertising industry, which urged people to rely upon brand names. This form of consumer communication was wrought with problems—there was a pronounced tendency for the “information” in the ads to be of marginal value, or even counterproductive—and resulted in a struggle over advertising regulation that eventually led to the passage of the 1938 Wheeler-Lea Amendment, a story that has received a fair amount of scholarly attention (Pease 1958; Stole 2006; Tedlow 1981; Young 1992).

Far less attention, however, has been paid to another, equally important, aspect of the battle over consumers' rights in the marketplace: the decade-long attempt to achieve mandatory quality standards for consumer goods. With what was sometimes termed “grade labeling” in place, consumers would be able to bypass advertising for the most part and make purchases based on actual quality and price. To consumer advocates, it was a rational way to make markets more competitive and efficient. Advertising agencies, media that depended upon advertising, and large corporations that enjoyed considerable market power all hated the idea. The result was a pitched battle.

Drawing on archival collections, trade publications, congressional hearings, and relevant secondary literature, this article traces the debates over grading standards for consumer commodities in the 1930s and 1940s. It explores the arguments behind the creation of a mandatory grading system that would have aided citizens in their role as consumers, helped fight monopolistic tendencies during a severe economic depression, and supported government economic policies during a time of national crisis. While consumer advocates and a majority of the American public applauded the idea, US manufacturers fought the proposals tooth and nail. They did their best to distort and muddy the issue and to align themselves with business-friendly legislators and regulators. They also looked to the emerging field of public relations for combat strategies. In some respects, the advertising industry and the corporations involved in this fight pioneered the use of modern public relations campaigns a full generation before such techniques became de rigueur for American big business.

A “NEW DEAL” FOR CONSUMERS

  1. Top of page
  2. Abstract
  3. A “NEW DEAL” FOR CONSUMERS
  4. GRADING OF CONSUMER PRODUCTS: A CHALLENGE TO ADVERTISING
  5. THE ADVERTISING INDUSTRY'S REBUTTAL
  6. GRADING REVISITED: THE ECONOMIC NATIONAL COMMITTEE (1938)
  7. AMERICA AT WAR: VICTORY BRANDS AND PRODUCT STANDARDIZATION
  8. GRADING AND PRICE AND QUALITY CONTROL
  9. WASHINGTON AND GRADING
  10. CONCLUSION
  11. REFERENCES

As Franklin D. Roosevelt began his first term as president, the American economy was in free-fall. But unlike earlier presidents whose economic policies were centered on the needs of producers alone, Roosevelt recognized that consumers also had a stake in the struggle to get America back on track (Brinkley 1996, 72–77; Cohen 1998; 2003, 54–56; “Consumers' Place”; Jacobs 2003, 258–259). An essential part of his plan was the creation of codes for fair labor and business practices. Antitrust laws were temporarily suspended as the National Recovery Administration (NRA) invited 19,000 trade groups from all fields to develop their own set of agreements on minimum prices, competitive practices, maximum work hours, minimum wages, and output (“Gov't and Business”). In addition to a Labor Advisory Board and a Business Advisory Board, Roosevelt was advised by a Consumers' Advisory Board (CAB), whose mandate was to look out for consumers' interests (Campbell 1940, chap. 1).

The concept of consumers as a specific interest group was reflective of a growing interest in consumer-related issues. Consumers had been galvanized following the 1927 publication of Your Money's Worth, a highly influential book written by Stuart Chase and Frederick J. Schlink (Chase and Schlink 1927). The authors exposed fraud and manipulation on the part of American manufacturers and called for the disclosure of adequate information about the products being offered for sale. Although the American National Standards Institute had been established in 1918, its sole purpose was to develop voluntary and consensual standards for industrial products (Coles 1938).1 So while industrial and government buyers were able to buy efficiently because they possessed the necessary knowledge, the average consumer was forced to rely on advertising, which often provided little factual information about the products for sale (Mayer 1989, 21; Silber 1983, 18).

In 1929, Schlink and Chase established a “watchdog” group called Consumers' Research to look out for consumers' interests. Consumers' Research employed technical experts and had a laboratory in which it tested products. The results of those tests were then published in the group's newsletter, which was originally called the Consumers' Club Commodity List. The newsletter proved extremely popular and boasted an impressive 42,000 subscribers by 1932 (Mayer 1989, 21; Silber 1983). The group attracted a number of prolific authors who wrote articles and best-selling books on consumer-related issues and also received support from a range of professional organizations.

GRADING OF CONSUMER PRODUCTS: A CHALLENGE TO ADVERTISING

  1. Top of page
  2. Abstract
  3. A “NEW DEAL” FOR CONSUMERS
  4. GRADING OF CONSUMER PRODUCTS: A CHALLENGE TO ADVERTISING
  5. THE ADVERTISING INDUSTRY'S REBUTTAL
  6. GRADING REVISITED: THE ECONOMIC NATIONAL COMMITTEE (1938)
  7. AMERICA AT WAR: VICTORY BRANDS AND PRODUCT STANDARDIZATION
  8. GRADING AND PRICE AND QUALITY CONTROL
  9. WASHINGTON AND GRADING
  10. CONCLUSION
  11. REFERENCES

In 1933, two plans for establishing quality standards for everyday consumer products were introduced to the public. The first was a proposal for mandatory grading of goods put forward by the CAB. Intended to complement the NRA's code-building system, it required manufacturers of consumer commodities to assign each product a grade of A, B, or C to indicate its relative quality, thereby enabling shoppers to choose the one that would best fit their preferences and pocketbooks (“CAB Grading Program”; “Keep Up Fight”; Lynd 1934).

Complementing the CAB's plan was the so-called “Tugwell bill,” which was drafted by Assistant Secretary of Agriculture Rexford Tugwell and introduced in Congress in June of 1933. In addition to calling for an end to false and misleading advertising and demanding changes to the existing labeling law, the measure sought to make the CAB's proposal legally binding. Product labeling had been mandatory since the passage of the Pure Food and Drug Act in 1906, but the law required only that a product's ingredients be disclosed, not that any information be included about its relative quality (Stole 2006, chap. 3). Thus, competing brands of canned peaches might each list their content as peaches, water, preservatives, and sugar, while providing no information of the kind that would enable consumers to judge the size and quality of the peaches or help them determine whether the can with the recognizable brand name was really a better buy than its competitor or a generic version.

While the law would benefit consumers, as well as small producers with no national advertising budgets but whose merchandise was possibly of higher quality, large manufacturers had a lot to lose. Their position in the market hinged on brand name recognition, achieved through massive amounts of national advertising designed to create the illusion of product superiority in consumers' minds. A mandatory grading system would undermine their common practice of arbitrarily touting a product as “extra fancy” or “superior” in quality.2

Keenly aware that government criteria for “quality” might cut into their profitable markets, national advertisers lodged strong objections to the grading proposals. Not only did they dismiss the need for such a system, they also questioned the government's ability to establish fair criteria for the three quality grades to be assigned to a product. Flavor, stated one industry spokesperson, was a matter of individual preference. Close to impossible to qualify, it was an imperfect way to determine a product's overall rating. In fact, argued an industry representative, advertising provided a better service to customers than “paternalistic government information” because “the average consumer would not understand a Government standard if he saw one” (Lichtenberg 1934). Another went so far as to characterize the grading effort as bordering on “actual government control” (quoted in “Lasker Visions”).

Consumer advocates, on the other hand, celebrated the proposals, claiming that they would protect consumers against advertisements that consistently failed to give them sufficient information. “If the buyer takes [the advertiser's] words at their face value,” contended one grading proponent, “he is frequently misled into believing the goods to be one or two grades higher in quality than they are in fact” (“CAB Grading Program”). The double standard was not lost on Consumers' Research, which pointed out that the industry used quality standards to make a determination about its own purchases and that the “most ably administered plants will defend to the death their right to buy soap and paper and typewriter ribbons on a basis which assures a grade and quality neither too high nor too low, precisely adapted to their needs, at a price level their purposes and finances permit or incline them to pay” (Schlink 1934, 117). Why, then, it asked, was the same courtesy not extended to consumers?

The CAB was unsuccessful in its attempts to convince manufacturers that because grading would help eliminate false and misleading advertising, it would actually reward the honest among them. “Consumer distrust of the advertising ethics which permit all products to be advertised as of highest quality could be dissipated were a series of grade names to become part of the advertising vocabulary,” it insisted. This did not mean that advertising would necessarily become irrelevant. “An accurate identification of grade is not incompatible with a colorful description of the many qualities incapable of standardization,” the CAB said reassuringly. “Brands will always differ” (“CAB Grading Program”).

THE ADVERTISING INDUSTRY'S REBUTTAL

  1. Top of page
  2. Abstract
  3. A “NEW DEAL” FOR CONSUMERS
  4. GRADING OF CONSUMER PRODUCTS: A CHALLENGE TO ADVERTISING
  5. THE ADVERTISING INDUSTRY'S REBUTTAL
  6. GRADING REVISITED: THE ECONOMIC NATIONAL COMMITTEE (1938)
  7. AMERICA AT WAR: VICTORY BRANDS AND PRODUCT STANDARDIZATION
  8. GRADING AND PRICE AND QUALITY CONTROL
  9. WASHINGTON AND GRADING
  10. CONCLUSION
  11. REFERENCES

By the mid-1930s, the advertising industry had embraced a range of sophisticated public relations strategies. The immediate goal behind these activities was to fend off the regulatory attempts. The long-term goal was to marginalize, even nullify, a rapidly growing consumer movement and minimize the possibility of future threats. When a 1934 survey conducted by the trade publication Sales Management found that a majority of respondents viewed the federal government as the most convincing authority for determining the quality and performance of consumer goods, the industry was very worried (“What the Consumer Thinks”; for the advertising industry's reaction to this survey, see “What Advertising Men Think”).

Advertising managers for newspapers and magazines were inundated with letters and analyses from the business community that predicted large revenue losses for the mass media should even the mildest version of the Tugwell bill make it through Congress. Most publishers were opposed to the measure; some freely expressed their opinions, whereas others neglected to inform the public about the bill's provisions.3 Also included in the industry's arsenal was a series of campaigns designed to convince the public of the “benign” and “useful” functions of advertising. Speakers' bureaus, motion pictures, radio broadcasts, and newly created industry front groups were used to spread the message. Strategies such as establishing a publicity department for the dissemination of information, securing the cooperation of other trade organizations, maintaining “direct and constant” contact with Washington, and making use of radio, newspapers, mail, and personal connections were all part of the effort (Rorty 1934, 357–358).

One industry tactic was decidedly ahead of its time. In 1937 a business organization called the Institute of Distribution created the Consumers Foundation, which then took on and revamped an existing publication, the National Consumer News, as its house news organ. The National Consumer News was edited by Crump Smith and represented a thinly veiled effort at presenting the grading issue from a big business perspective. Crump spoke of the magazine's mission as creating a “Golden Cord—Between Business and the New Consumer Consciousness” (quoted in “Trends”). While recognizing Smith's right to publish whatever he wanted, Consumers Union (CU), which had emerged as the dominant and most progressive consumer group after a hostile split off from Consumers' Research in 1935, was all but apoplectic that the magazine was operating under the guise of helping consumers when its real purpose was to promote an alternative, and voluntary, labeling system to replace the grade labeling proposal in the pending food and drug bill.

In contrast to the newsletters published by consumer groups such as Consumers' Research and Consumers Union, which accepted no advertising, National Consumer News sold ads to the tune of $540 a page (“Report on Publisher Smith”; “Trends and Perspectives”). The first issue devoted its entire center spread to a full-color advertisement for Del Monte's proposal for new “informative” labeling, and an article titled “Informative Labels Are Adopted—Del Monte, Libby Aid Buyer” literally paraphrased the same ad, a Del Monte publicity statement on the merits of “informative” and “descriptive” labeling, and Libby's plan for achieving this particular industry goal (“Bad Start”). The famous sociologist and active New Deal politician Robert S. Lynd shared CU's concerns; he warned that these and similar efforts were merely attempts to “channel consumer thought” in such a way that it would not be harmful to big business and national advertisers (“Consumer Groups Ask”; Smith 1979–1980).

When the NRA and consequently the CAB, were declared unconstitutional in 1935, it was clearly a victory for grading opponents. They were equally happy when, because of heavy industry lobbying, the grading provisions outlined in the Tugwell bill and a subsequent bill introduced for the same purpose eventually met their legislative demise in 1937 (“Drug Bill Weak”; “Resent White House S. 5 Stand”). Although a few industries decided to form voluntary plans for quality grading, most did not want the properties of their trademark to be known, for fear that customers would compare the price and quality of their brands against the generic or less well advertised brands.

The eventual outcome of the legislative battle that started as the Tugwell bill in 1933 was a slightly revised labeling law and the passage of the 1938 Wheeler-Lea Amendment to ban false and misleading advertising (Witherspoon 1998; Young 1992). But whereas the Wheeler-Lea Amendment effectively silenced the debate over advertising regulations for decades to come, the issue of grading consumer products continued to linger, and in fact took on new relevance when the Roosevelt administration launched an investigation into monopolistic practices and their links to the ongoing economic depression.

GRADING REVISITED: THE ECONOMIC NATIONAL COMMITTEE (1938)

  1. Top of page
  2. Abstract
  3. A “NEW DEAL” FOR CONSUMERS
  4. GRADING OF CONSUMER PRODUCTS: A CHALLENGE TO ADVERTISING
  5. THE ADVERTISING INDUSTRY'S REBUTTAL
  6. GRADING REVISITED: THE ECONOMIC NATIONAL COMMITTEE (1938)
  7. AMERICA AT WAR: VICTORY BRANDS AND PRODUCT STANDARDIZATION
  8. GRADING AND PRICE AND QUALITY CONTROL
  9. WASHINGTON AND GRADING
  10. CONCLUSION
  11. REFERENCES

In 1937, after eight years of economic depression, the economy was showing signs of recovery. Production had finally returned to 1929 output levels, and unemployment had been reduced from a peak of 25% to 14%. Then the economy unexpectedly went into a tailspin: by early 1938, manufacturing had fallen 30% from its 1937 high, five million additional Americans were out of work, and the unemployment rate was nearing 20% (Estey 1950, 22–23, chart; Goldston 1968; Lee 1955, 236). The economic crisis, now approaching a decade in length, began to look as if it might never end.

Thurman Arnold, who was the assistant attorney general in charge of the Antitrust Division, and other influential members of the Roosevelt administration, viewed stricter enforcement of the antitrust laws as the best strategy. The key to preventing large firms from dominating individual markets and enjoy the power to dominate price and output was to make it realistic for new firms to enter the market and effectively compete. If producers had to compete for consumers on the basis of the price and quality of their products rather than on trademarks developed through advertising, prices would come down and consumers would trickle back into the marketplace. Much to advertisers' dismay, the issue of grading had re-emerged, and given the gripping economic depression it made a lot of sense (Arnold 1938).

Deliberations resulted in a joint congressional resolution to create the Temporary National Economic Committee (TNEC). Commonly referred to as “the Monopoly Committee” when it was established in June of 1938, it was given the mandate to study the “concentration of economic power in American industry and the effect of that concentration upon the decline of competition.” While advertising was never the specific focus of any TNEC investigation, its role in protecting markets and preventing competition reappeared in hearing after hearing, keeping nervous advertisers on alert (Stole 2012, 20–28).

Testifying at a TNEC hearing dedicated to “Problems of the Consumer” in 1939, Dr. Ruth Ayres, a former CAB member who was now with the Consumers' Counsel Division of the Department of Agriculture, stressed the importance of product grading (“Committee Upholds Advertising Role”). The absence of grading measures, she said, meant that shoppers were forced to negotiate a maze of confusing price and packaging terms. As an example, Ayres pointed to a study by the Bureau of Standards showing the wide variety in packaging and pricing for tomato juice available at one store in Washington, DC. The 21 containers, representing 11 different brands, came in 17 different sizes and contained 15 different volumes, ranging from 19¼ to 99 fluid ounces. They were being sold at 15 different prices, ranging from two for 9 cents to a single container for 39 cents; and there were 16 different costs per fluid ounce, ranging from 3.3 to 6.7 cents for the cans and as much as 7.5 cents for one of the bottled juices. Packaging and pricing of cereals and cosmetics created the same level of consumer confusion (Ayres 1939; Belester 1939; Masters 1939; Roller 1939). Additional testimonials pointed in the same direction: advertising was not providing enough information to help consumers buy intelligently (Montgomery 1939).

“As a result of our present depersonalization, remote and high-pressured marketing set-up, consumers know or can find out little—if anything—about the relative quality of what they buy,” noted Herman Oliphant of the Treasury Department. “Grading is a long step toward giving the purchasing public this requisite knowledge; and its direct result is doubtless to produce effective competition on prices” (Oliphant 1938). “Consumers want facts about the goods they buy,” added fellow TNEC member Donald E. Montgomery, director of the Consumers' Counsel Division. “They want to be able to compare one commodity with another so as to make an intelligent decision as to which one best serves their individual need” (“Consumers Enter Monopoly Inquiry”). The hearing led to a study on consumer standards with Montgomery in charge. The resulting 433-page monograph Consumer Standards, published two years later, highlighted the need for mandatory grading of consumer goods (TNEC 1939, 1941). Working from the theory that small, independent manufacturers were at a competitive disadvantage against national organizations, the TNEC viewed the grading of lesser-known petroleum, textile, and other products as an effective strategy for letting consumers know what they were buying. The TNEC thought it likely that consumers might then prefer a less widely advertised but possibly superior product from a smaller manufacturer, thus fulfilling the committee's dual goal of assisting consumers and making markets more competitive (“Safeguard Against the ‘Monopolies’”).

Business interests looked with great concern to Canada, where grading had become obligatory and where the government could close down a production facility if the owner failed to comply (Brown 1943). Adding to their anxiety were two separate surveys conducted either by or for the business community, which showed that more than half the respondents were in favor of grade labeling (“Urges Advertisers”).4 A government proposal to create a “central consumer agency” with a Consumers' Standards Board to “foster, promote, and develop the consumer welfare of the people of the United States” was, according to the Wall Street Journal, the “first step towards standardization of everything else” and an end to “the whole system which we like to call our American way of life” (Montgomery n.d.; “Social Uses”). The political battle over the TNEC and its mission continued for more than three years, but much to the business community's relief, it did not result in a grading system for consumer goods.

Between 1939 and 1941, the TNEC spent more than $1 million, maintained a staff that included 182 experts, fully examined 95 different industries, and took testimony from 552 witnesses. It left a permanent record consisting of 37 volumes of printed testimony and 43 exhaustive monographs on various phases of its study (“Twilight of TNEC”). One of the committee's rather disturbing conclusions was that out of the hundreds of major American industries, no more than four or five firms controlled between 50% and 75% of the output, which effectively gave them control over the smaller firms in their fields (“Concentration of Economic Power”). Much to the business community's relief, however, Arnold and his supporters were not able to convince more conservative politicians of the need for change. Thus, the many investigations and hearings did not result in sweeping reforms of the capitalistic economy. The committee's last report was filed in the spring of 1941 and merely called for the strengthening of antitrust enforcement at the Department of Justice and the Federal Trade Commission (“Twilight of TNEC”). By this time, however, everyone's attention had turned to the looming war and the economic problems associated with a defense economy. Still, any advertisers who believed that this would curtail the ongoing demand for grading of consumer goods were in for a rude awakening. The war situation elevated consumers' need for credible product information, causing consumer advocates to eye one last, and very opportune, chance to impose some new rules.

AMERICA AT WAR: VICTORY BRANDS AND PRODUCT STANDARDIZATION

  1. Top of page
  2. Abstract
  3. A “NEW DEAL” FOR CONSUMERS
  4. GRADING OF CONSUMER PRODUCTS: A CHALLENGE TO ADVERTISING
  5. THE ADVERTISING INDUSTRY'S REBUTTAL
  6. GRADING REVISITED: THE ECONOMIC NATIONAL COMMITTEE (1938)
  7. AMERICA AT WAR: VICTORY BRANDS AND PRODUCT STANDARDIZATION
  8. GRADING AND PRICE AND QUALITY CONTROL
  9. WASHINGTON AND GRADING
  10. CONCLUSION
  11. REFERENCES

If systems for grading and standardization of consumer products had made sense to consumer advocates in the early 1930s, they seemed even more urgent toward the end of the decade with a war looming on the horizon. With fewer products available, consumers had an even greater need for reliable information about their qualities. Without adding cost or destroying established product names, proponents argued that grading could perform a valuable function in the fight for wartime price controls (“Grade Labeling—or Inflation?”).

Two new defense agencies, the Office of Product Management (OPM) and the Office of Price Administration and Civilian Supply (OPA), were created in 1941. Tasked with managing the wartime economy, they were met with a great deal of industry skepticism. Before long, however, manufacturers realized that they had little to fear from the OPM, which housed a set of business-loyal staffers. The OPA, on the other hand, was considered more of a problem because it attracted individuals, including its deputy head John Kenneth Galbraith, who were less devoted to the needs of business (“Grade Labeling Termed Threat”; “Standardized Labeling Gets Start”). In order to keep inflation under control the OPA imposed price ceilings, mandating the maximum amount that a manufacturer could charge for a product or service. It did not take long before the discussion over grading and standardization of goods returned to the political arena (“Brand Advertising Seen”).

A few months after America's entry into the Second World War, the War Production Board decided to create a set of “Victory” labels, based on a British wartime model, with a goal to “eliminate frills and wasteful practices” in fields where raw materials were scarce. The many affected industries were individually consulted and encouraged to develop their own strategies and plans for reducing the number of “varieties, styles and models” and for “eliminating unnecessary costs, decorations, fancy packaging and the like.” The director of economic stabilization, James Byrnes, assured affected manufacturers that this could be done “without destroying the competitive spirit” (“Ad Men Condemn Grade Level Plan”; “Byrnes Wants Consumer Goods Standards”; “Coming Victory Label”; “Grade Labeling to Halt”).

OPA administrator Leon Henderson explained that “Victory” labels would enable the civilian population to get the most out of a limited supply of materials and labor. The labels would reduce the costs of production, and they would aid in the determination, simplification, and enforcement of control and prices. The prices of “Victory” goods were to be based on their production cost, and the ceiling price would be set so that the producer could make a fair profit (Henderson 1942).

Consumer advocates welcomed the “Victory” brands with open arms. Colston Warne, a professor at Amherst College who had been the president of CU since the beginning, expressed his full support. Not only would “Victory” brands save consumers money, but they would ensure the best use of scarce wartime materials (“One Government Brand”). Voices in the business community, on the other hand, opposed the project as a costly administrative experiment that would strain public resources (Schenker, Jurist, and Wollner 1942). But government agencies liked the idea so much that a Standards Division was established in the early fall of 1942 to provide the OPA's operating divisions with technical assistance in developing the specifications for a variety of goods (“Suggestions for Program”). By January 1943, the sizes and styles of select consumer and industrial products had been reduced from 12,000 to 3,400 (“Grade Labeling Down the Wind”; “What Will Government-Imposed Standardization Mean”).

GRADING AND PRICE AND QUALITY CONTROL

  1. Top of page
  2. Abstract
  3. A “NEW DEAL” FOR CONSUMERS
  4. GRADING OF CONSUMER PRODUCTS: A CHALLENGE TO ADVERTISING
  5. THE ADVERTISING INDUSTRY'S REBUTTAL
  6. GRADING REVISITED: THE ECONOMIC NATIONAL COMMITTEE (1938)
  7. AMERICA AT WAR: VICTORY BRANDS AND PRODUCT STANDARDIZATION
  8. GRADING AND PRICE AND QUALITY CONTROL
  9. WASHINGTON AND GRADING
  10. CONCLUSION
  11. REFERENCES

Brand name advertising had never been a reliable measure of quality, but now, when material shortages were forcing manufacturers to use inferior raw materials for their products, its reliability was even further diminished. While the government had ways of checking manufacturers' adherence to the OPA's price ceilings, it had no standards or procedures in place for assessing the quality of branded merchandise (“Grade Labeling—or Inflation?”). Consequently, some manufacturers sold products containing lesser-quality materials under existing labels, whereas others tried to get around the price stipulations by decreasing the weight and quantity that consumers could reasonably expect (Arnold 1942).5 In 1943, for example, the OPA determined that Mars, Inc., the manufacturer of candy bars such as Milky Way, Snickers, and Three Musketeers, had reduced the weight of its products by 11% without telling consumers (Brown 1943). Such cheating was prevalent in many industries, including the production of canned goods. With the best fruits and vegetables going to the armed services, canners were left with lesser-quality goods for the consumer market, yet some were still selling them at top ceiling prices. Many big and well-known brands offered goods of inferior quality without reflecting that fact in their advertising claims (Montgomery 1944). The OPA viewed this as a serious offense. “The manufacturer who puts cheaper goods into a suit of clothes or a pair of shoes and charges the same price,” warned the agency, “is gouging the consumer and doing his part to create inflation” (Brown 1943). The creation of quality standards for consumer goods made more sense than ever.

Manufacturers did not agree, and they proceeded as if the government's goal was to see them eliminated. Businesses complained that the value created by the many millions of dollars they had already spent to create “brand loyalties” would be largely destroyed (“Grade Labeling” 1943b; “OPA Ruling”). “This process of grading, with all its vast complexities and needless labors—and needless inspections—is made wholly unnecessary for the simple and obvious reason that the buying public is perfectly familiar with the names and brands of merchandise which meets every requirement,” noted one industry defender. “Indeed, the assurance given by thousands of familiar labels, upon food products, clothing, refrigerators, tobacco, chewing gum, toilet articles, candies, household articles and so forth, are much more convincing than would be any number of ‘grade labels’ that might be pasted to such products by bureaucrats who know little or nothing about manufacturing problems or what actually constitutes good products” (“Bid for More Jobs”).

Industry representatives argued that consumers were better served by the descriptive labels that manufacturers were already using. The problem from consumers' perspective, however, was that those labels were written by the producers themselves. They adhered to no particular standards; there was no way to know how one manufacturer's “fancy” peaches compared in quality to another's “extra fancy.” Industry representatives continued to insist that mandatory labeling “would regiment consumer buying habits, kill the incentive for even better quality products at lower prices, destroy the consumer's freedom of choice, and restrict the natural American trend toward ever high standards of living” (“Ad Men Condemn Grade Level Plan”; Brown 1943).

Several industries were affected by the requirements, but the fight against grade labeling was fronted by those in the canning industry, who, unlike most other producers, had been granted special permission by the government to compute their own ceiling prices by calculating costs and adding a margin, a system that guaranteed them a profit and freed them from being concerned about the OPA's price policies. Not willing to relinquish this arrangement, canners launched an all-out lobbying and public relations effort against the proposed grading system (Cole 1943a; “Grade Labeling and Buck Passing”). Criticizing the grading proposal as expensive and a waste of government resources, they argued that it would make products more expensive because the additional cost of labeling would have to be passed along to consumers. That claim was quickly denounced by the Department of Agriculture, which had been put in charge of establishing grading criteria and developing individual price ceilings to match (“Grade Labeling Termed Threat”; “Standardized Labeling Gets Start”).

The opponents of labeling responded by creating the Brand Names Foundation, established in 1943. Supported by advertisers, advertising agencies, and advertising media, the organization sought to fight “confused economic thinking” and to convey a “clearer understanding” of how brand names and advertising helped people in their daily lives. The foundation utilized a range of promotional outlets, including print ads and radio, and directed its messages at a wide audience, including schools and voluntary organizations (“Salient Facts”).

The National Association of Canners followed suit, launching a million-dollar “education” campaign to sway opinion in its favor. It claimed that “scores of hundreds of Communists and their Fellow Travelers and sympathizers” in key positions with federal agencies and bureaus were behind the grading effort, with the sole aim of impairing and destroying the “American Free Enterprise” system (Berlin 1943; Cole 1943b; “Grade Labeling” 1943a; “Senseless and Frightening”). The absurdity of these statements was not lost on grading proponents. “Gosh,” commented a sarcastic Donald Montgomery, consumer counsel for the United Automobile Workers Union, “it's awful what a letter A, B, or C on a can of beans can mean if you think about it” (Montgomery 1944).

Throughout the spring of 1943, the OPA was under mounting pressure to abandon the grade labeling proposal. Prentiss Brown, a former Democratic senator from Michigan who had replaced Leon Henderson as the organization's head, was constantly being exhorted by the canning industry and its supporters to drop the program, whereas labor and consumer groups were pleading for the plan (“Charge OPA Policy”; “C.I.O. Opposes”; Lam 1943). Desperate to keep the grading proposal afloat, consumer advocates warned the OPA that abandoning the plan would be the same as taking a wrecking ball to the OPA's price-control program (Cole 1943c). “The issue is simple,” stated CU's publication Bread & Butter: “Without grade labeling, price control cannot be fully effective” (“Grade-Labeling—or Inflation?”).

WASHINGTON AND GRADING

  1. Top of page
  2. Abstract
  3. A “NEW DEAL” FOR CONSUMERS
  4. GRADING OF CONSUMER PRODUCTS: A CHALLENGE TO ADVERTISING
  5. THE ADVERTISING INDUSTRY'S REBUTTAL
  6. GRADING REVISITED: THE ECONOMIC NATIONAL COMMITTEE (1938)
  7. AMERICA AT WAR: VICTORY BRANDS AND PRODUCT STANDARDIZATION
  8. GRADING AND PRICE AND QUALITY CONTROL
  9. WASHINGTON AND GRADING
  10. CONCLUSION
  11. REFERENCES

The debate over grading took a sharp political turn in the spring of 1943, in what Alan Brinkley terms “a massive shift of power within the federal government away from liberal administrators towards corporate interests.” This turn was reflected in the appointment of business-friendly individuals to important agency positions (Brinkley 1996; Warne 1944). Now, with some of their own in key war agencies, manufacturers were much better positioned to tackle their adversaries on mandatory grade labeling. Lou R. Maxon, the OPA's deputy administrator in charge of information, enjoyed strong industry loyalties and frequently advised OPA head Brown on policy. He also happened to be the head of a large Detroit advertising agency that counted H. J. Heinz among its major clients. Maxon was dead set against grade labeling, fearing that it would spread to all fields of branded consumer goods, that all merchandise would eventually be regimented, and that a system of “state socialism” would be the result (“AFA Calls for Communications Freedom”; “Department Ready”; Maxon 1943; “Public and Grade Labeling”). He described grade labeling as “the greatest threat to American industry and our way of life that ever existed” and rejected the idea that such a system was essential for price control. Why, he wondered, would Brown use the agency to “put across an idea that Congress has turned down six times” (“Brown Likely to Drop Rule”)?6

Joining Maxon in the OPA were Dan Gerber of the Gerber Baby Food Company and Norman Sorenson of the Coleman Canning Corporation. Considering their financial ties to the canning industry, their appointments were a clear violation of official OPA policy, which prohibited any person with a financial interest in a particular field from being appointed to or retained in an agency position in which he or she would have to make price or rationing decisions that would affect those interests. But not only did Gerber and Sorenson appear before the House Agricultural Committee to testify against grading; it would later be revealed that the Food and Drug Administration had seized two hundred cases of Gerber's strained peaches for babies because they contained worms, and that the American Medical Association was re-evaluating its endorsement of the company. Brown did not protest Sorenson's and Gerber's activities, however. Instead of heeding the advice to have Maxon removed, he expressed faith in his deputy administrator's ability. He even increased Maxon's authority by leaving him in charge of all communication regarding public opinion on grade labeling and letting him have a say in final policy decisions at meetings that Brown himself was unable to attend. Only after heavy protests from consumer and labor interests did Brown halt the further expansion of his deputy's power, which according to CU would have made him “virtual co-director of OPA” (Cole 1943d; Lapin 1943; “Victories for the People”).7

Rumors began circulating that Brown was less than committed to passing a grading system, and this had a demoralizing effect on large sections of the OPA staff. Many were so distraught that they considered resigning from the agency (Cole 1943e; “Grade Labeling Under Fire”). Upset with this series of events, members of the Council of Organized Consumers, a New York–based organization representing a range of labor and consumer groups, traveled to Washington to remind the OPA head that there was no subject on which American consumers were more united than the need for grade labels for the effective enforcement of price controls. They returned empty-handed when no such meeting could be arranged (“OPA Gets New Plea”).8

Not only were canners and other grading opponents winning friends and gaining influence in the OPA, but they could also count on support from business-friendly politicians from both sides of the aisle. Foremost among them was Representative Charles A. Halleck (R-IND), who emerged as a particularly staunch opponent of grading, going so far as to call for an official probe into the government's plans (Denver Post 1943). He quickly gained support from Republicans and anti-Roosevelt Democrats in Congress for his resolution to investigate the OPA, the War Production Board, and any other agency that might be setting or planning to set standards for consumer goods (Cole 1943b). By April 1943, Halleck had organized a sweeping investigation into the OPA's activities under the pretext that federal authorities were trying to reform the nation's economy “along lines not authorized by Congress” (Devore 1943; “House Inquiry”). Testifying before a House subcommittee that was clearly biased against grading opponents, Paul S. Willis, president of the Grocery Manufacturers of America, accused “professional consumers” of taking advantage of the war emergency to impose “restrictive and unsound” measures upon the American food industry (“Willis Dec[lares] Grade Labeling as Impractical”). Later, in an open letter to Director of Economic Stabilization Byrnes and OPA head Brown, Willis argued that grade labeling would lead to deterioration in overall product quality because government grades would be far inferior to what manufacturers would produce in a more competitive environment. He warned that grade labeling would “place a ceiling on quality, rather than a floor under it” (“Hold Grade Label Plan Detrimental”).

While Brown was treated with kid gloves, the hearings delivered some hard punches to economics professor and OPA deputy head Galbraith, who had come out in favor of the grading proposal. Not surprisingly, Galbraith was generally disliked by the affected industries. “Why don't you take a sporting attitude and give us a chance to mix your theories with some sound advice from business men?” taunted the general manager and treasurer of the National Retail Dry Goods Association, Lew Hahn. “You know, when this war is over every business enterprise which manages to survive what you and your chaps are doing will be a national asset because it will provide employment” (Hahn 1943).

Pressured by the director of economic stabilization to pass the measure, a severely compromised Brown tried to wriggle off the hook, now suggesting that the grading measure might be outside the OPA's jurisdiction and that congressional action was required for its passage. This was not the case, according to legal staff; Brown held the power to make a decision. Accusing the latter of being beholden to business, the Council of Organized Consumers pointed to the “vast” quantity of incoming mail from individuals and organizations who favored grading and pleaded with the OPA to keep the program (Galbraith 1943; “Grade Labeling Urged”; “Lend-Lease Grade Labeling Program”; McHale et al. 1943; “OPA Holds Up Death”).

The issue took a new turn when Representative Clarence F. Lea (D-CA), who was pro-business and chaired the House Committee on Interstate and Foreign Commerce, asked Brown to hold off on making a decision, informing him that a subcommittee of Lea's committee would be holding public hearings on “restrictions on brand names” later that month. Representative Lyle H. Boren (D-OK) was put in charge of the subcommittee, which met frequently during May and June 1943 (“OPA Gives Up Fight”). Representatives from various industries in opposition to the OPA grading proposal were given ample time to testify during the hearings that began in June 1943. They contended that the grade labeling program had “nothing to do with the prosecution of war or maintaining production of goods” but was “aimed more at reform than at the control of inflation or the winning of the war.” Key consumer advocates, including Colston Warne, who had played an active role in defending the proposal and keeping the industry's feet to the fire, were not even invited to testify (Auerbach 1949; “Delay Is Asked”; “House Committee Asked”; United States Congress 1943).

Halleck maintained his view of grade labeling as “a movement to exterminate brand names.” He was supported by Boren, who characterized the proposal as the “whim and caprice of a few men” out to change the country's economic structure and threaten business and “our free press” (“Boren Denounces Grade Labeling”). Boren used the hearing to attack the Washington bureaucracy, stressing the importance of keeping the economy “sound.” In his view, anything that jeopardized the free and legitimate use of trademarks and brand names would endanger the economic welfare of the nation. And although national advertising, trademarks, and brand names might have their flaws, they were much preferable to “government control, standardization and any form of regimentation” (“Pledges Defense of Trade Marks”). The grading proposal had never carried a provision for wartime curtailment of trade names. This, however, had not stopped manufacturers from claiming that the government's true intention was to ban wartime advertising under the cloak of a drive to curb inflation (“Brand Advertising Seen”).

This was more than Brown could handle. Staging a comeback in defense of grading, he stated emphatically that its implementation would not cause established brand names to be discarded or impair their value (“Brand Advertising Seen”). Considering the program's goal of fighting inflation—so vital to production and morale during the war, and to the maintenance of free enterprise and democratic institutions after it—Brown was befuddled by claims that such a system would undermine the American system of free enterprise (Brown 1943).

Grading opponents now pegged their hopes to a bill introduced by Senator Robert Taft (R-OH), which aimed to put an end to required grade labeling of all commodities and to the setting of price ceiling differentials that did not conform to established trade usage. And even though it had never been among the OPA's goals or intentions, the bill specifically prohibited any restrictions on the use of brand names and trademarks. It permitted OPA standardization orders only where the price administrator found “that no practicable alternative exists for securing effective price control.” Much to consumer advocates' dismay, the Taft Amendment to the Emergency Price Control Act was passed by a Senate dominated by Democrats in July 1943, and in August Congress ordered the OPA to cancel any further plans for grade labeling (“Grade Labeling Dropped”; Kanady 1943; “Limitations on OPA Power”; Office of War Information 1943).

Consumer advocates were expectedly upset. Thanks to the “familiar coalition of Northern Republicans and anti-New Deal Democrats,” reflected Colston Warne, and under pressure from manufacturers, publishers, and advertising agents, American consumers would now be paying high prices for the poorest grades of products, and the lack of effective quality oversight would make price control almost meaningless (Warne 1944). Representatives from leading consumer organizations contacted the new economic stabilization director, Fred M. Vinson, pleading for his help in reversing the decision. They explained that they had never been opposed to brand names; they simply wanted supplementary information in order to assist the OPA with the enforcement of its orders. In the absence of a grade labeling system, consumers could not even hope to keep their home front pledge not to pay more than the ceiling price for products (Cole 1943f). An equally disappointed group of 40 self-styled “fighting Congressmen” organized themselves into a “consumer committee” with the avowed objective of restoring the OPA's original grading program (“Inside Washington”).

The possibility of a policy reversal kept the advertising industry on the alert for the war's duration and beyond. In spite of the considerable and widely acknowledged public support for a postwar continuation of the OPA, the business community launched a successful campaign for the agency's dissolution in 1946. The average American may have been concerned about the immediate price inflation that resulted, but the advertising industry was happy. Governmental grading stipulations had been successfully defeated (Cohen 2003, 134–135; Jacobs 2005, chap. 6). After a fight that had lasted more than a decade and taken many twists and turns, advertisers had won the battle. Ads, not government-established standards, were to remain consumers' main form of information about everyday products.

CONCLUSION

  1. Top of page
  2. Abstract
  3. A “NEW DEAL” FOR CONSUMERS
  4. GRADING OF CONSUMER PRODUCTS: A CHALLENGE TO ADVERTISING
  5. THE ADVERTISING INDUSTRY'S REBUTTAL
  6. GRADING REVISITED: THE ECONOMIC NATIONAL COMMITTEE (1938)
  7. AMERICA AT WAR: VICTORY BRANDS AND PRODUCT STANDARDIZATION
  8. GRADING AND PRICE AND QUALITY CONTROL
  9. WASHINGTON AND GRADING
  10. CONCLUSION
  11. REFERENCES

In spite of damaging criticism and rational arguments to the contrary, advertisers managed to keep grading proponents at bay throughout the 1930s and during the war that followed. Discussions surrounding grading and standardization had exposed a number of advertising's shortcomings, and the industry had shown its true colors: the purpose of advertising was not to educate, inform, or help the public, but rather to make consumers believe that the more heavily advertised brands were better than store brands or less widely advertised products when in fact the opposite might be true. This practice, however dubious, represented the key promotional tool for America's major manufacturers, and there was no way, even during the worst of wartime conditions, that they were willing to let it go. Fearing that brand name advertising might lose its luster after the war had ended and that any wartime concessions on their part might well continue into the postwar period and become permanent, advertisers saw it as in their best interests to protect advertising's role as the primary source of product information. Chances were that consumers might prefer the grading system or some of the reforms proposed by the industry's critics. While safety inspection of food production facilities is mandatory and performed by the government, product grading depends on and is paid for by the individual industries. Individual manufactures can elect not to participate. A voluntary grading system for beef, for example, has been in existence since 1917 and the egg industry created such a system (based on the Department of Agriculture's suggestions) in 1943.

Between 1946 and 1950, advertising played an instrumental role in convincing American consumers that they required to buy 21.4 million automobiles, more than 20 million refrigerators, 5.5 million electric stoves, and 11.6 million television sets (Hartman 1982, 8). Billions of dollars were spent on household appliances and furnishings. Between 1940 and 1950, the proportion of families who owned a mechanical refrigerator rose from 44% to 80%, a dramatic increase that would soon be replicated with the sale of television sets (Baughman 1992, chap. 3; Cohen 2003, 123). Advertising experienced a corresponding growth. In 1945, $2.875 billion, or 1.4% of the Gross National Product (GNP), was spent on advertising; ten years later, that number had more than tripled, to $9.194 billion and 2.3% of GNP (Pope 1983, 29; “Wartime Advertising”).

With more than a little irony, because of the lack of government-mandated grading standards for goods, CU experienced an extraordinary spike in interest for its rating services as consumption increased in the postwar years. In July 1949, Consumer Reports had 250,000 subscribers; three years later, that number had risen to 550,000, and by May 1953, 700,000 people were receiving the magazine every month (Warne 1949a, 9; 1952; 1953). This also had the effect of changing the nature of CU as an organization; the progressive policy reform group devoted to organizing consumers and shifting power sharply away from large firms gave way to a group disinclined toward political controversy and more willing to accept the marketplace as it was, not as it should be.

It was not an overnight transition. In 1945, CU established an office in Washington to monitor the many important reconversion battles, especially the continuing fight over price control legislation.9 The organization believed that having this office would make it easier to work with labor and liberal groups and simplify the task of keeping an eye on federal agencies that had jurisdiction over consumer issues (Warne 1945). Its 1946–1947 budget allocated $15,000 to study consumer-related issues, including grade labeling and standardization, housing, postwar living costs, taxes, and health insurance. CU also planned to bring the TNEC antimonopoly material up to date and publish those findings both in the form of special pamphlets and as articles in Consumer Reports and Bread & Butter (a magazine it published between 1941 and 1947). Last but not least, it envisioned itself making a political comeback, using said findings in testimony before congressional committees and in helping to help draft congressional bills. CU's ambition was clearly to become “the intellectual leader and spokesman for the consumer movement and large sections of the public” (“Legislative-Research Program”).

As the 1940s drew to a close, however, key individuals in the organization were becoming less comfortable with its activist role. They wanted it to become an independent, nonmembership-based, nonpolitical enterprise whose sole purpose would be to test products and make the results available to the consuming public. Only after a vote by the board of directors did President Warne's vision of CU as a “democratically-controlled, pro-labor” membership organization prevail (Warne 1949b).

CU experienced tremendous growth in the subsequent decades, as its testing expertise attracted an increasing number of members. This, in turn, indicated that there was an ongoing, even growing, need for product information.10 After the organization had spent the 1930s and 1940s arguing that the government should provide this service, its success now hinged on its own ability to deliver this information to its subscribers. It is difficult to assess whether the popularity of CU's testing services prevented demands for government grading from resurfacing, but the absence of political action among the lines of what occurred in the 1930s and 1940s is striking. Another reason behind CU's decision to let the issue rest may have been an increased public confidence in American big business. While the business community had struggled for public approval in the 1930s and 1940s, a 1953 survey showed that 57% of Americans held favorable views of its conduct (Smith, 1979–1980; 2000, 101; Marchand 1998). This, combined with a postwar advertising industry that had become increasingly savvy in its political strategies and determined to keep all forms of regulation off the table, might also have contributed to no new grading proposals seeing the light of day (Stole 2006, epilogue).

Still, a study conducted by the Center for Services Leadership at Arizona State University in 2011 revealed that fewer Americans than ever are satisfied with the products and services they buy (“New Customer-Rage Study”). Estimating that more than fifty million Americans had experienced an issue with a product or service bought within the previous year, it assessed the problem to have escalated steadily since 1976, when the first government study along these lines was conducted. With service on the decline and consumers spending a disproportionate amount of their hard-earned money on products that do not meet expectations, it should come as no surprise that some are predicting a new wave of organized consumer revolt—and if history tells us a lesson, this action is likely to meet a new round of industry resistance (Sirota 2011).

REFERENCES

  1. Top of page
  2. Abstract
  3. A “NEW DEAL” FOR CONSUMERS
  4. GRADING OF CONSUMER PRODUCTS: A CHALLENGE TO ADVERTISING
  5. THE ADVERTISING INDUSTRY'S REBUTTAL
  6. GRADING REVISITED: THE ECONOMIC NATIONAL COMMITTEE (1938)
  7. AMERICA AT WAR: VICTORY BRANDS AND PRODUCT STANDARDIZATION
  8. GRADING AND PRICE AND QUALITY CONTROL
  9. WASHINGTON AND GRADING
  10. CONCLUSION
  11. REFERENCES
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Endnotes
  1. 1

    In 1928, the American Engineering Standards Committee became the American Standards Association (ASA); in 1966, the ASA was reorganized and became the United States of America Standards Institute (USASI) (Ware 1942, 61).

  2. 2

    For treatments of advertising's role in oligopolistic marketing practices, see Baran and Sweezy (1966); Chamberlain (1962), chap. 5; Robinson (1954); Veblen 1938, (1954).

  3. 3

    For an excellent account of how advertisers in general, and drug manufacturers in particular, pressured newspapers to ignore or criticize the Tugwell bill, see Seldes (1935), pp. 56–60. Also see Hanson (1934); “Last Roundup”; Parlin (1934); Seldes (1938), 212, 300.

  4. 4

    For more information about advertisers' assessment of consumers' attitudes toward advertising, see “FTC Asks Probe”; Gallup (1940); “Hearings”; “Not Anti-Advertising”; Robinson (1940); “Would Make FTC Arbiter”.

  5. 5

    Congress acknowledged these dangers in the Emergency Price Control Act of 1942, which, in addition to vesting in OPA the power to set maximum prices, gave it the power to regulate and prohibit “practices relating to changes in form and quality” (“OPA to Set Up Mandatory Standards”).

  6. 6

    For a response from Consumers Union, see “Grade Labeling: CU's Reply.” For a discussion of the ongoing debate over grade labeling in the 1930s, see Stole (2006), chaps. 3 and 6; Jacobs (2005), chap. 4.

  7. 7

    Concerns that OPA members who were recruited from business circles might have a strong, and in some respects adverse, reaction to the agency's mission arose in other contexts as well, see Oppenheim (1942).

  8. 8

    The leading groups behind this claim were the American Association of University Women, the American Home Economics Association, the National League of Women Shoppers, the National Federation of Settlement Houses, the National Farmers Union, the Co-operative League of the United States, the National Council of Jewish Women, the National Council of Negro Women, the National Council of Catholic Women, Consumers Union, the Congress of Women's Auxiliaries of the CIO and the Ladies' Auxiliary of the Brotherhood of Sleeping Car Porters, AFL (Cottrell 1943).

  9. 9

    In spite of polls showing a high degree of public support for the OPA's extension, the National Association of Manufacturers allied with the National Retail Dry Goods Association and Congressmen representing agricultural and industrial interests, launched an intensive public relations program to end the OPA's reign. The compromise was, for consumers, a very weak bill, passed in December 1946, two days before the existing price control bill was to expire. “The result was a 14 percent increase in food prices with meat doubling and overall living expenses increasing 6 percent” (Cohen 2003, p. 103).

  10. 10

    According to Silber (1983, 132), the organization had close to 2.5 million members by 1980.