Federal Reserve bank reported. Receipts of some variety stores showed a far greater drop. During the demonstrations, early in 1961, one store executive said:

The most important thing that can be done is to convince the power structure that this situation can ruin the downtown area. The effect is not going to be confined to the retail stores. It will hit the banks, the office supply concerns, the insurance firms, the real estate interests, and all the rest.

In Savannah, Ga., a citizens' negotiating committee announced the end of lunch counter discrimination in downtown stores in July 1961. The action followed a 15-month boycott of the stores by Negroes. apparently because the Negro refusal to buy hurt merchants. The boycott cut retail sales as much as 50 percent in some places.

In the fall of 1962, businessmen in Charlotte, N.C., hit by drives for desegregation of public accommodations, estimated their business was cut by 20 to 40 percent.

Similar protests in Nashville, Tenn., produced a boycott which was maintained for approximately 7 weeks at what has been estimated at about 98 percent efficiency, a figure downtown merchants generally agreed on. Negroes in Nashville spend an estimated $7 million annually downtown and their absence had varying results. In one department store, they represented 12 to 15 percent of the business: in another department store, 5 percent. The transit company found its revenues dwindling seriously; the two newspapers found advertising linage figures falling.

In addition to the boycott supporters, other shoppers stayed away from the downtown Nashville area. While conditions remained unsettled as a result of sit-ins, they could either stay home or shop in suburban areas. This, too, hurt business in the central city, for these out-of-towners represent 20 percent of the shopping totals.

Variety stores were hit particularly hard. With their lunch counters a sit-in target, even those who did venture downtown avoided the food counters, which sometimes account for as much as 50 percent of the gross profit. Even businesses not involved in the sit-ins and which had reputations of good service to Negroes found business dropping.

State Budget Director E. J. Boling, of Tennessee, said violence in Tennessee associated with desegregation of public accommodations threatened the State's credit ratings:

We go up to New York to talk to investment bankers * they start off talking about such things as these dynamitings. Sometimes that's all they talk about * * * they only want to know about all the acts of violence. State Comptroller William Snodgrass concurred, and added that violence or the threat of violence can add a small fraction to interest rates and this adds up to millions of dollars eventually.

OBJECTIONS TO THE BILL

Now let me deal with some of the objections I have heard to the bill before this committee. As I have already said, it seems to me it is clearly within the power of Congress to base this legislation on the commerce clause, as well as the 14th amendment. And I do not think that requiring the owners of public accommodations to serve the public without discrimination is an unwarranted encroachment on private

rights. The owners of these places are already subject to all kinds of controls, in order to advance the public safety, health, order, and morality. No one doubts the propriety of requiring them to build fire escapes, to keep their kitchens clean, and to prevent disorderly or immoral conduct on their premises. Moreover, as the Attorney General has pointed out, many Southern States compel the owners of public accommodations to spend their money to enforce segregation. Surely it is no more of an encroachment on private rights to compel them to end segregation than it is to compel them to perpetuate it.

I have also heard it said that using the commerce power does not meet the moral issue. I do not understand this point. Good sense dictates that the moral policy against discrimination be carried out by using all available constitutional authority. Other moral policies (against prostitution and gambling) have previously been translated into law based on the commerce clause.

I do not think that basing this legislation on the commerce clause detracts in any way from the dignity or importance of the constitutional rights involved. The dignity of those rights is best recognized by doing something about them. The justification for using the commerce clause is that it will work. It is constitutionally sound, and there is no adverse legal precedent which must be overcome, as in the 1883 case with regard to the 14th amendment. The argument that the 14th amendment approach alone must be used because it is a "higher" basis for the legislation seems to me something of a snare and delusion. It risks putting so-called principle ahead of performance. It risks ending up with nothing, and risks it needlessly.

I have also heard an objection to the commerce clause approach on the ground that it will not cover all businesses impartially, but only those which affect interstate commerce, whereas the 14th amendment is not so limited. If I understand the Mrs. Murphy argument correctly, I think there are many people who do not want the bill to apply to the smallest businesses. Where there is an appreciable or substantial effect upon interstate commerce this bill is an appropriate way to meet this point.

The important point about coverage of the act is that it be complete enough so that a substantial majority of the businesses in any area or region of the country are required to comply. It does not have to have 100-percent coverage, but it has to be comprehensive enough so that in all areas of the country, North and South, rural and urban, most public accommodations will be desegregated. If that is done, no hardship will be worked on individual businessmen, and the climate in this field of civil rights will quickly change.

In this connection, there have been numerous references to the possibility of defining coverage under the act in terms of dollar volume of sales. Some statistics prepared by my staff show that different types of business vary widely in the average volume of sales. Moreover, the same type of business may vary widely in average size from one area to another. I have with me several tables and chartslabeled appendix I-showing the distribution of sales by selected types of businesses in 10 major cities. I would like to offer these for the committee's information.

What these statistics show is essentially as follows:

From appendix I, table 1: A $150,000 sales figure would afford adequate coverage only in the case of department stores in these 10 cities. At least 56 percent of the variety stores in these cities would be excluded; at least 76 percent of the gasoline stations would be excluded; 83 percent of the eating places; and 93 percent of the drinking places. If the figure were reduced to $100,000 annual sales volume, it would still be true in these cities that at least 49 percent of the variety stores would be excluded; 69 percent of the gasoline stations; 79 percent of the eating places; and 91 percent of the drinking places.

At $50,000, 22 percent of the variety stores would still be excluded; 34 percent of the gasoline stations; 64 percent of the eating places; and 65 percent of the drinking places.

Finally, using a $30,000 annual sales volume as a definition of coverage would mean that a minimum of 12 percent of the variety stores would be excluded; 14 percent of the gasoline stations; 34 percent of the drinking places; and 46 percent of the eating places. In other words, a $30,000 cutoff would only cover about half of the eating places in these 10 cities.

Bear in mind that these are figures for major cities, with the population shown in appendix I, table 2. In the Southern States, more than half the population lives in rural areas as is shown in appendix I, table 3. And the figures cited are for those cities where coverage is greatest. In many cities the coverage is sharply less than in those referred to above.

Another measure of coverage limitations is that shown in appendix I, table 4, furnished by the American Restaurant Association. It shows that, on a countrywide basis, only 8 percent of the restaurants gross over $100,000 annually, and only 221/2 percent gross over $50,000 annually. In other words, three-quarters of the restaurant establishments in the country would not be covered if a $50,000 standard were applicable to restaurants.

In summary, the use of a specified sales volume may have some disadvantages. It may result in unevenness of coverage as _between types of businesses and as between urban and rural areas. It might also lead to inequities among competitors, and to attempts to capitalize upon established exemptions by advertising their existence.

In this connection, Mr. Chairman, I dread the thought of replacing the odious signs marking white and colored restrooms, for example, and replacing them with "exempt" signs, indicating that this restaurant is exempt from the statute and others are not exempt.

This is a highly technical area as the above figures show. We have compiled them for the committee's general guidance in considering this legislation and we will of course be glad to assist further if the committee so desires.

In short, Mr. Chairman, this concludes my prepared statement. We strongly urge that you report favorably on S. 1732 and I will of course try to answer any questions that the committee members may

have.

(Appendixes to Mr. Roosevelt's statement follows:)

See footnote at end of table,