Mr. O'CONNELL. I was merely trying to explore the possibility that the tools that we have are not necessarily adequate in all cases to create the conditions we want to create, and I was wondering whether or not the Government, assuming that we want to have a competitive economy and that we want to create and maintain competitive conditions wherever possible, shouldn't search out for other devices to create the competitive condition where we cannot make it exist by virtue of an antitrust suit. For example, in the aluminum business we had a monopoly for I don't know how many years, and now as I understand it, as a result of the national-defense effort and for reasons that have nothing to do with the motives that I would have in mind, we have a competitor in the aluminum business now that is going into the business. As I understand it, the Government is lending it its own money to go into the business. That was a way of creating a competitive situation, was it not? A year or so ago, the Government indirectly created a competitive situation in one section of the country in the production of cement, because we had occasion to buy a couple of billion barrels of cement and a man that didn't even own a cement factory who had sufficient capital and decided that the order was sufficient inducement, submitted a bid, and that cement owner bid something in excess of a million dollars less than the other cement people. He got the order; he is in the cement business, and I understand he is an active competitor. Now, a competitive condition was created in that industry, too, in that section of the country. Mr. BALLINGER. You mean he is an active competitor now? Mr. O'CONNELL. My understanding is that he is cutting prices. Mr. O'CONNELL. That is it, he is cutting prices. I am merely suggesting that maybe there are other ways of creating competition in areas which cannot be met by the simple device of a lawsuit, and if we should take this proposition that it is the duty of the Government to see that competition exists wherever it can be created, wherever it ought economically to exist, maybe we ought to consider using other devices. Mr. BALLINGER. I see what your point is. Mr. O'CONNELL. In addition to the ones that we have. Mr. BALLINGER. I agree. For instance, you mention that we might do something about making capital more available for the starting of new enterprises; a lot of times things get snarled up, the way the financial situation works. Sometimes you can't get any money to compete with another concern. Mr. O'CONNELL. It seems to me in these areas where competition does not exist and which are essentially monopolistic, unless we assume that we have got to create competition, it seems to me we must go to the other extreme and regulate it as a monopoly, or own it ourselves as the Government, which seems to me to be a very undesirable thing. It is a last resort, and if in the sulfur industry and the potash industry a competitive industry does not exist, we have to try to create one. If we can't create it, we have to do something else. The CHAIRMAN. The monopolistic practices which tend to destroy competition are very well known. They are clearly identifiable, they have been mentioned over and over again by leaders in business and 304946-41--41 by leaders in the Government. Nobody who is engaged in interstate commerce today in the management of any large national enterprise is at all ignorant of what these practices are, and when their practices are adopted they are frequently adopted, I would say rather for the most part in full knowledge of the fact by those who are adopting them that they are against the policy of the Sherman antitrust law. If those practices could be abandoned voluntarily on the part of industry, industry ought to abandon them voluntarily, because if it doesn't it will face the exact alternative that Mr. O'Connell has just mentioned, or if they are not abandoned voluntarily they can be eliminated by a very simple method. (I see the witness is smiling because he sees exactly where I am leading.) The bill which I introduced for a national charter system, in which afterward Senator Borah collaborated with me, made the very simple provision that if a corporation were found guilty by the courts of violating the antitrust laws, of adopting any of these well-known practices, it would be in danger of losing its right to do business in the field in which the Federal Government has jurisdiction. That device, I think, would be more effective than anything else that can be devised, and it would preserve the freedom of enterprise without expanding the powers of government. Are there any other comments? Senator MEAD. I just want to add this one thing, Mr. Chairman; that is, that private enterprise, along with democracy, is on trial in the world today. Each of them must realize its respective responsibility, and democracy with a complicated, unjustifiable competitive system will find it very burdensome in attempting to compete with the totalitarian system of government and its regimented economy. So, if we are going to make great sacrifices to perpetuate our democracy, and each individual realizes his patriotic responsibilities, it occurs to me that private enterprise ought to wake up and eliminate the bugs that have been located or found to exist, so that both private enterprise and democracy, the democratic system, might survive. Mr. BALLINGER. I agree with him. Senator MEAD. Or have a better chance to survive. Mr. BALLINGER. Let me correct the record for one minute. Mr. O'Connell and I have been discussing a very dangerous subject-the dissolution of corporations-and I want the record to show that I think cases where you would have to dissolve a corporation, if you did have to dissolve it, would be very few, I mean cases where competition just doesn't seem to be able to work. Reducing the size of a corporation may not only be a device to restore price competition in an industry where it has been completely eliminated, but in some industries competition may be greatly increased, resulting in much lower prices and corresponding benefits to the economic system. This second use of dissolution proceedings, however, is a very technical subject, and I cannot discuss it here. I merely wish to say that the use of the dissolution device to restore price competition in an industry where it has been completely eliminated because of the size of the price leader operating without any collusive agreements would be very limited. Large-scale enterprise generally is no obstacle in the way of competition. The automobile industry is one of the largest industries in the country, and competition goes on vigorously there. You may have a few situations here and there where somehow you don't seem to be able to get competition to work. I think that even in those situations a vigorous investigation will produce some competition, but if we come to that very isolated case where we can't seem to be able to restore competition, I would rather see something done about the size of a unit than creating a public utility. I am afraid of that. Our investigation in the Federal Trade Commission shows the public utility regulation was rather pitiful. Why shouldn't it be when you are confronted with a billion dollars of invested capital and you have five or six men armed with two or three stenographers and inadequate funds, and everything else? You are sort of helpless. I want to be conservative about this problem of dissolution. The CHAIRMAN. You are recognized as a conservative, Mr. Ballinger. Mr. O'CONNELL. I hope, Mr. Ballinger, you didn't get the impression, and I hope the record doesn't indicate I have suggested an expansion of the area of public utilities. I think that it is to be expanded as a last and most undesirable alternative, but it seems to me to be in the picture if, as a possibility, we cannot create competitive conditions in given areas. I see no way of getting around it. If you cannot create competitive conditions in an area where something of importance is being sold to consumers at monopolistic prices, something has to be done to protect the public against the price. If competition doesn't exist, which is presumed to be the thing which does protect it, and it is certainly the most effective protection they can get-if that doesn't exist, something has to be done. Mr. BALLINGER. Rather than a public utility, I would rather take the chance of trying to restore competition by dissolution in some manner. It should be pointed out, of course, that there are oftentimes other ways of restoring competition in an industry without recourse to dissolution proceedings. The sulfur industry illustrates these other ways very well. In the case of sulfur, as we showed in the hearing, there is somehow a mysterious alliance between those who discover new fields of sulfur and the two dominant companies. Almost every lease is transferred to them. Suppose we broke that up; maybe in 5 or 10 years you would have four or five sulfur companies. Mr. O'CONNELL. But you still have only two. Senator MEAD. I take it you both prefer to explore every avenue of regulation before you recommend the extension of the powers of Government into any particular field, but that you both realize that the primary requirement is the protection of the consumer. Mr. BALLINGER. Absolutely, Senator. The CHAIRMAN. Are there any other questions? The Chair announced earlier in the week that the session today would conclude the presentation by agencies, but that members of the committee who represent the legislative branch, including the House of Representatives I may say to the gentleman who is walking outstill have an opportunity to be heard. Dr. Anderson, have we had any requests? Dr. ANDERSON. No. Mr. Sumners said he would like to be heard, and we were hoping you would have a message. The CHAIRMAN. I have indicated, of course, that I would like to do that. Dr. ANDERSON. And Mr. O'Connell has indicated he would like to have time. The CHAIRMAN. It is likely the Chair will call this meeting for Wednesday next, and if it is possible to arrange it, presentation will be made at that time by Mr. O'Connell, Congressman Sumners, and the chairman. The committee will recess subject to the call of the Chair. (Whereupon, at 12:40 p. m., an adjournment was taken subject to the call of the chairman.) EXHIBIT No. 2818 A BILL To amend an act entitled "An act to create a Federal trade commission, to define its powers and duties, and for other purposes"; approved September 26, 1914, as amended March 21, 1938 (38 Stat. 717; 15 U. S. C. A., sec. 41; 52 Stat. 111) Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That Section 7 of an Act entitled "An Act to create a Federal Trade Commission, to define its powers and duties, and for other purposes" is hereby amended to read as follows: "SECTION 7. That in any suit in equity brought by or under the direction of the Attorney General as provided in the antitrust Acts, the court may, upon the conclusion of the testimony, if it shall then be of the opinion that the complainant is entitled to relief, refer said suit to the Commission as a master in chancery, to ascertain and report an appropriate form of decree therein. The Commission shall proceed upon such notice to the parties and under such rules of procedure as the court may prescribe, and upon the coming in of such report such exceptions may be filed and such proceedings had in relation thereto as upon the report of a master in other equity causes, but the court may adopt or reject such report, in whole or in part, and enter such decree as the nature of the case may in its judgment require. "That in any suit brought by or under the direction of the Attorney General to invoke remedies provided in the antitrust Acts or to enforce the penalties thereof, the court may, at the request of the Attorney General, refer such proceeding or paricular issues involved therein to the Commission to take testimony and evidence, to make findings of fact thereon, and to draw conclusions of law therefrom. The procedure used by the Commission, as authorized by Section 5 (b) of this Act so far as the same is applicable, shall be followed in discharging this duty, unless otherwise ordered by the court. Upon the completion of such procedure before the Commission, it shall promptly report its findings and conclusions, and transmit the record of the testimony and evidence to the court in which such suit is pending, where such further proceedings shall be had in relation thereto as the court shall direct. "The Commission is authorized, on its own motion or at the request of the Attorney General, to investigate the operation and effect of any statute of a State of the United States or of any ordinance or regulation of a municipality or other political subdivision of a State, or of a combination or group of such statutes, ordinances or regulations, to ascertain whether, in fact, such law or laws bring about or result in an interference with or set up barriers to the free flow of commerce between and among two or more of the several States of the United States. If it should appear from said investigation that such interference or barrier exists, the Commission is authorized to hold hearings for the taking of relevant testimony and evidence, presented by the Attorney General or by the Commission, and from such testimony and evidence to make findings as to the facts relating to such law or laws and their operation with respect to and their effect upon interstate commerce. The findings as to the facts of the Commission shall be prima facie evidence in all courts of the United States in any suit or proceeding in which such facts are material or relevant, and shall, in all cases, be made public by the Commission." EXHIBIT No. 2819 A BILL To amend an act entitled "An act to supplement existing laws against unlawful restraints and monopolies, and for other purposes" approved October 15, 1914 (38 Stat. 730) as amended Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, that Sections 7 and 11 of an Act entitled "An Act to Supplement Existing Laws Against Unlawful Restraints and Monopolies, and for Other Purposes", approved October 15, 1914 (U. S. C. A., Title 15, Sec. 18) are hereby amended to read as follows: "SEC. 7. That no corporation engaged in commerce shall acquire, directly or indirectly, the whole or any part of the stock or other share capital, or the whole or any part of the assets, of another corporation engaged also in commerce, where the effect of such acquisition may b (1) to substantially lessen competition between the corporation whose stock is, or whose assets are, so acquired and the corporation making the acquisition, or (2) to restrain such commerce in any section or community, or (3) to tend to create a monopoly of any line of commerce. "No corporation shall acquire, directly or indirectly, the whole or any part of the stock or other share capital, or shall acquire the whole or any part of the assets of one or more corporations engaged in commerce, where the effect of such acquisition, of such stocks or assets, or of the use of such stock by the voting or granting of proxies or otherwise, may be (1) to substantially lessen competition (a) between such corporation or corporations or any of them, whose stock or other share capital or assets are so acquired, and any other corporation, engaged in commerce, owned or controlled by the acquiring corporation, or (b) between any two or more of the corporations whose stock or assets are so acquired; or (2) to restrain such commerce in any section or community, or (3) to tend to create a monopoly of any line of commerce. "This section shall not apply to corporations purchasing such stock solely for investment and not using the same by voting or otherwise to bring about, or in attempting to bring about, the substantialy lessening of competition. Nor shall anything contained in this section prevent a corporation engaged in commerce from causing the formation of subsidiary corporations for the actual carrying on of their immediate lawful business, or the natural and legitimate branches or extensions thereof, or from owning and holding all or a part of the stock of such subsidiary corporations, when the effect of such formation is not to substantially lessen competition. "Nor shall anything herein contained be construed to prohibit any common carrier subject to the laws to regulate commerce from aiding in the construction of branches or short lines so located as to become feeders to the main line of the company so aiding in such construction or from acquiring or owning all or any part of the stock of such branch lines, nor to prevent any such common carrier from acquiring and owning all or any part of the stock of a branch or short line constructed by an independent company where there is no substantial competition between the company owning the branch line so constructed and the company owning the main line acquiring the property or an interest therein, nor to prevent such common carrier from extending any of its lines through the medium of the acquisition of stock or otherwise of any other such common carrier where there is no substantial competition between the company extending its lines and the company whose stock, property, or an interest therein is so acquired. "Nothing contained in this section shall be held to affect or impair any right heretofore legally acquired: Provided, That nothing in this section shall be held or construed to authorize or make lawful anything heretofore prohibited or made illegal by the antitrust laws, nor to exempt any person from the penal provisions thereof or the civil remedies therein provided. "Nothing contained in this section shall apply to transactions duly consummated pursuant to authority given by The Congress to the Civil Aeronautics Authority, Federal Communications Commission, Federal Power Commission, Federal Reserve Board, Interstate Commerce Commission, or the Securities and Exchange Commission." "SEO. 11. That authority to enforce compliance with sections two, three, seven, and eight of this Act by the persons respectively subject thereto is hereby vested in the Interstate Commerce Commission where applicable to common carriers subject to the Interstate Commerce Act, as amended; in the Federal Communications Commission where applicable to common carriers engaged in |