ment, one of the gravest threats to our welfare lay in the increasing concentration of power in the hands of a small number of giant organizations.

"During the war, this long-standing tendency toward economic concentration was accelerated. As a consequence, we now find, that to a greater extent than ever before, whole industries are dominated by one or a few large organizations which can restrict production in the interest of higher profits and thus reduce employment and purchasing power.

"In an effort to assure full opportunity and free competition to business we will vigorously enforce the antitrust laws. There is much the Congress can do to cooperate and assist in this program.

"To strengthen and enforce the laws that regulate business practices is not enough. Enforcement must be supplemented by positive measures of aid to new enterprises. Government assistance, research programs, and credit powers should be designed and used to promote the growth of new firms and new industries. Assistance to small business is particularly important at this time when thousands of veterans who are potential business and industrial leaders are beginning their careers.

"We should also give special attention to the decentralization of industry and the development of areas that are now under-industrialized."

Again, in my State of the Union Message in January 1948, I told the Congress : "Growth and vitality in our economy depend on vigorous private enterprise. Free competition is the key to industrial development, full production and employment, fair prices, and an ever improving standard of living. Competition is seriously limited today in many industries by the concentration of economic power and other elements of monopoly. The appropriation of sufficient funds to permit proper enforcement of the present antitrust laws is essential. Beyond that we should go on to strengthen our legislation to protect competition."

In June of that year, I vetoed the Reed-Bulwinkle bill, which authorized certain exemptions from the antitrust laws for interstate carriers. In my veto message, I said:

"I have repeatedly urged upon the Congress the necessity for a vigorous antimonopoly program. This bill would be inconsistent with such a program.” The Eightieth Congress, however, overrode my veto.

In my State of the Union message this year, I said:

"If our free-enterprise economy is to be strong and healthy we must reinvigorate the forces of competition. We must assure small business the freedom and opportunity to grow and prosper. To this purpose, we should strengthen our antitrust laws by closing those loopholes that permit monopolistic mergers and consolidations."

I am gratified, therefore, to learn that your subcommittee is undertaking a serious wide-scale study of the antitrust laws for the purpose of determining in what respects they can be made more effective in preventing monopoly and developing a competitive economy.

I am glad to request the agencies referred to in your letter to cooperate fully with your subcommittee in this work. I enclose a copy of the memorandum which I have sent to the various agency heads on this subject. I have added a few agencies to the list you furnished because it seemed to me that your subcommittee might find occasion to call on them for assistance.

With all good wishes for the success of your work in this most important field.

Very sincerely yours,

HARRY S. TRUMAN.

The CHAIRMAN. The letter was accompanied by a memorandum addressed to the various bureaus. Will you read that, please, Mr. Bernhardt?

Mr. BERNHARDT. This is a memorandum dated July 8, 1949, addressed to the following departments and agencies:

The Attorney General; Secretary of the Treasury; Secretary of Defense; Secretary of Agriculture; Secretary of Interior; Secretary of Commerce; Chairman, Board of Governors of the Federal Reserve System; Chairman, Securities and Exchange Commission; Chairman, Federal Trade Commission; Chairman, Interstate Commerce Commission; Chairman, Federal Communications Commission; Chairman, Federal Power Commission.

Chairman Celler, of the House Committee on the Judiciary, has appointed a specia. subcommittee to undertake a broad inquiry into the antitrust laws. Mr.

Celler has indicated to me that he and his subcommittee wish to work in the closest cooperation with the Federal agencies that are concerned with the field of this inquiry.

I strongly favor the objectives of the Celler subcommittee. I am hopeful that its work will produce constructive recommendations and results.

I therefore request that you and your agency give Mr. Celler and his subcommittee the fullest possible cooperation and assistance, subject only to jurisdictional and appropriation limitation.

HARRY S. TRUMAN.

The CHAIRMAN. We have this morning as our first witness the distinguished Attorney General of the United States, Mr. Clark, who has given us on the House Judiciary Committee his cooperation for many years.

Mr. Clark, we are very happy to hear from you.

STATEMENT OF HON. TOM C. CLARK, ATTORNEY GENERAL OF THE UNITED STATES; ACCOMPANIED BY PEYTON FORD, THE ASSISTANT TO THE ATTORNEY GENERAL; AND HERBERT A. BERGSON, ASSISTANT ATTORNEY GENERAL

Attorney General CLARK. Mr. Chairman and members of the committee, if it is agreeable with you, I have here a written statement that I have handed to the reporter and to the press. However, I am going to just talk with you today as is usually my custom. I hope that you may later have the opportunity of reading my statement, my written statement. And I want to assure the press if they wish to take anything from the written statement, it is perfectly all right. I shall follow the written statement as closely as I can, sir.

As I proceed, if any of you have any questions, I will be very happy to answer them as I go along.

The CHAIRMAN. As you wish, Mr. Attorney General, either we can interrupt you or we can wait until you conclude. I would suggest, if I may, if it meets with the approval of the members of the committee, that we wait until your full statement has been read. Whatever you wish in the matter is agreeable.

Attorney General CLARK. Either way will be quite all right with me. It will not interfere with my chain of thought.

The CHAIRMAN. You may proceed.

Attorney General CLARK. Mr. Chairman, first let me thank and the committee for the opportunity to appear before you again. This committee, as I have stated in the past, is a committee that is very close to the hearts and minds of the Department of Justice and the personnel in the Department of Justice. We feel-and we are bragging when we say it-that it is our committee. In other words, we look upon this committee as being an arm, you might say, of our activities and of our duties and our functions. And for that reason it is always pleasant and always very helpful to be able to come here and to discuss with you the phases, and I think today one of the most important phases, of the functions of the Department of Justice.

Monopoly power, Mr. Chairman, is a problem that is transcendent, I think, to every person in America. I think it is a most important problem. In fact, I think it ranks along with the problems that we are faced with in foreign relations and that we are faced with in the defense of our country.

As a matter of fact, this problem, if solved, is one of our greatest defenses. It is one of our greatest defenses because one of the strongest elements of defense is a strong free competitive economy.

Our system, the American system, is based upon a strong free competitive economy. If we can keep our economy competitive, if we keep it free, we shall have a strong defense, we shall have a strong people, we shall have strong companies and a strong economy that can cope with the advancing problems that we are faced with throughout the world today.

On the other hand, Mr. Chairman, if we do not enforce the antitrust laws, if we do permit monopoly or monopolistic power to get a stronger hold upon our economy, then we will have what we call a personal or private regulation. We would be setting up, within our country and within our economy, private forces. It would not be necessary to have the Congress of the United States pass laws. They would pass their own laws and they would enforce their own laws. And that is one of the elements of monopoly power. That is one of the elements of restraint in trade. They set up private regulations that they go by, and they enforce those private regulations in a way that they deem is best for the economy of the country.

The bulwark of our system, I believe, therefore, is a free competitive economy. And it is most important that we see to it that that bulwark is protected.

power.

In our governmental system, we have a government of limited We speak of it very often. I know you hear it on the floor of the House practically every day, and the Senator from Wyoming hears it very often over across the hall.

We must likewise have limited power in our economy and in industry. We cannot permit the power of an industry to be placed in the hands of the few. If we do, we shall suffer the same penalties that we suffer if we permit the power in governmental affairs to be placed in the hands of a few people. That is why we have the system that we have today of the three branches of our great Government, the legislative branch, the judicial branch, and the executive branch.

And likewise in our economy, we must have an economy of limited power. By that I mean that the power in a definite industry, in a certain industry, must not be placed in the hands of a few people or of a few companies or organizations.

Now we hear much of equal opportunity, of equality; we hear much of equal rights; we hear much of being born free and equal. But I assure you, and I am sure all of you fully realize this, that there would be no such thing in reality unless we were able to create equal opportunity and keep the channels of opportunity open all during a man's life, all during the time in which he is attempting and is engaging in business activities.

The purpose of this committee in looking into this great problem of monopoly power, is one of the most important purposes that you could undertake, one of the most important undertakings that any committee of the Congress has inquired into. Because, as I have so often said, this problem is one of the most important problems that ever faced our country.

The problem of economic concentration is one that has worried not only the high executives of the Government, just as our great Presi

dent expressed it a few moments ago, in the letter your counsel read. He has been worried about the economic concentration. Legislative leaders have been worried about it. Businessmen have been worried about it. As a matter of fact during the war years some 17 out of every 100 business organizations, companies, corporations, partnerships, and the like, went out of existence. They disappeared-17 out of every 100.

Twenty-three percent of the workers that prior to the war were working for 95 percent of the corporations went over during the war and began working for the 5 percent of the corporations. In other words, 5 percent of the corporations obtained almost one-quarter of the workers that formerly worked for the 95 percent of the corporations in the United States.

I know that it is an amazing figure and one that has possibly been used many times, but less than one-half of 1 percent of the firms, companies, corporations, business organizations in America had about 75 percent of the defense contracts. Now, I do not say that in any critical way, because during the war it was necessary for us, in order to expedite production, to place contracts with those who were equipped at the time to carry them out, with those who had been versed in that particular line of activity. And so I do not say it in a critical way, but from a standpoint of monopoly power it is a very dangerous precedent, placing that many contracts over a long period of time with so few companies.

That is the reason why I think that your inquiry comes at a most important time. Up to this time we have been busily engaged in the usual problems that confront the country after a great war. Now your committee has a great opportunity to look into this concentration that comes with every war. It came after the last war. By going into it at this time and probing into the depths of what the causes of it are, and possibly coming up with some of the answers through legislative enactment, you will render this country and the world a great service.

It might be appropriate for me to tell you some of the implements that we in the Department of Justice have been using over a number of years in order to try to protect our free independent enterprise system.

The first one, as you all know, is the weapon of criminal prosecution. That involves presenting to a grand jury the facts that have been investigated and have been found to exist with reference to certain problems in the economic world.

The criminal weapon, I expect, was used to the greatest advantage during 1938 to 1941 in that period in which the antitrust division was headed by Thurman Arnold. During that time there were quite a number of criminal indictments returned, and a few criminal informations.

As you know, violating the Sherman Act is a misdemeanor, and, therefore, we can return an information. It is not often done. I believe during the last 2 or 3 years only one information has been returned.

The reason we have used the indictment method is because we believe the grand jury should pass upon these problems. If 23 men agree with us that there is ground for indictment, then an indictment should be voted.

We have followed that method ever since I have been Attorney General.

Most of our criminal indictments during the last 4 or 5 years have involved price-fixing operations, where some group have conspired together to fix the price of an item that they might manufacture.

The second means we have used is the injunctive method. In other words, we file a complaint and attempt to secure an injunction against the defendants, enjoining them from carrying on some of the practices. that have been carried on in the past.

I could give you quite a number of cases of that type, cases where injunctions have been obtained.

Take the Associated Press case, for example, 4 or 5 years ago. That was an injunction case enjoining the Associated Press from engaging in certain activities.

There are other cases of a similar nature. For example, right now we have out in Oregon a case against the Oregon Medical Association, somewhat similar to the case that was tried and prosecuted here in the District of Columbia several years ago.

Then we have a case in New York against the Investment Bankers Association which, I am sure, you have read about, an injunction case. We also have a case against the Railway Express Co. along the same lines.

Along with the injunction, we try to get other remedies.

Then we come to the most drastic remedy, as it has been described by those who are interested in the antitrust laws, of all of the remedies possible. That is the remedy of divestiture, the remedy of dissolution, the remedy of divorcement, as we call it. It has only been in the last few years I would say in the last 3 or 4 years that these last remedies have been used to the greatest advantage. We have found that, where there is monopoly power, a concentration of monopoly power, the only practicable way to attack it is by divestiture, by dissolution, or by divorcement. Those three means seem to be the most effective means that are possible to use in attacking this problem, particularly the problem of monopoly power.

We have filed quite a number of cases along that line. We have the du Pont case, which was just filed the other day. It is a case in which we attempt to secure a sale of stock owned by the du Ponts in certain corporations. Unlike some of the news stories on that case, it is not an attempt to force any dissolution of any corporations at all. There are only three companies, main companies, involved. First, there is the du Pont Co.-the paint company, the company that makes firearms, makes powder, and things of that kind-which we do not attempt to interfere with in the least in the case. Second, is the General Motors Corp., which engages in activities apart from the original endeavor of the du Ponts. Third, is the United States Rubber Co., which, again was entirely apart from the original activity of the du Ponts.

I give that just as an example and not to high light that case at all. Another case of a similar kind is the American Telephone & Telegraph Co. case. There, one of its subsidiaries is the manufacturer of its telephones and other equipment it uses. The attempt to divorce from the American Telephone & Telegraph Co. this subsidiary is the essence of the American Telephone & Telegraph case which is now pending in court.

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