Mr. Richberg recommended that some agency have authority in cases of administered prices, to forbid excessive prices, with an avenue of escape for business that voluntarily limited its power to a level where it could operate free of public regulation. Mr. Johnston, while deploring the necessity of more Government controls, was of the opinion that undesirable combinations must be handled case by case rather than by general legislation. He thought that a commission with power to accomplish the necessary splitting up would be the most practical way to avoid an excessive amount of regulation of the public-utility type. CONCLUSIONS Those who testified in this first series of hearings were generally in agreement that the antitrust laws are in need of reexamination. The motive of protecting not only free enterprise but free political institutions was stressed by one witness after another as peculiarly important in the present disturbed state of the world. The study of monopoly. power, proposed by the subcommittee, was again and again turned by the witnesses into a study of concentration of power, whether used for purposes now definitely illegal, or existing merely as an obstacle to new enterprise or free experimentation. The chairman, in issuing this summary of the most striking features of the testimony, expressed the hope that public consideration and comment, together with the results of further hearings, will serve to clarify the American policy on these vital questions. 96347-49-ser. 14, pt. 1- -2 DIGEST OF TESTIMONY [NOTE.-Marginal page number references refer to verbatim transcript of testimony, infra. No digest has been made of the report of the Federal Trade Commission presented to the committee on August 24, 1949.] HEARINGS, MONDAY, JULY 11, 1949 Introductory statement by Congressman Celler. Purpose of inquiry to discover if present laws adequate and if not to Need prompted by historical trend of monopoly to lead to Government Letter of President asking all Federal agencies to cooperate with STATEMENT OF TOM C. CLARK, ATTORNEY GENERAL Close relation of Judiciary Committee to Department of Justice. Importance of monopoly; first line of defense is a strong competitive and free economy. Concentration of power permits private control of the Nation. Government is one of limited powers; so too must our economy be one of decentralized and restricted powers, not placed in hands of a few. Seriousness of growing concentration shown by fact that during war 17 out of 100 corporations went out of existence. During war, 5 percent of the corporations took over one-fourth the working force that used to work for the remaining corporations and less than one-half of 1 percent of the firms in America garnered 75 percent of the defense contracts. This development is ominous and should be looked into. Antitrust remedies utilized by Department of Justice: (a) Criminal prosecution.-Used chiefly in price-fixing conspiracy cases. Can be done through grand jury or through information, as violation is a misdemeanor. Latter rare. (b) Injunctive relief.-Cases such as the Associated Press case and the present Investment Bankers case. (c) Divestiture.-Emphasized in past few years. Present Du Pont, American T. & T., and A & P cases. Defects in remedies, fines, jail sentences. Also, criminal case unsatisfactory because to obtain relief a civil suit must be filed as well. Department has not attacked bigness as such but only bigness when coupled with power to engage in certain unfair practices. Supreme Court has come close to declaring that power in and of itself is illegal (Tobacco case). Tobacco case was a criminal case; now negotiating to get a decree out STATEMENT OF TOM C. CLARK, ATTORNEY GENERAL Continued Small business needs the channels of trade open to new enterprise. Failure to have antitrust laws in Germany and Italy permitted the growth of business there until they, to solve their own problems, had to support a Hitler or a Mussolini. Best way to fight communism here is to create more opportunity and opening up business to smaller concerns. Present pattern of general law must be extended to meet the needs of our economy as it ad vances. Steps were begun by the TNEC. Out of 986 cases filed since passage of the Sherman Act, 508 have been filed within the last 10 years. Before 1934 only 6 to 10 lawyers were on antitrust work in the Department; today some 300. The appropriation of the Eightieth Congress for antitrust work totaled $3,400,000, which is more than ever before. Clark and Keating discuss Eightieth Congress and Reed-Bulwinkle Act. In 1949, 57 cases filed; in 1948, 34 cases filed; in 1949, 41 cases won by the Government. Standard Oil case. Congress has cooperated not only on appropriations but along many lines. Recent important cases included A & P case, Standard Oil of Cali- Preparing to try the Investment Bankers case in New York, and Other cases are Packer case in Chicago; A. T. & T. case. Small busi- Purpose of committee should include seeing how the present functions and aims of the Department can be strengthened. Investigation of causes of restraints would be helpful. Should repeal the ReedBulwinkle Act and amendment of section 7 of Clayton Act regarding buying of assets would prove beneficial. Department has also a merger unit. After the war three to five mergers a week called to their attention. They tried to prevent unhealthy concentration where possible. Columbia Steel case, sued unsuccessfully to prevent a merger. Suggests doubling the present penalty of $5,000 fine. Some people have suggested that persons convicted should not be permitted to serve as directors. A few jail sentences would be desirable, especially where there is strong evidence of price fixing, well known to be illegal. Department does not wish to discourage those trying to patent new inventions. Does attempt to prevent tie-in clauses, price fixing abetted by patents, etc. Abuses are being straightened out quite well now. Policy of Department to give advice to attorneys after which the Government, if it changed its opinion, would not bring a criminal proceeding but might bring a civil complaint. Clark & Michener discuss monopoly in the field of labor, and situation in Hawaii. Celler indicates that recommendations regarding labor legislation would perforce have to come from the Labor Committee. However, any other monopoly including labor may affect the development of industrial concentration. Clark points out the Allen-Bradley case illustrating conspiracy between labor and industry in which labor loses immunity from antitrust laws. Clark suggests that Government be authorized to sue for triple damages when injured by monopoly prices in its own purchases; but not in cases of injury to individuals. Concentration of wealth in few hands is getting worse. Reason for the increase despite successful prosecutions was chiefly the war. Large business leads to large labor and large Government. If the big cases can be taken care of, most of the smaller ones will straighten out. Sometimes divorcement is sought along with injunctive relief. STATEMENT OF TOM C. CLARK, ATTORNEY GENERAL Continued A clear price-fixing case where there is intent, is generally a criminal He cites one case where a criminal action was brought. Small business man contributes to advancement of society, and is an Many nations Economic concentration furnishes a fertile field for Communist doctrine. Monopoly is a tool of totalitarianism. TNEC warned that victory over the dictators might be lost at home by neglecting monopoly. Committee should study history and causes of economic concentration in United States and should see if forces supporting monopolistic trends here are also supporters of the cartels in Europe. Sherman Act has prevented concentration being further advanced than Cites figures of enforcement. See pages 77-79 above. Also trying to eliminate restraints in investment banking, and to Also won the A. & P. case and G. E. case. Heeding these examples, many firms in the United States refrain from engaging in certain practices. Deterrence is an effective remedy. Popular falacies regarding monopoly power are: 1. There is competition as long as there are two or three in the field. 2. Bigger the producer, the better quality of goods and cheaper price. 3. Bigness is achieved through meritorious accomplishments and better methods of production, etc. He doubts if these statements are usually correct; committee should investigate. STATEMENT OF SENATOR JOSEPH C. O'MAHONEY Recommends that committee read the Ferguson Report on decartelization in Germany. Committee pointed out two questions: 1. Cartel organizations used by Germany to dominate world trade. 2. Concentration of control of industry itself. Ruhr coal, iron, and steel industry is concentrated now. Army decided breaking it up would reduce production. |