point out to you the direct relationship between effective enforcement of a law and adequate personnel and budget for its enforcement.

Even during the so-called trust-busting days of Theodore Roosevelt, a period which until about 10 years ago had reached the high-water mark of anti-trustlaw enforcement, there were only six lawyers assigned to the enforcement of this law. At the present time the Antitrust Division has almost 300 lawyers. We have received generous support from Congress, and this support is reflected in the results.

That antitrust enforcement is in direct proportion to the money allocated for it has been demonstrated by the record of the Antitrust Division during the past 2 years. During fiscal year 1948 we filed 34 antitrust cases. For the fiscal year 1949 we received an increase in our appropriation of approximately $1,000,000 and were thus able to file 57 antitrust cases, many of which are among the most important cases ever prosecuted under the antitrust laws.

Through the first 50 years of the antitrust laws, in other words, up until 1940, 479 antitrust actions were instituted by the Government. In the last 10 years, from 1940 to date, 508 cases have been filed. In other words, more antitrust actions have been brought in the last 10 years than were brought in the entire preceding 50 years.

You will be interested to know that our attention has been especially directed at the huge concentrations of economic power that threaten the economic democ racy of this country. The heart of our antimonopoly program is the protection of the businessman and the consumer through the dispersion of monopoly power where it already exists, and the dissipation of restraints of trade that lead to that monopoly power.

The restraints of trade-price fixing, patent and trade-mark abuses, cartels—. are being attacked by seeking court injunctions which assure the end of such restraints, or by invoking the criminal penalties authorized by the Sherman Act. When monopoly power actually is present and competition cannot be restored by less drastic methods, that power must be dissipated and rendered impotent. This can be accomplished only by the application of the remedies of divestiture, dissolution, or divorcement.

These remedies do not have as their aim the destruction of an industry. On the contrary, their aim is to restore active and vigorous competition to an industry that has become, in effect, under such centralized control as to have substantially eliminated any real competition. In seeking to split up monopoly power, it is the policy of the Antitrust Division to have each of the parts remain a strong, independent enterprise, capable of competing and of holding its own in the struggle for business.

We are proceeding actively with our actions to break up the aluminum monopoly; open up the channels of trade in the shoe machinery industry and break up the combines and integrations found in the movie industry.

During 1949 we have brought action to compel the divorcement of American Telephone & Telegraph and its manufacturing subsidiary, Western Electric, which manufactures over 90 percent of all telephones, telephone apparatus, and equipment sold in the United States. The suit further calls for the break-up of Western Electric itself into three competing concerns.

Another pending case is the investment banking case in which we are seeking to eliminate a variety of restraints which have stifled competition in that field. We have also instituted an action against the four major meat packers in which we seek to restore competition to the industry by dividing these defendants into 14 separate and competing companies.

Only 10 days ago we filed what we consider one of the most important cases in the history of the Sherman Act when we instituted action to bring to an end the integration between three of the giants in their respective fields, namely, du Pont, General Motors, and United States Rubber Co.

I could name many other examples in which we are currently attacking the monopolistic concentrations that threaten this country.

These are big cases. They will take time to try. It will cost money to try them. But they are of tremendous importance and significance to the welfare of this country. The issue in each is whether the economy of the United States shall come under the control of the few or whether it shall remain under the control of the many, operating democratically through the laws of competition.

The number of cases filed does not tell the whole story. During the fiscal year which ended on June 30, the Antitrust Division won 41 cases in the courts. Among these were the case against the Standard Oil of California in which the Supreme Court held to be illegal exclusive dealing contracts which the company

had with some 6,000 independent filling station operators; the criminal case in which the court of appeals held that A & P had abused its monopoly power; and the General Electric case in which a district court held that company together with two others had a monopoly of the incandescent lamp business in the United States.

I do not want to suggest that the effectiveness of the antitrust laws is to be found solely in the cases prosecuted, any more than the effectiveness of a law against burglary is to be determined by the number of burglars who are apprehended and jailed. Like an iceberg, the antitrust laws are seven-eighths under water. For every case in which an individual violates the law and is punished for it, there are hundreds of cases in which individuals who might otherwise engage in certain practices refrain from doing so because they are against the law. There are many others who amend their practices to conform to the law as it is developed through our cases.

There is no way, of course, of evaluating the benefit to our economy from this aspect of antitrust law enforcement. We are ever vigilant to keep the channels of trade open so that every citizen may have the opportunity to enter the business of his choice without being subjected to an economic blackjack.

As a believer in democracy, I am greatly concerned by these current trends toward concentration and the increasing threats of monopoly. I am taken aback by the equanimity with which too many persons view these serious threats. It may be that they do not realize the seriousness of the situation. If that is so, this committee can perform a great service by letting the country know that it is, indeed, serious. Or it may be that the great majority of the people, including many in public life, are the victims of three assumptions-assumptions which, I am afraid, are as commonly held as they are erroneous.

First, it is too often assumed that competition continues to thrive as long as there are at least two or three or four in the field. As I have indicated, in my opinion, this is not so.

Secondly, it is assumed that the bigger the producer the better the quality of goods and the cheaper the price to the public.

Thirdly, it is assumed that companies become big because they deserve to be big; in other words, that they outdistance their competitors because they do a better job, render greater service, or furnish better goods.

It may be that in some instances these assumptions are correct. Personally, I doubt if this is often true. In any event, this committee will have made a great contribution to the understanding of our economy if it can examine these matters and let the country know the truth.

It would be premature for me, at the outset of your investigation, to discuss in detail the suggestions that I might have or others might make, for legislation to implement the antitrust laws. Later on, you may desire to have the Department of Justice go into this phase of your investigation.

I wish to emphasize again the great service that your committee can render to this country by examining thoroughly the operation of the antitrust laws with particular reference to how they may be further strengthened. I shall follow your investigation with the greatest interest.

I know the American people are equally concerned. The long-run welfare of this country will be very much in your hands during the next several weeks. I am being neither flattering nor overoptimistic when I say that I believe these difficult problems are in safe hands and that the responsibilities which your committee will shoulder--and they are, I am sure you will agree, great responsibilities will be discharged well.

The CHAIRMAN. Our next witness will be the distinguished Senator from Wyoming, Senator O'Mahoney.

I wish to state at the outset that we are very grateful, Senator, for your coming here this morning to enlighten us on this subject.

STATEMENT OF HON. JOSEPH C. O'MAHONEY, UNITED STATES SENATOR FROM THE STATE OF WYOMING

Senator O'MAHONEY. Mr. Chairman, I want to say that in my opinion this committee has tackled the biggest question in the world. By fostering of economic freedom we may prevent wars and regain the peace of the world, in my opinion.

If I were to suggest how this committee might approach its problem, I should recommend that each member obtain and read the so-called Ferguson report, which reviewed the' decartelization program in Germany.

Army Secretary Royall last year appointed a special committee headed by Commissioner Ferguson of the Federal Trade Commission to go to Germany and study the progress of the breaking up of the cartels and concentration in German industry. That committee was appointed because it was recognized that modern war is industrial, and that the control of modern industrial production is also the control of war. The committee filed a most interesting report. It has been examined by the Department of the Army, and recently Assistant Secretary Tracy S. Voorhees has filed his views on the Ferguson report with the Secretary. Mr. Voorhees pointed out that there were two questions: First, the question of the cartel organization by which German industry sought to dominate the trade of the world in the first instance and by which Hitler, having taken over the organization of industry, sought to dominate the world politically. And secondly, the problem raised by the concentration of control of industry itself. It is pointed out in this report that the iron, coal, and steel industry of the Ruhr is concentrated now. The Department of the Army was faced with this problem: Having broken up the cartels, should they proceed to break up the concentration of economic power in the Ruhr. It was decided not to do that, at least immediately, because it was felt that to break up that concentration of the coal, iron, and steel industry would reduce the ability of Germany to produce and thereby prolong the period our occupation would have to continue, and prolong the period during which United States production would be supporting the German economy.

I suggest a study of this because it will give you the outlines of the picture that faces the whole world. If free people are to fight and overcome the collectivism which results in arbitrary government power, it has got to be done here in the United States, because unless the citizens of the United States, and particularly those of us who happen for a time to be in Congress, realize that modern industry has produced collectivism and that our job is to organize this collectivist economy of ours so as to maintain the power of the people to control it in their individual capacity, we shall have great difficulty in preventing the continued growth of big government.

Now let me give you one or two examples of what I mean. These things come upon us almost unawares.

The Congress of the United States passed the Atomic Energy Act in 1946. It created the Atomic Energy Commission and gave to that Commission, a Government agency, a monopoly over atomic power. Because the judgment of Congress was that atomic energy was too important to trust to private hands, it was concluded that the people must control it through their Government. So we set up this Atomic Energy Commission and set up the Joint Committee on Atomic Energy to watch the Commission.

Then the Commission undertook to carry out its duties of making the atom bomb and developing the peaceful uses of atomic energy.

One of the most striking aspects of this is that the Atomic Energy Commission, which is a Government management organization, in order to build these plants made contracts with private management

organizations. Take the great Hanford plant at Hanford, Wash. A contract was made between the Atomic Energy Commission and the General Electric Co. which is a private management organization. The General Electric Co. under that contract has built the plant, The original construction contract was made during the war with du Pont. Du Pont got out of it because du Pont did not want to be in the limelight making bombs. The du Pont Co. had a surfeit of being called the "merchants of death" so du Pont got out and General Electric stepped in. Now General Electric with its managerial government from the top is making the bombs and managing the plan for the managerial government organization.

That is one type of management that we have in the modern world. Take the case of the oil industry. As members of the Judiciary Committee you will recall the famous antitrust suit many years ago against the Standard Oil Trust, as it was then called. Chief Justice White handed down that decision, and the Standard Oil Co. was broken up, There sprang up in its place almost a dozen other companies each of which is larger than the original Standard Co.

But over in Saudi Arabia and Mesopotamia, we now have four American companies: the Standard of California, the Texas Oil Co.-both operating in Saudi Arabia-the Standard of New Jersey and Socony Vacuum. Through a subsidiary organization, too complicated to describe in detail now, they control the biggest deposit of petroleum in the world, and in controlling it and producing it and managing it, they are in effect partners with Government.

The British Government, the old French Government, and the Dutch all had control of the Near East petroleum before our people went in. The American companies, before they went in, came to Washington and consulted the State Department. The State Department, in effect, through Secretary Hughes, suggested it would be advisable for them to go in because if they did not do so, the control of this foreign source of petroleum would all be in the hands of Britain. But my point is that these great petroleum corporations which sit down at the bargaining table with Government have taken on the aspects of the power of Government.

Do not misunderstand me. They are doing a grand job over there. The Aramco Co., which developed the Saudi Arabian oil, has already produced in Saudi Arabia a very great social advance. Arabians, who before the oil was discovered were just the normal desert nomads, now have steady employment, and this is a statistical fact, the Ara bians working for Aramco are 15 pounds heavier on the average than the Arabs were when the company first began its operation.

So I give you these two illustrations to show what I mean by the managerial aspect in government and in business.

Your own experience is such that you know that these managers function in the same way in both government and business. During the war, because modern war is an industrial enterprise, it became necessary for the Government to call upon some of the best industrial managers in the United States. The president of General Electric, Mr. Wilson, was one of the most able and efficient managers of the War Production Board. To win the war we, as a government, had to adopt the managerial policy toward production and industry. To win the peace we are probably doing much the same, because peace like war is a problem of production and of distribution.

Our great dilemma now is to establish the rules under which the American ideal of popular sovereignty in an order of both economic freedom and political freedom can be maintained. Attorney General Clark referred to the fact that the people of Europe turned to Mussolini and Hitler because of the failure of their economic institutions. That is quite true. When the individual citizens of Italy and of Germany were unable to support themselves because the privately managed economy did not give them an opportunity, because cartel organizations and monopolies had built up fences, so to speak, which excluded from opportunity all but those that the monopoly was able to use, Hitler and Mussolini, each in his own way, said to the people, "Give me the power and I will see that you get a job." And so the cartel system, the industrial monopoly system, led directly to the totalitarian system in government.

Now let us not deceive ourselves. Let us not think that such a thing cannot possibly happen here. That would be a great mistake.

What is the cause of communism? The cause of communism is the fact that in the modern world the proletariat has been brought into existence. The proletariat is composed of human beings who do not have economic freedom. And if they do not have economic freedom even in a country like Great Britain, where political freedom, of course, is guaranteed, the pressures rise constantly to create the totalitarian state. So you have the Socialist state in Great Britain as a result of the fact that in the modern world individuals are unable to preserve their opportunity against the huge organizations which are necessary to carry on modern industry.

Personally I do not believe that this question can be solved by antitrust alone. I support antitrust appropriations. I applaud the work that the Department of Justice and the Federal Trade Commission are doing, but it is not sufficient.

I remember one of the first of the large cases that I ever learned anything about was when I was a young man, secretary to Senator Kendrick, back in 1918 or 1919. A great outcry arose then against the packers. Two things resulted from that: One of them was a lawsuit and the other was the Packers and Stockyards Act. President Harding signed the act which gave to the Secretary of Agriculture more power to regiment an industry than was ever given before or since to any official of government. The lawsuit was filed, the case was clear, a consent decree was entered. But when the actual terms of the dissolution were to be carried out, then the fight began. Twenty years and six months elapsed from the date on which the original decree was entered until the matter was finally settled. And now again, Attorney General Clark tells us, we are bringing suit alleging monopolistic practices against the packers.

So I say, Mr. Chairman and gentlemen of the committee, the problem is not in my judgment to be settled by antitrust laws alone. It can only be settled by a recognition of the conditions that exist, of the change which has been brought about in organized economy by modern technological and social developments.

When I was a young man discussions about the problems of labor were always talked of as the problems of labor and capital. Now they are talked about as the problems of labor and management. Why? Because the modern corporation, the corporation which gives character to our modern economy, is managed by a group altogether