SCHEDULE OF EXHIBITS-Continued Number and summary of exhibits 135. Copy of general license agreement, in book form, dated 136. Amendment of Feb. 9, 1925, of sec. 21, Joint Acquisi- 137. Agreement, made Feb. 2, 1931, amending sec. 22 of 138. General license agreement, dated July 1, 1932, between 1. General license, Hartford to Owens-Illinois, Oct. 1, 2. General license, Owens-Illinois to Hartford-Empire, 3. Suction inventions agreement, Oct. 1, 1935, be- 6. Consolidated Lehr agreement, Oct. 1, 1935, between Hartford-Empire and Owens-Illinois.. 142. Letter-dated Dec. 13, 1938, from G. S. Quay, vice president and secretary, Hazel-Atlas Glass Co., to C. L. Terril, Department of Justice, containing record of royalty payments between Hazel-Atlas Glass Co. and Hartford-Empire Co.-- 143. General feeder license agreement, dated Mar. 25, 1933, between Hartford-Empire Co. and Ball Brothers Co... 144. Copy of letter, dated Sept. 1, 1932, from J. H. McNash, Hazel-Atlas Glass Co., to W. E. Levis, president of Owens-Illinois Glass Co.. 145. Memorandum, dated Feb. 9, 1933, re Hartford-Empire Co.'s license to Hazel-Atlas Glass Co. to make fruit jars. 146. Memorandum, dated Dec. 13, 1930, from Henry W. Carter. vice president in charge of patent and license department, Hartford-Empire Co., to W. E. Levis, president, Owens-Illinois Glass Co., re general license agreement between Hartford-Empire and Owens-Illinois. 147. Letter, dated Aug. 17, 1933, from Roger M. Eldred of Hartford-Empire Co. to I. J. Collins, president of the Hocking Glass Co., Lancaster, Ohio, re sale of fruit jars148. Letter, dated Aug. 15, 1933, from F. C. Ball, president, Ball Bros. Co., Muncie, Ind., to R. M. Eldred of Hartford-Empire Co. re sale of packers ware sold by General Glass Co.; copy of an unsigned, undated letter re sale of Mason jars; and a letter, dated 8-5-33, from the Copps Co., wholesale grocers at Stevens Point, Wis., to Ball Bros. Co. at Muncie, Ind. re "packer" jar situation__On file with the committee. SCHEDULE OF EXHIBITS-Continued Number and summary of exhibits 149. Copy of letter, dated May 3, 1933, from F. C. Ball, presi- dent of Ball Bros. Co., to Goodwin Smith, president, Hartford-Empire Co., re sale of "Crack Shot" fruit jars made by the Three Rivers Glass Co... 150. Copy of an agreement, dated Aug. 23, 1933, between Hart- ford-Empire Co. and Lynch Corporation, a glass forming 151. Copy of a letter, dated Sept. 20, 1933, from Arthur T. Safford, Jr., secretary of Hartford-Empire Co., to T. G. Werbe, president of the Lynch Corporation, Anderson, 152. Amended agreement, dated Nov. 12, 1938, between Hart- ford-Empire Co. and the Lynch Corporation relating to patent rights applicable to glass forming machines. 153. Hartford-Empire analysis of financial statements.. 154. Letter, dated Feb. 1, 1936, from A. M. Pease of Hartford- Empire Co., to George E. Day, Detroit, Mich., re prop- osition for glass plant in Detroit.. 155. Copy of a letter, dated July 1, 1935, from W. A. Nester of Obear-Nester Glass Co., to T. C. Werbe, president of the Lynch Corporation, re furnishing of Lynch bottle 156. Copy of a letter, dated July 1, 1935, from T. C. Werbe, president of the Lynch Corporation, to W. A. Nester of Obear-Nester Glass Co., re price and shipment of Lynch 157. Copy of a letter, dated July 3, 1935, from W. A. Nester of Obear-Nester Glass Co., to T. C. Werbe, president of the Lynch Corporation, re taking out of license as pre- requisite to shipping of Lynch machine... 158. Copy of a letter, dated July 8, 1935, from T. C. Werbe, president of the Lynch Corporation, to W. A. Nester of Obear-Nester Glass Co., re requirement of forming ma- chine license to use Lynch machines. 159. Copy of a letter, dated Nov. 20, 1937, from Goodwin Smith of Hartford-Empire Co., to Amory Houghton, president of Corning Glass Works, re line of glassware 160. Contract between Owens-Illinois Glass Co. and Corning Glass Works, dated Oct. 28, 1938, for the formation of Owens-Corning Fiberglass Corporation.......... 161. Copy of a contract, dated Nov. 1, 1937, between Owens- Illinois Glass Co. and Societa Anonima Vetreria Bal- zaretti Modigliani, of Leghorn, Italy- 162. Letter, dated March 31, 1936, from R. D. Browns of Hart- ford-Empire Co., to T. C. Werbe of the Lynch Corpora- tion, re misinterpretation of license contract between Hartford-Empire and the Lynch Corporation. - 302. Automobile Manufacturers Association, Inc., statement of income and expense for year ended June 30, 1938, entered in record Feb. 28, 1939. 303. Letter, dated Jan. 9, 1939, from E. G. Ackerman of the 431. Memorandum, dated Feb. 21, 1939, from Lawrence C. INVESTIGATION OF CONCENTRATION OF ECONOMIC POWER MONDAY, DECEMBER 5, 1938 UNITED STATES SENATE, TEMPORARY NATIONAL ECONOMIC COMMITTEE, Washington, D. C. The committee met, pursuant to adjournment, at 10:50 a. m. on Saturday, December 3, 1938, in the caucus room, Senate Office Building, Senator Joseph C. O'Mahoney presiding. Present: Senators O'Mahoney (chairman), Borah, and King; Representatives Sumners and Reece; and Messrs. Arnold, Davis, Henderson, Patterson, Lubin, and Berge. Present also: Department of Justice staff for Temporary National Economic Committee study-counsel, H. B. Cox (Special Assistant to the Attorney General); Joseph Borkin, Ernest Meyers, Charles L. Terrel, Benedict Cottone, Willis Rice, George Dession, Fowler Hamilton, H. C. Engelbrecht, Victor H. Kramer, J. M. Henderson, Monroe Karasik, Irving Glickfeld, Hyman Ritchin, David Clarke, Norman Bursler, and Seymour Lewis; also chief counsel for Federal Trade Commission Temporary National Economic Committee study, George W. Williams. The CHAIRMAN. The meeting will please come to order. This morning we are beginning the formal proceedings under section 3 (b) of the resolution by which this committee was created. That section reads as follows: The Department of Justice, Department of the Treasury, Department of Labor, Department of Commerce, the Securities and Exchange Commission, and the Federal Trade Commission are directed to appear before the committee or its designee and present evidence by examination of witnesses or the introduction of documents and reports. The evidence presented by each of these agencies shall cover the subject matter of this inquiry which is within its administrative jurisdiction under existing law, or which may be assigned to such agencies by the committee. Each such agency is authorized to request the committee to issue such subpenas as such agency may require for the attendance of witnesses and the production of documents and reports. It will be observed from the reading of this section that it is within the jurisdiction of each of the departments to present its own case to the committee. The committee sits in judgment upon the evidence which is thus presented, and after the evidence has been presented the full committee will give consideration to the various facts which have been offered for study. This morning the Department of Justice, which, with the Department of Commerce, the Federal Trade Commission and other agencies has been studying the effect of patent policies of the Government upon industry, and the effect of the use of patents upon industry, will present the first of these formal hearings. I now call upon Mr. Thurman Arnold, member of the committee, who is the representative of the Department of Justice upon this committee, to explain what the purpose of the Department is this morning. STATEMENT OF THURMAN ARNOLD, ASSISTANT ATTORNEY GENERAL, UNITED STATES DEPARTMENT OF JUSTICE, WASHINGTON, D. C. Mr. ARNOLD. Mr. Chairman, I would like to make a statement for the record for the purpose of indicating the transition between the more general type of hearing which has just preceded and the more particular inquiries which the Department of Justice is about to commence. The hearing which follows will be presented by the Antitrust Division of the Department of Justice. Mr. Hugh Cox, special assistant to the Attorney General, will conduct the examination in chief. It will deal with the use of patents. In order to show the relationship of this hearing to the general introduction which has just been given by Mr. Lubin, Mr. Thorp, and Mr. Henderson, it is necessary to outline the traditional point of view of the Department of Justice, not as the point of view of any individuals, but as the attitude deriving from the character of the laws which it has administered for nearly 50 years. I shall start my explanation by recalling two statements of Mr. Lubin. He said that American industry could not rest its distribution system upon the 2.7 percent of American families whose income is $5,000 a year or more. He went further and said that American industry could not even rest its distribution system upon the 13 percent of families who get more than $2,500 a year, since they total less than the population of the State of New York. We cannot produce for a nation the size of America and limit our distribution to the population of a State. There, in a nutshell, is our distribution problem. The antitrust laws represent an approach to that problem based on the conviction that prices must be brought within the reach of purchasing power for free and independent enterprise to do the job. Mr. Lubin pointed out the tremendous revival of industry which would occur if the five and one-half million families not on relief whose incomes have been about $1,200 a year or less should receive only $2.25 a day more. Of course, there is more than one way of giving them that $2.25. Incomes may be raised by direct Government subsidy. Another method involves laws raising wages or, as in the case of farmers, the prices of goods they sell. A third is by lowering prices to bring industrial goods and services within the reach of purchasing power. There is no single method which should be rigidly perscribed; all may be useful in their places. As a matter of fact, if industry cannot bring its prices within the reach of purchasing power, it is difficult to see how industrial activity can be maintained without Government spending. The third method-that of increasing the distribution of goods through competitive prices-is the one upon which the antitrust laws lay emphasis. Therefore, it is that method which will be stressed in that part of the hearings presented by the Department of Justice. Before going further, I must emphasize two points: First. In this investigation the Department of Justice is working for this committee, and, while we plan to be complete and thorough, it must always be remembered that what we present always must be subject to further study by the committee. We do not profess to speak for the committee. Second. Because of the title of "Monopoly" often given this committee, there has arisen some confusion which has tended to confuse the work of the Department of Justice with that of the committee. Of course, the committee is not engaging in enforcement activities of any character. The Department is so engaged, but this work has no relation to the committee's program, except, of course, as the committee may desire to avail itself of our experience. The instruments by which the Antitrust Division seeks to accomplish its objectives are the antitrust laws. They emphasize decentralization. They have been customarily referred to as an antimonopoly policy. A more accurate description would be to call it a policy against such restraints of trade as unreasonably hamper the free flow of goods in commerce at competitive prices. It is based upon the assumption that free and independent enterprise is able to distribute goods with efficiency, provided that small groups without public responsibility are prevented from eliminating competition and exercising arbitrary power over prices and distribution. In pursuing these objectives, antitrust enforcement offers an outstanding advantage. That advantage is the fact that the traditional case-by-case method permits us to take up problems, industry by industry, and situation by situation. Mr. Thorp, in his testimony last Friday, vividly demonstrated the tremendous variation between industrial patterns. The problems of the building trades are not the problems of the movies. The solution of milk tells us nothing about problems of steel. Under the case-by-case procedure of the Department of Justice, each business practice may be examined with respect to the particular interest and individuals involved. The presentation by the Department must necessarily cover two fields: First, substantive antimonopoly laws; and, second, procedure and administration. The inquiry into the latter should logically be postponed until after the substantive problems have been explored, and only a brief mention of the scope of the procedural inquiry can be made at this time. It must include: (1) An examination into the deficiencies of administration, involving determination of the size and type of organization required for adequate enforcement; (2) An examination of how the case-by-case method may be utilized to clarify the antitrust laws with respect to individual businesses or geographic areas-to the end that each businessman may have the guide he has so often requested as to what concerted action is lawful in his own industry. Here we hope to find the answer to the questions most frequently asked of the Department: (a) What is a monopoly? (b) How may antimonopoly policy be so administered as not to interfere with industrial efficiency? and (c) How may scrambled eggs be unscrambled? (3) An examination of how observance of the antitrust laws by normally law-abiding businessmen may be obtained-those businessmen who now are so often compelled by the aggressive tactics of others to violate the law in order to survive; and (4) An examination of how the antitrust laws may have a constructive application, through consent decrees and systematic co |