Dr. BUSH. I hope ultimately, sir, that we will have both forms, that we will have permanently attached to the court of appeals scientific and technical advisers who will permanently be a part of the court, but that we will have in addition, particularly in the courts of first instance, individuals called as technical advisers to the court who are called for each case individually.

The CHAIRMAN. Mr. Dienner, that buzzer, of course, was the roll call in the Senate.

Representative SUMNERS. Why not hold it until there is something important and they call us over in the House.

The CHAIRMAN. In that event, we probably would be here all the time.

The CHAIRMAN. The committee will recess until 2 o'clock.

(Whereupon, at 12 noon, a recess was taken until 2 p. m. of the same day.)

AFTERNOON SESSION

The committee reconvened at 2:10 p. m. on the expiration of the

recess.

The CHAIRMAN. The committee will come to order.

Dr. Bush, I think that all members of the committee this morning were very much interested in the testimony which you gave. I know that speaking personally, I think it was one of the most interesting discussions of the patent question which has been presented to our committee and it stimulated a number of questions in my mind, some of which perhaps we might be able to pursue this afternoon very briefly.

You are aware, of course, that this committee is operating by virtue of a resolution which was adopted by both Houses and signed by the President, which directed us to do certain things. Among these was the direction that we should examine the effect of existing tax, patent, and other Government policies upon competition, upon price levels, unemployment, profits, and consumption.

VALUE OF PATENT SYSTEM IN REDUCING UNEMPLOYMENT

The CHAIRMAN. The part of the study with respect to the effect of patent law upon competition has already taken place and a hearing has been presented to this committee. It was demonstrated this morning that your experience has been so broad that I felt it would be very illuminating if you would give us briefly, perhaps, the benefit of your judgment with respect to the effect of the present patent policy upon unemployment.

May I say before you answer that as I conceive it, that is the preeminent problem before the people of the United States and indeed before the people of the world. We have a system which is operating very inefficiently. If we are to judge efficiency by the social security which it produces, our system does not produce social security.

What, then, can the patent system do, what does it do, with respect to unemployment? Would you care to give your views on that?

1 Public Resolution 113, 75th Cong. Previously entered in the record as "Exhibit No. 2," see Hearings, Part I, appendix, p. 192.

TESTIMONY OF VANNEVAR BUSH, PRESIDENT OF CARNEGIE INSTITUTION OF WASHINGTON, WASHINGTON, D. C.-Resumed

Dr. BUSH. The patent system was designed expressly to bring out new industries in this country, and by so doing to advance the useful arts and science, and of course by increasing industrial activity and providing new products to provide for new employment. And that it did very effectively, very effectively because we went to the point where we had the highest standard of living in the world. Today, in my opinion, it is not doing that with nearly the effectiveness that it ought to, and if it were truly effective in that regard I think many more new industries would have sprung up in this country in recent years and would have provided a considerable amount of employment. Now, that has not been the only factor, of course. You spoke a moment ago of the tax situation and its relationship to that problem, but from the standpoint of the patent system alone I feel sure that if it were operating smoothly and effectively so that the individual and the small group had better opportunity to bring out in this country new and desirable products, that the effect upon our unemployment situation would be very real.

The CHAIRMAN. What prevents the individual and the small group from realizing the potentialities of the system which was envisaged by the drafters of the Constitution who directed Congress to provide this patent system?

Dr. BUSH. Several things. I will draw on my own experience in that regard. I was one of a small group several times that were instrumental in organizing new companies, new industries, based on inventions, some 15 years ago. In my considered opinion, that same procedure would not operate today to produce the things that were then produced, given the same opportunity as far as the ideas themselves were concerned, first because it would be much more difficult, if not impossible, to secure the interest of men having funds which they could properly spend in speculative ventures in a new undertaking, where the risks are very large. Only men of large means can properly take the long shot that is involved, and men of large means today, with the taxation system that we have, are not inclined to take long risks, so that it would be very much more difficult to finance such an operation.

The CHAIRMAN. Would you want this committe to draw the inference that we should arrange our system now so that it would accommodate men of large means primarily rather than men of small means primarily?

Dr. BUSH. No, sir; so that it would accommodate both in combination, the man of large means and the man with an idea.

The CHAIRMAN. All right, but would you tie it to the opportunity of the wealthy man to invest his savings or would you tie it to the opportunity of the poor man, the individual, to attain proper development?

Dr. BUSH. I would tie it to both, for I think that only when you have the proper combination of the man with the good idea, the new thought, the new invention, and capital able and willing to enter into its development with it have you a combination which can produce new industries.

The CHAIRMAN. I judge from what you have said this morning and from what Commissioner Coe testified yesterday that the patent system as it now operates tends to restrict the opportunity of the individual.

Dr. BUSH. I feel that it does, and of the small group, and, incidentally, also of all those who use the patent system.

The CHAIRMAN. And in the recommendations which you have made as a member of this Advisory Committee, you have covered the field so far as your present studies have taken you?

Dr. BUSH. We made at that time three recommendations which we considered to be the three most important ones and a number of minor recommendations. I do not think that those would go the whole distance toward giving us a perfect system, but I think they would go a very long way toward improving it.

The CHAIRMAN. I glanced over this report by the Science Advisory Board,' and I found on page 29 this statement-it raises the same question which you raised at the very outset of your testimony this morning [reading from "Exhibit No. 206"]:

The frontiers have disappeared. No longer may a citizen break new ground beyond the horizon.

You refer there to a citizen being, I take it, the natural person.

But the opportunity for pioneering in the application of science to human need remains and calls for the same virtues of courage, independence, and perseverance. It still is possible to enter uncharted regions in industry and it is still hazardous to thus open new territory for the national welfare.

Now let me ask you there: Is it as easy for a citizen, a natural person, to penetrate these frontiers of science as it was for Daniel Boone and the geographical pioneers of our history to penetrate the geographical frontiers?

Dr. BUSH. I think the risks are quite comparable.

The CHAIRMAN. Is that your answer, taking into consideration also the accumulation of capital resources by large groups of individuals operating as groups?

Dr. BUSH. Taking into account the whole situation as I see it, I think the courage and resourcefulness called for today in a man who would break new ground in the industrial field, produce new companies, new products, for the benefit of the public, and the risks that he takes, are as great as the risks of any pioneer; and his reward ought to be commensurate with the risk that he takes.

The CHAIRMAN. Yes; but I have not made my question clear. You described to us this morning a system which is followed by the Massachusetts Institute of Technology. As I understood it, you described the collective effort of a staff of an institution of learning. Now, my own feeling is that staff working together can probably produce better results than the individuals working separately.

Dr. BUSH. Oh, yes; in certain fields very much better.

The CHAIRMAN. So that illustrates what has been developing through our society in the last 50 years, namely, collective effort in science and in economics, so the question proposes itself, as it were: Is the individual who operates outside of a collective group protected in our present system sufficiently?

1 See "Exhibit No. 206", appendix, p. 1139 at p. 1147. Supra, p. 877.

Dr. BUSH. In my opinion he is not, and I think the day of the pioneer is not past, the day of the individual inventor is not past, for fine as these cooperative groups may be and necessary as they are to our general progress in this country, they do not cover the entire field.

The CHAIRMAN. But the individual inventor as such is now under a handicap that in attempting to develop his invention he is forced to compete with collective groups.

Dr. BUSH. Oh, but he is always competing. He has difficulties of all sorts.

The CHAIRMAN. That may be, but this is a new sort of difficulty that he didn't compete with in the days when the patent system was initiated.

Dr. BUSH. Yes; I think today he merely has more artificial hazards which ought to be removed from his path because he has troubles enough anyway without taking into account the artificial ones.

NEED FOR SINGLE COURT OF PATENT APPEALS

The CHAIRMAN. Of course you have recommended, as the Commissioner of Patents has recommended, that there should be one single court of patent appeals. Now the primary argument which has been advanced to support that recommendation has been this: That the individual inventor is unable financially to follow a collective unit through the 10 circuits of the United States Courts of Appeals to establish the validity of his patent, and therefore is in danger of losing his patent to a collective group which is willing to seize the use of the patent and put the inventor to his remedy in the courts.

Dr. BUSH. Yes, and more generally the delays, burdens, costs of the present system, which I believe has grown to be unduly cumbersome, are a burden upon society at large, for they are a burden upon the progress of the new things which the country could use.

The CHAIRMAN. So that your recommendation with respect to improvement in the court system is designed to open the way for individual enterprise?

Dr. BUSH. Yes, sir.

The CHAIRMAN. And you recognize that individual enterprise is handicapped by the necessity now of competing with collective power of some kind or another?

Dr. BUSH. The individual small enterprise at the present time can go forward with surety only when it has in its hands patents of the validity of which it is sure, so that it can proceed. The present process for establishing without a doubt the validity of a patent is now altogether too cumbersome, and if it can be shortened new ventures can go forward with more assurance.

The CHAIRMAN. So now we have developed a realization of a certain amount of control of scientific development and invention by these collective groups which we may regard as private groups. With that in mind, I want to read the next paragraph in your report [reading from "Exhibit No. 206"]:1

There has been a powerful trend toward stronger Government control of large industry in recent years. Unfortunately this has resulted in many measures which have borne heavily and which have added artificial hazards to those naturally in the path of new ventures. Independence has been curtailed.

1 Appendix, p. 1139.

What did you have in mind when that paragraph was written? Dr. BUSH. I had in mind, and I think the committee as a whole had in mind, a number of things. I can illustrate by one thing, if you wish. I think the general procedure that has been adopted in this country in regard to the control of the issuance of new securities has been a desirable thing in order to protect the public. But along with that entire problem, an attempt to control and protect the public against the issuance of securities of no value, if you like, has come an additional burden upon new ventures, an additional cost, an additional amount of red tape in the furtherance of issuance of securities to the public for the financing of new affairs. That is one illustration. The CHAIRMAN. You don't mean to intimate to this committee that it would be a valuable exchange to abandon the control or supervision which is now being exercised over the issuance of securities in order to obtain this greater freedom of which you speak.

Dr. BUSH. Not at all, sir. I hope that the benefits may be maintained and the disadvantages mitigated as time goes on.

The CHAIRMAN. Have you any suggestions as to how that might be done?

Dr. BUSH. No, sir; not without taking more time than I ought to take on that subject.

The CHAIRMAN. Well, now, if, by taking a little time, you could do that, I think I can speak for the committee in saying we will be glad to have a memorandum from you on that point.

Dr. BUSH. I will be very glad to go to work on that some time. The CHAIRMAN. Because the more information we get the more likely we are to reach conclusions that will be publicly advantageous. This whole question of the effect of patents upon unemployment, as outlined in our resolution, raises in my mind the question of what the effect is of labor-saving devices. Have you any opinions about that?

Dr. BUSH. Yes. It happens that in my own experience I have had very little to do with inventions which were brought out explicitly for the purpose of saving labor. I have perhaps 30 United States patents. I don't think any one of those is directed to the saving of labor as a means for the production of profit, and I very seldom encounter the group that is attempting to invent for that explicit purpose.

More generally, the cheapening of a product through the saving of labor very often results in its increased use, as we all know, so that the mere saving of cost in that way, in the production of a product, does not necessarily mean a decrease in the aggregate of labor used in that particular field.

The general result of all invention and all patents has been, first, to cause temporary dislocations in labor, but, second and more important, to increase very largely the potential call for labor in the country as a whole.

The CHAIRMAN. We have a condition which might be described as a race between the labor-saving device upon the one hand and the new invention upon the other, creating new demands. Would that be a fairly accurate description?

Dr. BUSH. We have a race between the tendency of old industries always to produce their products with less labor and the advent of new industries which are capable of picking up that labor and labor in addition.