Page images
PDF
EPUB

The CHAIRMAN. No.

Mr. PATMAN. That was corrected for the record.

If I were speaking solely from the armed services standpoint, and the military standpoint, I would approve this, just like the chairman. But there are more considerations in this than the military armed services. Economic questions are concerned.

The committee that had to do with the establishment and construction of these plants was a different committee from this committee. I am not bringing up any point to question this committee, or any other member, because there is not a member of this committee who probably doesn't have better judgment than I have.

But I am bringing up the question for the purpose of showing that the committee that established these plants, or under whose jurisdiction the plants were established, dealt with economic questions. Therefore, this committee has a greater responsibility in the question of disposal because it must necessarily consider those economic questions, and those are the questions I want to address myself briefly to. Mr. DURHAM. Well, Mr. Chairman

Mr. PATMAN. If I were looking at this

Mr. DURHAM. Would the gentleman yield at this point?

Mr. PATMAN. Sure.

Mr. DURHAM. This committee has not approved this yet. We are merely hearing it.

Mr. PATMAN. Yes.

Mr. DURHAM. He said we agreed with the chairman that we would adopt it just like it is.

Mr. PATMAN. The committee chairman said that yesterday.
Mr. DURHAM. Well-

Mr. PATMAN. He said that in his statement.

The CHAIRMAN. That is right.

Mr. PATMAN. Now, the good thing about this is that you are disposing of the plants to private industry. I am for it. We are all for the private-enterprise system. We want the profit system. We want to dispose of them. That part is good.

But how the bad outweighs the good is the fact that you destroy the competitive market in rubber, and you create a monopoly if this disposal plan is approved.

Those are the points that I want you to consider.

Now, the question of establishing these plants in the first place was a political question. In a democracy it is a political question.

The question of disposal of the plants is a political question.

I don't know-first, of course, it has already been done. But I didn't think that the question should be left up to three outsiders who were not elected by the people in a democracy, or who were not obligated to any person who was elected by the people. I didn't think that was the right thing to do.

The alternative I suggest to this plan is-and you will ask me for an alternative: That this committee and the comparable committee in the Senate, get together and negotiate, themselves, for the disposal of these plants because it is a political question, and when you get ready to report deal with small concerns, and if they are not able to supply the capital that is needed and necessary to make the purchase, recommend to Congress that the capital be supplied by the United States Government.

The CHAIRMAN. Wait 1 minute, Mr. Patman. Let me interrupt

you.

Then you suggest to us that the way to dispose of it--because you say you are in favor of disposing of it.

Mr. PATMAN. Beg pardon, sir?

The CHAIRMAN. You stated you are in favor of disposal of these plants, to put them in private industry. And you suggested an alternate approach to it, that the Armed Services Committee of the House, and the Banking and Currency Committee of the Senate, get together, open up negotiations, and try to dispose of them?

Mr. PATMAN. And give the little fellows an opportunity to buy these plants.

The CHAIRMAN. Well, now

Mr. PATMAN. They have not had an opportunity, Mr. Chairman. The CHAIRMAN. I wish you would point out wherein and in what instance a little operator has been denied the privilege of buying these big facilities?

Mr. PATMAN. Beg your pardon?

The CHAIRMAN. I wish you would point out in what instance a little operator, a small business, has been denied the privilege of bidding on these plants?

Mr. PATMAN. Well, No. 1, I think you required a $500,000 deposit. It would take a pretty good-sized concern to put up that amount of money.

The CHAIRMAN. And it takes a pretty good-sized corporation to run one of these plants.

Mr. PATMAN. That is right.

The CHAIRMAN. Because, as I visualize it, it is not in the sphere of small business. This is big business.

Mr. PATMAN. I know, but small businesses can own their source of supply, which is normally not a good thing. But in this instance it would be preferable to the monopolies owning it, and they are monopolies because they have control of the rubber supply.

The CHAIRMAN. There are 800 small fabricators throughout the United States.

Mr. PATMAN. Yes.

The CHAIRMAN. Did not these 800 have the opportunity if they saw fit to do so to organize corporations for the purpose of getting their end products?

Mr. PATMAN. They had no way of getting credit, Mr. Chairman. The CHAIRMAN. Oh, well.

Mr. PATMAN. No way of getting credit. You see, if they went to the banks they would wind up in New York because that is the only place they can get that much money. And around the board of directors at that table passing on the application would be directors in the rubber companies. They wouldn't have a chance.

If they went to the insurance companies, the only other place they would have an opportunity to get that kind of money, they would find on that same board of directors representatives of these big oil companies and rubber companies, and they wouldn't have a chance. And it requires available capital, Mr. Chairman, and this committee could make that possible if they were to negotiate the deals.

Mr. BROOKS. Will the gentleman yield, Mr. Chairman?
Mr. PATMAN. Glad to yield.

Mr. BROOKS. I want to ask you this: You complain about the deposit required of $500,000. What deposit would you recommend should be required?

Mr. PATMAN. Well, that part is not so material, Mr. Brooks.

Mr. BROOKS. Well

Mr. PATMAN. I mean from my standpoint, it is not so material. Mr. BROOKS. From your viewpoint?

Mr. PATMAN. Except I don't want it so high-that part they could probably comply with, if they had available capital.

Mr. BROOKS. From your viewpoint, though, would reducing the deposit make any difference on an overall purchase?

Mr. PATMAN. No; that is really not the problem.

Mr. BROOKS. That is our problem.

Mr. PATMAN. The problem is the unavailability of capital.
The CHAIRMAN. May I call-

Mr. PATMAN. You see, there is no place to get the money.

Now, in this morning's paper, the New York Times, that paper, we find an agency of this Government, wholly owned by this Government, with $1 billion capital stock provided by the Congress of the United States, is making a loan for a steel mill in Argentina of $60 million, and, in addition to that, it is making further loans along with the suppliers of the equipment and it will probably come out $100 million just on that 1 mill in Argentina.

Now, the point I am making is-I am not criticizing that. It is all right. I haven't a word to say in opposition to it, except to show in comparison that if we are able to spend so much money in helping other countries like Argentina in building a steel mill, why shouldn't we be able to help these little fellows buy some of these rubber plants to have a competitive rubber market in the United States?

The CHAIRMAN. Now

Mr. PATMAN. That is the point I am making, Mr. Chairman.

Mr. COLE. Mr. Chairman.

The CHAIRMAN. Mr. Cole.

Mr. COLE. I am not certain of the fact, but isn't it the fact that a number of small companies did organize and bid successfully for 1 or 2 of these plants?

The CHAIRMAN. The gentleman is correct. They organized what is called the American Synthetic Corp. And we will develop and show how many participated in organizing it.

Now, let us analyze what our able colleague has just said. He says we just reject this, and then pass whatever resolutions are necessary conferring on the Armed Services Committee and the Banking and Currency Committee the right and power to open negotiations. Then, if we find anyone who wants to participate that haven't the capital to participate, then some method be made by the Government to loan them the money.

Mr. PATMAN. In the bill

The CHAIRMAN. That is your provision

Mr. PATMAN. That is right.

The CHAIRMAN. that you are advocating before the committee? Mr. PATMAN. That is exactly right, Mr. Chairman.

The CHAIRMAN. And we would take the money out of the Treasury or organize some sale debentures or bonds and then we would loan it to these people who want to go in this business?

Mr. PATMAN. Well, the money wouldn't be a problem, Mr. Chair

man.

The CHAIRMAN. Now, why shouldn't we do that in every other enterprise, then?

Mr. PATMAN. There is a difference there.

The CHAIRMAN. Now, what is the difference?

Mr. PATMAN. The difference is that you are delivering lock, stock, and barrel the rubber industry of the United States to people who are known to have unconversational understandings about what they do.

The CHAIRMAN. I don't know anything about that. If you have any evidence of that the committee would be very glad to have you put it in the record.

Mr. PATMAN. I think the courts are filled with it, and the Federal Trade Commission. And I am not attacking them from that standpoint. They have all been doing it. But it is well known and recognized, and we know when we deliver it to them that they have a monopoly.

It is not just a question of 1 year, of $260 million. The $260 million is insignificant in comparison to the principle involved here, and the monopoly that will be created.

The price of raw rubber has been going up since a year ago. It was 223 cents 1 year ago. It has been increasing on the strength of the disposal of these plants because the people who were in the raw rubber business knew that when these plants became-were owned by the private industry in the United States, the price would increase up to raw rubber. Raw rubber went up to 38 cents.

Mr. DURHAM. But it has gone down to 30 and we are still in the negotiating stage.

Mr. PATMAN. Beg pardon?

Mr. DURHAM. It has gone down to 30, too, today.

Mr. PATMAN. It may be decided they are not too certain, after all; I don't know about it.

But, anyway, it went up to 38 cents. That is a 15-cent differential. Well, a 3-cent differential means $50 million a year. A 15-cent differential means $250 million a year. They can pay for these plants in 1 year by raising the price up to that 15-cent differential. And they would be allowed to do it.

There is nothing in this contract that would prohibit them from doing it. They can make it all back in 1 year, and continue their monopoly.

And another thing I want to invite your attention to, Mr. Chairman: The Attorney General rather cautiously approved this. If you will turn to page 32 of this statement of the Rubber Producing Facilities Disposal Commission, and read his letter, you will find that Mr. Brownell, the Attorney General, stated:

This is to advise you that on the basis of the information furnished to me by the Commission

that is the three members

I do not view the proposed dispositions as being in violation of the antitrust laws.

All right, the question is what information was presented to him. by the Commission? I think it would be well to find out, because

next year when something comes up and it is shown that this thing is not happening like you have thought, the Attorney General could say "Well, I didn't have any information on that. I told the committee that I was acting on the basis of the information that the three Commissioners furnished" to him. So that is rather a guarded and cautious statement of approval.

Now, let me briefly run through here, if you will, please.
Mr. DURHAM. Let's get back to the price

Mr. PATMAN. I just made some little notes.

Mr. DURHAM. Before you get away from the price.

Mr. PATMAN. Yes, sir.

Mr. DURHAM. Of course, you were talking about raw rubber, not synthetic rubber price?

Mr. PATMAN. That is right, in comparison to raw rubber.

Mr. DURHAM. What you are arguing, then, that the standard price of 23 cents under the Government at the present time will go up, say, in the 30-cent range or the 38-cent range; is that the point you are making?

Mr. PATMAN. Yes.

Mr. DURHAM. You think it will do that?

Mr. PATMAN. I certainly do, and more. Raw rubber price is liable to go to 80 cents a pound. There is nothing to stop it. You see, when they get together-you know Royal Dutch Shell is pretty close to other governments that have to do with raw rubber prices, and they are big as a mule in this thing.

Mr. DURHAM. How much raw rubber do you think we are going to consume next year-synthetic?

Mr. PATMAN. I don't know, but synthetics for some purposes, as the gentleman knows, is better than raw rubber in some instances.

Mr. DURHAM. Don't you realize that these plants can produce now more synthetic rubber than is required in the market?

Mr. PATMAN. Well, I know. I don't think you will have any problem there. When the people get these plants who are now bidding for them, you won't have any problem there.

The CHAIRMAN. Now, go ahead

Mr. PATMAN. They can get together better than the farmers can. Mr. COLE. Yes. Let's hear the rest of it and go on.

Mr. DURHAM. They haven't proved it yet.

The CHAIRMAN. Go ahead.

Mr. PATMAN. There is no buying here except from the big fellows. The little fellows are out in the cold. Money is unavailable to the little man to apply. The Small Business Administration only goes up to $150,000. Not enough to amount to anything in bidding on a rubber plant.

The private loan companies, of course like the banks and insurance companies, as I explained, are not going to make any loan for this purpose, for obvious and well-known reasons.

Under the plan as presented, the little man will have to depend upon this monopoly for a supply, or for his supplies. And they have their own outlets. They have their own outlets, I repeat. They are not interested particularly in just Tom, Dick, and Harry, and the little business. They are already tied up with other companies. They can put the price up, just like the price of aluminum was put up. And it will cost them something in one pocket, but if they will put it back

« PreviousContinue »