(3) To prevent practices condemned in the Clayton Act as leading to monopoly; namely: (a) unlawful discriminations in price and use of illegal brokerage fees; (b) the furnishing of services and facilities to dealers and resellers not on proportionally equal terms; (c) exclusive dealing arrangements and tying contracts suppressive of competition; (d) unlawful merging or consolidation of competitors through acquisition of capital stock or assets of competing corporations; and (e) interlocking of directorates between competing corporations above a certain size (Clayton Act, secs. 2, 3, 7 and 8, as amended.

(4) To protect producers, manufacturers, distributors, and consumers from the unrevealed presence of substitutes and mixtures in manufactured wool products (Wool Products Labeling Act).

(5) To supervise the registration and operation of associations of American exporters engaged solely in export trade (Export Trade Act). (6) To petition for the cancellation of the registrations of trademarks which were illegally registered or which have been used for purposes contrary to the intent of the Trade-Mark Act of 1946 (Lanham Trade-Mark Act).

(7) To gather and make available to the Congress, the President, and the public, factual data concerning economic and business conditions as a basis for remedial legislation where needed, and for the guidance and protection of the public; also to investigate operation of antitrust decrees and upon application of the Attorney General to make recommendations for readjustment of corporate business for antitrust purposes (Federal Trade Commission Act, sec. 6).

These duties and responsibilities of the Commission stem from the specific acts of Congress which are listed in the margin. In general. these statutes, passed over the period from 1914 to date, are recognized as foundation stones upon which rests the structure erected for the protection of competitive enterprise.

From the brief summary above, it will be seen that the Commission has the duty of acting to prevent and to correct, in the vast field of American industry and trade, the use of business methods, practices, and commercial arrangements which corrupt, stifle, or impede competition. To keep competition free to function effectively, unencumbered and unhampered by combinations or methods which suppress it or pollute its channels by trade abuses which are tainted in fraud, deception, bad faith, or oppression may be said to be the all-pervading objective of this legislation and the operation of the Federal Trade Commission thereunder.

When our economic system of free enterprise is challenged, as it is today, by communism or other totalitarian systems, it is more important than ever to our Nation that we exercise an intensified vigilance and effective control over the methods, practices, and factors which undermine, burden, or dilute that system and render it less useful or less effective in serving the common good. Py so doing, we strengthen free enterprise; we enlarge its security against attacks; we increase its economic good, its capacity to support our freedom and the high standard of living which the American people enjoy. Scrupulous and unfettered competition is the basic element which has made our economic system one of superior productive capacity and a guiding light| to floundering peoples of the world.

The Federal Trade Commission has the task of carrying out these objectives which have been set by Congress, the duty of acting in the

public interest to keep the streams of commerce functioning on the basis of competition freed from the corroding effects of trade abuses. It is vital to our economy that adequate means be supplied for this mportant work devolving upon the Commission.

COMMISSION FUNCTIONS IN RELATION TO DEFENSE MOBILIZATION

Experience in the past clearly shows that conditions and developments arising in emergency mobilization present special dangers to the preservation of free competitive enterprise. Not only is this true in iation to the operation of business during the emergency period but also in relation to postemergency protection of competition against the etrenchment of private monopolistic power and dominating concentrations stemming from the emergency. In the circumstances the Commission, as an agency charged with the duty of protecting free competitive enterprise, has a greater need than normally for funds

ich are adequate to enable it to forestall and prevent the inception. and extension of factors by which private monopoly may become entrenched, small business restricted or snuffed out, and the competive system crippled.

The President well recognized the increased dangers to our comstive system which may be engendered in the emergency when he rected the defense agencies to consult the Commission in performing er functions under the Defense Production Act to the end that the gers may be minimized and for the purpose "of determining and, The extent consistent with the principal objectives of the act and whout impairing the defense effort, of eliminating any factors which ar tend to suppress competition unduly, create or strenthen monopes, injure small business, or otherwise promote undue concentration nomic power."

He said that the long-standing tendency toward economic concentration was accelerated during the last war and that "partial mobilizaon in the absence of protective measures, may again expose our omy to this threat and thereby imperil the very system we are ing to protect. In numerous provisions of the Defense Producon Act of 1950, the Congress indicated its concern over this danger to free competitive enterprise," (President's memorandum of Sepber 28, 1950.)

In addition to the emergency resulting in enlarged demands upon Commission's regular functions, we have the further task of Psg upon voluntary agreements and industry programs under the sons of section 708 of the Defense Production Act; also the duty ong surveys at the request of the Attorney General, as provided

section, for the purposes of determining factors which are al to competition or which promote undue concentration and into small enterprise. We are having to devote to these functions derable part of the time of top members of the Commission's and economic staff.

Functioning of the Commission under its several statutes is correated into what might, for convenience, be referred to as programs, wh I wish to refer to briefly.

ANTIMONOPOLY WORK

The national public policy as declared by Congress in antimonopoly legislation requires that adequate consideration be given to and action taken against monopolistic practices and that they be restrained and prevented, wherever possible, for the protection of competition and consumers. It is only through such action that preservation of a domestic economy based on a free and competitive enterprise can be assured. The national emergency with which we are now faced stems largely from our efforts to guarantee to the free peoples of the world an economy free from monopoly because personal liberty can exist only where there exists economic freedom. Such national emergency brings about shortages of production facilities at home. This enhances monopolistic tendencies because when materials are in short supply a tighter control over production facilities reflects itself in higher prices, sometimes to the extent of profiteering at the expense of the Government and the consumer. It is imperative, therefore, that we use our available resources in antimonopoly work to protect our domestic economy of a free and competitive enterprise system from the threats to it created by our efforts to defend ourselves and to protect the economy of other people.

PROBLEM IN CONNECTION WITH DEFENSE PROCUREMENT

Mr. THOMAS. Mr. Commissioner, may I interrupt you there? I have been reading over your justifications and I noticed that the statement you have just made was also in the justifications. Quite a bit of emphasis was put on it, and I think there is some truth in what you say; but, as a practical matter, what can the Federal Trade Commission do about it?

Mr. SPINGARN. What can the Federal Trade Commission do about resisting increased concentration of economic power?

Mr. THOMAS. During this time of mobilization, when the country is spending itself into bankruptcy preparing for war and the big industrial concerns getting the lion's share of the business, as a practical matter what can the Federal Trade Commission do about it? Mr. SPINGARN. There are a good many things it can do. I do not mean to suggest for a moment that the Federal Trade Commission has the whole answer to the problem, as, of course, it has not; but we will, on the one hand, be keeping competition open and free by proceeding against price-fixing conspiracies as we have done in the Big Steel case, for example. On the other hand, on the antideception side, we can do some good by making certain that substitute products necessary for life and health are not being misrepresented to the public.

Mr. THOMAS. The public is not the buyer; it is the Federal Government, and if the procuring agencies of the Government, or Army Ordnance, go over here and give General Motors, Henry Ford, or Chrysler the lion's share of the business, what can the Federal Trade Commission do about it? It is not selling its products to the public for public consumption. It is doing a selling job to the armed services.

Mr. SPINGARN. Perhaps one example might be the situation that has arisen out in Detroit recently where the Hardy subcommittee of

the House Expenditures Committee recently held some hearings. The information is still in the preliminary stage, but it seems to indicate that the manufacturers of automobile parts, possibly by agreement with the distributors, have either refrained from bidding on Government contracts or else have bid higher than do their own distributors to whom they sell, and the Hardy subcommittee has estimated that during the years 1949, 1950, and 1951 the Government has paid approximately $305,000,000 more for vehicle parts than it should have paid. Now, our Commission is investigating that situation now. After discussions with Mr. Charles Wilson, who is desperately anxious to get more iron and steel scrap out, we have begun an investigation of allegations of monopolistic practics in connection with the purchase of this scrap. If we make a case, we will not only strike a blow at monopoly but we may also make available more scrap for steel-making and Mr. Wilson has repeatedly and publicly stated that it is very badly needed. I do not know how these matters are going to turn out, but they seem to me examples of the sort of highly useful things that we will be able to do during this defense period.

Mr. THOMAS. A good many of us saw World War II come and go. Mr. SPINGARN. Yes.

Mг. THOMAS. What is going on now in the procurement field by the armed services is nothing but a repetition of what went on in World War II.

Mr. SPINGARN. Yes.

Mr. THOMAS. What did the Federal Trade Commission do in World War II about this problem?

Mr. SPINGARN. Well, unfortunately, World War II is not a very good example, as far as the Federal Trade Commission is concerned, because the Federal Trade Commission was virtually decimated during World War II.

Mr. THOMAS. I do not think that is true at all.

Mr. SPINGARN. It was cut in half, Mr. Chairman.

Mr. THOMAS. What did it do with that very trying problem you have alluded to in World War II? It did nothing in World War II, and we have every reason to expect that it will do the same thing in World War III.

Mr. SPINGARN. Another very important thing we can do is to make factual investigations, make economic investigations and reports which will show what the trends are and point out the danger spots so that Congress can act on those matters.

Mr. THOMAS. Well, in World War II in the field of procurement, the armed services did all the procurement, and nearly all material was pumped off to the Government. Whether that was through n or ignorance or lack of good material, still that was the case. I would certainly hate to think it was through design.

Mr. SPINGARN. Yes.

Mr. THOMAS. You seek to use this point in your justification for muing your efforts apparently during this period of strain and ss; and, frankly, I do not just understand the cogency of it in the of past experience.

Mr. SPINGARN. As far as World War II is concerned, the Comassion was cut in half during that period. It was struggling to barely pafloat. I would hope that, if the Commission were kept virgorous and aggressive during this period, it would be able to do a great deal more than it did during the World War II period.

93850-52-pt. 1————7

Mr. THOMAS. Just what could you do? When the country is mobilizing for war and the armed services under present conditions are taking 20 percent of the entire national production for the armed services, what can the Federal Trade Commission do within that area of 20 percent?

Mr. SPINGARN. Well, as I say, in the first place, we can keep abreast of the monoply trend and report promptly to the Congress, so that we can show you the danger spots in which action ought to be taken, and I would not underestimate the importance of that function, Mr. Chairman.

CONSULTATION WITH DEFENSE AGENCIES

The President has also directed that the defense agencies consult with us in connection with any problems that they may have in which the elimination of competition may be a necessary corollary of what they are doing, in order that we may advance ways and means of eliminating or minimizing the monopolistic effects of the contemplated action.

We have also the Defense Production Act, which provides that voluntary agreements among producers and others, production pools, for example, can be created as exemptions to the antitrust laws, but that they have to be cleared with the Attorney General and the Chairman of the Federal Trade Commission before they go into operation, so that, again, monopolistic effects can be eliminated or minimized. We have worked on a number of those. I think there is a great deal that we can do in that field. Mr. Edwards, would you care to add anything to that?

REPORTING FACTS AND TRENDS TO CONGRESS

Mr. EDWARDS. I would not care to add anything to that, but I might make a statement on the reporting of facts and trends, as to what we have done or are now doing. First, we made two reports for Senator Lyndon Johnson's committee upon facts tending to keep up prices of certain imported materials which were essential to the war effort; second, we have followed that up with a report on the operations of the international oil companies in the Near East which we regard as somewhat too delicate to be printed while the negotiations which are now on are under way, which has been made available to those people in the Federal Government who are making current decisions about petroleum policy; and I have heard from a number of them that its use is quite valuable.

Third, we have almost completed a report on iron ore which is designed to show the effect of the ore shortage and of the control of the ore supplies, old and new, upon the power of the companies in the steel industry to compete with one another.

Fourth, we are preparing a report on the concentration of steel consumption, designed to show whether or not small concerns in different fabricating industries in different parts of the country are suffering from a steel shortage.

It is Congress' problem rather than ours to determine how far those shortages are undesirable, and how far they can be remedied. We provide the information, just as I have stated.