Now, when they legalize the existing set-up, what happens? Does the Commission pass upon their rates? No. You transfer to the industry the power to pass upon its own rates.

And here is the way it is done: What comes up to the Commission? Let us take the Southern Freight Association. What comes up to the Commission are the articles of association, perhaps the bylaws of the association. And the Commission looks over those articles and bylaws to see whether they comply with their rules and regulations, and they do not find any restraints in there or any bad practices. So they approve them.

Then what happens? Does the Commission pass upon the transactions that they engage in? Not a bit of it. The only time that the matter comes up for consideration-that is, the practices under the agreement is when someone has the hardihood to complain, and then what happens? The Commission holds a hearing and says, “Well, now, boys, you have to stop doing this now." There is no recourse for anybody that has been injured; there is no remedy. The remedy is, "Do not do it in the future, boys." But there is no remedy for past damage. You transferred to the industry complete control over its

own rates.

And I say that in a very short time the industry will bypass the Commission. It must be so.

Mr. FORISTEL. Mr. Wiprud, I suppose we must then go further than the repeal of the Reed-Bulwinkle Act. In other words, we have to correct the circumstances which existed prior to its passage as well. Mr. WIPRUD. Mr. Foristel, why did not Congress wait until the Supreme Court acted? I will tell you why. The Supreme Court said, in the Georgia case, that the transportation industry was under a mandate to enter into agreements to fix joint rates. There was not any question about the Sherman Act there. Here were the carriers, end to end, a carrier operating to St. Louis and a western carrier beyond. They were under a mandate of Congress to fix a through rate that would facilitate commerce-that would not restrain commerce. But the Court said that the Interstate Commerce Act which Congress had passed, did not eliminate the emphasis on competition in rate making, and, within the zone of reasonableness, there must be competition, with the exception of these through rates; and they said, "We do not stop at this stage of the proceeding"-which is only a preliminary stage "to define the area of permissible collaboration in the making of joint rates."

Obviously, they could not. They had to wait for the evidence to come in. What were the practices of the industry? And, based upon those practices, the Supreme Court, in its final decision, would have delimited the area of permissible collaboration in making rates. But Congress did not wait. Congress passed the Reed-Bulwinkle Act. And now you have counsel for the defendants in the western caseand you will undoubtedly find them in the Georgia case-rushing in to say, "Congress has struck at the heart of these cases." And you heard what I read as to what the judge said, when Government counsel urged the statement of the chairman of the committee-the author of the bill-as to what his own bill meant.

So I say to you that you do not need any more legislation until the Supreme Court acts and defines what is the permissible area of

collaboration in joint rate making. In other words, the area that will facilitate commerce and not the area that will suppress commerce: that is the great point-and that was the great point we tried to make when we argued against the Reed-Bulwinkle Act.

So I would say, Mr. Foristel, that Congress, not only in the public interest, but to save private industry in public transportation, has got to repeal the Reed-Bulwinkle Act. There is no other course left for Congress to pursue. If you do not, you are hastening the day when there will be no private enterprise left in the industry.

Mr. BALLINGER. Under the Reed-Bulwinkle Act, the Interstate Commerce Commission has the power to approve a fixing of rates, if they think it is reasonable. Could you explain to the committee how they would apply the test of reasonableness to a set of rates passed up to them? Would there be any rates that they could apply?

Mr. WIPRUD. Yes. The Commission, over the years, of course, has passed upon rates, and found some to be unreasonably low because they are noncompensatory, and found some to be unreasonably high, in the light of the evidence before it. But whether a rate is reasonable or not, Mr. Ballinger, depends upon the evidence in the case. It is a factual thing. What is an unreasonably low rate for one railroad may not be for another. It depends upon many facts. And that is what you have created the Interstate Commerce Commission for. It was created as the expert body to protect us against those things, so that rates are not unreasonably high and not unreasonably low. You gave to Commission the minimum-rate power, the power to put a floor under rates, so that the railroads could not engage in destructive

rate wars.

The Commission has all the power it needs. There is not any question about it. It is just the frantic effort of the industry to free itself from two great antitrust suits, which, in the long run, would have saved enterprise in the industry. There is no question about it.

Mr. BALLINGER. You think that competition, then, would be a better method for establishing reasonable rates; that is, between the maximum and the minimum.

Mr. WIPRUD. Mr. Ballinger, competition within the framework of a regulatory act. We must realize that Congress has established a regulatory act here. And, as I have said, Congress has said that the carriers must enter into agreements here to fix joint through rates. They must do that. That facilitates commerce. There is no one, no responsible official, no responsible man that I have ever heard of, that is opposed to the industry doing those things that will promote commerce. But all these things, that I have testified to, suppress commerce. They hurt the railroad industry. They hurt everybodythe railroad industry, other forms of transportation, and the public too.

Mr. PATMAN. I would like to ask you one question.

On page 31, you state, in your prepared statement:

A similar situation arose in connection with cast-iron pipe used in the huge water-supply projects at Phoenix, Ariz., and the southern California metropolitan area. The larger pipe manufacturers obtained from the railroads reduced rates from their few producing points, while the smaller independent pipe manufacturers had to submit bids on basis of the higher commercial tariff rates. I presume you meant, by that, that the larger manufacturers sought and obtained what is known as commodity rates.

Mr. WIPRUD. That is correct.

Mr. PATMAN. Commodity rates. Well, why could not the smaller manufacturers obtain commodity rates, too?

Mr. WIPRUD. Well, I assume that they could, Mr. Congressman, except for the combination.

Mr. PATMAN. And the length of time it would take?
Mr. WIPRUD. Except for the combination.

Mr. PATMAN. You mean the combination between the large producers of pipe and the railroad companies?

Mr. WIPRUD. In the first instance, the combination between the railroad companies themselves; and then, of course, the relationship with the larger pipe companies that furnish them the larger traffic.

Mr. PATMAN. I wonder if there are any interlocking directorates between the makers of steel products and the cast iron pipe and the railroad companies; I mean, if there are many of them.

Mr. WIPRUD. I do not have that information before me. But I do think, when you speak about directors of railroads, that it is rather interesting to note that very few directors of any railroad own much of the stock of any railroad. It is an interesting commentary. And there are many interlocking directorates-I mean between railroad companies and large industries, large banks, large insurance companies. That is quite a study, Mr. Congressman, and a very interest

ing one.

Mr. PATMAN. If I am correctly informed, the commodity rate must be initiated by the carrier affected. Is that right?

Mr. WIPRUD. The carrier must initiate the rate.

Mr. PATMAN. He must initiate the commodity rate.
Mr. WIPRUD. That is right.

Mr. PATMAN. Well, now, if a director of a railroad was also a director of a pipe-manufacturing plant on the railroad, he would doubtless have a much better chance, a much better opportunity, to succeed in getting the reduced rate than the smaller man who did not have a directorate on the railroad; would be not?

Mr. WIPRUD. Yes.

Mr. PATMAN. It is just natural, perfectly natural, that he would. No other questions.

Mr. STEVENSON. I have no questions.

Mr. WIPRUD. In regard to those rates on iron pipe, Mr. Chairman, I stated that they were commodity rates. They are really what you call section 22 quotations, which permit the railroads to quote rates at less than commercial rates.

Mr. PATMAN. Those are really commodity rates; are they not? They are what are commonly and generally referred to as commodity

rates?

Mr. WIPRUD. In the nature of commodity rates.

Mr. STEVENSON. Again I want to thank you, Mr. Wiprud.

Mr. WIPRUD. Thank you, Mr. Chairman.

Mr. BALLINGER. Mr. Crosby Field?

Mr. Chairman, Mr. Crosby Field is appearing in a dual capacity before the committee. First of all, he is a distinguished inventor who has patented many successful products in his life. Secondly, he is a very distinguished engineer.

The first part of his talk is going to be devoted to the difficulties that the small inventor has in penetrating markets in the United States,

because of the existing concentration of economic power. It is his belief that technology is one of the mainsprings of capitalism, and that it is only by tearing down that which is obstructing progress and replacing it by better methods that we can expand commerce in general. He is going to give a demonstration of the situation which confronts a small man who has been battling for years to get patents into successful operation; and he will show how it is, where he has got them into successful operation, that he has not been very much the beneficiary. I think that first part of his testimony will be of great interest to the committee.

Mr. STEVENSON. I am sure it will, and we will be very glad to have Mr. Field come forth, and present his statement.

You may proceed, Mr. Field.

STATEMENT OF CROSBY FIELD, INVENTOR, ENGINEER, AND MANUFACTURER, BROOKLYN, N. Y.

Mr. FIELD. Thank you, sir.

My name is Crosby Field, and I live at 8029 Harbor View Terrace, Brooklyn 9, N. Y.

In getting permission to read my statement before you, Mr. Chairman, I was aware of the fact that there are two ways of presenting facts. One might be called the method of statistical summary, in which you gather in all of the information to be obtained from those in the same field, and the other might be the method of giving the results in detail of your own experience, your own experiments.

As I have had about a lifetime, 40 years, of experiment, I thought we might start with that.

In my statement, you may find that I mention by name large "orporations. I want to say right now that I have been treated very well so far as personal relations go by all of these large corporations, and I am not in any way a sorehead. They have treated me very beautifully, in accordance with the mores of the time.

For example, when I left one corporation they kept me on leave of absence for years, hoping that an arrangement could be formulated whereby I could be brought back later, retaining my seniority in that way. That was the General Electric Co.

Another large corporation agreed to pay me full salary for a year and a half after I left, hoping that I might change my mind. So I have no complaints from a personal viewpoint; but I certainly do from a viewpoint that I might call, although it is too much used a word, that of ideology.

I am appearing before you at the invitation of your economic counsel, Dr. Willis J. Ballinger, because of my experience in connection with my inventions, their patenting and exploitation. It may be of some help to your committee in considering the effects of our present patent system on small business.

I have applied for more than 100 United States Patents, substantially all of which have been on machines actually made and which, in many cases, have come into extensive commercial use. My first invention to be patented was conceived in 1908, patent for which issued in 1912. I endeavored to sell it and, although several of the manufacturers admitted its technical merit, because of the probable customer resistance none would buy it.

Mr. BALLINGER. Could you tell the committee what that patent was, and explain why it was that you could not sell it?

Mr. FIELD. This first patent was a safety signaling system for interurban trains and elevated trains. In those days they had gates operated by the conductors or trainmen which opened and closed manually; and the method of transmitting the signals to the motormen, or the locomotive driver-they still had locomotives in those days running on elevated lines-was such that accidents occurred frequently.

I invented something that everybody said would work very nicely, and I started to push it. I found that the only way I could get a hearing on the merits of it was to go to certain well-established railway supply houses. Finally, one of the men there took me aside and said: "Let's be frank about this. There are only two ways in which your invention will ever be accepted. The first would be to have it. made a requirement by the Interstate Commerce Commission. The second would be to have it pushed by an official of the railroad industry."

I thought that was rather a large order, and the invention was not pushed.

Shall I proceed?

Mr. STEVENSON. Go right ahead.

Mr. FIELD. This proved to be quite typical of several other experiences where I endeavored to sell single or isolated patents. The value of a single patent, covering an invention not already in production and sales, no matter how meritorius, is usually of little or no value when considered by itself.

I then entered the employment of the General Electric Co. as a salaried worker and in 2 years had developed some devices, one of which achieved a sales volume of several million dollars a year. This was the oxide film (OF) lightning arrester and, although I am informed it is no longer being made, you gentlemen probably have seen it as you travel by rail or car. It is to be found on electrical power stations and substations throughout the country and you can recognize it by the fact that its exterior comprises three piles of cubelike boxes with flared sides, usually painted one color. The highest salary I received from the General Electric Co. during this development was $18 a week, but I did receive an additional $1 for the assignment of this patent. Mr. BALLINGER. Could you explain to the committee why you left General Electric?

Mr. FIELD. I would say it was because of shock. The head of my department was a lovely gentleman. His name was Charles P. Steinmetz, and I had a great deal to do with him, as I was developing this work under his guidance. Dr. Steinmetz was a man whose relationship to those working for the General Electric Co. is hard to explain. He was a sort of father to the underdog. I got to know him best, perhaps, at our first Christmas dinner. We were a lot of young men away from home, and, as the custom was, we had a Christmas dinner at which Dr. Steinmetz presided. He told us the story of his first Christmas dinner away from home; how he, a political refugee from Germany, enjoyed his dinner, which was a loaf of bread shared by the occupants of his attic in Switzerland. The occupants were himself a violinist refugee, and a trained rat that they had developed.

Dr. Steinmetz was a man with whom one could get on very friendly terms. And after I had been working there about 2 years, I said to