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ENTRANCE OF GOVERNMENT INTO BUSINESS

TUESDAY, MAY 24, 1932

HOUSE OF REPRESENTATIVES,

COMMITTEE ON RULES,

Washington, D.C. The committee met at 10.30 o'clock a. m., Hon. Edward W. Pou (chairman) presiding.

The CHAIRMAN. Mr. Shannon, we will hear you now on House Resolution 214.

[H. Res. 214, Seventy-second Congress, first session]

RESOLUTION Whereas protests against the entrance of Government into business in direct and unfair competition with its citizens are being received from communities throughout the United States; and

Whereas under the unprecedented economic depression into which the business of the Nation has been precipitated, and under which the Nation is now suffering, there exists an immediate necessity for the curtailment of the tendency of the Government to engage in business in competition with private enterprise, and for the withdrawal by the Government from many of the fields in which such competition already exists; and

Whereas such competitive business activities of the Government may be abolished or restricted in scope without impairing the ordorly and necessary functions of Government; and

Whereas the following are some of the protests which have been received relative to the disastrous effects on private business of Government competition, to wit:

(1) The Chamber of Commerce of Kansas City, Missouri, by resolution adopted March 15, 1932, enters the following protest:

" The attention of the Chamber of Commerce of Kansas City, Missouri, repeatedly has been brought to instances of private industry's losses because of competition by the Government. A check up shows that the Government has entered into competition with private business, and even the professions, in an astoundingly large number of cases. The lines of private endeavor which have suffered by this governmental competition include grain, livestock, retailing, wholesaling, and manufacturing. Even in the professions the private citizen finds himself in many cases in competition with Government employees engaged in the same line of work.

"In times of prosperity American business was inclined to sleep on its rights and to continue paying ever-mounting taxes without going to the trouble of making its real feelings on the subject known. With the decline of business, not only have taxes become a burden increasingly hard to bear but private industry is suffering in an increasing measure from the effects of competition of the Government in many lines of business.

The Chamber of Commerce of Kansas City emphasizes the necessity of curtailment of the tendency of the Government to engage in business in competition with private enterprise, and of the withdrawal by the Government from many of the fields in which such competition already exists. This competition has had a serious effect upon the ability of private industry to pay taxes for the support of Government, and wherever possible we strongly urge that the Government withdraw from such competition.”

(2) Mr. Conrad H. Mann, president of the Chamber of Commerce of Kansas City, Missouri, under date of April 16, 1932, enters the following protest:

"I have been told by officials of responsible business concerns that the Post Office Department plans to provide facilities for a large cafeteria in the new post office now under construction.

" It is my feeling that the Government should go slowly in entering into the restaurant business. I am confident that a study of the local situation will show the there is no need for any facilities of this sort to be included in the new post office. If the tendency for the Government to go into business continues, as it has in the past, we will soon reach the point where there will be no private business to pay taxes for the support of the Government."

(3) The Laundryowners' National Association of the United States and Canada, by resolution adopted March 17, 1932, enters the following protest :

“ Whereas this board of directors has received letters from its members about the entrance of the Government into the laundry business and entering into unfair competition with laundry owners: Therefore be it

Resolved, That this board of directors be recorded as being actively opposed to the entrance of the Government in business in direct competition with its citizens who are paying taxes for the support of government; and be it further

Resolved, That this board of directors oppose the establishment of new laundries or laundry departments in competition with laundry owners; and be it further

"Resolved, That this board opposes the practice of Government laundries entering into unfair competition with laundry owners, and in some instances doing laundry work at prices that are below the established cost of production; and be it further

Resolred, That entrance of the Government into laundry business during the present economic period, when widespread unemployment is prevalent, will bring about further unemployment and hardship to our citizens : Therefore be it further

" Resolved, That the secretary of our association send a copy of this resolution to the President of the United States and to all Members of Congress."

(4) The Kansas City Restaurant Association, of Kansas City, Missouri, by resolution adopted April 14, 1932, enters the following protest :

“Whereas the restaurant operators of Kansas City, Missouri, are Federal taxpayers and contribute large sums of money toward the support of the Federal Government; and

"Whereas we, the undersigned, do oppose the further entrance of the United States Government into private businesses in direct competition to Federal taxpayers in any form; and

"Whereas the Kansas City Restaurant Association, after due consideration by its board of directors and after careful inquiry and investigation as to the restaurant facilities adjoining or closely adjacent to the new Kansas City Post Office Building now under erection, have found such facilities adequate to take care of any number of post-office employees additional to the approximately two hundred post-office employees now being cared for in the neighborhood of union station, and, therefore, of the new post-office building; and

"Whereas at least four members of the Kansas City Restaurant Association now operating restaurants in the neighborhood of the new post-office building give assurance that they will enlarge their facilities to accommodate any and all increase in patronage arising from the opening of new post-office building: Therefore be it

Resolved, That the Kansas City Restaurant Association, through its executive body, composed of its officers and directors, does hereby protest the opening of an employees' cafeteria in the new Kansas City Post Office Building; which cafeteria would make the United States Government a direct competitor in business to Federal taxpaying citizens now operating restaurants in the neighborhood of the new Kansas City Post Office Building.”

(5) The Chamber of Commerce of the United States of America, under date of April 18, 1932, enters the following protest :

“The Chamber of Commerce of the United States has an established policy in opposition to Government entry into business fields which can be successfully undertaken and conducted by private enterprise.

(6) The National Printer Journalist, of Springfield, Illinois, under date of April 28, 1932, enters the following protest :

"The newspapers of the entire United States are very much opposed to the United States Government being in the printing business and furnishing printed stamped envelopes to the public."

(7) Many protests are also being received against the activities of the Federal reserve bank in Kansas City, Missouri. The Federal Reserve Board was created by an act of Congress, and its building in Kansas City, Missouri, erected on Government land, is now competing with private enterprise by

renting office space and, also, by maintaining a restaurant on its nineteeth floor for its employees.

The Seventeenth Annual Report of the Federal Reserve Bank of Kansas City, for the year ended December 31, 1931, contains the following items under * Earnings” Income from rented space, 1930, $276,028.75; 1931, $261,649.

Surely, this gives rise to the question: Is this banking as intended by the Federal reserve act or property income in competition with taxpayers?

Further, the Kansas City Restaurant Association, of Kansas City, Missouri, by resolution adopted April 14, 1932, protests as follows:

“Whereas the restaurant operators of Kansas City, Missouri, are Federal taxpayers and contribute large sums of money toward the support of the Federal Government; and

" Whereas we, the undersigned, do oppose the operation of private businesses by the United States Government in direct competition to Federal taxpayers in any form; and

“Whereas the Federal reserve bank, located at Tenth and Grand Avenue, in the heart of the down-town business district of Kansas City, Missouri, now operates, and has for several years, a cafeteria which, we are informed, takes care of about six hundred Federal reserve bank employees, removing six hundred customers from becoming patrons of down-town restaurants operated by Federal taxpayers; and

" Whereas this Federal reserve cafeteria operates without the cost items of taxes and interest on privately invested capital and sells food at prices lower than taxpaying restaurant operators can sell it, thus putting into the minds of these six hundred employees that the restaurant operators' prices are unduly high: Therefore be it

"Resolved, That the Kansas City Restaurant Association, through its executive body, composed of its officers and directors, does hereby protest the maintenance of a cafeteria in the Federal reserve bank building at Kansas City, Missouri."

(8) Protests have further been made against a practice, which originated in the National Capital many years ago and is now spreading to Federal buildings in communities removed from the Capital, of employees of the Government organizing and buying, in lot, articles of merchandise and commodities of all descriptions, to the detriment of private enterprise. These groups of Government employees, functioning under the supervision of Government officials, in Federal buildings which supply space, heat, and light without cost to them, are destructive to dealers in trade: Therefore, be it

Resolved, That a committee to be composed of five Members of the House be appointed by the Speaker, and that said committee proceed immediately with an investigation of Government competition with private enterprise. The committee shall report to the House of Representatives not later than December 15, 1932, the results of its investigation, together with such recommendations for legislation as it deems advisable. Upon the filing of its report such committee shall cease to exist.

For the purposes of this resolution the committee is authorized to select a chairman and hold such hearings, to employ such experts and such clerical, stenographic, and other assistants, to require the attendance of such witnesses and the production of such books, papers, and documents, to take such testimony, to have such printing and binding done, and to make such expenditures as it deems necessary.

Can you conclude in 30 minutes! STATEMENTS OF HON. JOSEPH B. SHANNON, A REPRESENTATIVE

IN CONGRESS FROM THE STATE OF MISSOURI, AND JOHN CONKRITE

Mr. SHANNON. You bet. I want to say, Mr. Chairman, that since you let me have the hearing the other day I have been home. I attended a meeting out at our livestock exchange. There are 500 men there in distress, and every man there attributes his distressed condition in a business way to the Government interfering with their business. The Government combats them, engaging in the very business they are engaged in.

The little Chamber of Commerce of Leavenworth came to me and said, “ Shannon, please let us present our matter through you.”

I said, “Why not go to your Congressman in your district in Kansas?” They said, “We have, but we think Mr. Strong and Mr. Lamberton are in fear of the civic employees up there, 700 in number, who are engaged in carrying on business on Federal ground. They are all a part of this engagement in trade.”

Then I said, " You do not mean to say that they are to-day competing with the outside world?” They said, " That is what it is." Here is a man who has been engaged in business for 30 years, and they put him out of business. We have any number of them. This man I was talking to said, “ If Congress is blind, or indifferent to this call, this will continue, and our little town will pass on, due to the Government running places of business on Federal ground." I said, “What do you mean by that!” He said, “I mean Congress appropriated $40,000 two years ago to add to the post.” I said, " They do not do business with the public?” He said, “They do do business with the public.” He said “We can not do business with the public, but they do it in their own area.”

I said, "Do you mean to say I could go out there and buy goods at the post ? " They said, “ Yes, sir, you can; without a card or anything from somebody in charge, just walk right up and buy it." In that connection, not long ago my secretary was in Kansas City as a witness. I said, “ Could she go up there and get some of those things?” They said, “ Yes, right now, and go into the Government stores and just buy the goods." Then I said, under what head is this! When the Government functions they always have catch names. They call themselves a service-work company, or a welfarerecreation association. I said, this may be the same thing. I sent the young lady up there in an automobile. She does not live in Kansas City, and is not now even living in Missouri. To my amazement these men told me what she could get; they said she could get anything.

I said, “What do you mean?” They said that she could buy a furnace when she is up there, or a victrola, or anything else. I said, “She can not carry a victrola away with her.” When she came back she had an immense array of selections of articles which she had bought at a Government post. I do not know whether it is on account of the inclination of women to smoke, but her first purchase was of two packages of cigarettes.

Mr. Cox. At what price? Mr. SHANNON. Fifteen cents. Then one of the members of the Chamber of Commerce told her to go across the street and buy some packages of cigarettes there. She went across the street and bought some packages of cigarettes for 17 cents.

Mr. MARTIN. How much were they in the post ?

Mr. SHANNON. Fifteen cents. There is the United States of America making war on the sovereign States, the State of Kansas and the citizens of Kansas, who have to pay a State tax of 2 cents on every package of cigarettes, and now, within a distance of 30 or 40 miles of this post, you find people not encouraging private industry because they can go into a Government reservation and buy those things for 15 cents.

Mr. O'Connor. I thought Kansas did not permit the sale of cigarettes ?

Mr. Shaxxon. They have changed the law. You can not tell the difference between those bought on Government ground and those

bought outside. Then she moved along to the next place and she bought this [exhibiting] for which she paid 85 cents. Then she bought this collar and this tie [exhibiting).

Mr. O'Connor. Who is going to wear that!

Mr. SHANNON. In the name of God, if that is not tempting those soldiers, I do not know what it is, since they have changed their uniforms and gotten away from the old form of collar, if they have to wear one of those. Every one who knows anything about military matters knows that if that was worn by an officer on parade he would be court-martialed the next morning. Then she topped the thing off by buying this [exhibiting). I have not yet found out what sort of military necessity calls for this sort of thing to be sold in a Government office. I do not know what a soldier would want with it, unless it would be to deceive the enemy. Mr. MARTIN. Did they ask any questions before she bought it!

Mr. SHANNON. No questions under the sun. Just as these men said

Mr. O'CONNOR (interposing). Are the clerks all soldiers?

Mr. SHANNON. I have it in the statement of the chamber of com. merce that there is a captain in charge, with two or three sergeants, and two or three others, and two or three civilian employees.

Then they said, “If you do not believe the Government is doing this, let me show you." Here is a letter using the War Department letterhead, from the post exchange, addressed to the McBride Shoe Co.

Mr. BANKHEAD. Is that franked ?

Mr. SHANNON. Yes, sir. Here is the name at the head of it. It says, “ Command and General Staff School, Fort Leavenworth, Kans No. 136."

Then it says, “ Post Exchange," and then it drops a little further down. In the limited time I have, I will have to hurry along with it.

Then it says, “ Come to see Post Exchange specialties for Friday and Saturday.” Then it says, “ Fresh eggs, pure creamery butter, campfire marshmallows, turnips, radishes," and so on down the list including artichokes. Then we come to the meat market. There are hundreds of things.

Mr. BANKHEAD. Let me ask you this question. As I understand you, this is a circular letter that this post sends out to civilians, to the citizens in the town of Leavenworth?

Mr. Cox. Soliciting business.
Mr. SHANNON. Soliciting business.
Mr. Cox. Not to the dependents of officers and men!

Mr. SHANNON. Nothing to do with the Government. This is a bureau. We do not blame anybody except when we grow careless and turn it over to bureaus, and this is what will follow.

Nobody fears the man who has power but hesitates to use it. He is not a dangerous man. But we always fear the man who reaches out for power. That is what your bureaus have been doing

Quit talking about paternalism in government and talk about the things the people understand. The little fellow at home knows what is doing.

The next things listed in this list are those things in the meat markets-spring lamb, roast lambat prices that no butcher could sell them for in Leavenworth. I mention these so you can see what is going on.

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