Table, companion of industrial distribution of 200 largest Table, growth of large manufacturing corporations_ Table, working capital, sales, and profits of large manufac- NAM, basic principles of the United States patent system.. Statement of the law department, National Association of Manu- STUDY OF MONOPOLY POWER MONDAY, NOVEMBER 21, 1949 HOUSE OF REPRESENTATIVES, SPECIAL SUBCOMMITTEE ON THE STUDY OF MONOPOLY Washington, D. C. The special subcommittee met, pursuant to adjournment, at 10:05 a. m., in room 346, Old House Office Building, Hon. Emanuel Celler (chairman) presiding. Present: Representatives Celler (chairman), Bryson, and Keating. Also present: C. Murray Bernhardt, general counsel to the committee, and David Cushman Coyle, consultant. The CHAIRMAN. This meeting will come to order. Our first witness this morning is Mr. Herman W. Steinkraus, president of the Chamber of Commerce of the United States. Mr. Steinkraus, before you proceed, I would like to make a statement which will embody a number of questions which I hope that you will touch upon in your statement. I have not read your statement, although I understand it was submitted in advance, but too late for me to read it before this meeting. Mr. Steinkraus, we have had a considerable volume of testimony to the effect that competition is not working in a satisfactory way in this country. We have had testimony from representatives of the Federal Trade Commission that there is an undue concentration of control in various industries in a few hands, and the tendency is to have those controls go into fewer and fewer hands. We hear that in some lines raw materials have been monopolized. In others, we hear that big concerns have used power to control market outlets. We are told that, in financing, it often depends upon the good will of a small group in New York. Other witnesses have told us that various institutions, private and public, have put premiums on small business to sell out to big business, regardless of efficiency. Moreover, representatives of the Securities and Exchange Commission, during the course of our hearings, have told us that the Government back in the thirties, apprehensive of the growth of the empires built up by public-utility holding companies, secured congressional approval of the Public Utility Holding Company Act and, under that act, forced public-utility holding companies to divest themselves of operating companies; and after the divestitures-and these companies, operating as units, as they have since approximately 1935, contrary to the arguments made by the publicutility holding-company officials-the rates of gas and electricity were reduced to the consuming public; the value of the stock held by the stockholders of the individual companies was considerably increased, and the separate companies prospered. Therefore, we are wondering if there are not other industries, perhaps, which have grown to large dimensions, that could not well benefit from a somewhat similar treatment. This country, we are told, is doing well. I think we can all vouchsafe that, compared particularly to other countries. But it does seem that there are problems we need to understand, and I hope that in presenting your statement you will let us have the benefit of your views which you have gathered over the years in your capacity as the head of a large firm, and as the head of a very distinguished chamber of commerce, and that you will help us understand these complaints that have been made to us about the state of competition. There are some of us who have a feeling that some of our antitrust laws have not been kept up-to-date. The Sherman Act is 59 years old, and the Clayton Act is 35 years old. Perhaps those acts do not adequately meet the abuses that are prevalent, and we would like to know whether or not you can suggest some ways by which those laws might be kept current. Therefore, we welcome a man of your stature, who comes here today to help us in a problem which is as old as it is vexatious. We will be glad to hear you. STATEMENT OF HERMAN W. STEINKRAUS, PRESIDENT, CHAMBER OF COMMERCE OF THE UNITED STATES Mr. STEINKRAUS. My name is Herman W. Steinkraus. I am president of Bridgeport Brass Co., of Bridgeport, Conn. I am also president of the Chamber of Commerce of the United States, and appear before you today in behalf of the chamber to express our general views on competition and monopoly. Mr. Chairman, I wish to thank you for that statement. I recognize the importance of what you say as to the seriousness of this problem, and, as you so kindly permitted us to do, to postpone our appearance here in order to give it the most thorough study we could; and I hope that the presentation of the analysis of this problem may add someching to the thinking of you and your committee on this very important matter. If I may be permitted to do so, sir, and because it is a rather logical sequence of thinking, which might take about 25 or 30 minutes to present, if it would be agreeable to you, I would be happy to present my statement first, and then answer any questions or touch upon some of these other matters. The CHAIRMAN. I am sure that is agreeable to the committee. I want to present to you six points of view, or six different points: First, our support for competitive enterprise, which you naturally would expect. Second, the issue of "bigness." Third, the actual market competition. Fourth, whether the economy is getting more competitive. Fifth, whether freedom of entry is available. Sixth, and finally, a proposed yardstick by which the Government can measure the presence of monopolistic conditions. To earn public acceptance and, indeed, to survive as private business, American enterprise must remain competitive enterprise This is the established policy of the Chamber of Commerce of the United States. At our annual meeting last May, without a dissenting voice, the chamber adopted a policy statement which represents careful thought and firm conviction I believe your committee would be interested in examining it. I should like to quote the following excerpt: The Chamber of Commerce of the United States of America is wholeheartedly committed to private enterprise in preference to Government enterprise; to free enterprise in preference to controlled enterprise; and to competitive enterprise in preference to monopolistic enterprise. I have cited this policy declaration at the outset because I believe the members of this committee share with us a common desire to foster an atmosphere favorable to continued development of a healthy freeand competitive-enterprise economy. An essential requirement is the continued freedom of businessmen to compete. As we see it, the question at the very heart of this investigation is the concentration of economic power. More specifically, is the public interest adequately safeguarded against the abuse of economic power by any individual business or business combination? Where in this country do we find any business so free from competition as to have the power to jeopardize or abuse the public interest? Putting it another way, where do we find a business that can jeopardize or abuse the public interest without at the same time flying squarely in the face of its own self-interest? Some say that keeping our economy adequately competitive requires limiting the size of business establishments. Of course, if their diagnosis is correct, then all you have to do is limit size. Certainly, mere size is not something sacred in its own right. On the other hand, if that prescription is based on an unsound diagnosis, prohibiting or reversing the growth of business establishments will certainly do our economy great harm. The emergence and multiplication of big business establishments has been one aspect of the dynamic expansion of American business. The unrivaled gain in our people's material well-being is another. These large establishments are the symbols of growth among thousands of suppliers, employing millions of workers. They are symbols of growth among thousands of wholesalers and retailers, employing other millions. These suppliers and distributors and their millions of workers are like the limbs and leaves of a tree. On the one hand, a tree could not exist without them, and, on the other hand, if the tree is cut down all will die. While this is no proof that bigger and bigger means better and better, our country's actual experience has demonstrated that bigger and bigger certainly does not mean worse and worse. There is general agreement among judges, legislators, economists, and other students of the problem on one fact. It is that different industries may be much alike in terms of size statistics and be very different so far as intensity of competition is concerned. Or they may look |