This was one of the major steps that the court took.

The second step was to enter a judgment that the necessary competitive conditions called for by law had not been established. The judgment recites that the execution of the Government's aluminum disposal program, together with Alcoa's acts in aid of that program has not wholly overcome the effect of the monopolization, that there was and I now use the words of the court

no well-founded assurance that in future years competitive conditions of an effective and lawful nature will prevail in the domestic aluminum industry— and that in order further to promote the establishment of such conditions in such manner as will give assurance that they will prevail, Alcoa and the individual defendants who owned stock in the Canadian company should dispose of that stock.

With respect to the Government's request for divestiture of plants and properties of Alcoa the court said of this in its judgment, that this request is presently denied, but-and this is of utmost importance jurisdiction was reserved by the court for 5 years from the adoption of the stock-disposal plan within which period, if conditions so warrant, the Government may apply to the courts for further and more complete relief.

Mr. SHEEHAN. Was this Judge Knox's opinion?

Mr. EMMERGLICK. This was Judge Knox.

Mr. SHEEHAN. He refused the Government's contention to split it up as of the present time?

Mr. EMMERGLICK. He said presently this will be denied, but I will retain jurisdiction for 5 years I am paraphrasing what he saidbut I will retain jurisdiction for 5 years, to see how this stock divestiture works. Maybe the Canadian company will become a formidable enough competitor in the United States to clear up what yet remains to be done to establish competitive conditions. Maybe it will not. We have only had a short period in which to review the operations of Reynolds and Kaiser as integrated producers. I cannot let go the jurisdiction of this court. I must see how, over a period of 5 years, this stock divestiture works.

If it does not work, the Government can come back and have further and more complete relief. This was in essence what the judge said. Mr. SHEEHAN. He is holding the opinion or the final approval on the opinion until January 1956, when he has to decide it?

Mr. EMMERGLICK. The 5-year reservation of jurisdiction expires on January 16, 1956, but this is a 5-year reservation of a right for the Government to apply to the court for further and more complete relief.

Mr. ARNOLD. Aside from the divestiture in the Canadian corporation, did the court also want to determine whether perhaps in relation to our own primary producers, Reynolds, Kaiser, and Alcoa, they themselves would become more competitive? Is that a part of the court's reasoning?

Mr. EMMERGLICK. The court definitely wanted to see whether as between themselves the primary producers would become more competitive and whether Kaiser and Reynolds would grow in strength and in market position in relation to Alcoa. This was one of the important things in the court's mind as indicated in his opinion; definitely so. In embarking on this relief program, in what might be

called a first effort to see if competitive conditions could be established without divesting Alcoa of properties, the court indicated that there was need to observe the progress of the industry for another 5 years. As I said, the operations of Reynolds and Kaiser as full-fledged producers were observable for a relatively short time. The court had before it figures for 1947-48 and one-half of 1949, but in 1947 neither Reynolds nor Kaiser had wholly in operation the entire complement of plants which each acquired from the Government. They were still acquiring and putting plants into operation.

So the court felt that there had not elapsed an adequate time to judge, from experience of competitive operations as full-fledged integrated producers, the progress of the industry.

The ink was hardly dry on the court's opinion when the hostilities in Korea broke out. These were followed by a vast expansion of our domestic industry with Government assistance of many sorts. And this expansion was in turn followed by metal controls and by price controls, so that if we look back to the 5 years which have elapsed since the court entered its judgment, I think we will find without any question that we have had scarcely a continuous period of many months of what might be called normal peacetime conditions in which to appraise the operations of the industry.

Immediately after Judge Knox' decision, the operations of the industry became completely artificial in that the size of the industry was more than doubled by Government-sponsored expansion programs. Metal supplies and prices came under Government control.

So that what Judge Knox looked forward to has not been realized— a period of 5 years from which conclusions might reasonably be drawn. as to the effectiveness of competition, free competition in this industry.

Mr. SHEEHAN. This is your opinion now. The judge eventually has to make that ruling sometime in January; does he not?

Mr. EMMERGLICK. I cannot speak for anybody but myself, Mr. Sheehan.

Mr. YATES. It is also true that it is a possible determination for this subcommittee and our full committee, too, in this sense as to whether or not, on the basis of the testimony which is offered before us, there should be a recommendation to the Attorney General to move the court to continue jurisdiction, which is one of the reasons that we are taking this testimony.

Mr. SHEEHAN. Mr. Chairman, I am no attorney; I am not a lawyer, but I was always under the impression that when the courts have a decision to be made that they are supposed to make the decision themselves on the basis of the evidence as they see it. And for us, even as a congressional committee, to sit here and tell the court what decision it should make in January, not being an attorney, I do not think that is within our jurisdiction.

Mr. YATES. That is not quite what I said. I said that one of the questions we have to determine is whether we should recommend to the Attorney General

Mr. SHEEHAN. It is out of the hands of the Attorney General now. It is in the hands of the court.

Mr. YATES. It is in the hands of the court retaining jurisdiction of the parties. The Government of the United States is one of the parties to the suit. The Government is represented by the Attorney

General. I feel sure that the Attorney General would want to know the conclusions of this committee if it so decided as to whether or not the jurisdiction, the continuing jurisdiction, should be moved. I am not saying that we are going to the court. I am saying, as a result of this hearing-and we can come to an opposite conclusion— we can come to the conclusion that we should not participate in it at all. We are now in the process of taking testimony to determine whether or not we would feel that it would be in the best interests of the American economy to recommend to the Attorney General that he move the court for a continuation of jurisdiction over Alcoa, in order to determine whether or not the competitive condition-in order to determine whether or not the jurisdiction should be continued to give the court a chance to observe the operation of the three primary producers under normal competitive conditions.

Mr. SHEEHAN. Is the Attorney General in the position of being able to go into court in January?

Mr. YATES. Yes; he can go in at any time; can he not?

Mr. EMMERGLICK. May I endeavor to clarify that? The judgment provision that I referred to is a retention of jurisdiction granting the Government the right to apply to the court within 5 years from January 1951 for further and more complete relief. If the Department of Justice does nothing, the reserved jurisdiction will come to an end automatically. The judge has to do nothing on his own initiative. The moving party must be the Department of Justice. Mr. YATES. That is one of the things that we have to consider in the course of these hearings.

Proceed.

Mr. EMMERGLICK. The doubling of the productive capacity of the industry by Government-sponsored expansion programs, which have now become known as two rounds of expansion, has resulted in introducing not a single new producer presently in production. Practically 100 percent of the productive capacity for smelting aluminum has been distributed in the Government expansion program to the same three producers, Alcoa, Reynolds, and Kaiser.

I heard members of the committee speaking this morning of a Big Three. There is no Big Three. There are only three. A Big Three suggests that there are some smaller producers. There are only three. This emphasizes the fact that this is, as I put it before, a most intensly concentrated industry. The concentration which existed in 1950 has been intensified by distributing practically 100 percent of the new Government-sponsored, Government-aided expansion capacity, by distributing that to the same 3 producers.

Mr. SHEEHAN. But the Government has made that distribution? Mr. EMMERGLICK. Yes, it has.

Mr. YATES. The document to which Mr. Sheehan referred before respecting our discussion on integration has in its summary and conclusions on page 19 in the first paragraph, subparagraph 1, the

statement:

There are now 3 major domestic producers instead of 1, and there will be 6 producers in 1954.

You have just stated that there are only three producers at the present time.

Mr. EMMERGLICK. Yes. Now, there is a small producer coming along with a plant, Anaconda Copper Co., which will account for 3 percent of the total industry capacity to smelt aluminum.

Mr. YATES. There were not six in 1954?

Mr. EMMERGLICK. There were not 6; there are not 6 today; and there is no present prospect for any more.

Mr. SHEEHAN. Isn't the Olin Industries supposed to start operating in New York?

Mr. EMMERGLICK. No, Olin was one of the candidates along with many others for participation in a third round of expansion which the Government abandoned some time ago. When this report was written there was in existence on paper a third-round program, and it was hoped that two new producers would be introduced into the industry. That hope has not been realized. The Government has abandoned its third-round expansion program. All that has been accomplished in broadening the base of the industry, in the whole process of doubling it in size with Government assistance, has been to provide in Anaconda productive capacity representing 3 percent of the total capacity which will get into operation. It is expected late this year.

Mr. YATES. Is this the fourth producer to which you referred earlier?

Mr. EMMERGLICK. Yes.

Now, the value of that producer to the small-business man engaged in this industry may be gathered from the fact that Anaconda's plans are to use all of its production in its own fabricating activities. Anaconda is not expecting to be a seller of primary aluminum, or of primary aluminum fabrications.

Mr. YATES. IS Anaconda receiving any Government assistance in connection with its organization?

Mr. EMMERGLICK. Anaconda did receive some Government assistance. I can't recall all of the forms of the Government assistance that Anaconda received. Accelerated amortization was one. Whether there were any others, I am not able to recall.

Mr. ARNOLD. Mr. Emmerglick, does Harvey Aluminum have a contract with Anaconda for any of the supply from Anaconda's new plant?

Mr. EMMERGLICK. I am not clear as to the relation between Harvey and Anaconda. I have a recollection that some kind of contractual arrangement was made for supply of aluminum to Harvey when the decision was reached by Anaconda to become a smelter.

I can't recall the terms or the nature of the arrangement, just that there is some kind of arrangement.

Mr. ARNOLD. We can verify that later from Harvey Aluminum. Mr. DALMAS. With respect to Anaconda, that is Anaconda Copper & Wire Co.?

Mr. EMMERGLICK. Yes.

Mr. DALMAS. And probably all of their production would go into transmission wire, is that correct?

Mr. EMMERGLICK. Yes.

Mr. DALMAS. Of which there has been a continuing shortage over a great many years?

Mr. EMMERGLICK. Yes. Aluminum has been competing with copper and taking a good deal of the business away from copper for that purpose and other purposes.

Mr. DALMAS. Thank you.

Mr. EMMERGLICK. Now, a third round of expansion, as I have said, was planned. While efforts were being made to introduce new producers into the industry to bring about the broadening of the industrial base and a more assured supply of metal for small users of aluminum who do not have their own smelting facilities, while this was going on, Alcoa entered into a contract with the Canadian company-which we call Limited-for the sale to Alcoa of 1,200 million pounds of metal over a period of 6 years.

Now, in the course of

Mr. YATES. Where was that to go?

Mr. EMMERGLICK. From the Canadian company to Alcoa.

You will recall that I said that Judge Knox wanted to separate the Canadian company from Alcoa and put an end to the ties between the two companies which existed by reason of the common-stock ownership. In the course of his decision, in pointing out why it was desirable to completely separate Alcoa from the Canadian company, the judge called attention to a long-term contract which existed between the Canadian company and Alcoa between 1947 and 1950.

This was a 3-year contract for the sale of 300 million pounds of metal by the Canadian company to Alcoa.

Judge Knox criticized that contract and pointed out that arrangements of that sort ought not to exist between these two companies or be repeated in the future.

We come down, then, to about a year and a half ago, and Alcoa entered into a contract with the Canadian company to buy over a period of 6 years a billion two hundred million pounds of primary aluminum.

Mr. SHEEHAN. Mr. Emmerglick, what relationship does that bear to our production?

Mr. EMMERGLICK. A billion two hundred million pounds to our production?

Mr. SHEEHAN. To the United States production.

Mr. EMMERGLICK. Well, I have the figures here. We produced in March of this year 130,000 tons, which was an all-time high for United States production.

Mr. SHEEHAN. So this would be practically a year's American production split over 6 years' time?

Mr. EMMERGLICK. Well, it would be a very significant quantity of metal spread over a period of 6 years.

Mr. SHEEHAN. A very large quantity of metal?

Mr. EMMERGLICK. Yes. What it did, obviously, was to create a long-term intimate relationship between these two companies.

Well now, feeling that this contract should be canceled, the Government filed a petition, using this reserved jurisdiction, which came in very handy-filed a petition to have it canceled.

Mr. YATES. Why?

Mr. EMMERGLICK. On two grounds. In the first place, the Government asserted that it was action which, so to speak, flew in the face of what Judge Knox had ordered. Judge Knox said these two companies should be separated. He had criticized the 300 million 3-year