organizations of private enterprise in competition causes the Government, whether it really understands what it is doing or not, to break down the system of private investment and security by a series of attacks, direct or oblique.

The State's instinct of self-preservation causes it to view the more competent corporate organization of its citizens with envy and alarm. The sloth, untrustworthiness, and incompetence of government do not permit it to have or exercise creative talents, but it has authority and it has public money. These it can use to destroy. For illustration, we need look no farther than T. V. A. and what it is intended to do to the public utility corporations.

It is the savings of our people invested in corporate securities that provides for the development and expansion of business. If investors lack confidence and will not purchase the securities of industry, the investment bankers offering these securities to the public are unable to dispose of them because of the investors' unwillingness to buy. It is fear that is freezing our capital and capital markets. Increase that fear and you will bring the industrial and economic life of the Nation to its knees, its very life-strength so weakened that it will be a ready and easy victim of any new developments.

The women of the Nation will not exchange their present right to individual ownership of basic property rights for a tiny piece of a Federal license revocable at the will of some Federal commissioner appointed to office and not elected as a representative of the people.

Pass this legislation and I believe the women investors of the Nation will demand the return of their capital investments in corporate securities which will be affected by this measure and once more they will return to the old days of "sugar bowl hoarding." Gentlemen, we are serious in these declarations.

If you wish to protect the women of this Nation-and we believe. you do—we beg you to drop consideration of this Federal principle. You have asked repeatedly for a counter plan to aid the Nation in its recovery from the present slump. We believe we have one. Here it is:

1. Let Congress halt its investigation of the acts of industry and investigate its own acts which have been harmful to industry.

2. Declare a moratorium on all legislation harmful to industry. We believe that much legislation has been passed in the last several years that has provided brakes to the capitalistic system thereby restraining it from functioning normally.

3. We urge you to name a capable nonpartisan fact-finding committee to study these various laws and their effect upon our industrial and economic life in order to determine what ones are retarding the economic machinery, then repeal them at once.

Only in this way, we believe, will this repression of the natural forces of capitalism and private enterprise from which we are suffering today be corrected.

As the largest group of capitalists in the country we look to you to withdraw this Federal licensing bill and to devote your time and energies to a constructive program that will bring us out of our present repression while preserving for use the fundamental system of private enterprise provided for in our Constitution. The women of the country would wholeheartedly cooperate with you in such a program. Gentlemen, we appreciate your cooperation and consideration. [Applause.]

We would like the opportunity of adding for the record some additional statistics which might be of interest to you, and possibly several resolutions that will be short.

Senator O'MAHONEY. Make them short. We do not want to burden the record.

Miss CURTIS. I want to say again how much we appreciate your cooperation. We know how busy you are.

STATEMENT OF MRS. GLADYS B. STEWART, AVA, MO.

Senator O'MAHONEY. Mrs. Stewart, we will hear you now.

Mrs. STEWART. Mr. Chairman, I feel that I would not be justified in taking up the time of the committee. The two speakers who have just finished have covered the points I would have covered. I am sure I would not be able to add any knowledge to the

Senator O'MAHONEY. You might very easily do that.

Mrs. STEWART. These two ladies have brought out the points I had in mind if I said anything to the committee. I think it would be repetition for me to do it, and I do not think I would be justified in taking up your time.

Senator AUSTIN. In order to have the benefit of your background, do you endorse what they said?

Mrs. STEWART. Largely.

Senator AUSTIN. I would like to have the record show your residence. You are from Missouri?

Mrs. STEWART. Yes.

Senator O'MAHONEY. Of course, she would not wholly.

Senator AUSTIN. What is your town?

Mrs. STEWART. Ava, Douglas County.

Senator AUSTIN. Have you served on the judiciary of the State of Missouri?

Mrs. STEWART. I am a member of the State legislature judiciary committee.

Senator AUSTIN. Have you been a circuit judge in Missouri?
Mrs. STEWART. Yes.

Senator AUSTIN. You are now the only woman member of the Legislature of Missouri?

Mrs. STEWART. Yes.

Senator AUSTIN. And you have been assistant United States attorney?

Mrs. STEWART. Yes.

Senator O'MAHONEY. We would be very happy to let you make a statement, if you care to.

Mrs. STEWART. Thank you. I do not think I should take up your time, for the points I have in mind have already been covered.

Senator OMAHONEY. We would be very glad to have you point out the instances in which you disagree with the other witnesses. Mrs. STEWART. I do not think they would be important enough to justify taking up your time.

Senator O'MAHONEY. I want to make the public announcement that the committee will now recess until Thursday morning at 10:30, at which time two witnesses are expected to appear. With the testimony of those witnesses, the hearing will close, for the present, at least.

(Whereupon, at 4:30 p. m., a recess was taken until Thursday, March 24, 1938, at 10:30 a. m.)

FEDERAL LICENSING OF CORPORATIONS

THURSDAY, MARCH 24, 1938

UNITED STATES SENATE,

SUBCOMMITTEE OF THE COMMITTEE ON THE JUDICIARY, Washington, D. C. The committee met, pursuant to recess, in room 318, Senate Office Building, at 10:30 a. m., Senator Joseph C. O'Mahoney (chairman) presiding.

STATEMENT OF B. L. KNOWLES, ASSOCIATED GENERAL CONTRACTORS OF AMERICA

Senator O'MAHONEY. You may proceed, by first giving your name. Mr. KNOWLES. My name is B. L. Knowles. I am field engineer of the Associated General Contractors of America, a nonprofit association of general contractors who perform possibly in excess of 65 percent of all the contracting that is done by contractors in the United States. This statement is made in behalf of our managing director, Mr. Edward J. Harding.

The Associated General Contractors of America presents this statement in opposition to the bill, S. 3072, of course, because its members are vitally interested in any effect that its passage might possibly have upon the corporate structure of firms engaged in construction operations. The association's most serious concern, however, lies deeper than that; namely, in the disastrous effects that the enactment of this measure would in our opinion inevitably have upon the market for construction, and hence upon reemployment of labor and capital in private industry. That the Government has sought relief from the unemployment evil chiefly through the medium of construction is a well-known fact. Many of those high in the administration have repeatedly asserted that a revival of the construction industry through the investment of private capital would provide the most efficient means of effecting immediate reemployment. The very basic character of our industry and the tremendously widespread influence upon the nation of its propserity or lack thereof makes it most important to give careful consideration to the effect which the passage of any proposed legislation might have upon the construction market.

The members of this committee have frequently requested throughout these hearings that the witnesses manifest a cooperative spirit in the attempted solution of the problems which this measure is designed to bring about. That we may qualify as a cooperative witness, we should like to state that our association has from its very inception placed at the disposal of the Government and all its bureaus, departments, and commissions having any connection whatsoever with

the construction industry, all of its facilities. It has cooperated with these departments and bureaus to the fullest extent and we believe. we may state with all modesty that it enjoys the confidence and respect of these Government agencies.

Our association is made up chiefly of those contractors who have built and are building America, and we believe that the voice of this industry is important at this juncture.

Industrial expansion and construction is undertaken as a long-term investment. A merchant or a manufacturer must look a considerable distance into the future before he can wisely shape his course with reference to the expansion of his plant. He must give due consideration, of course, to the normal hazards of business; to the ordinary fluctuations in values and the economic adjustments which must necessarily be made from time to time in the conduct of his affairs. His aim, of course, is to utilize his plant in such a manner as to derive from it a reasonable return on his investment during its economic life. These considerations make his problem difficult enough, but if in addition he forsees years of certain uncertainty, an entire lack of assurance of immunity from destructive business baiting-if he envisions a host of entirely abnormal hazards which provide a constant threat to his very business existence, he will, of course, positively decline to give consideration to a program of expansion irrespective of any immediate needs therefor that may exist. That this bill will create that uncertainty, that it is bound to lead to business-baiting, and that it creates entirely abnormal and needless business hazards is thoroughly evident to us as we read the measure. What, then, will be the effect of the dark cloud of doubt and apprehension which will certainly spread over the business of this country should this legislation be enacted? What will be the result with respect to the country's most urgent problem, reemployment?

Our association makes surveys at more or less frequent intervals of the potential market for construction in its various fields. Such a survey was made a few months ago to determine the value of construction for mercantile and industrial purposes which might be expected to be put on the market within a year, under reasonably favorable business and credit conditions. We learned that undoubtedly the volume of this market is somewhat in excess of a billion dollars. I might say that this estimate is away below the normal expectation in that field.

It should be borne in mind that this does not include housing or public buildings. The award of contracts for this construction would mean an income to workers in the construction and allied industries of over $800,000,000. We include, of course, those workers engaged in the production of construction materials and equipment as well as those engaged immediately at the site of construction. To destroy this market, and we are certain that that would be the result of the enactment of this legislation, would simply mean that these workers would not receive this income, and if the passage of this and/or other legislation that imposes threatening onerous and restrictive regulations tending to hamper the development of industrial expansion be accomplished, the desire of the Administration to have the construction industry do its part in "taking up the slack" through the investment of private capital in construction projects, simply cannot be realized.

I would like to relate a little incident at this point out of my own experience. Less than 3 weeks ago I was talking to a New England manufacturer. My home is in Massachusetts. He employs in the vicinity of 500 skilled employees, men and women, and he has been contemplating for some time the expansion of his plant. He asked me about this bill and what I thought with respect to its being favorably reported.

In the course of our conversation he said:

I am planning an expansion program which may seem small to you, but it represents about $25,000 investment, and if it comes about it will cause me to employ about 150 more people and give jobs to a good many workers in the construction industry.

And he said:

If this bill should pass, I simply will not expand my plant.

Similar statements to that have been made to me by many manufacturers and industrialists.

Senator O'MAHONEY. On what do you think he based that fear? Mr. KNOWLES. I think that what I am going to say in my statement will clarify that point.

Senator O'MAHONEY. Very well.

Mr. KNOWLES. To go into a detailed discussion of the measure section by section, giving our objections, would be simply to restate much that has been most ably said by previous witnesses; therefore, we shall not attempt it.

To summarize, then, we wish to state that we are opposed to this bill because there is so much uncertainty in its language that it is bound to give rise to honest difference of opinion and uncertainty as to what constitutes "dishonest or fradulent trade practices and unfair methods of competition" as differentiated from legitimate business acumen and production efficiency.

We object to the bill because, so far as we know, no one has ever officially defined what constitutes monopoly in restraint of trade, and hence, industry, however well intentioned, would not have the slightest idea of what it might or might not legitimately do by way of development and expansion.

Senator O'MAHONEY. Would it cause you very much inconvenience if I should undertake to give the point of view of former President Taft with respect to monopoly?

Mr. KNOWLES. It would not disturb me in the least.

Senator O'MAHONEY. I think you may be interested in it. I think that the ladies here might be interested in it. Bear in mind that this is not a radical talking; this is William Howard Taft, President of the United States for 4 years and later Chief Justice of the United States. On January 7, 1910, he sent a message to Congress on Federal incorporation, in which he said:

There has been a marked tendency in business in this country for 40 years last past toward combination of capital and plant in manufacture, sale, and transportation. The moving causes have been several: First, it has rendered possible great economy; second, by a union of former competitors it has reduced the probability of excessive competition; and, third, if the combination has been extensive enough, and certain methods in the treatment of competitors and customers have been adopted, the combiners have secured a monopoly and complete control of prices or rates.

A combination successful in achieving complete control over a particular line of manufacture has frequently been called a trust. I presume that the deriva