Gambar halaman
PDF
ePub

The CHAIRMAN. Splendid. Thank you very much.
Secretary MATTHEWS. Thank you very much.

The CHAIRMAN. This meeting will be adjourned now and we will hear Secretary of Agriculture Brannan on Monday morning at 10 o'clock.

(Whereupon, at 11 a. m., the special committee adjourned, to reconvene at 10 a. m., Monday, July 18, 1949.)

(The following matter was submitted for the record :)

Hon. EMANUEL CELLER,

NAVY DEPARTMENT, Washington, August 29, 1949.

Chairman, Committee on the Judiciary, House of Representatives. DEAR MR. CHAIRMAN: During my testimony on July 15, 1949, in connection with the hearings on monopoly power which your committee is conducting, a number of questions were asked, concerning which I requested an opportunity to have appropriate studies made in order to furnish the information to your committee.

The first question was: "What is the geographic dispersion of contracts let by the Military Establishment?" Inclosures 1, 2, and 3 indicate the figures for Air Force, Navy, and Army for various representative periods. Although the periods covered are not identical, I think the figures will indicate the general pattern for your committee.

The next question asked was: "What percentage of business is being done by competitive bidding at the present time?" Our statistical studies for the first half of fiscal year 1949 for the three Departments indicated that, in numbers of transactions, the contracts which were advertised amount to 9 percent and those negotiated, 91 percent. In money value, the amount obligated under advertised contracts was 28 percent of dollar volume and that expended through negotiation was 72 percent. I would like to indicate the Navy figures under this topic and point out certain facts in the light of which these figures should be evaluated. During fiscal 1949, Navy contracts were let by advertising in 11 percent of the transactions, or 36 percent of the total number of dollars. Negotiated contracts were 89 percent of the number of transactions, or 64 percent of the dollar volume. In connection with the negotiated contracts, it should be noted that the percentages of transactions negotiated reflect a large number of purchases under the provisions of section 2 (c) (3) of the Armed Services Procurement Act, which permits purchases in a manner common among businessmen where the total amount is $1,000 or less. A portion of the transactions is reflected from reports from the shore establishment, and this portion_comprises 96.6 percent of the number of transactions, or 5.9 percent of the dollar volume of the contracts negotiated. Numerous minor transactions within the fleet and by the smaller shore installations are not reflected; however, it is apparent that the volume of transactions reflects a substantial number of purchases of $1,000 or less.

The question was asked as to whether or not 80 percent of the business by dollar volume was placed with firms larger than those which would meet the definition of small business. Our statistical studies tend to confirm this statement. It should be noted, however, that these statistics reflect only prime contract business. The volume money-wise during the war was very high, and 20 percent would represent a substantial amount of business. It should be further borne in mind that finished items which the armed services were procuring frequently were of a type produced only by relatively large businesses. A good example of this fact would be aircraft procurement, since there are no aircraft manufacturers which would meet the definition of small business. The same would be true of other items of military significance produced in volume during the war.

The question was raised during the hearings as to whether or not post exchanges and ships service stores compete with private industry. This was the subject of recent inquiry by the Philbin subcommittee of the House Armed Services Committee. The result of the inquiry was the adoption of a joint regulation by all the services. The results of the investigation are stated in the remarks of Congressman Philbin, commencing on page 11084 of the Congressional Record for Friday, August 4, 1949. The agreement between the committee and the representatives of the armed services is summed up on page 11086 in the

following changes: Imposition of the Federal retailer's tax, revision of the authorized list of merchandise, and the abolishment of special order privileges.

Information was further requested with reference to the number of persons engaged in work at navy yards which might be considered of a manufacturing nature, which in turn might be in competition with private manufacturing concerns. I would like to emphasize that the primary purpose of navy yards is to build and repair ships, and manufacturing activities are not significant. Our figures indicate that during fiscal year 1949 only 1,200 productive workers, with the possible addition of 1,200 supporting overhead workers, were engaged in manufacturing work. This would be approximately 21⁄2 or 3 percent of the total shipyard employment. The policy of the Navy Department with reference to the manufacture of items of standard stock is that such items shall be manufactured only for one of the following reasons:

(a) To develop, maintain, and improve quality;

(b) To obtain material which cannot be obtained at advantage commercially due to its special nature or small quantities required; or

(c) To retain special skills in working force.

The further question was asked concerning the use of the provisions of the Armed Services Procurement Act permitting reports to the Attorney General on evidence of antitrust or monopolistic activities. I am advised that although there has been some use of the provisions relating to negotiation after competitive bid prices were determined to be unreasonable, thus far no use has been made of the provision in a situation in which it was considered that the prices were not independently arrived at.

I am returning herewith a corrected copy of the transcript of the testimony. If I can be of further service to the committee, I will be pleased to have you call upon me.

Sincerely yours,

FRANCIS P. MATTHEWS.

STUDY OF MONOPOLY POWER

MONDAY, JULY 18, 1949

HOUSE OF REPRESENTATIVES,

SPECIAL SUBCOMMITTEE ON THE STUDY OF
MONOPOLY POWER OF THE COMMITTEE ON THE JUDICIARY,

Washington, D. C.

The special committee met, pursuant to adjournment, at 10 a. m., in room 346, Old House Office Building, Honorable Emanuel Celler (chairman) presiding.

Present: Representatives Celler (chairman), Bryson, Denton, Wilson, Michener, and Keating.

The CHAIRMAN. The meeting will come to order.

Our first witness this morning is the distinguished Secretary of Agriculture, Mr. Charles F. Brannan.

We are very happy to hear from you, Mr. Brannan.

STATEMENT OF HON. CHARLES F. BRANNAN, SECRETARY OF AGRICULTURE; ACCOMPANIED BY S. R. NEWELL, DEPUTY ASSISTANT ADMINISTRATOR FOR MARKETING, PRODUCTION, AND MARKETING ADMINISTRATION, DEPARTMENT OF AGRICULTURE

Secretary BRANNAN. Thank you, Mr. Chairman. I have a statement which I think should take about 15 to 20 minutes, about 20 minutes. Would you care to proceed in that fashion?

The CHAIRMAN. Anyway you wish.

Secretary BRANNAN. Mr. Chairman, monopoly is one aspect of the concentration of economic power.

At what point the concentration is considered to be monopoly is always a controversial issue and must be determined by law. The problem that concerns us, as a Nation, is not so much whether a particular concentration of power meets a technical definition of monopoly but rather it is whether that concentration is harmful to a group or to the whole people.

I am very glad that the Congress has seen fit to undertake a broad study. I think we should constantly survey the entire economy in this way so as to see where the economic powers lie, how they are used, whether they stifle competition, whether they prevent the expansion of the economy by holding down production or by holding up prices, and whether the remedial laws are adequate.

The farmer has long been pitted against economic giants and has had to fight constantly for his freedom. It is a never-ending struggle. It is still true to a considerable degree that the farmer has to accept what is offered when he sells his products and that he has to pay what is asked when he buys.

This is another way of saying that whether the farmer is buying or selling he is confronted with concentrated economic power greater than his own.

Through the years the Congress has made many efforts to alleviate this situation, (a) by limiting the excessive use of power in particular areas of the economy and (b) by helping to increase the bargaining position of the farmer. These efforts account for an important part of the work of the Department of Agriculture.

A basic reason for official crop estimates, daily market reports, and other agricultural statistics is to give the individual farmer access to the facts he needs if he is to get a fair deal in the market place.

A basic reason for price-support programs is to give the farmer greater independence in choosing the time and the price at which he is willing to sell. The Congress probably would never have legislated price-support programs were it not for the fact that industry has cut production to maintain price while the farmer traditionally has gone on producing while his prices went farther and farther down out of line with industrial prices.

A basic reason for programs assuring agricultural credit has been the power of financial concerns to deny the farmer access to the reasonable credit terms he had to have for his very existence.

A basic reason for the rural electrification program is to circumvent the concentrated economic power which was used for so long to deny farmers the modern benefits of electric power.

These examples indicate in a general way the breadth of the problem of concentrated economic power from the standpoint of agriculture. Let us turn now to specific acts of Congress in this field which are administered by the Department of Agriculture. I should like to group them into two classes-first, the regulatory statutes which have provisions for preventing monopolistic practices against the interests of the farmer and the general public and, second, statutes which attempt to redress an imbalance of economic power by safeguarding or adding strength to the farmer's position.

The statutes falling in the first category are the Packers and Stockyards Act of 1921 and the Commodity Exchange Act, adopted June 15, 1936, as an amendment to the Grain Futures Act of 1922.

1. Packers and Stockyards Act: This law was passed after an investigation by the Federal Trade Commission revealed monopolistic control by the large terminal stockyards.

In substance, title II requires that no packer shall engage in unfair, deceptive, discriminatory, or monopolistic practices. In the earlier years of enforcement of the Packers and Stockyards Act numerous formal administrative proceedings were initiated alleging combinations in restraint of trade on the part of packers. Some of these resulted in the issuance of cease-and-desist orders.

In recent years the limiting factor on full enforcement of the provisions of title II has been one of funds. For this reason, the packer work generally has been handled on an informal basis. As information has been developed concerning unfair packer practices, or complaints have been filed, conferences have been arranged with the packers' managements involved, and in many instances corrective action has been obtained.

Packer work has been centered principally on livestock-buying operations at supervised markets. Action has been taken to elim

inate buying practices of packers which resulted in livestock being channeled regularly to certain packers without being offered on the open competitive market. Action has also been taken to eliminate turn systems, whereby dominant packers obtained the first opportunity to bid on consigned livestock in the hands of commission firms for sale. At certain markets it had become customary for packers, in connection with their purchases of bulls, veal calves, and hogs, to delay their buying operations until such classes of livestock had been acquired by market speculators, who normally would be their competitors, and then to purchase from such speculators. Informal action has been taken to correct this condition.

In June of 1948, under authority of the act, the practice followed by some packers of buying hogs on a "run of the mine" or "weight schedule" basis was required to be discontinued. Selling agencies were required by stipulation at many markets to offer all consigned hogs on the open market and to sell them on the basis of their merits. under competitive-bidding conditions. This action required packers to modify substantially their hog-buying methods.

Studies made of packers' buying activities showed that at several markets packers operating plants adjacent to the markets had not placed their own buyers on the markets but had conducted their buying operations by making purchase commitments to dominant. dealers at the market, who normally would be competitors of theirs. Through informal conferences, packers were induced to place buyers on many markets where previously they handled their purchases of livestock through local dealers.

Packers have been required to divest themselves of ownership in livestock-selling agencies, order-buying organizations, and dealer firms. They have also been required to discontinue any discriminatory or restrictive buying operations at supervised markets. Formal actions by the Department against packers in recent years have involved principally their failure to pay for livestock purchased, false and misleading advertising, and improper grade marking of meats. I would emphasize that enforcement of the Packers and Stockyards Act is no substitute for vigilant enforcement of antitrust statutes. The current antitrust suit against major packing companies is a case in point.

Another section of the Packers and Stockyards Act provides for the regulation of stockyards and market agencies at the stockyards. Unfair and discriminatory practices are prohibited, and the Secretary of Agriculture is authorized to prescribe reasonable and nondiscriminatory rates to be charged.

2. Commodity Exchange Act: This act imposes statutory prohibitions and controls on futures trading in certain specified commodities, including grains and cotton. Among these prohibitions and controls are several which have the effect of inhibiting monopolistic practices. Most important in this respect is the prohibition against the corner or attempted corner of any commodity in interstate commerce or for future delivery.

While all the existing provisions of the Commodity Exchange Act tend to prevent a squeeze or market congestion and make a corner or monopoly more difficult, experience has shown that this act needs to be strengthened and improved in several respects. This includes extending the scope of the act to include more commodities and to

« SebelumnyaLanjutkan »