STUDY OF MONOPOLY POWER WEDNESDAY, AUGUST 24, 1949 HOUSE OF REPRESENTATIVES, SPECIAL SUBCOMMITTEE ON THE STUDY OF MONOPOLY POWER OF THE COMMITTEE ON THE JUDICIARY, Washington, D. C. The special subcommittee met, pursuant to call, at 10:05 a. m., in room 345A, Old House Office Building, the Honorable Emanuel Celler (chairman) presiding. Present: Representatives Celler (chairman), Bryson, Denton, Michener, Keating, and McCulloch. The CHAIRMAN. Gentlemen, the meeting of the subcommittee of the Judiciary Committee studying the growth of monopoly power 'will come to order. Our first witness this morning will be Mr. Mason, of the Federal Trade Commission. There is on the desks before all the members the report of the Federal Trade Commission on the Concentration of Productive Facilities, 1947, Total Manufacturing and 26 Selected Industries. Mr. Mason, I am sure that we will be very happy to hear you, and I presume that you will talk on the subject of the concentration of productive facilities, and use this report by way of explanation concerning your remarks. Mr. BRYSON. Mr. Chairman, does this paper in this report purport to bring the report up to date? It is dated August 24, 1949. The report itself is dated 1947. The CHAIRMAN. We might ask that of Mr. Mason as he goes along. Mr. MASON. This report is dated as of today, Congressman. It was presented as of 9 o'clock this morning, and we wanted to have the opportunity of coming up here and discussing it. The CHAIRMAN. Mr. Bryson means the report itself has the date 1947. year for which 1949 data were 1948 data were Mr. BLAIR. That merely means, sir, that the latest the data are available at this time is the year 1947. not available as of the time we prepared the report. not completely available; so, the year 1947 refers to the year for which the measurement is made. Mr. BRYSON. Yes. It does not relate to the study as of 1948 and 1949. 561 STATEMENT OF HON. LOWELL B. MASON, ACTING CHAIRMAN, FEDERAL TRADE COMMISSION Mr. MASON. Mr. Chairman, my name is Lowell B. Mason, and I am Acting Chairman of the Federal Trade Commission. The chairman and the printer both promoted me to chairman, but I would like to have the record show that I am Acting Chairman of the Commission. The CHAIRMAN. I hope you have ambitions. [Laughter.] Mr. MASON. Thank you, sir. Mr. MICHENER. Hopes. How about the prospects? [Laughter.] Mr. MASON. The Commission desires the privilege of discussing with you the factual data on the "concentration of production facilities" report which it is filing this morning with the Congress. Your committee's task in evaluating the effect on the economy of our present laws pertaining to business will, in our opinion, be helped if it has a well-founded, conservative appraisal of the business-concentration problem in the United States. The Federal Trade Commission comes up with no answer to the problem, at least in this report.. In fact, I would say the purpose of this presentation to you is not even to state the problem except insofar as the facts themselves disclose the problem. There are three levels in the structure of the economy of ours which have concentration, and which concentration might be studied: First, the plant level; second, the corporate level; and, third, the financialinterest-grouping level. Our study has been directed to the corporate level, and our economists-the criteria which our economists have used in presenting this report have, in my opinion, presented a most conservative picture of the situation. Our report and studies have been limited to 26 industries. We have been circumscribed by certain conditions. In the first place, it was impossible, because of the physical situation, for us to make a more complete study; and, then, there are lack of financial reports on the small industries, and the problem of classifying multiproduct companies such as General Electric, which makes thousands of different items, and General Motors, which not only makes automobiles, as we commonly think of them, but also makes locomotives and other things; and then, of course, there is the factor of specialization. So, our economists have been faced with the problem of trying to give as specific and as careful an analysis as they can of this concentration problem, with these factors against them. So, they have chosen a study of only a small number of corporations. We have 113 corporations in the United States which have over $100,000,000 in assets. These 113 corporations own $16,093,000,000 of total corporate assets. Those are the net capital assets. I said at the beginning that I thought this report was a conservative report, and I think that is one of the indications, because our economists, in making this study, did not take the gross assets of these companies, which would, of course, include the reported depreciation. As we all know, the larger corporations are very conservative and take all the depreciation which they can; and, as a consequence, the financial picture with regard to them is, perhaps, not as optimistic as it would be on the smaller corporations. We have some charts which John Blair of our staff will analyze, and I would like to have him go into some detail in explaining them; but I think there is a very interesting picture which I would like to talk about before Dr. Blair goes into the details of the specific industry. That is presented by compiling several of the figures which Dr. Blair and the economists have assembled. Congressman Keating, I was talking about this concentration problem as we try to illustrate it. We do not actually state the problem, but we think the facts state the problem, and we feel that the presentation of these facts will give the committee an intelligent basis on which to base some future action. I think that one of the most interesting things about this report are the three classifications between the very high concentration industries and the medium ones, and then those which are not so highly concentrated at the top. You must bear in mind that back in 1937, when the Census Bureau made its analysis, one of its first analyses of course, the Commission has been interested in this subject since 1921; but in 1937 the Census Bureau made an analysis of the 50 largest corporations, which at that time owned 2,869 different establishments. They employed 16 percent of all the total employment of corporate and noncorporate businesses and they paid out 21 percent of the total pay roll and produced 28 percent of the total production in the United States-but, getting back to this chart, we find in the first group that three companies in the United States in aluminum-I do not know how to spell it, Mr. Chairman; so, I will make it "alu," and you can tell that is "aluminum". [Laughter.] and tin cans; and three of the companies own 100 percent of the production in aluminum in that particular industry; and then in tin they have there, I think it is, 95.3 percent. Then, after tin you have linoleum. The CHAIRMAN. How many of the tin manufacturers own 98 percent? Mr. MASON. These are all three companies. Mr. MASON. This list which I am putting down here is a list where three of the companies own the percentages, from 100 percent on down in this first group, which we show as the high concentration, in the 13 different industries in this high concentration which own from 100 percent down to the lowest of the 13, which was 64.0, and you have Îinoleum in there; they come next; and after linoleum you have copper smelting, and after that you have your cigarettes which, of course, everybody knows-that is popularly known as one of the high concentrations; and after cigarettes you have the distilled spirits which is an industry where you have three of the companies which own very high concentration, and after the distilled spirits, you have plumbing, which is another one, plumbing manufacturing. Mr. KEATING. Plumbing supplies, you mean? Mr. MASON. Plumbing supplies, yes; not the men who put them into the house, but the fellow who makes them. Mr. KEATING. No; the manufacturers. Mr. MASON. Yes. Then, you have rubber goods, your rubber tires, which, of course, in those there is a very high degree of concentration, too. These are all with the three companies, and they go from the 100 percent, as I say, down to 64 percent. After rubber you have office equipment, your IBM, and the machinery that you use in offices; and you have the automotive industry which is, of course, another one which is very high; and you have your crackers and biscuits, which we generally do not think of as a highly concentrated industry, but actually is one of the big 13. Then you have your farm machinery, and you have your meat prod ucts. Now, those companies-I hope I have got 13 down here The CHAIRMAN. You have an elephant's memory to remember those. Mr. MASON. Thank you. Mr. BRYSON. The lowest one there is two-thirds? Mr. MASON. This is aluminum. Mr. BRYSON. No; the lowest. Mr. MASON. The lowest one is 64 percent. Mr. BRYSON. Practically two-thirds. Mr. MASON. Yes; 64.0. Those are the 13 highest, and those are the ones which the Commission feels represent the highest concentration. As I say, three companies control, as you point out, Congressman, from two-thirds on up. Mr. KEATING. Those are not all by any means basic; what we call basic industries. Mr. MASON. No; that is right. Mr. KEATING. I have been thinking in my mind of a distinction in treatment between basic industries, on the one hand, and an item like linoleum, on the other hand. Mr. MASON. Yes. Mr. KEATING. Well, now, that rather shatters the idea that there is a difference, a fundamental difference, in concentration as to whether you have a basic industry or-I do not know what you call it-nonbasic, I suppose. Mr. MASON. Yes; you can have high concentration of economic power, for instance, in lead pencils or something which would not be a basic industry. Your steel, your primary steel products, come even further down the line, but because of their tremendous size they stand up more like sore thumbs. For instance, your United States Steel and your Bethlehem and your Republic, which are further on down the line, as I shall show you——. Mr. BRYSON. Steel is not concentrated as badly as aluminum or tin. Mr. MASON. Oh, no; not in the first top number. Your first, United States Steel, used to have, I think, something like 90 percent; now Bethlehem and United States Steel together do not have quite 45. They have declined in their relative position but, of course, have advanced in their power and in their productive capacity. Mr. BRYSON. No three of the big steel companies together own 64 percent? Mr. MASON. No; not 64 percent. I will come to that list next. Mr. BRYSON. How about the dye? Mr. MASON. Dye? Mr. BRYSON. A big company such as du Pont. Mr. MASON. No; our figures do not get into dyes. We only went into 26 industries. I am sorry I have not got those figures. We might be able to get them for you. Of course, that has been in the public print. with the cartel problem. Mr. BRYSON. And the suit that has lately been brought. Mr. MASON. Yes. Now, you take your next group, gentlemen, you have those whichThe CHAIRMAN. Mr. Mason, I wonder if we can get that chart which you have placed on the board into the record? Mr. MASON. So far as I have gone, the economists have that in the report, but I wanted to put it in on the blackboard. The CHAIRMAN. It might be well to put it into the record in chart form. Mr. MASON. It is on page 17. (The list referred to follows:) Aluminum Tin cans and other tinware__. Linoleum Copper smelting and refining Cigarettes Distilled liquors--- Plumbing equipment and supplies. Rubber tires and tubes__ Office and store machines and devices_. Motor vehicles---- Biscuits, crackers, and pretzels.. Agricultural machinery-- Meat products---. Percent of control by 3 companies 100.0 95.3 92.1 88.5 77.6 72.4 71.3 70.3 69.5 68.7 67.7 66. 6 64.0 Mr. MASON. Now, you take your second group, which represents companies of six industries, where six companies hold a very dominant position in the industry. I think this one also is shown, and the only reason I wanted to put it on the blackboard was that I want to put all of them before you so that we would have all of them when Dr. Blair discusses his chart over here. In this next group you have companies which start out with 69 percent, and go down to 60 percent. Mr. KEATING. Six companies are Mr. MASON. These are the ones which have the six. You start out with glass, glass containers. We all realize that is a pretty highly concentrated industry. Then, you have carpets, which are not so well known. These are the six companies where they control either 69 on down to 60 percent, and after carpets we have the dairy products, and steel-there comes your steel, Congressman, that you were talking about. Mr. BRYSON. And the dyes, too, chemical. Mr. MASON. Then, after chemical The CHAIRMAN. Industrial chemicals. Mr. BRYSON. That would include dyes. |