To this I answer that the very existence of the large corporation is itself the evidence that it is best calculated to suit the public need because it has grown up under the free patronage of free buyers in a free market.

It may be that in certain industries, in rubber for example, that the smaller corporation can do as thoroughly efficient a job of production as the giant. But careful investigation of the industry will show that even the small tire producer is a giant enterprise according to our earlier standards.

It may be true that in such industries as these, size was originally achieved through special pricing policies which had the effect of limiting competition. But our present laws are adequate to prevent the recurrence of such evils. The very existence of this committee is proof that there is an active public conscience at work in this country of which every industrial management is keenly aware.

Because of these facts, it seems obvious to me that a business cannot be characterized as too big simply by reference to the volume of its sales, to the proportion of its industry's total assets which it controls, or to the size of its capitalization. Before any company can be called too big, careful study must be made of the conditions out of which its size has developed. Of necessity, this involves examination of the company and its competitors; the nature and quality of their managements; their form and structure, their production efficiency and pricing policies; and the other factors which determine whether the rapid growth of one company and the failure of others to grow are due to differences in the caliber of their respective managements. If such a study, impartially and objectively conducted, shows that a company's growth has been due to superior management, then attempts to limit this growth would constitute a penalty imposed upon greater skill in industrial organization. Only after this aspect of the matter has been exhausted is it possible to distinguish undesirable bigness from that which is of benefit to the economy.

The CHAIRMAN. Thank you very much, Mr. Martindell.

The Chair would like to put in the record a statement by Mr. R. V. Craig, National Industrial Traffic League. He was to testify yesterday, and instead offers his statement for the record.

(Statement submitted by Mr. R. V. Craig of the National Industrial Traffic League is as follows:)

STATEMENT OF THE NATIONAL INDUSTRIAL TRAFFIC LEAGUE

The National Industrial Traffic League is an organization composed of shippers and receivers of freight by all methods of transportation which are under the jurisdiction of the Interstate Commerce Commission. Its membership includes individual companies and corporations and local regional and national organizations who are interested in transportation matters. The present membership is approximately 1,500, and through our membership in the various organizations that are members of the League, it has been estimated that the League represents approximately 300,000 shippers. Its membership consists of large companies, medium-sized companies and a large number of small companies. The National Industrial Traffic League attempts to represent the interests of the shipping and receiving public in matters of national scope and does not concern itself with local or sectional matters.

In connection with the subject being considered by this committee, the league supported the so-called Reed-Bulwinkle bills which resulted in the passage of section 5a of the Interstate Commerce Act. The league supported this change in the

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law because it was felt that it was as much in the interest of the shipping public as in the interest of the transportation agencies.

For rate-making purposes, the railroads of the United States divide into three major territories. The official lines being those railroads operating generally east of the Mississippi River, north of the Ohio and thence following the line of the Virginian Railroad to Norfolk, Va.; the Western lines, consisting of those railroads operating generally west of the Mississippi and Illinois Rivers, and the southern railroads operating generally east of the Mississippi and south of the Ohio Rivers. Each of the above-mentioned groups of railroads operated, insofar as their determination of freight rates were concerned, under procedures which had been developed over a period of many years and which, in the opinion of both the transportation agencies and the shippers, met in a general way the needs of commerce and provided the only known method for carrying out many of the orders of the Interstate Commerce Commission (Western Grain Case, 17000, Part 7).

From the time of the decision in United States v. Trans-Missouri Freight Bureau (166 U. S. 290 (1897)) until the Department of Justice filed suit against the western carriers in the so-called Lincoln case, no question was raised as to the legality of this method of determining transportation charges; however, with the filing of that suit the transportation agencies and the shippers became very much concerned, and his concern expressed itself in the introduction of the so-called Reed-Bulwinkle bill. That legislation was supported not only by the league, but by numerous other organizations including farm organizations, state commissions and the Interstate Commerce Commission. The bill represented an amendment of the Interstate Commerce Act (not of the Sherman Act) to clarify the law, so that carriers when exercising recognized docket procedures and following conference methods approved by the Interstate Commerce Commission shall have proper protection against invocation of the antitrust laws by reason of such rate procedures. Since the enactment of section 5a, the various transportation agencies, particularly the railroads and the inland waterways, have filed applications with the Interstate Commerce Commission which applications included agreements establishing the procedure under which these carriers would operate, if and when, such agreements were approved by the Interstate Commerce Commission.

As discussion of this matter is limited to: "Are the results compatible with the intent of Congress?"

Your committee, we presume, considers the whole matter from the standpoint of the monopoly or antitrust laws and Government policies thereunder.

We would respectfully suggest that discussion of the results of the enactment of section 5a is premature. This, because of the fact that the only agreement so far approved by the Interstate Commerce Commission is the Western Traffic Association Application I. C. C. Docket No. 2, which will become effective December 15, 1949, and obviously there are no provable results one way or the other under this agreement. The agreement as approved by the Commission contains several changes from the former procedures all of which are to the advantage of the shipping public. Among those changes are the following:

1. The docketing of all proposed changes in classifications, rates, rules and regulations-formerly only increases were docketed.

2. The right of shippers to appeal to a carrier committee of higher jurisdiction, on all matters handled by that committee.

3. The publication of the actions taken by each committee so that interested shippers may be currently advised of the status of all proposals and may take such action as is deemed necessary in connection with such determinations by the committees.

4. The chairman of a carrier committee will no longer have the right to ask for reconsideration by a committee of higher jurisdiction of the actions taken by the committee of which he is chairman.

5. Many freight rates are published with expiration dates to meet certain emergency situations, but some of them remain in effect so long as to become, in the minds of the shippers, a part of the permanent rate structure. Under former procedures, the shipping public was not advised when the carriers conIcluded to allow these rates to expire. Under the new agreement, any such rates which have been in effect for a period of 15 months or longer must be again placed on the docket and the shipping public advised of the intention of the carriers to allow those rates to expire. They may then ask for a hearing or take such other action as they think desirable.

All of the above substantially enhance the shipper's opportunity to obtain proper rate adjustment without recourse to the Interstate Commerce Commission. The above improvements in the procedure were all supported by shippers generally. It has been asserted that section 5a is a "railroad law" or a "truckers' law" or a "water carriers' law," but these assertions are not in accordance with the facts. The shipping public was as much interested in the enactment of this legislation as any carrier or group of carriers, and the shipping public is vitally concerned with the operation of the procedures established under that law. It is the opinion of the overwhelming majority of shippers that there can be no stable freight-rate structure without procedures substantially along the lines approved by the Interstate Commerce Commission in ICC docket No. 2. In this connection, we would like to point out that neither in the hearings before Congress nor the hearings before the Interstate Commerce Commission in connection with the passage of the act or the approval, or otherwise, of the agreements filed under the act, has anyone suggested any substitute for this method of making freight rates. Despite the wide publicity given to the hearings before the Interstate Commerce Commission, except for the Department of Justice, no shipper or receiver or any other organization opposed the principles contained in the agreement filed with the Commission. The two or three parties who appeared before the Commission, in what might be termed opposition to the approval of the formal agreements then pending, merely urged changes in detail which they suggested should be incorporated in the agreements before approval by the Commission.

What we have said in connection with approval of agreements that have been filed with the Interstate Commerce Commission should in no way be construed as approval for procedure of agreements which have not, as yet, been filed with or considered by the Interstate Commerce Commission, and what we have said in connection with rate-making procedures generally applies more particularly to railroads as contrasted with other forms of transportation. In connection with procedures not yet filed, the league will continue to advocate before the Interstate Commerce Commission that such procedures contain the proper provisions for the safeguarding of (1) the interests of the shipping public and (2) the unrestrained right of the individual carriers to take independent action without any interference on the part of the carriers of the same class.

This subject was thoroughly explored by the Congress in hearings before the passage of section 5a. Every conceivable argument, both for and against the passage of the act, was advanced in those hearings. It was considered by Congress at great length over a period of several years, from the standpoint primarily of transportation agencies and shippers, in terms of implementing the Interstate Commerce Act and relieving the work and formal functions of the Interstate Commerce Commission. Presuming, as we do, that this committee will consider this matter primarily under the antitrust laws, it is the view of the league that no action should be taken by this committee regarding this matter until sufficient time has elapsed to enable the results to be thoroughly tested by experience. The CHAIRMAN. The next meeting of this committee will be on Friday when procurement officials will answer some of the charges made against them by some of our recent witnesses. At that time, Mr. Keating will preside.

The meeting will now be adjourned.

(Whereupon, at 4: 20 p. m., the meeting adjourned, to reconvene at 10 a. m. Friday, November 25, 1949.)

STUDY OF MONOPOLY POWER
(Second Series)

FRIDAY, NOVEMBER 25, 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 adjournment, at 9:05 a. m., in room 346, Old House Office Building, Hon. Kenneth B. Keating presiding.

Present: Representatives Keating (presiding) and Wilson.

Also present: C. Murray Bernhardt, general counsel to the committee, and David Cushman Coyle, consultant.

Mr. KEATING. All right, General, we will be glad to hear you this morning.

STATEMENT OF BRIG. GEN. E. M. BRANNON, ASSISTANT JUDGE ADVOCATE GENERAL, ACCOMPANIED BY COL. R. A. HOWARD, JR., COMMANDING OFFICER, CHICAGO QUARTERMASTER PURCHASING OFFICE; LT. COL. GORDON W. COOK, OFFICE OF THE QUARTERMASTER GENERAL; J. M. MILLARD, RESEARCH DIRECTOR, MECHANICAL PRODUCTS SECTION, RESEARCH AND DEVELOPMENT BRANCH, OFFICE OF THE QUARTERMASTER GENERAL; M. E. GRIFFING, REFRIGERATION UNIT, MILITARY PLANNING DIVISION, OFFICE OF THE QUARTERMASTER GENERAL; MAJ. GEN. WILLIAM H. MIDDLESWART, ASSISTANT QUARTERMASTER GENERAL; AND FRANCIS P. KERR, HEAD, REFRIGERATION UNIT, MILITARY PLANNING DIVISION, OFFICE OF THE QUARTERMASTER GENERAL

General BRANNON. Mr. Chairman, before I start, I would like to say that this hearing involves several different phases: Those are the preparation of the specifications, the award in Chicago, certain considerations that have been given to the protest of the Sunroc Refrigeration Co. here in Washington. For that reason, I would like to make a general statement for the record because I am not familiar of course, with all the facts. Those are matters, of course, over a wide

area.

I would like to have at the table, if I may, the representatives of the Army, so that I may call on them from time to time, or have them available to answer questions of the committee as we go along.