on December 31, 1946. The bank had 3 offices: 1 in Rockville Centre, Roosevelt, and Uniondale. The Uniondale office was opened in December of 1953. Located as we were in one of the fastest-growing areas in the United States, where the population had increased from about 400,000 in 1940 to over a million in 1954, the growth which the bank enjoyed did not give us the facilities to fully service the areas in which we were located. This was, of course, due to the ever-increasing demands made on the bank for larger loans and specialized loans such as accounts receivable and road-equipment loans. The result was that many new firms moving into our areas went to the larger New York City banks to secure the credit lines necessary for their type of business. Nassau County National was one of the first banks in the county to go into automobileloan financing through the dealers by financing both their wholesale and retail paper. It enjoyed a large measure of success in this venture as is shown by the growth of its portfolio in this type of paper. Outstandings in December 1954 were almost $5 million compared with $400,000 in December 1946. They also expanded their FHA home-improvement department, which had outstandings of $1,800,000 in December 1954 compared with $61,000 in December 1946. It would seem strange to the average layman that a bank that showed such a splendid growth in high-yielding assets would, at the same time, be handicapped in servicing the community, but to a banker knowing the restrictions placed on a bank as to its ratio of risk assets to capital and the added burden of taxes and increased operating costs, you can readily see the problems which existed. Our automobile department expanded but at the same time our dealers were always in need of larger lines to take care of their expanding business and the increased cost of their units. These two factors, one caused by the increase in population and the other by the increased costs of production made it almost beyond the capacity of a small bank to service because of its 10 percent capital limitation. Our directors were all aware of their problems and decided that the only hope that existed for meeting these demands was in building the capital funds as best they could out of earnings. As our stock was unlisted and had a restricted market, it was deemed not wise to sell more stock. The bank was operated on a very conservative basis, paying only $1.50 yearly dividend and keeping expenses at a minimum. Their success in this is shown by the figures of capital, surplus, undivided profits and reserves which were over $2 million in September 1954 compared with $944,000 as of December 1946. In spite of this conservative program, we were continually faced with the demands for more loans which, of course, was due to the terrific expansion going on in Nassau County. In addition, we had the problem of holding our savings accounts against the rate of 3 percent paid by the County Federal Savings & Loan and the 21⁄2 percent paid by City Savings Banks and larger commercial banks in Nassau County. We could only afford to pay 2 percent. In our own community of Rockville Centre, the county Federal grew to one of the largest savings and loans institutions in the country with savings accounts of over $115 million. This institution has retarded the growth of our savings department because of its ability to pay a high rate of interest. I am mentioning only a few of the handicaps in the operations of small banks but I believe that the greatest by far is the problem which is almost beyond their capacity to overcome and that is to grow in the same degree as the community grows which they are servicing. If they cannot do that, they cannot have a successful operation and give the proper service. Nassau County has had an exceptional growth, not only in population but also has enjoyed an influx of large industries which are moving out of the city, decentralizing and following the trend of population. All of these retail outlets and manufacturing plants need more banking services of all kinds and on a larger scale. This was, in my belief, the predominant factor that brought about the decision of the directors of the Nassau County National Bank to consolidate with a larger bank which could take care of the ever-growing needs of Rockville Centre, Roosevelt, and Uniondale. They were aware of their difficulties and realized that by doing so they could best give their communities, their depositors, borrowers, and employees the opportunities of growing with Nassau County; for it is only in these larger institutions which have the resources to meet the demands of this dynamic economy that these opportunities exist. I have no doubt that this decision was sound for although the consolidation has only been in effect less than 3 months, I can already see the benefits. We have been able to meet the credit needs of 2 local businessmen with credit lines of $150,000 and over. We have also been able to finance both the local school dis trict and the village of Rockville Centre on a larger scale than before. The savings department has increased by over $400,000 due no doubt to our ability to pay a rate of 2%1⁄2 percent, and we are now in a position to offer many additional services such as charge plans for local people, accounts receivable financing, educational, and equipment loans. I might add that your school-savings plan, which we never encouraged before, is very popular with our local people as are the home improvement loans for improving new homes of less than 6 months old. There is no doubt in my mind, now that I am able to compare the small bank with the large bank operation, that our community will benefit as will the other banks in the village because those people who previously went to the city for their banking needs will realize that the same service is available locally and will keep their business in the local area. This should stimulate business in all the local banks. WARREN A. SCHNEIDER, Vice President. INTEROFFICE COMMUNICATION THE FRANKLIN NATIONAL BANK OF FRANKLIN SQUARE, To Mr. Arthur T. Roth, president. The opponents of consolidations or mergers usually imply that the community is retarded by curtailed banking services and the small depositors and borrowers are always discriminated against and receive less consideration. Since our consolidation the activity in our installment loan department, savings accounts and special checking accounts, which deal primarily with the small borrower and depositor, have shown substantial increases. Our banking services to the general public, since consolidation, have been greatly expanded as necessary capital is available to make alterations and install modern equipment to serve the public faster and more efficiently. Our main banking floor has been improved by installing an acoustical ceiling and new lights which provide more efficient operation. We have provided larger desk space for customers. National Cash Register machines have been installed for posting the deposits and withdrawals in our savings department which eliminate hand posting and furnishes the customer with a machine record of the transaction. New and modern bookkeeping system has been installed, also one-stop banking service is furnished by the tellers which saves the customers considerable time in completing their various banking transactions. Adequate capital acquired through consolidation enables the bank to better serve the expanding industrial business and the increased population in our county. As an independent bank, we found it impossible to meet the larger credit demands of a number of our customers due to limited capital funds. Lack of experience in servicing the large credit requirements was also a handicap. As a past executive officer of an independent bank and now the officer in charge of the Inwood office of the Franklin National Bank of Franklin Square, N. Y., my observation is that competition is much keener since the consolidation as it has increased public interest in banking locally. Our Inwood office is not more than a 5-minute auto ride to the following banks and savings and loan association which serve this area: Bank of the Manhattan Co., Chemical-Corn Exchange Bank. National Bank of Far Rockaway, Rockaway Savings Bank, Meadow Brook National Bank, Peninsula National Bank, and the Lawrence-Cedarhurst Federal Savings & Loan Association. With these institutions all competing, the public derives many advantages. To mention a few-fast and courteous service, competitive rates on all types of loans including mortgage loans and rates of interest paid on savings accounts. Where competition is so keen there can be no monopoly or curtailment of banking services to the public. Opponents of consolidations and mergers many times fail to take into consideration the causes that force independent banks to consolidate. The independent bank generally does not have sufficient capital to meet the expanding economy. The earning power is seldom sufficient to attract additional capital because of the limited return on the capital invested. It is unable to attract capable management and personnel because of inadequate salaries and the limited chances of advancement. The inability to secure suitable directors is also a major problem. The banking services of the average independent bank in the metropolitan suburban areas are no longer capable or adequate to meet the demands of the expanding business and the only recourse of the independent bank is consolidation or merger. WM. F. RHINEHART, Vice President. The CHAIRMAN. We will adjourn, to meet tomorrow morning at 10 o'clock in the Judiciary Committee room, when we will hear Mr. Edward F. Howrey, Chairman of the Federal Trade Commission. And he will be the only witness in the morning. And there will be a considerable amount of questioning of him. (Whereupon, at 1 p. m., the committee recessed, to reconvene at 10 a. m. Wednesday, June 15, 1955.) ANTITRUST AND MONOPOLY PROBLEMS WEDNESDAY, JUNE 15, 1955 HOUSE OF REPRESENTATIVES, The subcommittee met, pursuant to recess, at 10 a. m., in room 346, Old House Office Building, Hon. Emanuel Celler (chairman) presiding. Present: Representatives Celler (chairman), Rodino, Rogers, Fine, McCulloch, Scott, and Keating. Also present: Herbert N. Maletz, chief counsel and Kenneth R. Harkins, cocounsel. The CHAIRMAN. The meeting will come to order. We have as our witness this morning the Honorable Edward F. Howrey, Chairman of the Federal Trade Commission. But first, the chairman wishes to place in the record a statement of Senator Homer E. Capehart of Indiana. (The statement of Senator Capehart is as follows:) STATEMENT OF HON. HOMER E. CAPEHART, A UNITED STATES SENATOR FROM THE STATE OF INDIANA It is a fine thing that the Committee on the Judiciary is making a study of the report of the Attorney General's National Committee To Study the Antitrust Laws. The report must stand on its own; and after hearings such as these, its true value will become apparent. I want to confine these comments to that part of the report dealing with "freight absorption," "good faith meeting of competition," and "delivered pricing." As you know, I have been deeply interested in this subject for about 7 years, and am gratified that the members of the Attorney General's committee, with but very few dissents, adopted the competitive philosophy with respect to these subjects for which I have so long contended. First, I want to compliment Attorney General Herbert Brownell, Jr., for setting up that committee to study the antitrust laws. While we may not all agree with all their recommendations, I think it was a good thing to have the study made. I also am happy that there were dissents to many parts of the report, for this gives us the opportunity to test the soundness of the majority opinions against the criticisms of the dissents. This also applies to the critical testimony before this committee. Of course, you know as well as I do that antitrust enforcement always steps on the toes of some businessmen. Almost never do businessmen admit that they have conspired to fix prices, that they have attempted a monopoly, or that they have otherwise deprived the consumer of the competition that is so basic to our free enterprise competitive system. Whenever businessmen have been sued by an Attorney General for violating our antitrust laws they generally have some reason or reasons to excuse their conduct, to protest their innocence of wrongdoing, or otherwise to be outraged at the Attorney General for bringing suit against them. Sometimes their complaints are well founded, more often they are not. I want also to take this opportunity to say that I believe antitrust law enforcement under the Eisenhower Administration has been at least as virorous and forthright, and perhaps more so, than it has been at any time since the antitrust laws were passed. Businessmen are becoming more accustomed to the requirements of the antitrust laws and innocent violations are now necessarily less widespread than they were 25 years ago. But the large volume of important antitrust cases that have been brought in the Eisenhower administration, both by the Attorney General and by the Federal Trade Commission, is a firm and sound testament to a vigorous antitrust enforcement policy. Having been a businessman all my life, and a salesman for most of it, I know the important part that competition plays in this great free enterprise system of ours. I agree with the Supreme Court when it said in the Standard Oil Company of Indiana case (340 U. S. 231) that by the Antitrust Laws Congress sought to protect competition and to prohibit monopoly. Our antitrust laws must permit every seller to compete for the business of any buyer whom he thinks he may sell at a profit. And we must guarantee every buyer the greatest possible number of sellers competing for his business. This is basic in a competitive economy. For that reason, I was greatly disturbed by a rule of law that received wide publicity in the late forties and was interpreted by many to deny manufacturers or other sellers the right to meet a lower price which their competitor was offering to their customer. The impact of this situation is particularly applicable in the sale of basic commodities where freight is an important factor in the delivered cost. A seller frequently is required to absorb a part or even all of the cost of transportation to be able to compete for business in a distant market whenever the buyer is located close to the plant of a competitor. When a manufacturer has a competitor who is lawfully offering a lower delivered price to the customer, because the competitor has a lower transportation cost on shipments to that buyer, I can see no basis whatever on which to deny that manufacturer the right in good faith to meet that lower price. There are many small manufacturers in Gary, South Bend, Indianapolis, Evansville, and in other parts of my State as well as throughout the Nation who operate but one factory and who cannot sell the entire capacity of that plant within their local community. I vigorously support the right of those businessmen or any other businessman in these free United States to sell their goods in Maine or in California, in Florida or in Washington State, and at all points in between. Anyone who has done any selling knows that his ability to sell goods in a distant market requires that he be permitted to meet a lower price at which competitors in that market may be offering like commodities to prospective customers. Any other rule of law ignores the fact that we are one Nation-and a vigorously competitive Nation. We are trying to promote more trade, not only within the United States, but throughout the world: but in this matter there are many reactionary people who want to turn the clock back and to establish trade barriers among the different regions of the United States. I have been deeply concerned about increasing trade between the United States and South and Central America. I want to see more trade, not less trade, among the nations of the world. I want to create more jobs both at home and abroad by selling more goods to more people and increasing purchasing power. It is therefore particularly disturbing to find that we must even fight at home for the right to permit continued trade by our own businessmen with other sections of our own country. And make no mistake about it, no businessman can sell his goods in any market in which he cannot meet the price that a competitor is lawfully offering to customers in that market. What reason is there ever to deny a businessman the right to meet, in good faith, a lower price which his competitor is lawfully offering to customers for comparable goods? In the past several years there have been more than a dozen bills introduced in the Congress, and referred to this committee, that deal with this subject. I will not try to analyze for the competent lawyers on this committee the technical language of such technical legislation. In this field of the law changing but a few words in a bill can completely change the meaning and the purpose of the legislation. I have, therefore, consistently sought, with respect to the bills I have introduced on this subject, the best advice obtainable from the experts both within and out of the Government. Early in the last Congress, I introduced a bill (S. 1377) which closely followed a bill that the late Senator Pat McCarran, a distinguished former chairman |