that is so, as to what percentage it is well for one particular unit to have of the production of an industry. Is it well to have it at 10 percent, or as Gary said some years ago, 40 percent in the steel industry? Is it advisable to have it even beyond 40 percent? We would like to get some enlightenment on that, Doctor. If the line is to be drawn, where shall it be drawn?

Mr. WILSON. May I ask a question, Mr. Chairman?

The CHAIRMAN. Yes.

Mr. WILSON. What is the relation, Doctor, briefly stated, in your opinion, between bigness and monopoly? Does it have any direct relation?

per se

Mr. BRYSON. And is bigness of itself Mr. WILSON. Yes. What is the relationship? Does bigness make monopoly in every case?

Mr. CLARK. I do not know just how to discuss that point, Congress

man.

Mr. MICHENER. Well, compare the United States Steel and the atomic bomb; that ought to give you a comparison.

Mr. CLARK. Bigness nearly always results in price leadership.
The CHAIRMAN. Results in what, Doctor?

Mr. CLARK. Results in price leadership, and price leadership is the tool of restraining competition.

Mr. WILSON. Price leadership of itself is recognized as not a violation of the Sherman antitrust law, isn't it, Doctor?

Mr. CLARK. That is true.

The CHAIRMAN. But it is a matter we should concern ourselves about. Mr. WILSON. I am not saying we should not, but I am just trying to get his opinion on it.

Mr. KEATING. But under the competitive system, which you staunchly advocate, price leadership is inevitable, is it not?

Mr. CLARK. No, not if you had a dispersed industry. It cannot be price leadership in a really dispersed industry.

Mr. KEATING. Well, there would be price guidance by the biggest concerns in an industry, would there not? In other words, is it not one of the natural results of free competition that those who desire to compete are not going to get too far away from prices set by the big fellows in the industry?

Mr. CLARK. That is the point I make, that the big fellows, if you have them, will usually bring about a condition of price leadership, and if you have not got the big fellows, if the industry actually is dispersed in a lot of relatively small units, which make up the industry, you will not have price leadership unless you have a trade association that is able to act very effectively without getting caught by the Attorney General.

Mr. KEATING. Give us an illustration of an industry here today that does not have any price leadership.

Mr. CLARK. The shoe industry.

Mr. KEATING. The shoe industry?

The CHAIRMAN. The ladies' garment industry has no price leadership.

Mr. DENTON. The furniture industry would be in that category.

Mr. CLARK. That is right.

The CHAIRMAN. Wherever there is style, there could not be.

Mr. KEATING. Well, is the lack of price leadership a concomitant only of those industries where style enters into the picture? That is true, certainly, in furniture, ladies' garments and shoes.

Now, is there a basic industry, let us say, which does not have price leadership?

Mr. CLARK. Well, the term "basic" stops me. I was going to suggest the candy industry-all the food industries are free from any very obvious price leadership.

Mr. KEATING. The food industry, you think, is free from that?

Mr. CLARK. Yes, I think so.

Mr. DENTON. Does not General Foods

Mr. CLARK. We have some pretty big people there, but the industry still is dispersed far enough so that I think it is still competitive. Mr. KEATING. You do not necessarily mean dispersed geographically?

Mr. CLARK. No, I mean dispersed in industrial units.

Mr. KEATING. I see.

Mr. WILSON. Doctor, many times price leadership, as you say, results in a saving to the consumer, does it not, as well as sometimes it means the other thing?

Mr. CLARK. I have already said that during the inflation the administered-price industries kept prices below the competitive level. That was a very brief and exceptional experience, but we have to give them credit for it.

Mr. McCULLOCH. Well, Mr. Chairman, we have had other experiences in our economy in normal periods. I have in mind, particularly, the Ford Motor Co., which was certainly-what is the phrase you used-in price leadership, for many years, and it is my humble personal opinion that that price leadership resulted in many millions of Americans having an automobile that would otherwise not have had

one.

Mr. CLARK. I think you are quite right, but you certainly do not list Mr. Henry Ford as a typical follower of American business practices. Mr. MCCULLOCH. I do not think that that is something that needs to be implied as a part of the question. I was talking about a price leader, not a general economic pattern.

Mr. CLARK. But seriously, I think that that was an idiosyncrasy of Mr. Ford. It was not an example of management's attitude, as we find it exhibited generally in American business.

Mr. MCCULLOCH. During the time that it was in effect, though, it had a very beneficial effect on the American economy.

Mr. CLARK. Undoubtedly it had, and it is a splendid example of the economic analysis, Mr. McCulloch, which leads us to this feeling that if they will go ahead and expand production and will thereby bring about conditions where they must reduce their market prices, they will find the market growing along with their expanding production, and we can hope to continue to progress.

Mr. McCULLOCH. Mr. Chairman, along that line I wanted to return. to at least part of what I believe Mr. Keating had in mind.

Is

During 1946, 1947, and 1948, I think it is generally agreed that the then existing steel capacity did not meet the abnormal demand. it proper for me to draw from your observations that it is your opinion that the steel productive capacity and maybe some other productive

capacity in America is not now large enough to meet normal demands under competitive industry over a reasonable number of years, say 5 or 10?

Mr. CLARK. No; it is not adequate to meet the demand for steel in a full employment economy.

Mr. MCCULLOCH. Well, do you think, Dr. Clark, that over the next 5 or 10 years there is much likelihood that we are going to have a full employment economy in America?

Mr. CLARK. Oh, yes; I have to take that position, Congressman, because that is our duty. I do, yes.

Mr. MCCULLOCH. I am pleased that there is someone who has that optimistic approach.

We have never had such a condition in America in recent years except during wartime, have we? Is it correct, that in wartime or immediately thereafter, when there was a pent-up demand which had not been satisfied during the emergencies, that was the only time we had this?

Mr. CLARK. We never had deferred demands until something like a war had caused them to be deferred, or a great depression, but I am not relying on backlogs of demands in my estimate of the potential economy that we are entering.

I am relying upon the fact that out of the 48,000,000 American families, all of whom have the American disposition, the American wants, and the eagerness to get the comforts of life that our modern economy has made possible for those able to buy them, there are at least 20,000,000 families that have not entered yet into the markets for these fine things. They are waiting there.

You make the price that will enable the American people to buy, and the demand is almost unlimited, and can maintain the economy on a full-employment basis.

Mr. McCULLOCH. But I gather, to repeat the question, except in times of emergency up to now, we have never had what I take it is meant as a full employment economy, have we?

Mr. CLARK. Oh, yes. We have what you would approximate as that, I think, in the late 1920's.

Mr. DENTON. We had a great many unemployed then, did we not? Mr. CLARK. Well, we had very primitive statistics at that time. We do not know how many there were, but in 1927, 1928, and 1929, the figures are not supposed to have been very high.

Mr. KEATING. Was not one of the difficulties in the late 1920's and the collapse that occurred, in part an overexpansion that occurred on the part of many industries?

Mr. CLARK. I would not think so at all, Mr. Congressman.

Mr. KEATING. You do not think that caused that?

Mr. CLARK. No indeed. I think it was the speculative markets that brought about that collapse.

Mr. KEATING. There is one important part of this testimony that I would like to ask a question about, Mr. Clark. At the bottom of page 7, I gather from your statement that you characterize yourself as neither an extreme left-winger nor an extreme reactionary, and since I happen to lay claim to being in the same category, I am very much interested in the sentence after that, in which you say that, "Many of those, let us say, of the middle ground favor Government ownership in some cases."

I would be interested to know in what cases you feel Government ownership is justified.

Mr. CLARK. Well, the outstanding case, of course, is a public waterworks system.

Mr. KEATING. In a public-utility situation, I suppose in the development of our natural resources, evidenced, perhaps, by the TVA, you would feel that Government ownership was justified in such an instance as that?

Mr. CLARK. Public power; yes.

Mr. KEATING. Is it limited to that?

Mr. CLARK. I simply do not set up any principle at all in this. That is my point. If a situation with respect to any particular kind of business is such that you cannot leave it to be controlled by the forces of competition and public-utility type of regulation does not work well enough, the only other way to have it handled is through social ownership, Government ownership.

I do not back away when that situation develops and say, "No, as a matter of principle, I am opposed to public ownership."

I just want to decide each case on how it is going to work out best, and I think that is the way it has been done.

Mr. KEATING. Do you back away from the Government's going into

the steel business?

Mr. CLARK. I do not believe there is going to be any need for the Government to go into the steel business.

Mr. KEATING. In other words, you do not favor that?

Mr. CLARK. No, not now. There is no problem like that up to now. Mr. KEATING. Have you favored it within the last year?

Mr. CLARK. No, sir. Are you referring to the Spence bill?

Mr. KEATING. No, I am referring to the President's threat that if the steel industry did not expand, as he claimed it should, that the Government would go into the steel business to compete with it. Were you in sympathy with that or not?

Mr. CLARK. Well, I am the only one, I think, who has made a statement before a congressional committee on that. It was just before the Spence bill was introduced, the day before, and I told the Joint Committee on the Economic Report that all that had been proposed was that the Government undertake to find out how large a volume of production, and what size of capacity were necessary to meet the needs of the people, to use every possible way of bringing about that large a capacity and production at that level by aids to business, in encouraging business, positive assistance to business. Mr. KEATING. In the way of loans?

Mr. CLARK. Well, in every way they talked about. They talked about tax incentives; there was quite a range of things, and the President went on and said that if despite all these efforts in bringing about the production of goods that the American people need through private enterprise we do not get it, then we ought to figure on having the Government step in itself. I do not get shocked by that at all, Mr. Keating. I think that if that situation arose, and I do not expect it to arise, there would be very few who would say that the people must be denied goods which they need simply because private enterprise will not furnish them.

Mr. KEATING. In other words, where the Government decides that private enterprise is not furnishing the goods which the people need,

then you would contend that Government should go into any business, any line of business?

Mr. CLARK. The Government is nothing but the representatives of the people. I will say when the people decide that they are not getting goods which they need through private enterprise but that it is possible for them to get those goods through their own action, they ought to go ahead and act.

Mr. KEATING. Well, people decide things only by a referendum. You would not advocate such a matter being settled by a national referendum?

Mr. CLARK. A national referendum would seem to me to be a pretty difficult process for any decision.

Mr. KEATING. I agree it would be impractical. But it must be decided by a Government board or bureau, and your position is that if a Government board or bureau decides that private industry has not produced enough of a certain item then that Government board or bureau should be able to go into any line of manufacturing activity?

Mr. CLARK. Not at all. I said that the Government is the representatives of the people, and I was referring to the Congress.

Mr. KEATING. To the Congress?

Mr. CLARK. Yes, sir.

Mr. KEATING. You would think that the Congress, if it felt that private industry was not making enough of a certain item to fill the needs of the people, that the Congress should then authorize the Government to go into a particular line of business?

Mr. CLARK. Yes, and I do not know why anybody should be startled by it. They have been doing that with respect to public power and a whole lot of other operations.

The same questions were raised on the extension of the parcel post. We have always had this argument that the Government must not do this, that this is something that must be reserved for private enterprise. I do not think you can draw the line at any particular kind of industry and say that Government enterprise should be contemplated only in that industry, and it should not be in any other.

Mr. KEATING. So that you draw no distinction between utilities and water works and power, and so on, on the one side, and industry, in general, on the other?

Mr. CLARK. None at all. You cannot draw that line, Mr. Keating. We have been moving that line along all the time.

The CHAIRMAN. We have crop insurance, RFC, all sorts of interference by Government in business. Government is in business in

many instances. I do not think

Mr. BRYSON. The House today is debating a bill providing aid for rural telephones.

Mr. KEATING. That is for loans.

The CHAIRMAN. Direct or indirect aid.

Mr. BRYSON. Phones for people who have not had them before. Mr. KEATING. There are many who favor Government loans to industry who would not favor the Government in that business. Mr. CLARK. Well, this is a loan to cooperatives. Cooperatives are social groups just like Government.

Mr. KEATING. That is exactly what it will turn out to be.

7