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EXHIBIT IX.-Corporate earnings, textile industry, United States, 1929-48

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Source: Textile Workers Union of America (CIO), The Nation's Most Prosperous Industry (1948), and Profits Build a Financial Fortress (1949).

EXHIBIT X.-Sales of chain and mail order firms and independent stores which sell women's garments, by type of stores, 1935, 1948

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The CHAIRMAN. The next hearing of this committee will be on Monday morning at 10 a. m.

(Whereupon, at 12:25 p. m., the special committee adjourned, to reconvene at 10 a. m., Monday, July 25, 1949.)

STUDY OF MONOPOLY POWER

MONDAY, JULY 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 10:05 a. m., in room 346, Old House Office Building, Hon. Emanuel Celler (chairman) presiding.

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

The CHAIRMAN. The subcommittee will come to order.

Our first order of business today is to hear from Mr. Everett M. Kassalow, associate director of research of the Congress of Industrial Organizations.

Mr. Kassalow, we are very happy to hear from you.

STATEMENT OF EVERETT M. KASSALOW, ASSOCIATE DIRECTOR OF RESEARCH, CONGRESS OF INDUSTRIAL ORGANIZATIONS

Mr. KASSALOW. May I first express the thanks of my organization, the CIO, for being permitted to testify before this committee on this very important subject of monopoly.

As I understand it, the first meetings of these hearings are in the nature of an introduction to a larger investigation. What I hope to do today, then, is try to suggest a method or an approach to this subject which we feel would be most fruitful. No doubt, others have made suggestions too, but we hope ours will bear some fruit.

Later on, we should like to be permitted to present a detailed statement on program suggestions.

The Congress of Industrial Organizations believes this subject of monopoly, and more specifically the impact of monopoly concentration upon the entire price system, to be of outstanding importance. It is our firm conviction that unless more sense and rationality can be brought to bear upon the wage-price-profit relationships in this country, we may face the prospect of ever-increasing Government intervention and regulation in the economic system.

The rather dismal experience we have had in trying to control monopoly and monopoly pricing over the past few decades seems to point to ever-increasing regulation as the only alternative. The current recession, reflecting as it does, to a considerable extent, an unbalance between wages, prices, and profits, lends further weight to this direction. It is for these reasons that we hope that this committee will come up with something concrete and effective in the form of

tools to make our price system more competitive and more fluid, and thereby reduce the pressure for regulation.

There have been a number of investigations, public and private, of monopoly and concentration in the past. Somehow, however, these have not been productive of action. We hope that this investigation will be primarily one of action rather than a mere study group.

Back in 1939, as you are all no doubt familiar, a specially appointed Temporary National Economic Committee made the most thorough and far-reaching surveys of monopoly and economic concentration in this Nation's history. The documentation which it furnished on the! nature and extent of concentration was simply voluminous. More recently, a report of the Senate's Small Business Committee-Economic Concentration and World War II (Senate Committee Print No. 6, 79th Cong. 2d sess.)-brought up to date some of the material developed by the TNEC.

We believe it would be foolish for this investigation to attempt to retrace the detailed ground covered by the TNEC. While some gaps remain to be filled in, and we should like to comment briefly on these below, the greater part of the basic research in this field does not have: to be resurveyed. There certainly can be little argument with the bulk of the data revealed by the TNEC hearings and reports.

We believe, therefore, that if this committee is to be successful in its efforts to deal with the monopoly question, it should take as its starting point the conclusions and recommendations reached by the members of the TNEC. In other words, we strongly urge you to reexamine the principal proposals and recommendations made by that group. which labored so long and so well to unearth the facts about monopoly.

In the final report of the Temporary National Economic Committee (S. Doc. No. 35, 77th Cong., 2 sess.) on pages 20-45, you will find its conclusions and recommendations.

It has always seemed to us a legislative tragedy that these recommendations and conclusions have gone so largely unnoticed by succeeding Congresses. We do not insist that every one of these recommendations and conclusions should have been immediately enacted into law. Indeed, as it has turned out, by action of the Federal Trade Commission or decision by the United States Supreme Court, a few of the Temporary National Economic Committee's recommendations have been put into effect. But generally we feel these proposals can well form the nucleus for an effective program against monopoly and concentration at this time. The recommendations and proposals, for example, on such things as resale price maintenance laws, trade associations, and patents, to choose a few examples, certainly merit the most serious consideration by this present committee.

As part of its work, the Temporary National Economic Committee also requested Mr. Walton Hamilton, of the Yale University Law School to prepare a report appraising the Government's antitrust program down through the years. (Antitrust in Action, Temporary National Economic Committee Monograph No. 16.) In what we feel was in many ways a brilliant and suggestive monograph, he pointed to the dreary and ineffective history of this particular Government program. Based on this largely ineffective history, he made a number of instructive and provocative suggestions for future antitrust policy.

These, too, we feel are an important part of the record and should receive careful consideration by this committee.

In urging you to take this kind of a starting point we are hopeful that this committee will assume the mantle of action rather than of mere investigation. Starting with a serious consideration of the TNEC recommendations, we feel, should get the committee off on the right foot. After all, unlike the Temporary National Economic Committee, this is a legislative committee, and we look expectantly to its work.

As I have already indicated, while we believe the Temporary National Economic Committee surveys and recommendations form a good starting point in the field of monopoly, there are some other problems and areas which still remain unexplored and which we hope this present committee can get into.

In surveying prices and price policies, and what could be done to modify them, we feel that previous committees investigating monopoly, and this includes even the TNEC, have tended toward an overlegalized approach. Their work as well as the work of the Antitrust Division tends to search for evidence of actual collusion in the price field between different companies. On another level, much of the antitrust work seeks to unearch invidious plans and schemes on the part of corporations to grasp control over significant areas of production in particular industries.

While much of this no doubt has gone on, and goes on, in American economic life, we believe that any up-to-date approach to the problem of monopoly and monopoly pricing must give equal emphasis to another line of attack.

We have reached a stage in this country as a result of which several dozen large corporations by their mere size and economic location are in policy-making positions.

To state it simply by way of example, what the General Motors Corp. decides about its 1950 plans, so far as budget making is concerned, will to a significant extent largely determine what will happen to production, prices, and employment in the automobile industry. By its very size and competitive strength such a corporation is a pace setter for millions of workers and their families. The same would also hold true of leaders such as United States Steel, General Electric, American Woolen Co., and a number of others.

Let's assume that one of these corporate leaders looking ahead to 1950 budgets its operations for that year at a production level of onethird below 1948, with at least a corresponding drop in employment or man-hours worked. At the same time, it also determines a price policy. The work of the TNEC, and the National Resources Planning Board before it, gives abundant evidence of price administration of this character in a number of industries.

As we see it, this kind of planning to a large extent will determine the levels of employment, output, and prices in many industries. In effect, too, it will almost result in planning the over-all level of national income. Incidentally, to all those who are so eager to attack and castigate the words "economic planning" may we throw down the challenge that they investigate and try to up-root the very comprehensive private planning involving public welfare that is carried on by this. country's leading corporations.

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Now, perhaps the argument occurs to some members of this committee that while a General Motors or a United States Steel may budget for a low output and a relatively high price for a given year, their competitors can plunge in with price cuts and enlarged volume and high employment. A little thought about this possibility should dispel it. In the first place, there is in some industries the barrier presented by the kind of collusive price maintenance that is carried on by trade association publications. The more or less open pricing system, for example, which characterizes some of the important products in the steel industry makes it nearly impossible for individual companies to run against the stream.

Even more pertinent is the realization of competitors that once they unleash a price war they will, indeed, open a Pandora's box. Could Studebaker, Hudson, Kaiser-Frazer, and even Ford or Chrysler, long lead General Motors in serious price cutting?-No. We believe the evidence will bear out our contention that the very position of these corporate leaders, some of whom we have already mentioned, without the necessity of collusion has the effect of administering prices and production.

To repeat, here is a vast amount of planning involving literally economic life and death for millions of Americans being done by a handful of giant corporations.

What can this committee do about this question, which to us seems to be the most fundamental one in this whole field of pricing and monopoly?

Well, let me repeat my opening injunction that somehow, somewhere, we must break through the chain involving the wage-priceprofit relationships if the price system and free private enterprise are to remain in effect in our economy.

Getting back to what the committee can do, let me urge you at least to close up the gaps of ignorance which now prevail about the actual pricing and output policies of these companies. If, as we have indicated, their decisions have such vast repercussions the public is at least entitled to know what general criteria they use in determining prices and output. Frankly, with all the private and public studies that have been made in the past in this field, we know next to nothing about the planning and budgeting tactics of these giant corporations. What, for example, is the break-even point for United States Steel, Anaconda Copper, General Electric, and other corporate giants? At what level do they have to operate, normally speaking, to cover all their costs? Beyond that, what level of operation do they look upon as their normal standard? This is not a mere academic question because it is the way corporations plan and operate.

In a hearing before the subcommittee of the Joint Committee on the Economic Report in December 1948, for example, the executive vice president of the General Motors Corp. testified to the effect that the standard volume of operations for his company was something like 80 percent of capacity. This was the level of operations that his company normally planned for and the level at which they made satisfactory profits (Corporate Profits, hearings before the Joint Committee on the Economic Report, Congress of the United States, 80th Cong., 2d sess., pursuant to sec. 5 (A) of Public Law 304, 79th Cong., pp. 506-581).

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