Sapiro, Allan L., Americans for Democratic Action, Democratic 627 Tyler, William B., California & Hawaiian Sugar Refining Corp., Ltd- 482, 534 114 Warmack, William J., Certified Public Accountant, representing House Small Business Committee 192 Webber, William T., California Walnut Growers Association__. 589 Wilcox, F. R., California Fruit Growers Exchange 561, 635 Willis, H. L., representing Northwest co-op breeders 369 Wright, Edgar, representing the Washington State Grange 418 Ads of both GSI and Safeway for August 15 and 16, 1947. Ads of both GSI and Safeway for August 22 and 23, 1947. Letter from Elisha Hanson to the Honorable Walter C. Ploeser_. Letter from James C. Gray, FPHA, to Walter E. Kroenig_ 245 310 311 312 Press release from House Small Business Committee for August National Tax Equality Association : Letter from the Honorable Wright Patman, the Honorable Wright; statement before the House Ways and 431 Ploeser, the Honorable Walter C., statement before the House Ways and Means Committee, November 24, 1947 Treasury Department Forms 990 and 1028 635 GREENBELT CONSUMER SERVICES, INC. FRIDAY, AUGUST 22, 1947 HOUSE OF REPRESENTATIVES, SUBCOMMITTEE No. 2 oF THE SELECT COMMITTEE ON SMALL BUSINESS, Washington, D. C. Subcommittee No. 2 met at 10 a. m., in room 131, Old House Office Building, Hon. Walter C. Ploeser (chairman of the committee) presiding. Present: Representatives Walter C. Ploeser (chairman of the committee), R. Walter Riehlman, and Wright Patman. Present also: Representative Walter A. Lynch; Allen W. Maddren, assistant director in charge, Select Committee on Small Business; Willis Ballinger, economic counsel, Select Committee on Small Business; James Foristel, Representative Ploeser's office; Albert E. Arent, counsel, Greenbelt Consumer Services, Inc.; Samuel F. Ashelman, Jr., general manager, Greenbelt Consumer Services, Inc. Chairman PLOESER. The committee will come to order. This hearing has been called as a result of certain complaints made to this committee in regard to the Government resettlement project known as Greenbelt, Md. It has been alleged that the United States Government, through its agencies known as Farm Security Administration and later the Federal Public Housing Administration, has built a Government financed and owned community housing approximately 8,000 people and has caused to be created therein a commercial monopoly, which it continues to protect to the exclusion of other commercial enterprises desiring to establish business locations for the purpose of distributing goods and services. It is alleged that this monopoly is enjoyed by the Greenbelt Consumer Services, Inc., a cooperative. The Chair believes it incumbent to state that this committee is legally directed by House Resolution as follows: The committee is authorized and directed to conduct a study and investigation of the problems of small business, existing, arising, or that may arise, with particular reference to (1) whether the potentialities of small business are being adequately developed and if not, what factors have hindered and are hindering the normal operation of established small business and/or its development and enterprise; (2) whether agencies, departments of the Government or Government owned or controlled corporations are properly, adequately, or equitably serving the needs of small business. Accordingly, the Chair, pursuant to resolution unanimously passed at the first meeting of this committee, appointed a subcommittee charged with the responsibility of conducting a study of Government 1 competition with business and Government financing of business. It is the opinion of the Chair that such a study is most important. Such program comprises a study of the growth of cooperatives and other types of enterprise and their part in the pattern of the competitive enterprise system. Because this committee's study of Government competition with and Government financial assistance to business begins with hearings on cooperatives, I wish it clearly understood that the committee is not singling out cooperatives as the only recipients of special privileges in our economy. This committee knows special privilege is far-flung in our business system. All complaints, in their turn, will be gone into and be subjected to careful scrutiny; but, I repeat, it would be very unfortunate, indeed, if the fact that our hearings are opening with cooperatives, is interpreted as an attempt to single out cooperatives as either a bad example of special privilege or as the only case of special privilege in our business system. Such an interpretation would be grossly unfair to cooperatives and the Chair would be the first to resent it. In the case of Greenbelt, Md., the fact that the alleged monopoly fostered by Government is enjoyed by a cooperative is incidental. It is, nevertheless, important to the factual studies of this committee. But, the Chair wishes to make it very clear that any beneficiary of such alleged monopoly would have the attention of this hearing. The Greenbelt Consumer Services, Inc., as a cooperative, is of no unusual significance save that it is the alleged beneficiary in this case. If Greenbelt Consumer Services, Inc., was an ordinary joint stock corporation or a copartnership or an individual enterprise, the primary purpose of this hearing would be the same. The subcommittee appointed for this purpose was composed of the following members: Mr. Howell, of Illinois, chairman; Mr. Hill, of Colorado; and Mr. Keogh, of New York. Since the schedule of this hearing, these gentlemen have been unable to meet because of other duties; in the case of Mr. Howell, I have a letter which would be read to the committee. This is addressed to the chairman of the committee: In view of the fact that I intend within the near future to qualify as judge of the United States Court of Claims, I feel that I should disqualify myself from acting either as chairman or as a member of any subcommittee of the select committee of the House of Representatives investigating problems of small business pending my formal resignation from Congress, which will automatically terminate my membership on any House committees. However, my plans are such that I cannot indicate to you exactly when my resignation will be forthcoming, but meantime, I am sure that you can appreciate my position. In the case of Mr. Hill, work of the Agriculture Committee in Europe; in the case of Mr. Keogh, the work of the Select Committee on Foreign Aid in Europe. Mr. Riehlman, who has been designated by the Chair to preside as acting chairman of the regular subcommittee, realizing that a quorum could not be present, has asked me to appoint a substitute subcommittee with myself as chairman. Accordingly, and in order to facilitate the schedule of the committee's work, I have appointed a temporary subcommittee to substitute, composed of the chairman, Mr. Riehlman, and Mr. Patman. There has been an attempt on the part of some to impunge the purposes of the House Small Business Committee in its study of cooperatives. It has been said by one left wing publicist that the work of this committee is "a concerted campaign to harrass" cooperatives. The Chair states for the benefit of cooperatives that the work of this committee is not in any sense an antiaction. It is not a probe-it is not a persecution-it is not a witch hunt. It is a factual study. It has been said that the Chair is opinionated. Speaking only for the chairman, I am of the opinion that in a competitive capitalistic system, the right to function as a cooperative exists and should be protected. I am further of the opinion that farm marketing cooperatives have served an essential niche in the system. I believe a free competitive system, such as we claim to have in America, permits the functioning of joint stock corporate enterprise, copartnerships, limited copartnerships, individual proprietorships, mutuals, reciprocals, and cooperatives. These hearings were not conceived to harass anyone. They are being held to determine whether or not the Government has granted any type of enterprise benefits and protections not enjoyed by other businesses and whether these benefits and protections have a discriminatory effect upon other businesses. It is the particular duty of this committee to devote its interest to the smaller enterprises, commonly referred to as small business. These studies, therefore, are consistently in line with the responsibility of the committee. It is difficult in this age of critical economic issues for any one human being who devotes most of his attention to such problems to be without opinion. To be without opinion and proceed in a mental vacuum would be to be valueless in the services of his country. The fact that all men have opinions neither precludes them from seeing to it that facts are fairly presented in a public hearing on all controversial issues, nor does it bar them from changing those opinions as the facts develop. I have no doubt that other members of this committee have opinions on this subject, but I am confident, until it has been demonstrated to the contrary, that they, too, will lean backward to see that there are fair play and honest analyses. Let me now put in its proper perspective the present inquiry of the committee into cooperatives. Over the last 25 years Congress has conferred certain privileges upon cooperatives. It has conferred the privilege of tax exemption. It has permitted cooperatives to have a Government banking system so that cooperatives might borrow money at very low rates of interest. Farm cooperatives have been exempted from the provisions of the Federal Securities Act in registering issues of securities. Cooperatives have obtained special privileges under the antitrust laws which have removed them in part from the jurisdiction of such laws. The granting of these special privileges to cooperatives has resulted in mounting criticism by private business that such privileges have imposed an increasingly unfair burden upon private business. Our inquiry, therefore, is to determine whether such complaints are justified. It is reasonable for the Congress to seek from time to time to determine whether special privileges conferred by it upon any kind of busi ness is still in the public interest. If Congress grants special privileges to business, is it to be denied the right and duty of reappraising the workings of such privileges in the future on the ground that an attempt to do so constitutes a prejudiced inquiry against the holders of such privileges? Such a condition would put Congress in the ridiculous position of being unable to rescind any special privileges that it grants. In line with the impartial policy of this committee, time will be allotted to Federal Public Housing Administration and Greenbelt Consumer Services, in the event they desire to refute the allegations before the committee or to submit additional information relevant to the issues. The Chair desires to make it very clear that witnesses will be heard in their order and that both sides will be allotted time. Furthermore, it must be understood by all present that this is a factual hearing by an official committee of the Congress-it is not a show-and there are to be no demonstrations on the part of anyone in attendance. Mr. PATMAN. May I ask a question, Mr. Chairman? Chairman PLOESER. Now it is the hope that we can complete all of the planned program in the ensuing 2 days. The schedule of witnesses will be rather tight. I had hoped that we would work today, even to a very late hour, if necessary, in order to complete the schedule that we had for today, and that we would begin even earlier on the morrow, so that even those not on schedule who would care to be put on the schedule, and who have something to add to the factual study, may be admitted tomorrow. In view of that, the Chair would entertain a motion fixing the time of the hearing. Mr. RIEHLMAN. Mr. Chairman, I would like to move that the hearings proceed during the day as late as necessary to have a schedule of witnesses as presented, or additional witnesses, if time permits; that when the committee adjourns tonight, it adjourn until 9 o'clock tomorrow morning and proceed until 5 p. m., and then adjourn, with necessary recesses for lunch or evening meals. Chairman PLOESER. Is there any objection to the motion? Now I would like to introduce to all present, the members of the committee sitting, so that everyone may know who is talking when they are talking. A VOICE. You ought to give us another room. Chairman PLOESER. We will have order in the committee, as I have just stated. The VOICE. Give us the caucus room. Chairman PLOESER. I introduce on my left Mr. Patman, of Texas, former chairman of this committee. On my right, Mr. Riehlman, of New York, member of the committee. On his right, Mr. Lynch, of New York, of the Ways and Means Commitee, observing the hearings. And the members of the committee staff are on my left. |