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Mr. VARRONE. They are using a combination of things. They are getting some bristles out of Poland, and some bristles out of France, and some bristles out of England, and some bristles out of South America. It is a conglomeration of mixtures. It is not worth its salt. They are mixing it with horsehair and nylon and synthetics.

Mr. OSMERS. What happens to the brushes made in the Federal prisons? What is the disposition of those? They obviously make many more than they can use themselves in the prisons.

Mr. VARRONE. They go to any number of Government divisions, like the Army and the Navy. I cite again in my statement the specific orders that have been made for the Army and the Navy and the Air Force, and a number of Government operating organizations.

Mr. OSMERS. Do I understand you correctly to say that let us take the Army, for example, and say they want some brushes

Mr. VARRONE. Right.

Mr. OSMERS. Are they required to buy them from the prison supply, or are they sold at a lower price or given to them?

Mr. VARRONE. I do not know how they run their market value, but it stands to reason they can sell them a lot cheaper than private manufacturers. You could not expect private manufacturers or free labor to compete with prison labor.

Mr. Osmers. What is the average hourly rate for labor in your field?

Mr. VARRONE. It depends. There are a number of figures. If you are talking about the man who makes the brush Mr. OsMERS. Yes. Give me an average figure. Mr. VARRONE. $1.50 to $2 an hour.

Mr. Osmers. Do you feel your union would be helped if they had some specific place in the Government or some inpartial place in the executive branch of the Government where you could place your case and be heard, and where the Federal prison people could come in and tell their story?

Mr. VARRONE. There is no question about it, sir.

Mr. OSMERS. In other words, when you have to go and try to curtail competition with your industry now and with the members of your union you bave to go and talk to your competitor; do you not?

Mr. VARRONE. Yes.

Mr. OSMERS. You have to go down to the prison people and talk to them.

Mr. VARRONE. That is right.

Mr. OSMERS. Do you think it would be advisable if we could establish in the executive branch of the Government some place where any Government agency or department would have to go before to prove the need for some new competitive activity?. For example, supposing the Navy, which is very ambitious, decided they want to make brushes and have sailors make them. They are going to give up some battleships and they are going to have the sailors make brushes. Do you think it would be advantageous for the working people of this country if the Navy, instead of going into the brush business, had to go down to the Director of the Budget and prove their case?

Mr. VARRONE. Definitely

Mr. OSMERS. Don't you feel it would be helpful to your employees and the rest of the people of this country if once a year the President were required to make a report to the Congress and to the people of

the country as to the progress that has been made in ending this competitive activity?

Mr. VARRONE. It would be the most wonderful idea, sir. It is needed.

Mr. OSMERS. That is all I have, Mr. Chairman.
The CHAIRMAN. Thank you very much.

Mr. WARD. The next witness is Mr. Jackman, president of the Investors League, Inc.

The CHAIRMAN. We have your statement, which will be incorporated in the record. Any additional statements you wish to make we will be glad to receive.

STATEMENT OF WILLIAM JACKMAN, PRESIDENT, THE INVESTORS

LEAGUE, INC.

Mr. JACKMAN. Fine. I appreciate that very much, Mr. Chairman, but I think I would like to go over the statement.

The CHAIRMAN. What?

Mr. JACKMAN. I would like to go over the statement. It is very short.

The CHAIRMAN. Do you mean you would like to read it?
Mr. JACKMAN. Yes.
The CHAIRMAN. If you want to do that, go ahead.

Mr. JACKMAN. I am William Jackman, president of the Investors League, Inc., with headquarters at 175 Fifth Avenue, New York, N. Y. The league I represent is the oldest and largest organization of investors, with thousands of members residing in every State of the Union. It is an organization of investors, both small and large, who make up the backbone of our private enterprise system, which is, in turn, the backbone of our national economy.

As there is a distinct possibility that the Treasury Department will shortly come forth and ask for an increase in the debt limit, it is our contention that we should give consideration not only to the bill that is presently before you, H. R. 8832, but to consider the significant consequences of this continued drift toward ever-expanding indebtedness. Yes, we should put our house in order and commune with ourselves and see if we cannot possibly appraise the situation as it stands with the figures and facts that are available.

The Investors League is particularly interested in that phase of the bill which would seek to discover the extent to which the Government is in business and I would say, gentlemen, the biggest business in the world.

It is our feeling that when this survey or investigation is completed, it is very likely to occur to Congress that if the Federal properties now owned by the Government were sold to private interests the result would be most constructive from the standpoint of the national debt and tax revenues. In other words, if the proceeds from the sale of these properties were applied exclusively to a reduction of the national debt, the reduction, we believe, would be substantial. Obviously thereafter the Federal budget would not need to include interest on that portion of the Federal debt which had been retired. The properties, when operated under private ownership, would add large sums of new tax revenue which the Government has heretofore not received. This

additional revenue should result in at least a balanced budget, if not make possible further tax reduction.

Completely separate and apart from the revenue or tax features of such an objective is the fact that they are in line with the Investors League's objectives in helping to maintain the private-enterprise system for it is well known that private-operating enterprises cannot compete with Government-owned concerns for two very good reasons. One is that the Government-owned enterprises are free from taxation, and the other one is that the funds necessary to keep them in operation and allow for growth come from the taxpayer rather than from the investor public. If our private-enterprise system is to serve the public well, the competitive conditions under which it operates must not only be fair but it must be similar in all instances. In other words, the same rules must apply to all.

Obviously, if one group of enterprises enjoys definite Governmentbestowed advantages, it will eventually destroy the other. As your distinguished chairman has said:

* * * if the Government engages in activities which the citizen normally carries on, the Government deprives the citizen of his ability to pay the taxes without which the Government cannot exist.

Just over a year ago Charles E. Wilson, former head of the General Electric Co., suggested that the Federal Government dispose of its investment in business enterprises by forming corporations whose stock would be purchased by the holders of Federal bonds. Many individuals since have made similar suggestions. I wonder if this committee has given any thought to the magnitude of Uncle Sam, Inc.

The seventh intermediate report of this committee says the reported capital assets of the Federal Government as of December 31, 1951, was $146 billion. Various estimates of from $20 to $50 billion have been made of the liquidatable activities in the $146 billion. If $30 billion is accepted as a reasonable estimate, let's compare it with stockholders' equities in some of the Nation's biggest private enterprises. Ladies and gentlemen, it would require all of the net worth of 29 well-known American companies to equal the Government's $30 billion investment in liquidatable business enterprises. Isn't that staggering? These 29 companies are composed of 2 of the largest

from each major industry, plus 1 giant in the communications field. They are—and listen to this imposing list: American Telephone & Telegraph Co. Pacific Gas & Electric Co. Standard Oil Co. of New Jersey Consolidated Edison Co. of New York Socony-Vacuum Oil Co.

Anaconda Copper Mining Co. General Motors Corp.

Kennecott Copper Corp: Chrysler Corp.

Bank of America (California) United States Steel Corp.

National City Bank of New York Bethlehem Steel Corp.

American Tobacco Co. E. I. du Pont de Nemours

R. J. Reynolds Tobacco Co. Union Carbide & Carbon Corp.

Swift & Co. Pennsylvania Railroad Co.

General Foods Corp. Santa Fe Railroad

Goodyear Tire & Rubber Co. General Electric Co.

Firestone Tire & Rubber Co. Westinghouse Electric Co.

The Great A. & P. Tea Co. Sears, Roebuck & Co.

Safeway Stores, Inc. Montgomery Ward & Co.

When we consider that the national debt is close to the $275 billion limit set by the Congress and that we have admitted, liquidatable, competitive Government businesses larger than 29 leading private

corporations in the United States, is it not time for more business in Government and less Government in business?

Mr. Chairman, the Investors League firmly believes that there is over $30 billion of liquidatable assets now held by the Federal Government that can be sold to private investors. The members of the Investors League stand ready to invest in these assets as private enterprises. They are sick and tired of having someone else invest their earnings for them.

We believe that H. R. 8832 sets up the best machinery for seeking out and listing the liquidatable assets of the Federal Government. We believe that H. R. 8832, in the veto recommendations permitted to the Anti-Government-Competition Board, will halt the tendency to create new activities apparent in many departments and agencies. And finally, Mr. Chairman-and may I add, most important-we believe it is high time the Congress goes on record as being against the Government being in any kind of business in competition with its people which violates the basic concept of the public interest.

The declaration of policy in section (2) of H. R. 8832 will tell the executive branch in no uncertain terms, exactly how the Congress feels about these activities. Mr. Chairman, we believe you and everyone else in this room will agree that in the end we are all dependent upon the executive branch to stop at least 85 percent of these activities that the Congress never specifically authorized, does not now condone, and apparently wishes halted.

If the Congress expresses its desires, in this form, to see these activities turned bact to the citizenry and the Executive fails to act--this same Congress can take more drastic steps through its appropriating and other powers to force the hand of the Executive.

Behind the framework of our entire economy in the United States, as you know, lies the free-enterprise system. This system must stand if the country as we know it is to stand; if future generations are to have the comforts and benefits we have enjoyed in the past and are enjoying today. There is no escape from that fact. I know it, you know it, and every member of the Investors League knows it.

Anything and everything that can be done to preserve the freeenterprise system is of concern to the investing public. The Investors League urges a favorable report and quick passage of H. R. 8832. Let's get the Government out of competitive business.

The CHAIRMAN. Thank you very much.

Mr. OSMERS. Mr. Chairman, I would like to ask Mr. Jackman if he would describe just a little bit more his organization, the Investors League. Is that a membership organization, with annual dues? And what services does it perform for its members?

The CHAIRMAN. Yes.

Mr. Jackman. It is a membership organization with membership dues. And amongst the many functions that we perform, we hold forums on economic matters that affect investors in various parts of the country.

We have an advisory board that consists of some 88 people representing every State of the Union. Its membership is distributed throughout the United States, with thousands of members in every State.

Thank you.

It is a nonprofit organization and nonpartisan. We have conducted not only these forums but we have conducted educational programs. For instance, in the past 2 years we have had high-school essay-writing contests in trying to pick up the high-school student to the importance of the investor in our national economy.

The amazing thing this year was the tremendous number of young students who participated. Last year we gave the winning student, who came from New Mexico, a share of stock in some 7 or 8 corporations, and brought her to New York and gave her quite a good time. This year the winning student was from California. So in that area it is very definitely educational.

It is educational in the area of the forums we have conducted, such as how to improve management-stockholder relationships and how to resume the flow of venture capital and how to perpetuate the free-enterprise system, and things of that nature.

Mr. OSMERS. Your organization does not handle the actual investment of funds for its members?

Mr. JACKMAN. No.
Mr. OSMERS. It is educational and nonprofit?

Mr. JACKMAN. We not only do not handle them but we do not recommend either one way or another what they should buy or sell.

Mr. OSMERS. Were you here this morning when a representative of the paint industry testified?

Mr. JACKMAN. No; I am afraid not.

Mr. Osmers. The paint industry as you know is divided and diversified and spread all over the country. He made what I thought was a rather interesting observation that private paint concerns were wary of investing money in machinery to make certain Navy types of paint because they feared that the Navy would go back to the manufacturing of that type of paint and their investment would therefore become more or less useless because the Navy is the principal consumer of that product.

Using that as a very small example, do you feel that the everincreasing unnecessary competitive business activities of the Federal Government will, if continued unhampered, make the investment of risk capital less and less attractive and tend more toward the investment into Government securities, and less and less into private business?

Mr. JACKMAN. Very definitely.
The CHAIRMAN. I think that statement is accepted.
Mr. JACKMAN. Oh, yes. I think it is even worse than that.

The CHAIRMAN. I do not think we need any argument on that. Anyone who has any experience or commonsense knows that is true.

Mr. JACKMAN. No. I think it could be emphasized more so. It is even worse.

We have had over the past few years in our economy a tendency to mortgage futures. I hope you know what I mean. I do not want to go into what I mean by it. It is bond sales, leasing, and so forth. We have not gone into the equity market. The equity market is down to zero. We do not have a thimbleful of equity securities today. Last year, going across the country as I did, the thing I came up with is this: That the only fear business has got today is Government. It is not competition.

The CHAIRMAN. Just a minute, Mr. Jackman. I do not want to be discourteous, or anything of that kind, or even border on it.

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