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But you are talking to a group here who believe--and if I am not correct, Mr. Lipscomb can correct me—who agree fully on what you said. You do not need to argue for it to us. We are all for it. Is that right, Mr. Lipscomb?
Mr. LIPSCOMB. That is right.
Mr. WARD. Mr. Jackman, are you familiar with the transition of ownership of farm credit mixed ownership corporations to a privately owned status?
Mr. JACKMAN. No, I am not very well acquainted with that situation.
Mr. WARD, I thought you might be aware of how they moved from Federal to private ownership, and the farmers and others now own the stock rather than the Federal Government.
Mr. JACKMAN. Yes, I know some of them, but I could not go into a lengthy discussion on that. I have quite a lot of data available in the office.
Mr. WARD. You have not considered the applicability of that principle to other types of Government-owned corporations, have you?
Mr. Jackman. Yes. I think there are quite a lot of things involved in there which could be used in many, many other instances.
The CHAIRMAN. Mr. Ward, if you wish to make a statement now we would be glad to have it on the record.
Mr. Osmers. You are familiar, Mr. Jackman, with the banking business that the Federal Government does in its post offices--the so-called Postal Savings System?
Mr. JACKMAN. Oh, yes.
Mr. OSMERS. Do you believe with the facilities today available for the saving of funds that we need to continue the Postal Savings System?
Mr. JACKMAN. Oh, no, because I think the original intent of Congress in setting up the Postal Savings System was to make available to people in rural areas and in communities without banks, or any places for putting their savings, a place where they could deposit their money. It was a very good idea in that regard.
The CHAIRMAN. You would be satisfied if we could forget the postal savings end of it and get through some of these others, would you not? And hold it where it is.
Mr. JACKMAN. I think even on that there is no necessity for it today.
The CHAIRMAN. You do not want us to start tilting at that one on this committee, do you?
Mr. JACKMAN. Well, it is in competition with the taxpayer.
The CHAIRMAN. Surely it is in competition, but you do not want us to start trying to get that out, do you? You do not want us to embody in our program here a move to get rid of postal savings, do you?
Mr. JACKMAN. No.
The CHAIRMAN. If you overload us we will not get anywhere and then we will bog down. Mr. JACKMAN. You have competition there and it is applicable.
The CHAIRMAN. I agree with you, but I have to have a toothache too. I do not like it but there is a certain amount of it I have to put up with.
Mr. OSMERS. Mrs. St. George, a very able member of our committee, has introduced a bill to eliminate the Postal Savings.
The CHAIRMAN. I know, but she will not get it through this session.
The CHAIRMAN. Your statement will be incorporated in the record, Mr. Brylawski the same as if you read it, and if you want to add to it that will be agreeable.
STATEMENT OF HENRY H. BRYLAWSKI, EXECUTIVE SECRETARY
AND GENERAL COUNSEL, DISTRICT OF COLUMBIA BUSINESS PRACTICES COUNCIL
(The prepared statement of Mr. Brylawski is as follows:)
STATEMENT OF HENRY H. BRYLAWSKI, EXECUTIVE SECRETARY AND GENERAL COUNCIL, DISTRICT OF COLUMBIA BUSINESS PRACTICES COUNCIL
Mr. Chairman, my name is Henry H. Brylawski, attorney at law with offices in the Woodward Building, Washington, D. C. I make this statement in behalf of the District of Columbia Business Practices Council, of which I am executive secretary and general counsel.
The District of Columbia Business Practices Council is an organization composed chiefly of retail merchants in the District of Columbia the principal purpose of which is to promote and advance the interests of the merchantile industry in the District of Columbia.
The council believes that Government competition with private industry is contrary to the fundamental economic principles upon which the economy of our country is based. The council believes in a system of free enterprise unencumbered by Government regulation or competition, insofar as is practicable and consistent with the general welfare.
With these basic concepts in mind, the District of Columbia Business Practices Council desires to go on record as favoring legislation which reaffirms these principles and assists in their perpetuation in our economy.
We have, therefore, examined with interest H. R. 8832, the Anti-Government Competition Act, as well as H. R. 9834 and H. R. 9835, which also are designed to limit Government competition with private industry.
The Council does not desire to comment on the technical application of any of these proposed acts, feeling that it is beyond the province of the council to suggest language which might be employed to perfect them; nor do we feel qualified at this time to favor one over the others.
We desire, instead, to go on record as favoring this legislation in principle and, at the same time, to bring to the committee's attention examples of Government competition with private industry which will help to illustrate the real need for legislation of this kind.
There have existed for some time in Washington and elsewhere throughout the country, wherever there are concentrations of Federal employees, a number of clubs, credit unions, recreational associations, and like organizations made up of Government employees and operating within the framework of Government installations. These organizations have received the benefit of official encouragement and assistance from the various Government departments, and we think rightly so. For we would like to say at the outset that we recognize and approve of the fine work that they accomplish in the enhancement of morale and in other aspects.
A good many of these organizations, however, include among their major endeavors the operation of selective discount purchase ventures. A survey con
ducted for the council has disclosed that these purchase clubs have, through direct solicitation and otherwise, obtained for their memberships discounts from regular prices on many items of merchandise as well as services that are not available to the buying public at large.
The survey disclosed that in some instances large retail outlets are maintained, in one instance at least within Government leased space, for the benefit of employees. It also disclosed that in furtherance of the discount activities, the Government's time, spac, stationery, and mailing privileges were sometimes utilized.
There are various forms of the discount club activity. In most instances it consists of obtaining from certain cooperating retail merchants discounts available only to the organization members. In others direct quantity purchases were found to have been made by the clubs for distribution to their members.
While these activities have not been carried on by the Federal Government directly, the fact that they have been countenanced and encouraged by the Government, that they have been operated out of Government buildings through agencies which are semiofficial arms of the Government, and on the surface have all of the indicia of being official Government activities, has created for them an atmosphere denoting operation by the Government, or, at the least, with Government approval. This, of course, has contributed toward their widespread acceptance by Government employees.
In addition to the violation of the fundamental principle of the separation of the Government from private enterprise, Federal and State laws are violated by these activities. These laws include the Robinson-Patman Act which very definitely prohibits the granting, soliciting, or acceptance of selective discounts, except under circumstances which are not present in these cases.
The council has obtained authoritative legal opinion that the Robinson-Patman Act would apply to the discount purchase clubs in the District of Columbia without regard to the question of interstate commerce. In addition, the fair-trade laws of the 45 States where such laws are in effect are being violated by the clubs which conduct discount purchase activities within those States.
We are glad to report that after bringing these conditions and activities to the attention of the appropriate Government officials steps were taken which may serve to cause the discontinuance of these purchasing activities. Conferences were held with the Secretary of Commerce and with representatives of the Bureau of the Budget. These conferences culminated in a bulletin to the heads of the executive departments and establishments from the Director of the Budget, & copy of which is attached to this statement (bulletin No. 54-11).
In this bulletin the Bureau of the Budget has advised the heads of executive departments and establishments to eliminate any consumer purchasing practices of Federal employee organizations which may be in violation of law.
In addition the bulletin emphasizes the responsibility of the heads of departments and establishments for assuring that such facilities are not devoted to activities of such organizations in violation of law.
The Director of the Budget also wrote to the council explaining in more detail the position of the Bureau. A copy of this letter, dated June 18, 1954, is also attached. We are very appreciative of the action taken by the Director and in order that the administration's position on this subject might be better known by the various agencies we have reproduced and distributed his letter to a number of departmental heads.
The Director of the Budget, however, did not consider this subject from the standpoint of Government interference with private enterprise, but primarily from the question of violation of law or the unauthorized use of Government facilities and resources. For this reason, as well as others, we feel justified in bringing the subject to the attention of this committee.
We believe that, when considered in the perspective in which it operates, the discount purchase activity of the various quasi-official Government employee organizations constitutes an important and serious form of competition on the part of the Government with private enterprise.
We desire, therefore, to place this brief outline of this activity in your record as an additional example of the need for corrective action of the kind provided for in the legislation now under consideration.
EXECUTIVE OFFICE OF THE PRESIDENT,
BUREAU OF THE BUDGET,
Washington 25, D. C., June 18, 1954. Mr. BERNARD N. BURNSTINE, President, District of Columbia Business Practices Council,
Washington 5, D. C. DEAR MR. BURNSTINE: The Bureau of the Budget has given further consideration to the questions you have raised with us in connection with consumer-purchasing activities of voluntary Federal employee organizations.
As we advised you at our meeting of March 29, the Bureau fully recognizes the importance of bringing to the attention of the executive departments and establishments complaints with respect to alleged improper use of Government facilities and manpower in activities of certain Federal employee organizations. In view of the responsibility of the heads of departments and establishments for assuring that Government facilities and manpower are not devoted to activities of such organizations in violation of the law, we believe that examination and review of such complaints are the responsibility of the heads of the appropriate executive agencies.
The Bureau of the Budget has therefore issued the enclosed bulletin to the heads of all executive agencies, bringing to their attention the types of complaints that we have received and requesting them to take appropriate action to assure that Government facilities and manpower are not devoted to activities of Federal employee organizations in any manner or for any purpose contrary to law. This bulletin should facilitate your efforts to bring specific situations directly to the attention of the agencies involved.
To the extent that your organization has questions with respect to consumer purchasing activities carried on by Federal credit unions organized by groups of Federal employees, we believe that your questions should be directed to the Bureau of Federal Credit Unions of the Department of Health, Education, and Welfare since it is that agency of the Federal Government which has legal responsibility for administration of the Federal Credit Union Act in connection with Federal credit unions organized by groups of Federal employees or by other eligible groups of citizens.
We expect that the heads of the various agencies concerned will give careful attention to specific complaints of violation of law, and that they will be anxious to eliminate any practices which may be demonstrated to conflict with the fairtrade laws. However, we do not believe that it is either feasible or desirable to establish governmentwide policies which might have the effect of depriving these Federal employee organizations of the opportunity to engage in activities of a type which are commonly accepted as normal functions of employee organizations sponsored or permitted by private employers.
In summary, we have concluded that any action of the Bureau of the Budget in regard to issues you have raised should be limited to calling the agencies' attention to their responsibilities in these matters. It is on the basis of this conclusion that the enclosed bulletin has been issued to the Federal agencies Sincerely yours,
ROWLAND HUGHES, Director.
BUREAU OF THE BUDGET,
Washington 25, D. C., June 18, 1954.
BULLETIN No. 54-11 Subject: Use of Government facilities and manpower in activities of Federal
employee organizations. To the Heads of Executive Departments and Establishments:
1. This bulletin (a) brings to the attention of the departments and establishments complaints received by the Bureau of the Budget with respect to alleged improper use of Government facilities and manpower in activities of Federal employee organizations and (6) emphasizes the responsibility of the heads of the departments and establishments for assuring that Government facilities and manpower are not devoted to activities of such organizations in violation of law.
2. The Bureau of the Budget has received complaints from several sources that voluntary organizations of Federal employees are improperly utilizing Government facilities and manpower in some of their activities, specific reference being made to certain consumer purchasing activities which are alleged to be in
violation of fair-trade laws or are claimed to be otherwise improper. Among these complaints are charges that Government space has been used in the storage and display of consumer merchandise available for sale to employees, that penalty mail indicia have been improperly used, and that Government manpower has been improperly used in administering bulk purchasing activities of such groups. Where these complaints have been specific the Bureau of the Budget has referred them for investigation to the heads of the agencies concerned.
3. Voluntary organizations of Federal employees which contribute to the welfare and morale of Federal employees merit the encouragement and support of the departments and establishments. It is not believed either feasible or desirable to establish government wide policies which might have the effect of depriving these organizations of the opportunity to engage in activities of a type which are commonly accepted as normal functions of employee organizations sponsored or permitted by private employers. The head of each department and establishment should, however, take appropriate action to assure that the support provided to such organizations does not result in the use of Government facilities and manpower in any manner or for any purpose contrary to law.
ROWLAND R. Hughes, Director. Mr. BRYLAWSKI. I just want to say the District of Columbia Business Practices Council is a local trade organization composed of retail merchants, and we intended to and I do in my statement bring to your attention one form of Government competition which perhaps you are not too familiar with, and which perhaps on the overall picture of Government competition is not too important, and yet it is important to us.
We felt it worth while to bring it to your attention as an added reason for the passage of the type of legislation vou have under consideration.
We do not express any particular favor over any particular bill which is pending before you. We have not had the opportunity to study them all. We do favor legislation of this kind.
That is all I want to say in addition, of course, to my statement which is in the record, I understand.
The CHAIRMAN. That is right.
Mr. Osmers. Mr. Brylawski, I would like to ask you whether you feel you should establish in the executive branch of the Government some place where members of your District of Columbia Business Practices Council can present their case for the ending of some competitive Government activity, and where the appropriate Government department could come and defend itself?
Mr. BRYLAWSKI. We would be most highly in favor of that, Mr. Osmers.
Mr. OSMERS. Do you feel that the President should be required to make a report each year to the Members of Congress and the people of this country on competitive business activities and the progress that is being made to eliminate them?
Mr. BRYLAWSKI. I think it would be most helpful.
Mr. OSMERS. Do you think before any new discount club could be started within the Government that they should be made to go to the Director of the Budget and prove their case and prove the need for their activity?
Mr. BRYLAWSKI. I feel that, and I also feel in no case would it be justified. Even those that are existing. I would like to go a little beyond that.
Mr. Osmers. I realize that the existing ones will require a painstaking and careful job with topflight personnel to weed out those that are unnecessary and those that should be continued. But certainly as to