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bringing their case to the attention of the Government agency engaged in the competitive practice.

About 20 percent of these Government operations appear to be authorized by law, and the balance are matters of administrative discretion. Of the latter, 70 percent, or 40 cases, involve Department of Defense. Of these, more than 31 cases have been referred to Defense and discussed with them by Business and Defense Services Administration. As you know, that Department has now listed a total of 31 activities for identification of all establishments involved and complete analysis by the 3 branches of the service. The results of this program will be coming in beginning August 8 of this year.

While we in Business and Defense Services Administration can neither prejudge nor predict the outcome of these cases, we can say that our week-by-week contacts on this matter with the Defense Department are such as to develop a high degree of confidence that the facts will be uncovered, that industry will be fully consulted and that mutually satisfactory results will be obtained.

While most of our work thus far bas been with Defense, Business and Defense Services Administration has similar work with other Government departments. A start has been made, with the Post Office, where two complaints have been received. One has been withdrawn after the complainant was fully informed concerning the operation, and the other is being jointly explored by the Post Office and canvas goods manufacturers.

Thus it is possible to visualize present procedures leading to successful conclusions of the 80 percent of the cases coming into Commerce, involving matters of administrative discretion within the executive branch of the Government. It may seem that progress is slow, and perhaps uncertain. But it is difficult to visualize lasting successful outcome without thorough, painstaking, detailed analysis. At least one executive department is now aggressively pursuing this course, and all are greatly stimulated, and their work agumented by the work of the congressional committees and the Hoover Commission. Also, it must be remembered that a great many of these questioned activities have grown up and become firmly established over many years.

Even in regard to those cases of activities authorized by law, the machinery now exists in the form of congressional committees, the Hoover Commission, and a determined executive branch to bring out the facts and effect such corrective action as is required. Under these circumstances sound results will be obtained.

Mr. HONEYWELL. I believe Mr. Teetor, has given you the position of the Department of Commerce on the various pieces of proposed legislation, which follow in the next three paragraphs.

The CHAIRMAN. Unless there is some objection, we will just forget about H. R. 8832, and H. R. 9834. We might just as well forget those two.

There is one question which I have, Mr. Honeywell. On page 3 you state that at least one executive department is now aggressively pursuing this course.

Which one is that?
Mr. HONEYWELL. The Department of Commerce.
The CHAIRMAN. That is your own Department?
Mr. HONEYWELL. Yes, sir.
The CHAIRMAN. Do you have any questions, Mr. Dawson?

Mr. Dawson. No; except to congratulate him on the way he is doing this important job.

Mr. HONEYWELL. Thank you very much.

If I may add, I answered that question "the Department of Commerce" because that is one area in which I feel qualified to speak.

I want to add for the record that there is a tremendous amount of activity where we have it here within the Department of Defense along this same line, but I believe that you have scheduled testimony from that Department separately.

The CHAIRMAN. That is Mr. Wilson?

Mr. HONEYWELL. Yes, sir; and I believe Mr. Pike is to appear shortly.

Mr. Dawson. You are of the opinion that there is no necessity for pinpoint legislation at this time, setting out the activities and details to be carried out by a new agency?

Mr. HONEYWELL. That is correct, sir.

Mr. Dawson. And, you have no objection to a declaration of policy of the Congress that you continue to thoroughly look into this matter, and to eliminate it wherever it is necessary to be eliminated?

Mr. HONEYWELL. None whatsoever.

Mr. OSMERS. Mr. Chairman, I would like to ask Mr. Honeywell 1 or 2 questions.

The CHAIRMAN. You may proceed.

Mr. OSMERS. At the top of page 2 of your statement, Mr. Honeywell, you mention 75 or 80 types of industrial and commercial activities of the Government.

There has been a lot of reference made in committee reports and speeches, and otherwise, as to the number of activities in which the Government is actually engaged, and I believe it would be helpful, certainly, to the work of the Harden subcommittee, if you would be kind enough to furnish us with that list of 75 or 80 activities, some time subsequent to this hearing.

Mr. HONEYWELL. We will be happy to do that, sir. (The information referred to follows:)

DEPARTMENT OF COMMERCE, BUSINESS AND DEFENSE SERVICES ADMINISTRATION

Government competition with private business
CASES REPORTED BY DIVISIONS TO DATE, JUNE 1, 1954

Divisions

Cases

Government depart

ment concerned

Industry position

Do.

Agriculture, construction 1. Repair and maintenance of Defense, Corps of En. Complaining. and mining equipment. construction equipment. gineers. 2. Surplus disposal, spare

.do..

Concerned. parts. Aluminum and magnesium. 1. Aluminum sweating: 6 Air Defense

Complaining. Force bases, 4 naval air

stations, Automotive.......

Building trailers (prison State of California...- Do.

labor). Building materials and con 1. Aluminum sweating. struction. 2. Force account construction. TVA.

Complaining. 3. Insulating board,

Agriculture

Do. Business machines and of 1. Metal shelving (Prison In Justice.

Not stated. fice equipment.

dustries).
2. Plating and heat treating. Not stated.

Do.
3. Marking devices....

Defense, Ordnance Complaining.

plants. 4. Office machine repair... GSA

Considering: 5. Laundry and dry cleaning. Defense.

Has complained. Chemical and rubber. 1. Fertilizer manufacture. TVA

Concerned. 2. Chlorine plants (4).

RFC

Do.
3. Synthetic ammonia plants Defense, Ordnance
(4).

Corps.
4. Spent sulfuric acid

do.

Do. 5. Styrene manufacture

RFC, rubber reserve.. Complained. 6. Paint manufacture (2) Defense, Navy

Complaining. Communications.. 1. Message transmission. Defense, Signal Corps. Do.

Commerce, CAA. Concerned. 2. Financing

Agriculture, REA.... Complaining. 3. Proposed microwave sys State of California...

Do. tem, statewide. Consumer durable goods... 1. Furniture, brooms, mat Justice, Prison Indus No complaints.

tresses.

tries. 2. Optical glass.

Commerce, Bureau of Do.

Statistics.
3. Commemorative medals...- Treasury, Bureau of Do.

Engineering.
Container and packaging... 1. Reconditioning stoel drums, Defense, Navy... Concerned.

2 locations.
2. Fiber ammunition tubes... Defense, Ordnance.. No complaint.
3. Box factories, 149 stations. Defense, various

Some concern. Copper.... 1. Brass mill, sheets..

Treasury, United No complaint.

States Mint. 2. Brass mill....

Defense, Naval gun Do.

factory.
3. Nonferrous foundries. Defense, Navy

Do.
Electronics

1. Quartz crystal grinding... Defense, Air Force.... Concerned. Electrical equipment

None. Food industries. 1. Coffee roasting

Defense, Army and Complaining.

Navy. Forest products. 1. Sawmills, logging, etc. Defense, Navy and Do.

Air Force. 2. Wood preserving.,

Defense, Air Force Protesting.
3. Printing and publishing... Government Printing Concerned.

Oflice, Bureau of
Engraving, and De-

fense.
General components.
1. Gears.

Defense, Philadelphia Not stated.

Navy Yard. 2. Anchor chain.

Defense, Boston Navy Do.

Yard. General industrial equip None.

ment. Iron and steel..

None. Leather, shoes and allied Shoe manufacture... Justice, Prison Indus Not complaining. products.

tries. Metalworking equipment... Leasing of machine tools. Defense.

Do. Miscellaneous metals. 1. Zirconium-hafnium... Interior, Bureau of Justified.

Mines. 2. Titanium sponge.

do...

Recommends shut

down in August

1954. 3. Tin..

do.

Do.

Government competition with private business Continued
CASES REPORTED BY DIVISIONS TO DATE, JUNE 1, 1954

Divisions

Cases

Government depart.

ment concerned

Industry position

Power equipment.
1. Generation and distribu- TVA.------

Recommends retion.

view. 2. Generation and distribu- Agriculture, Bonne Do, tion.

ville Administra

tion.
3. Generation and distribu- | Agriculture, South-

Do.
tion.

east Power.
4. Generation and distribu- | Agriculture, South-

Do.
tion.

west Power.
5. Generation and distribu- Agriculture, REA....-

Do.
tion,
6. Generation and distribu-Municipal electric Do.
tion.

system. Scientific, motion picture, 1. Braces and artificial limbs.. Veterans' Administra- Complaining. and photographic prod.

tion, ucts. 2. Dentures

do..

Do. 3. Hering aid promotion. Shipbuilding, railroad, ord. 1. Research and development Defense, Ordnance... No complaints. nance and aircraft. 2. 8 fields of ordnance manu do.

Do.
facture.
3. 3 fields of aircraft manu Defense, Air Force... Do.

focture.
4. Shipbuilding, repair, etc.--- Defense, Army Trans- No details.

portation.
5. Cergo and passenger trans Defense, MATS. Concerned.

port.
6. irport subsidies.

(?).
7. Waterways subsidies

Do. 8. Porcel post.

Post Office.

Not cle r. Textiles and clothing ---- 1. Rope manufacture..

Defense, Navy Protesting. 2. M il bag manufacture. Post Office

Do. Water and sewer ge indus None.

tries and utilities.

Do.

CASES KNOWN, NOT REPORTED THROUGH INDUSTRY DIVISION Mailbag repairs: For decrntralization, Post Office Department is about to install and staff five new stations. Declines to entertain private bids first.

Postal savings system: Comntroller General reported in 1952 that need no longer exists. Two bills pend-
ing. American Bankers Association is active.
Synthetic rubber

plants: Disposal is in hands of a commission appointed by the President.
Cooperatives and other tax-exempt activities:
Farmer cooperatives
Consumer cooperatives
Retail owned cooperatives
Mutual fire and casualty insurance companies
Mutual savings banks
Savings and loan associations
Production and credit associations
National farm loan associations
Credit unions

Mr. Osmers. I want to say, Mr. Honeywell, that I think you have made a fine statement and a constructive statement.

BDSA is doing a good job, and I particularly want to subscribe to the last paragraph in which you say that the Department would have no objection to the enactment of either H. R. 9835 or H. R. 9890.

Mr. HONEYWELL. Yes, sir.
Mr. Judd. Mr. Honeywell, are you a businessman yourself?
Mr. HONEYWELL. I have been, Mr. Judd.
Mr. Judd. How long have you been in the Government, sir?
Mr. HONEYWELL. I came with Mr. Weeks on January 20, 1953.

Mr. Judd. To go back to the question which was discussed earlier by Mr. Dawson and some of the others about the things which the Government has to do, allegedly, when a war comes, and we are not adequately prepared, and speed is of greatest importance.

You have been in Government 1% years, and you were in private business a long time before that. Do you think that the Government

took over more than was necessary at the beginning of World War II in order to get the most efficient step-up in the necessary production?

Mr. HONEYWELL. Mr. Judd, I do not necessarily believe they took over more at that time. I believe that possibly some of the things they took over could have been relinquished sooner.

Mr. Judd. In other words, they hung onto them longer than was necessary?

Mr. HONEYWELL. Yes, sir.

Mr. JUDD. Are you familiar with a statement made by—I cannot remember his name but I think it was Beck—the man who was Hitler's chief expediter, during the war, and along during the last year of the war, Germany had to carry out a marked decentralization, because they could not get adequate production with the Government running everything? They had to decentralize and put production and management back into the hands of private business.

I was struck at the time I read that by the fact that Hitler had tried it and it did not work even in a totalitarian state with complete control from the top. I feel that our tendency when we are in an emergency to say that we have to do almost everything through the Government in order to get it done quickly should be reconsidered.

I wanted your reaction as to whether we cannot get more production if we use the system which is operating, rather than reshuffling the system with the idea we can thereby get things done more rapidly.

Mr. Dawson. May I ask one more question?
The CHAIRMAN. Surely.

Mr. DAWSON. It is better to have too much than to have too little in a time of crises.

Mr. JUDD. That is right; and that is the reason the Government should not operate in that fashion; that is my whole point.

Hitler tried it, and did not get more production. So he had to go back to private business.

Mr. Dawson. When we look into the situation which surrounded Hitler and when we see the greed of those

The CHAIRMAN. Off the record. (Discussion off the record.) Mr. Dawson. I do want to call Dr. Judd's attention to the fact that when people become immensely rich as a result of using the system in existence, the effect is to rob the Government, and Goering and all the rest of them piled up wealth.

I would hope that the day will never come when an American will put greed ahead of the welfare of his country,

Mr. Judd. That was already here during the time of the Revolution.

Mr. Dawson. If that is still here, then we ought to rededicate ourselves to the principles of patriotism, when we find that an investigation showed that big business--the great motor companies—entered into a conspiracy to hold up the price of parts in order to control the price of automobile parts to the Government in time of war.

Mr. JUDD. That rededication is something which has to be done constantly, and one of its main functions ought to be to regulate and prevent such excesses by private persons or agencies.

The CHAIRMAN. We started last November—now you want to upset it again.

51144–54-15

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