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we are getting from the Government. I just want to show you, sir, how the industry is actually shrinking. It was always a small industry, but because of this additional problem, and other problems, it is getting smaller and smaller and smaller and is in very bad shape.
The CHAIRMAN. You cannot use any of these new plastic products?
Mr. VARRONE. No. Not if you can get a pure bristle brush. If you have ever painted a house and used a brush and you have a choice, you would want a pure bristle brush as against any synthetic brush I speak now as a layman approaches the problem and not as a paintera man who knows what a good tool consists of.
The CHAIRMAN. What animals do the bristles come from?
Mr. VARRONE. Yes. It so happens that that makes the best material for paint brushes.
The CHAIRMAN. Who is stockpiling them?
Mr. VARRONE. The Government is right now. The Government has a stockpile of bristles.
The CHAIRMAN. What particular branch?
Mr. VARRONE. If the bristle is going to be used for the Government, then convict labor will have the opportunity to make the brushes, and we will not.
Mr. OSMERS. Do you get any bristles from the national stockpile?
Mr. VARRONE. We are trying. I should not say we are trying. I know the manufacturers are trying to get the Government to release some of that bristle, but they have not
been too successful. Mr. OSMERS. You know, and as the chairman already pointed out, it is not the business of this committee, although we are vitally interested in the problem-it is not the matter we are dealing with here today, which happens to be the importation and the stockpiling of bristles, as you know. Although we are interested in what you have said, we would like to get back to the four bills which are before the committee which seek to limit or terminate the unnecessary competitive activities of the Government.
Mr. Chairman, I would like to ask Mr. Varrone this question: How long has the Government been making bristle brushes in its prison program?
Mr. VARRONE. I think since 1930.
Mr. Osmers. Has there been an increasing activity or a diminishing activity?
Mr. VARRONE. We have every reason to believe it is an increasing activity. We do not have any way of checking other than informal discussions with Commissioner Bennett. At least I have had the pleasure of discussing it with Commissioner Bennett, and in my statement I have some facts. I knew they had a projected brush program well on into December, when I spoke with him in the month of June, and our people are walking the streets without any work.
Mr. Osmers. Presently what do you use for bristles if this Chinese source of supply is cut off?
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. 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 have 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.
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
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. 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 indebted
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.
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 forumis 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.