If local government in the United States is weakened, just so is the structure of our Government weakened. If local government totters, then failure of our traditions and heritage of local government, and individual initiative will fall by the wayside and be replaced by a centralized government-bureaucratically all powerful.

We regard a cessation of Federal acquisition of valuable industrial and commercial properties with their consequent removal from local tax rolls, as essential. We think these bills are a step in that direction. Thank you.

I shall be happy to try to answer any questions the members of the committee may have.

The CHAIRMAN. Do you have any questions, Mr. Osmers?
Mr. OSMERS. No; I haven't any.

The CHAIRMAN. Mr. Dawson.

Mr. DAWSON. The Government went into the business of buying large tracts, building large buildings and equipping them with machines calculated to furnish the Army with necessary war materials that they had to have. Private industry was not in position to meet the challenge of war. That was the responsibility of the Government. What would you have substituted for the steps taken by the Government in World War I and prior to World War II in order to meet the threat that the Nation was facing then, which challenged its existence? Mr. HAMILTON. I am making no criticism, Congressman Dawson, of past history. I am merely making a plea for correction of existing difficulty in the future.

I do not criticize the Federal Government's acquisition policies regarding war production potential during the war. However, I can give you cited examples where such production facilities, which were built by the RFC, paid taxes. They were transferred as surplus as a result of the war's ending; later transferred to private enterprise, which turns out civilian goods as well as military goods, and makes a profit on those because that particular plant is in a tax-free status. Mr. HILLELSON. Congressman Dawson, could I ask a question, or would you yield?

Mr. DAWSON of Illinois. Yes.

Mr. HILLELSON. That relates to 5605, doesn't it, Mr. Hamilton? Mr. HAMILTON. That is correct.

Legislation has come from this committee to correct that particular situation, and we very much commend the committee and Congressman Hillelson as a freshman Congressman for getting the bill through the Congress. We are very hopeful it will pass the Senate as well, since it has passed the House.

Mr. OSMERS. Mr. Chairman, I want to point out while it is true the Government did build under such circumstances as that during the war it has, in some instances, become a continuing policy and it is a trend that must be stopped.

I would say this: Had it not been for the magnificent private enterprise and free labor system we have in this country we would never have been as successful in the production of war material as we were. I think it is a good ststement, Mr. Chairman.

Mr. CONDON. Mr. Hamilton, would you be critical of a situation that occurs in my town of Richmond, where the Maritime Commission owns Richmond yard 3?

Now, they are leasing that out to private enterprise to run various types of businesses there, but only certain private enterprise is interested because they have a 24-hour recapture clause, because they want to keep that yard available in the event of another emergency, where we have to start building ships rapidly.

Now, don't you feel that is a type of Government activity that certainly is justified by the international scene as we see it today? Mr. HAMILTON. Oh, yes. If you were asking if I should be critical of the 24-hour recapture clause, I certainly would not be. I don't think the American Municipal Association is in favor of the Government doing anything to endanger its national security.

Mr. CONDON. There you have an example of private enterprise in a free from ad valorem taxation because the Maritime Commission and the Government feels it is necessary to keep that yard in the event of a future grave emergency. I don't feel you can get away from that situation as long as it is necessary to keep that yard.

Mr. HAMILTON. I am not critical of that type of a situation, sir. I think that there is a distinction between that particular type of situation in Richmond and the type of situation covered by Mr. Hillelson's bill, principally about which I have been speaking this morning.

Mr. ČONDON. Now, one or two other questions: In the light of Mr. Osmers' bill, is there any reason why the Department of Defense, itself, cannot, because they are the biggest holder of these properties and the biggest doer of these activities, make the changes without creating this additional board and taking the authority away from Defense and putting it over in the Secretary of Commerce?

Mr. HAMILTON. No, sir; there is none, and if you will read my statement you will notice that we state here we are in favor of the principles embodied in the bill. We are not commenting on the specific sections of the bill.

Answering your question more directly, the Defense Department can correct this situation; but I have been present in many meetings where they have been so requested and to date I regret to say the Defense Department is not disposed to do so.

Mr. CONDON. Here is an illustration that is of concern to me: For example, let's take submarines. Submarines are made by the Electric Boat Co., a private-enterprise group. They are also made at the Portsmouth Navy Yard and the Mare Island Navy Yard. Now, the Department of Defense and the Navy Department feel, for reasons of national security, they want to have both prepared, the navy yards, to make these submarines, and also to keep the Electric Boat Co. going. That is their decision as of now. I am just wondering about the wisdom of taking that decision-making power away from the Department of Navy and the Department of Defense, and putting it over, in effect, in the Secretary of Commerce.

Mr. OSMERS. Mr. Chairman, I am not trying to answer the question of the witness, but I have listened very carefully to what Mr. Condon has said, and I don't think that is particularly within the scope of these hearings, or within the scope of the bills that have been presented and that are under discussion, and that we can very well get into what should be the national-defense policy of the United States with respect to some of these things.

Certainly, take, for example, the manufacture of an atomic submarine: That is not a competitive activity with private enterprise in this country and, therefore, I don't think

Mr. CONDON. It is in a sense, Mr. Osmers, because

Mr. OSMERS. What private company is making atomic submarines? Mr. CONDON. I understand the Electric Boat Co. is geared to do it. Mr. OSMERS. No; they are doing it for the Government.

Mr. CONDON. That is private enterprise. The Electric Boat Co. is private enterprise.

Mr. OSMERS. That is probably because the Government can't do it itself; but the important thing is that is not a case that would come within any of these bills, whether they pass or not. That is a matter that comes within the national-defense policy of the United States, and that isn't a competitive business type activity.

If you go back to the thing Lincoln said—and I wouldn't attempt to quote it exactly-if you stay within the sphere of Government doing those things the people cannot do for themselves-obviously no one would build an atomic submarine because no one would have use for it except the Government.

Mr. CONDON. I think the Navy yard in building private ships is competing with shipbuilding yards. So, if you carry that argument to the extreme, the Navy yard should go out of business.

Mr. OSMERS. To some extent you are correct; that is correct.

Mr. HAMILTON. If I may answer the question directed to me by Congressman Condon, I think a distinction must be made in any consideration of this problem, a distinction between those activities of the Government which have a historical basis and those activities of the Government which have been carried on for many, many years as compared with the tremendous growth in new Government activities, which actually, to a large extent, have followed World War II rather than growing up during it and preceding it, and I certainly don't think, as an individual now, not speaking for the American Municipal Association or the city of Boston, you can close up or should close up the Boston Navy Yard completely.

Mr. McCORMACK. I hope not.

Mr. HAMILTON. I think that distinction must be made between those historical government functions and this steady growth of new governmental functions.

The CHAIRMAN. Very well. Thank you for coming in.

Mr. HAMILTON. Thank you, sir.

The CHAIRMAN. Arthur Smith, Jr., District of Columbia Trucking Association. If you will, identify yourself and then proceed in your

own way.

STATEMENT OF ARTHUR CLARENDON SMITH, JR., SECOND VICEPRESIDENT, DISTRICT OF COLUMBIA TRUCKING ASSOCIACIATION

Mr. SMITH. My name is Arthur Clarendon Smith, Jr., representing the District of Columbia Trucking Association, of which I am second vice-president. We represent over 200 firms locally who operate over 7,000 vehicles in this area.

Specifically, our complaint today comes from the movers division of this association in which we have 30 moving companies as members of the District of Columbia Trucking Association.

I am personally employed by Smith's Transfer & Storage Co. as vice president and general manager.

Our two complaints are with the Government competition we find from the General Services Administration, Moving Section, and the crating operation at the Cameron, Va., Quartermaster Depot in Alexandria, Va.

Let's take the first problem concerning General Services Administration and their Moving Section of that organization.

The CHAIRMAN. May I interrupt you just a moment?

Mr. Osmers, I wonder if you would take over because the Bender subcommittee has a meeting at 11:30.

If you will continue these hearings

Mr. OSMERS. All right, sir.

Proceed.

Mr. SMITH. First, let me explain their function as I understand it. The Moving Section of General Services Administration is charged with the function of moving all Government offices in this area. We believe this could be done by the local moving companies in this city at a savings of public funds if let out on a competitive-bid basis.

Mr. BROWNSON. You wouldn't confine your observations to this city?

Mr. SMITH. No.

Mr. BROWNSON. You would let anybody have the opportunity to bid?

Mr. SMITH. That is right.

Our reason for believing this is our observation of some of these moving operations where manpower is not used as economically as it would be by a private concern. Unfortunately, we have not been able to prove this to General Services Administration, and we have no way to compare their cost and ours. In fact, it is very difficult for us to find any facts from this organization as their figures are not open to public scrutiny from our investigation, and they are very difficult to find. We have found that they pay over a million dollars a year in wages alone and they employ approximately an average of 400 laborers. We know they are adequately supplied with vehicles of their own and they do hire some outside trucks from private contractors to supplement their fleet when very busy.

From the above figures, we then estimate that General Services Administration does well over $2 million worth of office moving in this area for which only few taxes are paid to the local or Federal Government where they hire a few trucks.

We know in our own moving business and from figures received from the survey of the National Furniture Warehousemen's Association that the main cost of local or intracity moving is 40 or 50 percent of the dollar cost the local mover receives and pays out in labor on local moving jobs. We can substantiate this with our own operation figures and the figures the National Furniture Warehousemen's Association has gathered from the whole moving industry.

Several years ago, during the latter part of the Jesse Larson administration of General Services Administration, we had a conference with his office regarding this problem and requested their cooperation

and open bids for this work. We received little, if any, cooperation as they definitely were not interested in our proposition because no bids were asked for until this year.

The first of this year, in February and March, there seems to have been a change in that feeling; yet, after competitive bidding in three particular instances, the low bidders were refused as being too high and the GSA was given this work.

I am referring to the invitation to bid No. 11BJ54-63 issued by the Veterans' Administration Supply Maintenance Division and bid No. 64 of that same office. I also am referring to the bid made for the Civil Service move on March 12, 1954, to move the Civil Service office from the Old Pension Building.

The successful bidders on these jobs were, respectively, the Jacobs Transfer Co. on bid No. 63 at $5,100, the Colonial Storage Co. on bid No. 64 at $4,160, and the Kane Transfer Co. at $19,785 for this last Civil Service move.

All of these bids were rendered in good faith but were not accepted as we were told the General Services Administration Moving Section was sure it could handle these office moves at a lower cost.

There were approximately six companies biddding on each of these invitations, and until this day we have had no accounting as to how successful or unsuccessful the General Services Administration was in completing this work at a lower cost.

There was one instance in one of these bids where the bidders were told that all file cabinets moved must be held in an upright position; yet, it was noticed that the General Services Administration did not follow their own instructions but moved these file cases in the most expeditious manner by turning them over on four-wheel dollies. It impressed us as being ironical that we sould be required to bid on one particular way of moving and then the General Services Administration was allowed to move these file cabinets in the usual manner which would naturally make our cost higher than usual for this large volume of filing cabinets.

The General Services Administration is well equipped with vehicles. From the count in the annual motor vehicles report of December 1953, they have a total of 232 trucks in this area from a 1-ton rating and above. Perhaps all of these are not used in moving; yet, this is the second largest fleet in this area, which is exceeded only by the Post Office Department, which has 380 trucks.

A recent step forward in our opinion which General Services Administration has made is that they have recently let a contract with a private firm, the Jacobs Transfer Co., to do their hauling for their new Franconia warehouse.

Mr. OSMERS (presiding). Where is that located?

Mr. SMITH. That is the new warehouse out on Shirley Highway, right off Shirley Highway, a very large installation.

The first contract let was for a 3-month test period. The second contract, now running, is for 1 year's duration, which that firm was successful in securing as low bidder after lowering their first bid 3 cents per hundred pounds on the original trial run contract.

After this year's contract was let, the General Services Administration Public Relations Office let out a press release stating the fact that this new contract would save the taxpayers nearly $60,000 a year