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GOVERNMENT IN BUSINESS

(H. R. 8832, H. R. 9834, H. R. 9835, and H. R. 9890)

THURSDAY, JULY 15, 1954

HOUSE OF REPRESENTATIVES,
COMMITTEE ON GOVERNMENT OPERATIONS,

Washington, D. C. The committee met, pursuant to recess, at 10:05 a. m., in room -429, Old House Office Building, Hon. Clare E. Hoffman, chairman of the committee, presiding.

The CHAIRMAN. The committee will be in order.
Who is the first witness, Mr. Ward?
Mr. WARD. Is Mr. Stringfellow here?
Mr. EMMONS.
Mr. EMMONS. Yes.
Mr. WARD. Do you want to take the stand, Mr. Emmons?
Mr. EMMONS. Yes.
The CHAIRMAN. Mr. Emmons, go ahead.

STATEMENT OF BLYTH EMMONS, DIRECTOR, WASHINGTON

OFFICE OF THE NATIONAL SMALL BUSINESS MEN'S ASSOCIATION

Mr. EMMONS. Thank you, Mr. Chairman.

Mr. Chairman, I am very glad to be here, sir. My name is Blyth Emmons. I live in Washington, D. C., and am the director of the Washington Office of the National Small Business Men's Association with offices at 925 15th Street NW., Washington, D.C. The association's national headquarters is located at 2834 Central Street, Evanston, Ill.

The National Small Business Men's Association was founded in 1937 to give small businessmen a voice in national affairs and to help preserve free competitive enterprise in the United States. We have members in all 48 States, representing approximately 170 categories of business.

The association holds national membership meeting each year. At each meeting a financial statement is rendered showing all income and giving an itemized statement of expenditures. All members are eligible to attend these meetings. At each meeting a program is adopted by majority vote of those present to guide the activities of the association until the next membership meeting is held and a new program adopted. We had our 1954 meeting here in Washington in early April at which time the following legislative recommendation was adopted:

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GOVERNMENT IN BUSINESS

(1) That the Federal Government be prohibited from engaging in any business in competition with private enterprise, and that all Government corporations be liquidated.

The National Small Business Men's Association is definitely concerned that there are now more than 100 kinds of businesses operated by the Government. The Federal Government employs 2,371,635 civilians; it has an annual budget of $72,116 million; it owns and operates large areas of land in the continental United States; it had a debt as of January 4, 1954 of $274,641,955,399.98, equal to almost the total annual production from all sources; it operates over 100 business-type activities; it has stores inventories comparable to those of all private enterprises combined; it is the largest insurer, the largest lender, the largest tenant, the largest holder of grazing land, the largest owner of grain, the largest warehouse operator, the largest shipowner, the largest truck-fleet operator. The reported capital assets of $146 billion of December 31, 1951 are no doubt much greater now.

It is not the intention of our association in presenting this statement to come before this committee and go into detail about that which your committee has spent months and four thick volumes showing how incredibly broad the Government competition with private business has become.

Government competition tends to destroy initiative on the part of the people and particularly the small businessman, and to restrict the normal growth and expansion of private enterprise, privately financed. This also has the effect of depriving the small businessman from starting a new business, in which his possibilities of survival might in part be assured by a Government contract, on which in turn he would pay Federal taxes and make jobs which again in turn would lead to taxes paid by such employees to the Federal Government.

We fully realize that during a wartime period the Government gets into various businesses based on the supposed elements of time and speed for the so-called good of the cause or war effort; but after each war it has become not only the tendency, but the fact that the Government has continued to stay in such enterprises, and the bureaucrats employed by the Government to run these projects have no desire to give up that which has become their livelihood, supported by the taxpayers' money, and, therefore, their attitude is "To hell with the taxpayer.

We have members who have been put out of business by the Government, and in one special case forced out by the Army-Air Force post exchange bureaucratic setup. We believe that the small businessman should be allowed to take over the responsibilities of Government contracts such as supplying cigarettes, lawn mowers, and soap to the Air Force, coffee, rope, cordage, paint and uniforms to the Navy, and leasing automobiles or trucks and other necessary articles to the General Services Administration.

For some time the small, independent businessman who owns the store or the dry-cleaning establishment or the bakery or small specialty shop in the neighborhood where the serviceman lives and where he returns after his duty is complete on a base is having a tough time competing with the PX, the ice-cream dispensing, the post

cleaning establishment and other Government-owned and operated services which the soldier, the Air Force man and in many cases the sailor patronize, and therefore this neighborhood man or woman who owns his or her own business loses out. It goes further when the optometrist, the small hardware merchant, the jeweler, and the dairy delivery man lose this type of business because of the minor difference between the PX discount and the local businessman's price.

In turn there is the manufacturer who is eliminated by the Government doing its printing at the Government Printing Office. The Government makes its own rubber stamps, mailbags, padlocks, et cetera.

The Government, in all three armed services, roasts its own coffee. This might be necessary if there were no other coffee-roasting equipment in the country.

Also, the Government maintains and repairs its own typewriters, adding machines and other office machines and hospital equipment, whereas the local maintenance company, more often than not a smallbusiness man, is not invited to bid on maintenance contract in which he might save the Government considerable money.

In addition, there is your small public warehouse which many times could use some Government business, but which in most cases either cannot afford to enter a bid or is completely ignored.

The above and many other Government-operated enterprises keep a closed door as far as giving the independent a chance to do business with his Government.

The Government is not only in competition with business, but when the businessman shows any desire and interest in requesting his chances to do business with Uncle Sam, the bureaucratic attitude and redtape is such that particularly the small-business man gives up in frustration and despair and returns to his knitting, and perhaps wonders what kind of socialistic country he is living in. This is emphasized when the Government official he has been dealing with, and to whose salary he contributes, can stymie, forestall, and perhaps put him into bankruptcy, due to the lack of everyday explanation and help.

This association realizes that it is most difficult to get the Government out of business. The Government in business tends toward socialism. It is hoped that steps will be taken by Congress to get the Government out of business so that this socialistic tendency is abated, and that then there will be an incentive for the private citizen to do the job for his Government efficiently and profitably.

If in wartime or under extraordinary circumstances the Government must

go into business, then let the Government, through the administration, explain to the businessman public, of which our smallbusiness man is in the majority, what, how and why his Government is in competition or must do the job.

In H. R. 8832, which is concerned with the problems of Government in business, it has been emphasized that the possibility of private enterprise doing business with the Government could be termed an incentive. The incentive to encourage business spending, by the investment of private capital, so that Mr. John Q. Small-Business Man can use his experience and know-how to take part in the business of his Government.

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We strongly urge that this committee continue its good work, and eventually draft a law which will give the citizen the chance to participate in the tax-spending dollar he pays the Government.

We further urge the creation of a Board-section 3 of H. R. 8832— with full authority to carry out the provisions of this act, and that the Board shall also have the authority to exercise special powers as described in section 6.

In conclusion I would like to read the following which is entitled, “Private Enterprise,” the author of which is unknown.

The power to choose the work we do
To grow and have the larger view
To know and feel that we are free,
To stand erect, not bow the knee,
To be no chattel of the State,
To be the master of our fate,
To dare, to risk, to lose, to win,
To make our own career begin,
To serve the world in our own way,
To gain in wisdom, day by day,
With hope and zest to climb, to rise;

That is private enterprise.
"Thank you, Mr. Chairman.
The CHAIRMAN. Are there any questions?
Mr. Osmers.
Mr. Meader.
Mr. OSMERS. Mr. Chairman.
The CHAIRMAN. Yes.

Mr. OSMERS. Mr. Emmons, what type of business are the members of your association engaged in, sir?

Mr. ÈMMONS. Congressman Osmers, about 70 percent of them are small manufacturers, sir.

Mr. OSMERS. Small manufacturers?
Mr. EMMONS. Yes, sir.
Mr. OSMERS. General merchandise?
Mr. EMMONS. General merchandise.
Mr. OSMERS. I think you made a very strong statement.

I do want to make this observation, Mr. Chairman: That, even though I am probably as devout in my desire to get the Government out of business as any man in Congress, I think your statement at the bottom of page 1 is probably a little bit broader than any of us might want to go. It is so all inclusive that it probably demonstrates one of the reasons why we will have to create some form of Board or Agency within the Government to review those activities and to separate those which must be conducted and are essential from those which can be left to private enterprise.

The CHAIRMAN. You are referring to the last paragraph?
Mr. OSMERS. On page 1; yes, sir.
The CHAIRMAN. Mr. Meader.
Mr. Riehlman.
Mr. KARSTEN. Let me ask a question.
The CHAIRMAN. Pardon me.
Mr. KARSTEN. Your bill is not as broad as this last paragraph?
Mr. OSMERS. No; it is not.

I realize the earnestness of the part of the organization that went into the phrasing of that paragraph, but I did want the record to show I feel it is a little broader

Mr. KARSTEN. In other words, that is advocating too much

prohibition here, and that maybe a little Government business wouldn't be bad; is that what I interpret the gentleman to be saying?

Mr. OSMERS. No; I think, Mr. Karsten, nothing will ever replace good judgment, and I feel we will have to set up in the Government an agency where good judgment will be exercised and where business can come and state their case and where Government agencies can also come and state their case, and only through dealing with each case, as it occurs, will we be able to delineate between those activities which should be conducted by the Government properly and those which should not be.

Mr. KARSTEN. But you don't think we should prohibit all, as this language would indicate, but that we should select those we prohibit?

Mr. OSMERS. That is right, and that will vary, as was indicated by the testimony here yesterday, Mr. Karsten.

I keep going back to something Mr. Pilcher said yesterday. We should never put the Government in the position where they are in handcuffs and not be able to defend themselves in a situation where some predatory interests might conspire together to take advantage of a situation.

Mr. Emmons. I think our association will go along with you on that, sir.

At these meetings they are apt to endorse a resolution that seems to cover a multitude of thought, and perhaps if it is broken down they would go more along your lines, sir.

Nr. KARSTEN. Does your association endorse Mr. Osmer's resolution, or was that just some

Mr. EMMONS. They did not specifically, sir. This was just a broad get-the-Government-out-of-business resolution, sir.

Mr. KARSTEN. Are you speaking for your association?
Mr. EmMoNs. I am speaking for my association; yes, sir,

Mr. KARSTEN. Do you think they would be willing to make the concession you are making here?

Mr. EMMONS. I believe they would, sir, on just a commonsense basis.

Mr. KARSTEN. You couldn't say for sure?
Mr. EMMONS. I could not.
Mr. KARSTEN. They may insist upon this original language?

Mr. EMMONS. I don't think they would insist, sir, based on their attitude and having been at that meeting.

Mr. CHUDOFF. Mr. Emmons, can I ask you a few questions?
Mr. EMMONS. Yes, sir.

Mr. CHUDOFF. Let's assume one of these bills would become a law of the United States. Do you really think small business will get any more business than they are getting now, or don't you rather think big business will get a little more than they are getting now?

Mr. EMMONS. I will have to answer you, sir, based on the type of members that compose our organization. I think they would.

Mr. CHUDOFF. Since I have been in Congress, I have been trying, to the best of my ability, to try to see that small business got more business and big business got less business, and I haven't been very successful and I don't think, personally, this will do you any good.

I want to commend you for coming up here. I am glad to see the small-business men of America are really on the ball, but I don't think

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