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engages or participates in competition with private enterprise were completely turned over to private enterprise?

Mr. PIKE. No, sir; I am sorry that I do not have that information.

We have not progressed far enough along with our study of these individual cases to be able to give you even a wild guess on that.

Mr. FOUNTAIN. You feel that money would be saved?
Mr. PIKE. Yes; I think money will be saved.

Mr. FOUNTAIN. And, in addition, of course you are doing the just thing in turning these matters over to private enterprise?

Mr. PIKE. In general, I will also say, or I will always say that private enterprise will do a better job, and more cheaply than the Government.

Mr. Dawson. Should the Government go out of competition wherever you can find private business to do the job, and do it as cheaply?

You did not say "cheaper,” but you said "as cheaply.”

Mr. FOUNTAIN. I said, in addition to doing the just thing of turning it over to private business, private enterprise should be able to do it cheaper, or as cheaply.

Mr. PIKE. We do not have sufficient information yet for me to answer that question with anything but a wild guess.

Mr. Judd. Mr. Chairman, I want to concur in the statements of commendation to Mr. Pike in representing the Defense Department, because the Defense Department has been in the past, quantitatively, at least, the worst offender. It is bigger, and it spends more money and its people are scattered all over the world, and it does need to do more things under its own control, and the tendency to expand is harder to resist in your Department.

So, therefore, I think you deserve, all the more, commendation.

It is true as the chairman said earlier that you have always had the authority and you have had the power to do this, but sometimes there has not been the will, and that is the one question, as to whether the Congress not only ought to give you orders, so to speak, to use the authority and the power that you already have. But that is for us to decide.

Mr. PIKE. Thank you.

The CHAIRMAN. Mr. Pike, if you remember, there is another witness who has a complaint, but in between we have scheduled a representative from the Department of the Treasury, and I have his letter here, and I note that the Treasury Department has no comments to submit on the provisions of H. R. 8832, H. R. 9834, and H. R. 9835.

He does not mention H. R. 9890.

Mr. Pike, if you will remain here, we have another witness, Mr. Eugene P. Hubbard, secretary-treasurer of Local 246 of the Milk Drivers and Dairy Employees for Greater Washington, whom we would like to hear at this time, and we would like for you to listen to his complaint.



The CHAIRMAN. You may proceed in your own way, Mr. Hubbard.

Mr. PILCHER. Mr. Chairman, could I make one comment? I want to again say that the Democrats want to say something nice about

what the Republicans are doing. I want to congratulate Mr. Pike. They are doing something about it, because I know Mrs. Harden and our subcommittee investigated that scrap-metal business, and they have shown that they did what we asked them to do.

They have taken care of the boxmaking business in the Air Force, and it seems they are doing a good job, and I want to congratulate them.

Mr. PIKE. Thank you for those kind words.

Mr. HUBBARD. Mr. Chairman, after I read this prepared statement, may I have a little time and be allowed to say a few additional words, please, sir?

The CHAIRMAN. Certainly; take just as long as you wish,

Mr. HUBBARD. Mr. Chairman, my name is Eugene R. Hubbard. I represent local No. 246, Milk Drivers and Dairy Employes of Greater Washington, International Brotherhood of Teamsters, Chauffeurs, Warehousemen, and Helpers of America. I am the business agent and secretary-treasurer of our local.

My purpose in appearing here is to call attention to a situation which is an excellent example of Government in business and which, in addition, well illustrates how the public is subsidizing the situation to its own detriment and to the distinct advantage of military personnel and their friends and their friends' friends.

The problem has to do with the price at which fluid milk to deliver on contract, usually of 30 or 60 days' duration, to military reservations in and around the Washington, D. C., metropolitan area and which milk, in turn, is resold at approximately the price it is delivered by the dairies to post exchanges.

There are in this area some 10 such places which include Fort Myer, Fort McNair, Fort Meade, Bolling Field, Andrews Field, Walter Reed, Fort Belvoir, Quantico, Arlington, and Patuxent Naval Air Base.

The price of milk delivered to Belvoir is now 17 cents a quart, a great deal less than consumers here in the District of Columbia can buy it delivered. This price holds for one quart or several thousand quarts. At Fort Myer, the price is 21 cents which is not greatly under the retail price to nonmilitary consumers.

These are examples of the range in prices to post exchanges as contrasted to the charges to the public.

Potential customers of the dairies who would buy milk at the same price as the general public now are in position to satisfy their wants through their friends who are within easy reach of this cheap milk supply and whose bargain prices are being subsidized by you and others who have to pay the regular prices.

The only thing you members or your staff need to do to get firsthand knowledge of how these friends' friends cut in on this cheap milk is to go to the neighborhoods of these military posts and see one housewife or another load up the family car with this milk from the post exchanges, and haul it around to other families. We submit, this is doing business without a license and, in addition, is adding to the subsidy burden which the others of us must carry.

The milk which is sold under these contract arrangements is generally referred to as “surplus milk.” There is no difference in its content and quality from that sold a quart at a time over the counters in public-patronized retail outlets or delivered to your doorstep every


day. This surplus milk can be sold by the dairy companies to post exchanges at high prices, and thus retain a degree of balance with prices which you and I pay. But it is not, and that is where the shoe pinches. We could have no objection if it did not take out of ordinary circulation the customers who would pay the public price because then they would help to carry the social-security-tax load, and the sales-tax load, and all the other taxes which are collected.

But the dairies are selling this commodity which is even hurtful to the same customers whom we are trying to serve. What is bappening in the vicinities of the post exchanges is entirely clear. Cancellations for regular deliveries tell the story of what is happening in allowing this milk to get into the hands of those who, we believe, you will agree are not bona fide patrons of post exchanges.

In addition, the exceptionally low price and the spread between costs to the exchanges and costs to you and to others further adds inducement to hand this milk out to as many friends as possible in order that many may share this windfall.

In the course of a year, and according to the size of the family, the amount involved is important, and worth going after, of course.

It is our belief that it is time for the Congress to plug up this noticeable leak, and to take much of the fun out of passing this cheap milk around at the cost of subsidy through our everyday citizens.

Mr. Chairman, at the present time we are selling vitamin D milk in paper cartons. All vitamin D milk in the glass bottle is selling to the regular home consumers in and around the Washington area for 25.5 a quart, home delivered.

Yet, at some of the bases here, we can buy the same quart of milk for 14 cents per quart. At others it runs up to 15, 16, and 17 cents a quart, and I think the highest is 19 cents a quart. Í did make an error in saying 21 cents in my statement.

We find in the double cream or whipped cream at Fort Belvoir that there is a difference of about 13 or 14 cents on a half pint, and on the table cream it runs a little better than 10.5 cents.

The retail drivers in whom I am particularly interested here, and who have suffered more than anyone else in the past 30 to 60 days, some of those men in and around the posts and even further away, have lost as many as 20 to 30 cases of milk off of one end of their particular route, and it is not going to be long before they will not be able to have a route at all.

Their earnings have been reduced, as they were working on a commission basis, and we find that as a whole the whole group of retail men are suffering

It is just not altogether in and around the posts, but it is wherever the military personnel are located. We find now that among the members of the union, when we go up to solicit custom.ers, there is not much use in talking to them if they are from the military, because they say "we can buy the milk so much cheaper at the post, and exchanges." We are just interested in finding out if something can be done, and it is not just on the milk proposition.

We find at one of the posts where the retail drivers go out to sell a dozen eggs, the very same eggs they are trying to sell to the customer, door to door, that they can buy those same eggs at the post exchange for 20 cents a dozen less than the retail driver has to sell them for. So, you can see that we are naturally interested in seeing if something

cannot be done to help these 600 or 700 retail drivers, whom a lot of you know are trying to make a good living, and are working hard, and they should have some relief, because we cannot compete with those practices at the post exchanges.

The CHAIRMAN. Do you have any questions, Mr. Dawson?
Mr. Dawson. The gentleman's statement is very illuminating.
I have no questions.

Mr. PILCHER. I want to compliment Mr. Hubbard on his statement, and I am glad Mr. Pike, and I hope, Mr. Honeywell, is here.

What he is saying is true. It is not only true of milk, but it is true of liquor and it is true of most anything that is sold at the post exchanges.

It is all right for the soldiers and others to buy at that price, if they are entitled to buy it, off the post lots of places, civilians will get the military personnel when they go in to buy their groceries, to buy it for them, and they buy most anything they want. That is not fair to private enterprise, and it is not fair to the local merchants and it is not fair to the industry.

I know it is a hard thing to cope with, and they have made several investigations, but when they take the matter up with the local commander, he always says they investigated, but found no irregularity, but we all know that there are irregularities.

I hope that the Defense Department and Mr. Honeywell and the others will investigate the post exchanges on that particular thing, because it is true.

Mr. OSMERS. Mr. Chairman, this, as we discussed in earlier sessions of the hearings, is more a problem of the responsibility on the part of the military commander rather than a typical competitive business activity of the Government.

Do you feel, Mr. Hubbard, that the average American workingman is better off working for the Government, or working in the private enterprise system, where he can bargain collectively, and join together and adjust his working conditions as well as his pay, and the number of hours which he works?

Mr. HUBBARD. Well, there are advantages to both sides, but, naturally, I am more interested in seeing the individual working in private industry.

I believe that with collective bargaining and other things, he does make quite a bit of progress, and improves his position year by year.

His working conditions are improved.
Mr. OSMERS. Thank you very much.
Mr. HUBBARD. Thank you so much.
Mrs. HARDEN. I have one question, Mr. Chairman.
The CHAIRMAN. Surely.

Mrs. HARDEN. Do you know what the difference is in the price of butter a pound?

Mr. HUBBARD. No, I do not exactly know about the price of butter: I am sorry.

Mrs. HARDEN. Thank you.
The CHAIRMAN. Dr. Judd.

Mr. Judd. I do not know whether this is wholly a matter of policing or not. When men are overseas, obviously, they have to have post exchanges to provide them with almost everything from home. But I wonder if the policy of providing men here at home who are

living off the post and who have their families with them, and so on, with everything under the sun they need, is a sound policy. I have always had doubts about whether post exchanges should furnish every-thing that the rest of the people have to buy in the retail market. I do not know whether that is a policy law, or a policy established by a directive of the military, but it seems to me the tendency is to take on in these post exchanges here at home all sorts of commercial activities which ought not be on military posts in the United States.

Is that a matter of law or just a policy that has been established by the Department?

The CHAIRMAN. The policy of the Department authorized by law and at their request. At Bethesda the officers' club gets all kinds of drinks at very reasonable prices.

Mr. JUDD. I have not been out there myself in that capacity.

The CHAIRMAN. I have only been in the surgical department, but from the people that came in there, and from their fragrance, I judged that was true.

Mr. RIEHLMAN. The gentleman sitting up here, the author of one of the bills, says that he will be glad to get us some pertinent infor-mation.

The CHAIRMAN. I would like to hear it.
Mr. OSMERS. I think it is true what you said about Bethesda.

Mr. Judd. Why should post exchanges supply the man living off the post his clothes and the clothes for his kiddies and milk for his family table?

The CHAIRMAN. They are fringe benefits. You believe in fringe benefits, do you not?

The CHAIRMAN. As a member of the union.
The CHAIRMAN. Certainly.

Mr. JUDD. I know they are fringe benefits. But there is a world of difference between providing things for the men overseas and providing everything for them and their families off the bases in this country.

The CHAIRMAN, Surely, that is right.

Mr. Judd. And the business is expanding, and as long as it is expanding I do not know that you can correct it all by just policing.

Mr. Osmers. Unless you review the entire subject of the remuneration of the servicemen, you can hardly attack it from this posture here. I believe that would be a matter that would have to be gone into. It concerns the attractiveness of career service, pay in the various parts of the world, and in various parts of this country. It is a little beyond the scope of the legislation before us today.

Mr. JUDD. That is right.

The CHAIRMAN. Mr. Pike, would you tell us something about this milk situation?

Mr. PIKE. I am not really competent to answer all the questions brought up here, except to shed this little light, perhaps, on the subject. This whole matter of commissaries and PX's is one that is recognized by the Department of Defense as being a difficult problem, and it does get into the area that you were discussing of their pay. It is a part of fringe benefits. For that reason commissaries and post exchanges were specifically and purposely excluded from the basic

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