eral Government to use all practicable means either in a manner calculated to foster and promote free competitive enterprise and the general welfare, et cetera; is that true?

Dr. CLARK. Yes.

Senator DONNELL. And I think you have found, have you not, that there is a general disposition on the part of all Members of Congress, at least, or an expression to that effect, to be favorable to free enterprise; that is correct, is it not?

Dr. CLARK. Undoubtedly.

Senator DONNELL. Senator O'Conor asked you in regard to these recent developments that have occurred during the past few months which have intervened since September 30 and he referred to the suspension of the publication of certain newspapers and notably referred to the one in New York in which there was a merger. You are familiar with that transaction, in New York City, are you not? Dr. CLARK. I read of that.

Senator DONNELL. What were those two newspapers?

Dr. CLARK. The Sun, and one of the Scripps-Howard papers.
Senator DONNELL. What was that paper?

Dr. CLARK. The World Telegram, I believe.

Senator DONNELL. As to the cause of that merger, Doctor, was that a planned, insofar as you know, attempt to restrict competition? Was that the purpose of that merger?

Dr. CLARK. I thought the Sun went broke.

Senator DONNELL. As a matter of fact, one of the main officers of the Sun gave out a statement, did he not, as to the reasons why they could not longer continue in business?

Dr. CLARK. I am not familiar with that.

Senator DONNELL. Did you see that?

Dr. CLARK. No.

Senator DONNELL. Do you not remember, Doctor, that included in the course of a statement given out by one of those officers was something to this effect: I do not have it before me, but my recollection is that he assigned in quite a large part the very heavy labor cost that had arisen and to which the Sun had become subjected. Do you remember that, or did you hear that?

Dr. CLARK. No, I did not read that statement.

Senator DONNELL. You did not read that statement.

Dr. CLARK. I might say, Senator, I never knew a manager of a concern that went broke that did not have some other person to blame for his tough luck.

Senator DONNELL. You have no reason to doubt the truthfulness of the head of the New York Sun, have you, in making that statement, if he did make it?

Dr. CLARK. He thought so.

Senator DONNELL. He thought so, and it could, do you not think, Doctor, doubtless be developed as a matter of statistical information and fact that there had been very heavy labor cost increases in the operation of that newspaper?

Dr. CLARK. Undoubtedly, and every other successful newspaper has met them, borne them, and succeeded.

Senator DONNELL. And that man was not able to do so.

I thought the chairman said there had been a suspension of others. Senator O'CONOR. There were 34 of them.

Senator DONNELL. By that token, it would appear that 33 others, for some reason, suspended. Do you know why they suspended?

Dr. CLARK. Their managers were not good enough to succeed. Senator DONNELL. Thirty-three managers were not good enough to succeed, and you think that was the cause of the suspension of those other 33?

Dr. CLARK. Yes.

Competition is constantly driving the inefficient into bankruptcy. Senator DONNELL. Can you tell us the name, Doctor, of a single one of those 33 newspapers?

Dr. CLARK. I did not even know there were 33.

Senator DONNELL. How do you know with just as much positiveness as you asserted here as to what has been transpiring over in the House of Representatives whether or not the cause of the suspension of these 33 other newspapers was the inefficiency of their managers! How do you know that?

Dr. CLARK. Because that is the way business is run.

Senator DONNELL. Do you know, Doctor, whether or not we have had such a considerable number of suspensions in the newspaper business within any comparable period within your recollection or mind? Dr. CLARK. Yes, I know of one period.

Senator DONNELL. When was that?

Dr. CLARK. I know of one period where the suspensions were much more numerous, but I cannot tell you the period. It was during the earlier part of the depression.

Senator DONNELL. Do you mean the depression back in 1929 ?
Dr. CLARK. Yes.

Senator DONNELL. Back during the Hoover administration; is that right? Is that what you are telling us here this afternoon?

Dr. CLARK. I had not planned to tell it. That is not what I had planned.

Senator DONNELL. I would like to know.

Dr. CLARK. The earlier days of the depression.

Senator DONNELL. You mean after the Hoover administration, or some time in 1929. Is that when it was?

Dr. CLARK. After 1929.

Senator DONNELL. Have you ever made any study of the statistics on the number of failures in the newspaper industry in this country, at any time, Doctor?

Dr. CLARK. Oh, no. I have a recollection of one period when newspapers were folding up very rapidly.

Senator DONNELL. You do not have a recollection that you can assure yourself this afternoon is at all accurate as to the number of newspapers that have folded up, as you termed it, in any period of national history from the beginning up to now?

Dr. CLARK. Of course not.

Senator DONNELL. Except the 34 that Senator O'Conor told us about?

Dr. CLARK. No; I have no statistics.

Senator DONNELL. In regard to more recent matters, I would like to ask you one or two other questions, and then we will proceed on to some phases of this bill.

Have you seen a recent publication by Messrs. John Lintner and J. Keith Butters of the faculty of Harvard University which is either

out or is to come out in the Review of Economics and Statistics? Have you seen that?

Dr. CLARK. I do not recall anything like that.

Senator DONNELL. It is an article in which those gentlemen take issue with certain findings of a similar study of mergers by the Federal Trade Commission. Have you seen that?

Dr. CLARK. No, sir.

Senator DONNELL. I have in my hand here a clipping from-I think it is the New York Times, and I do not have the date, but it is a very late one, I believe as late as yesterday. This document, I ask, Mr. Chairman, to have inserted in full in the record.

Senator O'CONOR. That may be incorporated.
(The newspaper clipping referred to is as follows:)

HARVARD DATA HIT FTC ON MERGERS-STUDY COVERING 1940-47 FINDS SMALL
LINES' GROWTH AIDED MORE THAN BIG CONCERNS

(By Will Lissner)

Mergers among manufacturing and mining companies from 1940 to 1947 were a much less important source of growth for large companies than for smaller ones, according to a study released yesterday by the Harvard Graduate School of Business Administration.

The study, which is reported by John Lintner and J. Keith Butters of the faculty of Harvard University in the forthcoming issue of the Review of Economics and Statistics, takes issue with certain findings of a similar study of mergers by the Federal Trade Commission.

The Commission maintained that industrial concentration had been promoted by the merger movement because the movement's outstanding characteristic “has been the absorption of smaller independent enterprises by larger concerns."

Dr. Lintner and Dr. Butters reported that their statistical findings indicated the reverse conclusion. The apparent contradiction between these findings arose because the Commission analyzed primarily data on the number of mergers, whereas the Harvard study also took full account of the size of the merged companies, the report says.

MERGERS STUDIED BY SIZES

When the data are ranked by size classes, they said, the average percentage growth in the assets of the acquiring companies in each size class was regularly and substantially smaller for larger than smaller buyers. This was true, they added, whether the growth was expressed on a per acquisition basis or for all acquisitions of each acquiring company lumped together.

These relationships are perfectly regular throughout the six size classes in which they broke down the data, the economists reported. The classes were $1,000,000 to $5,000,000; $5,000,000 to $10,000,000; $10,000,000 to $50,000,000; $50,000,000 to $100,000,000; and over $100,000,000.

The relationships also hold consistently for all manufacturing as a whole, for all durable and nondurable manufacturing taken separately, and for each of the 10 major manufacturing groups in which 80 or more mergers were reported during the 8-year period.

The aggregate assets acquired through mergers expressed as a percentage of the aggregate listed assets of all the companies in each size class are much smaller for companies with assets of more than $100,000,000 than for those with assets of less than $100,000,000, the Harvard economists found.

"Technical measures of concentration in the asset holdings of manufacturing and mining companies show only a slight increase in concentration as a result of merger activity during 1940-47," the report said.

The Harvard economists' findings confirmed those of the Commission in showing that the vast majority of companies sold or merged during the period were relatively small in size.

"It should be noted, however," they declared, "that the preponderance of small firms among those sold or merged simply reflects the preponderance of small firms in the economy."

Senator DONNELL. This article is headed "Harvard Data Hit FTC on Mergers."

It is by Mr. Will Lissner. Do you know Mr. Lissner of the New York Times?

Dr. CLARK. No, sir.

Senator DONNELL. The article reads in part as follows:

Mergers among manufacturing and mining companies from 1940 to 1947 were a much less important source of growth for large companies than for smaller ones, according to a study released yesterday by the Harvard Graduate School of Business Administration.

The study, which is reported by John Lintner and J. Keith Butters of the faculty of Harvard University in the forthcoming issue of the Review of Economics and Statistics, takes issue with certain findings of a similar study of mergers by the Federal Trade Commission.

The Commission maintained that industrial concentration had been promoted by the merger movement because the movement's outstanding characteristic "has been the absorption of smaller independent enterprises by larger concerns." Dr. Lintner and Dr. Butters reported that their statistical findings indicated the reverse conclusion. The apparent contradiction between these findings arose because the Commission analyzed primarily data on the number of mergers, whereas the Harvard study also took full account of the size of the merged companies, the report says.

You have not heard of that publication?
Dr. CLARK. No.

Senator DONNELL. I just want to ask you about one further recent happening, and that is in connection with certain statements which you have made in your testimony of last September.

At page 622 of your statement, you said:

I am very glad to appear anytime before congressional committees, considering recommendations which the President has made upon the advice of the Council of Economic Advisers, and the bill now before you is of that character.

Do you remember so testifying?

Dr. CLARK. Yes, sir.

Senator DONNELL. Then on page 623 you said:

The Council recommended to the President that he ask for this legislation because in our view it was necessary to extend the power of the Federal Trade Commission in this manner for economic reasons.

Then you also said at page 625:

A few days later, the President sent to the Congress his first Annual Economic Report which under the law is prepared with the aid of the Council of Economic Advisers, and, of course, is very largely written by us.

There are other things that appear in your statement to similar effect; namely, indicating the fact that the President was relying in large part on the recommendations of the Council of Economic Advisers.

That is correct; is it not?

Dr. CLARK. I hope it is. He certainly does follow out the lines we advise him to take.

Senator DONNELL. One of the members of that Commission is no longer with it. That is correct; is it not?

Dr. CLARK. Mr. Edwin G. Nourse, the former chairman of the Commission resigned.

Senator DONNELL. Has his place been filled as yet?

Dr. CLARK. No, sir.

Senator DONNELL. You just have two members on that council? Dr. CLARK. That is right.

Senator DONNELL. How long has he been out?
Dr. CLARK. Since the 1st of November, I think.

Senator DONNELL. That would be 3 months and a half.

I might be digressing a little bit, I realize, but I might ask you, if you do not object to telling it, do you think that the Council of Economic Advisers can function as well with two members as it could if this vacancy created by the resignation of Mr. Nourse had been

filled in the meantime?

Dr. CLARK. I would like very much to have the full membership. Senator DONNELL. Is the other member, Mr. Keyserling, now the vice chairman?

Dr. CLARK. He was vice chairman in the beginning; he is now acting chairman.

Senator DONNELL. But he is not the actual chairman, but just the acting chairman, and his official capacity is that of vice chairman ? Dr. CLARK. That is correct.

Senator DONNELL. And you, as you indicated, are a member at this time?

Dr. CLARK. Yes, sir.

Senator DONNELL. I have an article here from the St. Louis StarTimes published Friday, February 10, 1950, which I will offer to be incorporated into the record, Mr. Chairman.

Senator O'CONOR. That may be so incorporated.

(The article referred to is as follows:)

TRUMAN DIDN'T SEE ECONOMIC COUNCIL, DR. NOURSE WRITES

NEW YORK, February 10.-Dr. Edwin G. Nourse, writing today in Collier's magazine, said President Truman's Council of Economic Advisers never had a chance to discuss its findings with the President.

In an article entitled "Why I Had To Step Aside." the 66-year-old economist who resigned as Chairman of the Council last fall also said the other members "wanted to advance philosophies or causes for which they had a personal enthusiasm."

This, Dr. Nourse said, was contrary to his belief that the Council should operate as a professional and nonpolitical agency.

On the Council with Dr. Nourse were Leon H. Keyserling and Dr. John D. Clark.

Although he noted that the President's course often substantially paralleled Council recommendations, Dr. Nourse added:

"On no occasion did the Council have so much as a single hour's time in which we could sit down with the President to answer any question that arose in his mind, clarify data, or examine alternative courses and probable consequences."

INFORMED BY ASSISTANTS

"We learned of his final policy decisions through an assistant or an assistant to an assistant on the White House staff.”

The first real showdown between political and economic interpretations of the Council's role came in February 1949, the article related. This occurred when the Council was asked to appear before the Joint Committee on the Economic Report.

Dr. Nourse said he was away from Washington at the time but expressed his belief that the Council could not "discharge its function effectively and without embarrassment either to the Chief Executive or to Council members if it is drawn out of the Executive Office into the political atmosphere of Capitol Hill." But the other members of the Council accepted the invitation, the article continued, and the presentation before the committee "stressed the imminence of inflationary dangers." Dr. Nourse commented: