Is that all?
Are there any further questions?
Mr. Pilcher. I would like to ask him a question.

First, I want to congratulate you upon this statement. I have been on the Harden subcommittee for the past 2 years, and I will go a little further, and say that I want to congratulate your Administration. This is a bipartisan matter. We have to have our little politics in it, but the Government is bigger than both parties. It seems to me if you are really doing what you were saying you are doing, and your Department-BDSA is a branch of the Government where we Congressmen can carry complaints from our constituents to you, you are doing the same thing that we are trying to set up here now; is that correct?

Mr. HONEYWELL. That is true, sir, and that has been in operation for approximately 5 months now.

Mr. Pilcher. You will agree, I think, that certain branches of activities which exist are activities which the Government has to stay in?

Mr. HONEYWELL. Without being specific, I can agree with that statement; yes, sir.

Mr. Pilcher. It seems to me if they are really doing this job, that we have a branch of the Government to which we can go with our complaints now.

That is kind of like the first bill, Mr. Dawson, which was H. R. 8832; was it not?

Mr. Dawson. Yes, sir.

Mr. Pilcher. If this is functioning, and if they mean business, as they say they do, I think they are doing the same thing that we are trying to set up here.

Mr. OSMERS. I certainly want to subscribe to what Congressman Pilcher said so far as he has gone. There were, possibly, three weaknesses in the present operation. I would certainly not accuse anyone or state that any one in the executive department is not doing everything they can at this time, but under the present procedure there is no way for Congress and for the public to know what has been done specifically over any given period of time, unless a committee, such as the Harden subcommittee, on some particular day would call an official up and ask for a statement.

There is no required report on the details of the Government being in competitive activities, and I think that that would be a helpful and necessary thing.

The second thing is that despite all of the Government activities which may be going on at the time, and the efforts of the Department of Commerce to curtail existing activities, there is no procedure set up which would prevent the Government in some specific and probably remote instance-remote from Washington--from setting up unbeknown to the committees of Congress, and possibly even to the Department of Commerce, a competitive type activity. It might be very small at the beginning, and there is no review of that proposition provided for under present procedures.

Third, while it is true that your major and stronger industries, particularly those who have the financial ability, do maintain Washington representatives, and they have a peculiar advantage under the present situation, because they are here in Washington it is pos

sible for them to have access to the Department of Commerce, and I am sure when they go over there, they are courteously treated, and I have no objection to that, but what happens, Congressman Pilcher, is that if some man in your district or in mine is engaged, like a man who was a witness the other day, in a little business distributing circulars, and he feels he is being put out of business by an activity of the Post Office Department, he has no Washington representative nor industry association to represent him.

That is why I feel that it should be possible, as a right under the law, for that man to write to the Secretary of Commerce and say, “This is the case."

I suppose a lot of them write anyway, but as a matter of right, I would like to see it established so that he could write to some department of government, and get the answer.

Mr. Judd. You say you had excellent success and cooperation with the Defense Department, and that you are now working on other departments; that you have gotten it started with the Post Office Department, and that your own Department is aggressively pursuing this course.

Without asking you to identify any particular departments, are there some which are resisting what you are trying to do?

Mr. HONEYWELL. Mr. Judd, there has been no case of resistance so far reported to me.

The CHAIRMAN. Reluctance?
Mr. HONEYWELL. May I define that statement?

The reluctance has been only in their knowledge of the intent of the inquiry, and when that is properly explained, there has been full cooperation.

Mr. Judd. You do not mean to tell us that you have run across many Government agencies who are willing to cut themselves down?

Mr. HONEYWELL. I wanted to state, sir, that all of the Government agencies that we have contacted have been willing to listen. They have been willing to give a hearing to industry representatives who come to Washington, and through our offices have had an appointment made for them to talk directly with the alleged offender.

The CHAIRMAN. If I may interrupt here, Doctor, what about the handling of liquor by the Defense Department, of which Mr. Shafer complained so bitterly, especially in Michigan, where they did not pay the tax. They were decidedly reluctant, were they not, to get out of that business?

Mr. HONEYWELL. I am sorry, sir, but I am not informed on that.

Mr. Judd. Our experience is that Government agencies are always reasonably courteous and they entertain our complaints, but they do not do much about them. I am not blaming any particular individual. It is a disease of genus homo. He does not decrease himself voluntarily, without considerable pressure, and I think there is merit to what Congressman Osmers said.

You presently have to depend upon persuasion, your presentation of the facts and your urging that this is the general intent of Congress and the Hoover Commission, and so on. But you cannot go to them and say that as a matter of law you are not only authorized, you are commissioned to do this thing. The longer you are in Government the more you will find, I think, that it is almost impossible without such authority and power to cut down as much as should be done, in order to promote both economy and efficiency.

I think the Congress should consider making this a matter of law, authorizing your Department to be responsible for this function.

Mr. Osmers. Mr. Chairman, I just have one further question which I wanted to ask of Mr. Honeywell.

The CHAIRMAN. You may proceed.

Mr. Osmers. I cannot seem to find it in your prepared statement, but possibly you testified verbally on it. I believe you said that there was one department in the Government which had a program in connection with this, and I assumed from what else has been said, you meant the Department of Defense?

Mr. HONEYWELL. My answer to that, sir, was the Department of Commerce, because of our specific activities in this field, but I qualified that later by stating that the same thing was true in the Department of Defense.

Mr. Osmers. That is the reason that I wanted to catch that. So, we now have, Mr. Chairman, two departments of the Government which are aware of this problem and are doing something about it, aggressively.

I happen to know that the Department of Defense is doing everything they can under the circumstances, and you have convinced me, sir, that the Department of Commerce is doing the same.

How about the many other branches and activities of the Government? Do you know of any active, affirmative, and positive program in the other branches and departments of the Government to curtail unnecessary competitive activities, except for the Department of Commerce and the Departir ent of Defense?

Mr. HONEYWELL. The Post Office Department.
Mr. OSMERS. The Post Office Department?

Mr. HONEYWELL. Yes, sir; I mentioned that in the testimony here today.

Mr. OsMERS. That is right.

Mr. HONEYWELL. In regard to the very first complaint which was brought up, by bringing together the complainant and the proper officials of the Post Office Department, the complainant chose to drop the problem. He recognized his inability to handle the job as was required.

Mr. OSMERS. I see. We have now three departments, and I am not trying to make this sound like a cross-examination, but I think the members of the committee would like to know whether any more than three departments of our great Government had active programs, affirmative programs, in this field?

Mr. HONEYWELL. May I submit that to you, sir, in later testimony? Mr. OSMERS. We would very much like to have it. (The matter referred to is as follows:)

With the exception of the work with the Post Office and Defense Departments mentioned above, we have not yet had more than preliminary contacts, such as request for information, with the other interested agencies. These contacts give us every reason to anticipate full cooperation as the cass develop and the work progress s. The agencies are listed in the table which has been submitted enumerating competing activities.

Mr. Dawson. You are of the opinion that the Department of Commerce should be interested in this matter essentially because of its activities and that it should be the proper place where these matters should be considered?

Mr. HONEYWELL. That is correct, Mr. Dawson.

Mr. Dawson. And such a setup as Business and Defense Services Administration in your Department will go into any department where there is complaint?

Mr. HONEYWELL. That is right.

Mr. Dawson. You can thus act as a clearinghouse for complaints about the Government being in certain businesses, wherever it may be in the Government?

Mr. HONEYWELL. That is right.
Mr. JUDD. Mr. Chairman, may I ask a further question?
The CHAIRMAN. Certainly.

Mr. Judd. I have been so impressed with your testimony that I wonder whether you come from the Minneapolis Honeywells or whether they come from you.

Mr. HONEYWELL. May I stand and bow.
Mr. Dawson. What is Mr. Honeywell's business?

Mr. JUDD. I do not know what his business is, but I know what the Minneapolis Honeywells' business is. They make the heat regulators for the country, and most of the bombsights for the Government.

Mr. Dawson. Mr. Honeywell, what were your activities before you entered the Government?

Mr. HONEYWELL. Mr. Dawson, I lived for 16 years in Hawaii. I was connected with one of the major sugar agencies in relation to sugar production, and plantation work there, and transportation, and all of the allied activities.

Mr. Dawson. You were a small-business man?
Mr. HONEYWELL. Small business; yes, sir.

The CHAIRMAN. Have you any idea of the amount of money which the Government has invested in plants which are in competition with private industry?

Mr. HONEYWELL. No, sir; I do not.

The CHAIRMAN. Have you any idea of the different activitieseven approximately an idea of the different activities in which the Government is engaged in competition with private business?

Mr. HONEYWELL. I have testified that between 70 and 80 was the figure which we have discovered.

The CHAIRMAN. But you do not know the amount of money involved in the plants, nor the number of employees, nor the volume of business in dollars which they do?

Mr. HONEYWELL. No, sir.

The CHAIRMAN. I might say to you that I have been trying since this first complaint came to me almost a year ago to get that information, and I am no wiser today than I was then.

I have not been able to obtain even approximately the volume nor the extent of the business which the Government does, and the Harden and other subcommittees have held extensive hearings over a long, long period.

With reference to people who object to any legislation or to any policy of the administration which would get the Government out of private business, here is a letter dated July 16 which came in this morning from the Retirement Federation of Civil Service Employees, representing 35 other local unions which are affiliated with it, and they write:

Our association here at the Portsmouth Naval Yard is definitely opposed to House bill H. R. 9835 introduced by you on July 8.

Skipping on down in the letter, they further state:

The shipyards are tooled and equipped to do the work that this legislation proposes to turn over, in part, to private industry.

Well, the only proposal that we have that the Government should get out of is where it is in competition with business activities that, perhaps, business can carry on, but in those specialized activities which are carried on by the Army, Navy, or the Air Corps, they must be handled by these departments because of the secrecy involved and because they have the technical knowledge.

He further states:

We further believe that legislation of this nature is pernicious and trust that this bill will be pigeonholed for the remainder of this session—this bill and any other legislation.

Have you any idea why these members of this Retirement Federation could be opposed to getting the Government out of competition with private industry? Mr. HONEYWELL. I do not know, sir.

. Mr. FOUNTAIN. What is the name of that organization, Mr. Chairman?

The CHAIRMAN. Retirement Federation of Civil Service Employees. Mr. FOUNTAIN. Thank you very much.

Mr. Dawson. Any time you jeopardize a man's livelihood, he is going to holler.

The CHAIRMAN. They are retired people.

Mr. Dawson. Yes; but they have sons and daughters in the agencies.

The CHAIRMAN. Yes; but how are the sons and daughters engaged in these things going to get their pay if the fellows who pay the taxes are shoved out of business?

Mr. Dawson. The only way the Federal Government can operate is through taxation.

The CHAIRMAN. How are they going to get it, if they will not let the fellow go to work and earn the money to pay the taxes?

How will they have it?
Mr. Dawson. They can only get it from those who have got it.
The CHAIRMAN. All right.

We will now hear from the next witness, who is Mr. Thomas P. Pike.



Mr. PIKE. Mr. Chairman, my name is Thomas P. Pike, and I am Assistant Secretary of Defense for Supply and Logistics.

I appreciate this opportunity to appear before your committee to set forth the Department of Defense position on the bills under consideration, and expecially to inform the committee of the Department of Defense policy with respect to commercial and industrial type facilities.

The CHAIRMAN. Let us do as we did last Friday or Saturday. Do you want to incorporate your written statement into the record?

Mr. Pike. Yes; I would like to do that.

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