A consent decree was entered. A trustee was appointed pursuant to that consent decree, to take the Columbia Gas stock and hold it. So far, of course, you have a separation, an end of the control. But the decree contained this provision: That the trustee should vote the stock as directed by Columbia Gas. And, of course, it became perfectly ridiculous.

Missouri-Kansas Pipe Line Co., the other stockholder, whose stock by that time had been reduced to something like 40 to 42 percent, continued its efforts to have its corporation freed. Finally, the Columbia Gas people proposed that the trustee be discharged and the stock distributed. To whom? Why, to the stockholders of Columbia Gas. That is a method which is known as the pro rata distribution, which simply transfers the control from a corporation to the same community of stockholder control.

There was a provision in the decree that under certain circumstances Missouri-Kansas Pipe Line Co. might intervene in that case. They intervened. They filed a petition to intervene, which was denied by the district court. As soon as their lawyers stopped speaking the judge denied the motion at once.

The case went to the Supreme Court. In an opinion written by Mr. Justice Frankfurter, the right to intervene was upheld. That meant that it was going to be extremely difficult to do anything about that final distribution of stock without doing something with regard to Missouri-Kansas Pipe Line Co.

In the meantime, the SEC had a proceeding with regard to the transaction. Finally, Columbia Gas, I suppose, realized that it was not going to get away with that kind of a divestiture and sold the stock to Phillips Petroleum Co. Phillips Petroleum Co. and MissouriKansas Pipe Line Co. had made a contract for the joint acquisition of that stock, the Columbia Gas stock. Phillips Petroleum Co. was not a competitive company with regard to Panhandle Eastern; so that that did not establish a situation which was violative of the antitrust laws.

There was an instance where the remedy was very simple, where it was finally applied simply because the Securities and Exchange Commission had got into the situation, and simply because the private parties had had an opportunity to intervene in the case and force that kind of a settlement. Had the legislation which I have in mind been on the books, they would not have had as much difficulty as they encountered in doing that.

Now, there is a second important case which I have in mind, or, rather, a group of three cases dealing with the same subject. It is in the automobile-financing field. That is an enormous business. Three large companies do 80 percent of that business. Four hundred small companies divide the other 20 percent. How did that happen? There is a monopoly. How did it happen? Well, it happened in a typical way. I think it happened in the only way that that kind of a monopoly can happen. It happened because of predatory, oppressive, and monopolistic practices which excluded the small man from the business.

There was a case brought against General Motors and its finance company called GMAC. Another case was brought against Ford and a company known as Commercial Investment Trust, an automobile

financing company. A third case was brought against Chrysler and Commercial Credit, another financing company.

Those cases were brought at South Bend in 1937. In 1940, an equity suit was brought against General Motors to break up this situation. That was at Chicago in 1940. Eight years later, it is still pending. Eight years later, the monopoly between Ford and CIT and between Chrysler and Commercial Credit still exists, and the practices are continuing.

General Motors owns all of the stock of GMAC, and always has owned it. It requires its dealers to patronize GMAC with regard to financing the purchase of automobiles, wholesale and retail.

What I say about General Motors and GMAC applies substantially with regard to the other two companies.

Automobiles are sold for cash by the factory. Their business in that regard is done in the same way that you go to the movies, put your money down at the box office, pay cash, and go in. It is the same way that you buy a package of cigarettes out of the slot machine. You put your money in first; then you get your cigarettes. That is the way the wholesale automobile business is done. The dealers need money to do it. Many of them have to borrow money. Naturally, that business is a very lucrative business. In order to induce the General Motors dealers to patronize GMAC, they have brought a variety of pressure acts against them. An automobile dealer has a contract for 1 year with the factory. The truth of the matter is that it is not a contract at all, because there is no obligation upon the part of the factory to do anything. There is no obligation upon the part of the factory to sell the dealer an automobile. The only thing that the factory is obliged to do is to receive his orders-not to fill them; they may fill them or not, as they please.

The contract provides that General Motors shall have the right periodically to examine all of his records. And they do it. They have a form which requires the dealer to state what he is doing with his financing paper, whether he is selling it to GMAC, to other companies, or to banks, or whether he is keeping it himself. They do not want him to keep his own paper himself. They want him to send it to General Motors. So then the dealer's business belongs to General Motors. A factory and a finance man go to the dealer together to solicit him, to give the business to the finance company.

Now, one can imagine what a terrific pressure that puts upon the dealer. There must be a tremendous incentive to make any dealer patronize anybody else under those circumstances. And I could recite other monopolistic practices here in that field. But I want to say what has been done about it. Indictments were brought at South Bend against these three groups. The case against General Motors and GMAC was tried. They were convicted by a jury. It went to the circuit court of appeals at Chicago, and it was sustained. The Supreme Court refused to review it. At that time, Ford and Chrysler came to the Department of Justice and suggested a consent decree. A concent decree was entered. The indictments against them were dismissed without a trial. The consent decree prohibited an affiliation-it contained a number of prohibitions, but I will speak of two at this moment. One of them was that there should be no affiliation between Ford and any finance company; that is to

say, that they should have no proprietary or stock interest in a finance company, and that there should be no joint solicitation of dealers. The decree said that if the Department of Justice does not within a certain time get a similar decree against General Motors-does not bring a case against General Motors and does not get a similar decree against them-these provisions with regard to affiliation and joint. solicitation shall then be vacated with regard to Ford and Chrysler and Commercial Credit and CIT.

Mr. BALLINGER. What does "CIT" stand for?

Mr. HARDY. Commercial Investment Trust.

Now, putting it in another way, what that meant was this: That if certain offenders were not prosecuted successfully within a certain time, other offenders should be relieved of restrictions and no longer molested. That was an agreement which I thought was contrary to public policy, one which no prosecuting department ought to make. To me it was very bad judgment to make such a decree. I think the Department of Justice could have got a decree minus any such qualification.

If there had been on the statute books a right of private parties affected, adversely affected, by this kind of decree, to appear in court and raise their voice against it and give reasons why, and show how it would adversely affect them, I think no such decree would have been entered.

Now, the Department of Justice did not bring a suit against General Motors until a couple of years after that decree was entered. It did not procure a decree. It did not meet the conditions of those decrees at the deadline time. That deadline was postponed for a series of years, until, after the war, Ford decided that we would do something about it; that they would do something to get this provision vacated.

They appeared in the district court, and the district court refused to vacate those provisions. They went to the Supreme Court. The case was decided here the other day, last Monday. The Supreme Court decided that the Government was bound to respect that agreement, and that these provisions of the decree were vacated. So that today those provisions of the decree are vacated.

I want to say something about the motion-picture case, in which case a similar decree was entered. That was a case begun in 1938. Today, more than 10 years later, that case has not been brought to a conclusion. It was decided in the Supreme Court last May and has gone back to the district court.

After that case had been in court for 2 years, a consent decree was entered. The consent decree in my opinion had nothing to do with the acts in restraint of trade. It did not touch them. It set up a so-called arbitration system, by which the victims of this monopoly might quarrel amongst themselves about the crumbs that would fall from the monopoly table.

Of course, they objected to it. Here is a pamphlet published by the Temporary National Economic Committee, Monograph No. 43, about the motion-picture industry. It says something about that decree on pages 75 and 76.

As I say, it did not touch the evil.

It set up a judicial system. When I spoke about legislative decrees a moment ago, I had that in mind. It set up throughout the entire United States a judicial system, to enable the victims of this monopoly to quarrel amongst themselves as to who should get the pictures. And it did not molest the monopoly, did not deprive it of the cream of the business at all. This judicial system, with these great tribunals, was not to touch that.

Finally, in 1944, the Government filed a motion to modify that decree, in which it stated that it had discovered that the decree was inadequate. Then they went on to try the case; and I think the trial was concluded in June 1946. The district court then entered a decree prohibiting a series of monopolistic practices. It refused to grant divestiture, which I think was a very important and necessary remedy. The divestiture asked for by the Government was that these big film companies be separated from the theaters which they own. I think the fact that they were engaged not only in the production of films but in their distribution and exhibition brought them in competition with their own customers; namely, the independent exhibitors. And the monopoly, and the discriminatory and oppressive practices which followed against these small-business men, these small exhibitors, were prohibitive. That will only be cured by prohibiting that motive, by getting out of the exhibition business.

The Supreme Court sent that case back to the district court to do something about that.

About 10 days ago, another consent decree has been proposed with regard to that problem, a consent decree by RKO, which probably constitutes a pattern of consent decrees which we may expect to see from the other defendants, Paramount and Twentieth Century-Fox Film Corp., and the others.

To understand what that decree means, what it accomplishes, and what it may fail to accomplish, we may divide the theaters which the film companies control into four different classes. The first class are theaters that are owned jointly by one or more of the defendants in the case; that is, RKO and Paramount may jointly own a theater or jointly own a number of theaters. That is the first class.

The second class is where there are joint ownerships between film companies and independent exhibitors.

A third class is of theaters owned by a film company, by a defendant, and acquired by monopoly power-and which constitutes the fruits of the monopoly. I use an expression of the Supreme Court there. That is the third class.

A fourth class is of theaters wholly owned by a defendant and innocently acquired. That is to say, they have acquired them without any unlawful activity, such as beating an exhibitor over the head with an economic blackjack and taking his theater away from him.

That is the description given in the Government's petition in this case. These companies would virtually strangle a man economically, starve him for films, so that they might buy him out and drive him out of the business. That is what the Supreme Court meant when it said "fruits of monopoly."

Now, what does this decree do with regard to each of these classes? First, with regard to those jointly owned by defendants, they are to

be transferred to one of the defendants. If, with regard to a particular theater, A and B divide the stock interest 50-50, one of those 50percent interests is to be transferred to A or to B, so that one of them will have 100-percent interest. That means, in all of those instances, that one of those defendants will have those theaters, a block of theaters.

As to the second, where the theaters are jointly owned by a defendant and an independent, there is to be divestiture there. That is to say, the defendant is to get out. If he has a 50-percent interest, he is to transfer that to the other fellow or to some place else.

As to No. 3, that is where a theater is wholly owned, acquired by monopoly and fruits of monopoly. It is impossible to tell from that decree what happens to them.

Where they are wholly owned-the fourth class-and innocently acquired, there is no requirement of divestiture in that decree.

But when you get that far, this is what you have with regard to RKO. At least, this is the principle of it; I do not know how many theaters they have. It has been difficult for me to discover, by reading the pleadings and the record of that case, how many theaters they had and how many theaters they remained possessed of. It means that they have a large block of theaters when they get through, and that they are back where they began. They are in competition with their own independent theater-operating customers. And we may expect the same old human motive to operate.

Now, how is this divestiture to be accomplished, such as it is? Why, all of the theaters are to be put in one newly created corporation, and the film business is to be put in another newly created corporation, and the stock of both of those newly created corporations is to be distributed pro rata amongst the stockholders of the top company. That leaves the same community of stockholder interests, with one exception. One of those stockholders owns 24 percent of the stock, so that he will get 24 percent of the theater company's stock and 24 percent of the film company's stock.

The consequences of that are to be prevented by this method: A trustee is to be appointed. He is to receive that 24 percent of the stock and vote it. The decree does not say how he will vote it. It does not say with whom he will consult about voting it. It does not say he shall not consult the owner and he shall not vote it in such-and-such a way. It is the old Columbia Gas decree minus the provision which says he shall vote it as directed by the monopolizer. They simply do not say anything about that. And there again we are going to have the same old human motive operating, and it is going to be voted the way it is voted.

Let us suppose what I suggested in the beginning were the law; namely, that these independent small exhibitors were permitted today to go into that court and raise objections to that decree and say: "Let's see what this thing is and how it is going to affect this business. Is it going to restore competition and free enterprise?" If that is a good decree, no one would object.

But no one knew what was in that decree until about a day before it was filed in court.