As I say, if we had had on the statute books the right of private parties to come in and say something about that, we would have a very fine test as to the efficacy of that decree. And, if it is a good decree, that would be discovered as a result. Mr. BALLINGER. I would like to ask you one question. I understand that you would not only let these interested parties come in and argue with the court as to whether the proposed consent decree effectively protested their interest, but you would go a step further. Suppose they were turned down by the court, and the court stood by a bad consent decree. Would you give them the right to appeal the consent decree to an appellate jurisdiction? Mr. HARDY. Yes. Mr. BALLINGER. Would you also give them the right at any time to come into court and claim that the consent decree was operating to the detriment of their interest, and ask for an amendment of the consent decree? Mr. HARDY. Well, I had not thought about that. I would have to think about that. I do not think, if you gave them this first chance, and gave them the appeal, which would be a check upon the court, you would have any reason for that. Mr. BALLINGER. But there is a wide difference between a proposed plan and how it gets into operation frequently. I mean, its operation may work out entirely different from what it says on paper. And it seems to me that that might be a further logical step. As it now stands and I will have to ask you as a lawyer, as I am not one-isn't the Government the only party that can move to amend the consent decree? Mr. HARDY. Yes. Mr. BALLINGER. That is a right possessed solely by Government. So that, if Government makes a bad deal with the court, the Government is not going to be on the alert to amend a consent decree. So I am suggesting to you: Why would you not allow these interested parties to come into court at any time and claim that the consent decree was not working in their interests or was not conforming to the terms on which it had been laid down. Mr. STEVENSON. They would all be demanding that right. We would not have any decree. Mr. HARDY. Well, it would facilitate the enforcement of the antitrust laws. It would prevent the entry of ineffective decrees. Mr. BALLINGER. You think that would be enough. If you would start at the beginning, you would take a chance on what came out after that? Mr. HARDY. In a word, what I have in mind is to establish a means of making certain in the consent-decree department that you get a good decree. Mr. STEVENSON. We appreciate very much the effort you have put in on this report to the committee. It represents a lot of work on your part, and I think you have something there that ought to be followed up. Mr. BALLINGER. I would like to put in this letter, Mr. Chairman, from Fred Hall, the owner of the Variety Theatre in Akron, Colo. Mr. STEVENSON. Very well. (The letter referred to is as follows:) VARIETY THEATRE, Akron, Colo., November 16, 1948. HOUSE OF REPRESENTATIVES OF THE UNITED STATES, Eightieth Congress, Washington, D. C. (Attention: Paul O. Peters, staff investigator.) GENTLEMEN: I am enclosing a copy of a letter relating a typical small, independent-theater story. I would be happy if it should benefit the cause of the "little man" in your investigations. Thank you for past favors. Very truly yours, FRED HALL. VARIETY THEATRE, Mr. ROBERT MOCHRIE, Akron, Colo., November 16, 1948. General Sales Manager, RKO Radio Pictures, New York, N. Y. DEAR SIR: Is it the policy of your company to take an application on a deal in the branch manager's office; then, knowing that the exhibitor had dated the pictures and sent in the calendar, call him long distance and falsely lead him to believe that the home office had rejected the contract in order to force the sale of two pictures which the exhibitor had said he did not wish to buy? On October 13, because no RKO salesman had called on us for more than 3 months, my wife and I dropped into your Denver office to see if someone wished to sell us your new-rapidly aging-product. We spent the afternoon, or most of it, making a deal with your branch manager, Joe Emerson. Because we needed the pictures at the time, we agreed to our usual percentage figure on such pictures as Melody Time and Fort Apache, although neither could be considered new enough for percentage, and the late playing date was no fault of ours. We offered the usual percentage on Rachel and Good Sam, top flat on Return of the Badmen-much too much, we have learned since and an unprecedented 40 percent for a replay of Best Years, plus some double-bill product which we don't need but took to save argument. We explained to Mr. Emerson that we could not use Velvet Touch-murder melodramas will not pay here. And Race StreetGeorge Raft is poison at this box office. He agreed to pass them up, and wrote up the application. As the prices were higher than our customary deal, and the pictures, conversely, older, we saw no reason to doubt that the deal would go through-and Mr. Emerson assured us that it was safe to date the pictures on our closeNovember calendar. In fact, he called the booker from his desk to check one date we wanted. So we dated the pictures and sent our calendar copy to the printer. Late Monday night, October 18, I received a long-distance call from Mr. Emerson. He began, "Fred, they don't like some of these prices." Of course, just as he knew I would, I assumed "they" meant your home office, and that the deal was rejected. He went on to say that "they" wanted 40 percent on the top-bracket shows, but that he thought he could get the original split figure through if I would take Velvet Touch and Race Street, obviously a high-pressure "force"; but, just as he had planned, I did not relish the prospect of filling three Sunday dates and changing the printer's copy at this late date. So I finally said O. K. and hung up. Afterward, however, I remembered another instance of these shady selling practices of your branch manager and decided not to play sucker again. I wired my rejection of the contract, and confirmed the rejection by letter. Sure enough, to bear out all my suspicions, Mr. Emerson's answer stated that he had never told me the original deal was rejected. I would be very interested in knowing to whom he referred when he told me "they" did not like the prices, and "they" wanted 40 percent. The whole affair cost me considerable money and time, as last-minute booking of three Sunday dates is no easy matter; and, to wind up our relations with Mr. Emerson, we were coldly refused admittance to a screening in Denver last Wednesday night, November 10. We happened to be in the Allied office at closing time; and Mr. Ashby mentioned that if we were staying overnight we should take in the screening of Cary Grant's new picture. He said it was not an advertised trade show, but that Mr. Emerson had told him he was having it for some of his friends and some of the exhibitors who had missed the trade show. I said I thought we would pass it up, as our relations with Mr. E. were strained at the moment; whereby Mr. Ashby said, "Nonsense-go on over and tell him I sent you." So, we were really quite unprepared for the embarrassment of Mr. Emerson's cold announcement that it was a private screening. If you would like copies of all the correspondence pertaining to the matter, I shall be happy to send them. This seems to us a prime example of the illegal selling practices to which independent exhibitors are sometimes subjected, and in which the Department of Justice is currently taking a gratifying interest. Please advise us if we are to be subjected to further insults and high-pressure salesmanship by telephone, or if there might be some way in which we could do business with your company in a friendly and straightforward manner? Thank you. Very truly yours, FRED HALL Mr. STEVENSON. We will adjourn now until next Wednesday morning at 10 o'clock. (Whereupon, at 4: 23 p. m., the committee adjourned to reconvene Wednesday, November 24, 1948, at 10 a. m.) ! MONOPOLISTIC AND UNFAIR TRADE PRACTICES WEDNESDAY, NOVEMBER 24, 1948 HOUSE OF REPRESENTATIVES, Washington, D. C. The subcommittee met in room 129, Old House Office Building, at 2 p. m., Hon. William H. Stevenson presiding. Present: Representative Stevenson. Also present: Willis J. Ballinger, economic counsel, and Paul O. Peters, staff investigator. Mr. STEVENSON. The Subcommittee on Monopoly of the Small Business Committee of the House will now come to order at this adjourned session, at 2 p. m., of this 24th day of November 1948. Mr. BALLINGER. Are we ready to call the one and only witness, Mr. Chairman? Mr. STEVENSON. Yes. Will you do that? Mr. BALLINGER. Colonel Wozencraft, will you give your full name for the record, and whom you represent? STATEMENT OF COL. FRANK W. WOZENCRAFT, WASHINGTON COUNSEL FOR THE INDEPENDENT BANKERS ASSOCIATION OF THE TWELFTH FEDERAL RESERVE DISTRICT COLONEL WOZENCRAFT. Mr. Chairman and members of the committee, my name is Frank W. Wozencraft. I am Washington counsel for the Independent Bankers Association of the Twelfth Federal Reserve District. In response to the invitation of Mr. W. J. Ballinger, economic counsel of the committee, I am here today representing the association and its 350 member banks located in the seven Western States Arizona, California, Idaho, Nevada, Oregon, Utah, and Washington. The association was organized in 1937 to protect free enterprise in banking and to oppose the elimination of competitive banks and to fight against monopoly in banking. Monopoly in banking will in turn foster monopolies and cartels in other business. There can be no free enterprise in other fields unless there is free enterprise and competition in banking and credit. The elimination of competition in the field of banking constitutes one of the most potent threats to small-business men and to the entire freeenterprise system to be found in America today. Lest this statement may be considered overly pessimistic, let me refer you to the Annual Report for 1944 of the Federal Deposit Insurance Corporation which states in part, and I quote: 1315 Monopoly in banking is a threat to American traditions, both because it limits the opportunities to engage in the business of banking and because it provides an opportunity for favoritism in the extension of credit which may foster monopolies in other industries. The growing tendencies toward monopoly in the banking business are serious, and prompt action should be taken to curb them The inevitable result of the continued "growing tendencies toward monopoly" in banking and the attendant restriction of credit would be the socialization of banking and the end of free enterprise in our economy. The American public will never permit a private monopoly of credit. The ultimate outcome can only be the socialization of banking. It has begun in England. It has already been legislated in Australia and only restraint by the courts during pending litigation to test the constitutionality of the act has prevented the complete socialization of all banks. It can happen here. That is why the Independent Bankers' Association of the Twelfth Federal Reserve District, from its inception, has stanchly advocated the necessity for new Federal legislation for the maintenance of free enterprise in the banking field. We believe the most serious threat to free enterprise in banking today is the unregulated operation and expansion of the bank holding company-that queer animal that is neither fish nor fowl and has grown up entirely without effective regulation by any Federal or State agency. Relying on the general corporation laws of the respective States, the holding company has moved into banking operations denied both National and State banks. It has made possible the accomplishment by indirection of that which could not be done by direction. According to the September 8, 1948, issue of the American Banker, 11 bank holding companies now own or control 330 banks, with more than 800 banking offices, extending into 20 States. The aggregate resources of these 11 corporations and their affiliated institutions exceeds $13,500,000,000. Accepted rules of law confine the business of banks to banking and prohibit them from engaging in extraneous enterprises-that is from the Annual Report for 1943 Board of Governors of the Federal Reserve System. It is recognized that banking must be kept free from entanglement with other business enterprises in order that the banker may maintain the disinterested judgment necessary to the sound extension of credit and the protection of the depositor's money. When a bank also controls another business, I think that it is obvious that that business enjoys an unfair competitive advantage in the obtainment of credit. That is just one of the reasons why banks may not own companies engaged in nonbanking activities. A bank holding company, however, is not bound by the legal restrictions which apply to banks. I have here a copy of the American Banker of February 27, 1948, showing a chart of one holding-company organization, "a Panama corporation with offices at Nassau, Bahamas, B. W. I." This chart was prepared by the Virginia Bankers' Association. I would like to offer it for the record. Mr. BALLINGER. May it be received, Mr. Chairman? Mr. STEVENSON. It is so ordered. It will be entered as part of the record. |