Each of these pamphlets present a clear, concise analysis of the problem of Government competition with private enterprise accompanied by appropriate recommendations toward a resolvement of the issues.




Basic principles.-Any invasion by Government into the area of private enter" prise weakens the foundation and threatens the existence of a free economy. Such invasion constitutes unfair competition with the citizens of the United States; represents the commitment of and continuing demand for billions of dollars of tax moneys; increases the costs and decreases the efficiency of Government; creates a heavy burden on taxpayers, and constitutes an inflationary threat.

Federal enterprises should be transferred, wherever practicable, to the people, acting for themselves or through private business entities created by them. Such transfer will reduce the Federal debt; reduce or eliminate future Federal expenses; increase revenues to Federal, State, and local governments through additional taxes paid by these enterprises under private ownership, and remove the Federal Government from unfair competition with its citizens.

There is urgent need for immediate development of the best possible plan to transfer Federal enterprises to private enterprises.

The accounts of Government agencies engaged in competition with private enterprise should be audited annually by reputable independent, professional accountants and the reports of their audits should be made public.

Mr. Osmers. We have received through the office of Congressman Hale Boggs of Louisiana a very good statement from Joseph D. Henderson, the national managing director of the American Association of Small Business, Inc. (The statement follows:) AMERICAN AssoCIATION OF SMALL Business,

July 10, 1954. Hon. CLARE E. HOFFMAN,

House Office Building, Washington, D. C. DEAR CONGRESSMAN HOFFMAN: Thank you again for your invitation to present a statement at the hearing on H. R. 8832 before your committee on the July 14. I regret that previous commitments prevent my going to Washington at this time, because I consider this particular bill a very important one to all small businesses and every business in general.

In compliance with your request, I have drafted a statement which I am requesting the Honorable Hale Boggs to present for the record. I am sending 100 copies of this statement on to you under separate cover. According to information from New Orleans postal authorities, they should arrive not later than Monday morning. Inform your staff to be on the lookout for them. Attached hereto is a copy for your immediate information.

Favorable action by your committee and final approval of H. R. 8832 by the President will be appreciated by all taxpayers in the Nation, Yours for keeping small business in business and Very sincerely,

J. D. HENDERSON. P. S. On account of weight, package containing statements is going forward via parcel post.

J. D. H.


AMERICAN AssociaTION OF SMALL BUSINESS, INC. Mr. Chairman and members of the committee, my name is Joseph D. Hender

I am national managing director of the American Association of Small Business Inc., with national headquarters in Suite 431 Balter Building, 404 St. Charles Avenue, New Orleans, La. We are grateful for your invitation to present a statement at this hearing. It is indeed gratifying to testify in support of proposed legislation designated as H. R. 8832, entitled “The Anti-Government


Competition Act” to get the Government out of business in competition with taxpaying free enterprise.

It is certainly high time that some definite action be taken to relieve the taxpayers of the double role of paying taxes and competing with the tax-exempt Government agencies and other tax-exempt revenue-producing organizations.

The Congress is searching high and low for sources of tax revenue to offset the reduction in taxes just recently granted as a result of the strong demand for relief by the members of the American Association of Small Business, Inc., and the people of the Nation in general. With this thought in mind we believe that it is proper that we point out to you, and through you the entire membership of Congress that billions of tax-exempt revenue-producing property and businesses are now in possession of the Federal, State, and city governments, in addition to the many more billions held by trust funds, cooperatives, endowments, foundations, and all manner of institutions. The tax load will be lighter for all of the people when the free tax riders are required to pay taxes like all the rest of the people.

You must be aware of the various governmental activities which today should be carried on by independent business in our country. For example to mention a few instances, how many Americans realize that the Government of the United States is engaged in the manufacture of ice cream and has 162 locations throughout the United States; that the Government is in the telephone business with an operating cost of more than $1.5 million annually; that the Government is manufacturing paint at an annual rate of 10 million gallons; that the Army and Navy are gradually taking over the freight forwarding, freight brokerage, steamship, and tugboat business; that in 1 year the Government roasted 125-million pounds of green coffee in Government-owned plants; that the Government warehouses are now using 3 million square feet of foor space to store goods, which space could be furnished by private enterprise at less cost; that the Government has moved into the printing business to such an extent that it threatens private enterprise. The Government is asking for State socialism or totalitarianism. The British Government recently experienced the futility of Socialism. Why continue to encourage Socialism by government in business in the U. S. A.?

When the many billions of dollars in Government-operated businesses are liquidated then the national debt can be reduced in proportion When the Government gets out of business in competitition with free enterprise and removes the drag on initiative then business will boom and a recession will not be forthcoming.

Some progress has been made, the Brooklyn Naval Clothing Factory has been shut down, all the lumber and sawmill operations of the Army Air Corps and the Navy have been discontinued, 17 of the sixty-odd scrap-metal operations of the Army and Air Force have been shut down also.

The Mississippi Barge Lines have been sold to private taxpayers and 13 wartime synthetic rubber plants are to be sold to private operators soon, and the Reconstruction Finance Corporation is almost liquidated.

The American Association of Small Business, Inc., has opposed Government in business down through the vears.

We will be only too glad to help in any way possible in the expedition of the passage of H. R. 8832.

In order that the gentlemen of the committee may be acquainted with the program of the American Association of Small Business, Inc., we submit an outline of the objects and purposes which are as follows:

To promote a national, nonprofit, nonpolitical organization of all small businesses, professions, and consumers, dedicated to the preservation of the American way of life: (1) by protecting the United States Constitution and the Bill of Eights; (2) by amplifving the voices of the people in legislative affairs through the ballot; (3) by lobbving, legislative service and action, in representing our members before committees of Congress, State legislatures, municipal councils, boards, and all other public bodies; (4) by opposition to monopoly, regimentation, excessive taxation, and extravagance in Government spending of taxpayers' monev; (5) by stopping socialism and communism in the United States; (6) by educating the people on the advantages of our free enterprise profit system;(7) by speciel services to groups or individual members; (8) by promoting power, influence, and mutuality of interest of our members, in governmental policies, civic and community improvement when united; (9) by informing our members of administrative, economic, legislative, or other matters directly or indirectly affecting their interest: (10) by protecting our members so that small business shall not be discriminated against in mointaining our constitutional individualism for the dignity of small businesses, professions, and ultimate consumers.

Small business is the backbone of our American business community. Over 98 percent of all businesses in the United States are small. employing on an average 10 people. There are over 4 million firms in the Nation which indicates over 40 million people are emploved in small business. All small businesses will be more prosperous when the Government gets out of business.

Mr. OSMERS. We have another statement here from Richard P. White, executive secretary of the American Association of Nurserymen, Inc.

(The statement follows:)


TION OF NURSERYMEN, INC. The American Association of Nurserymen, Inc., was organized in 1875. It is presently composed of 1,525 member firms in 46 of the 48 States. These firms produce nursery stock of all types (fruit, nut and shade trees, ornamental plants for landscape use, trees, shrubs and vines for shelterbelt, soil erosion and farm woodlot planting).

The association is governed by a board of governors of 109 delegates, representing all States, and all types of business operations. It has a set of policy declarations adopted by this board of governors which was last reviewed in July 1953. The association's policy statement in regard to the subject under consideration is as follows:


(1) The American Association of Nurserymen, Inc., believes that the production of nursery stock of governmental agencies supported by taxation, except for experimental, educational, and timber production purposes on public lands, is competitive with private industry, costly, against public welfare, and is not a proper function of our American form of government.

(2) That every effort shall be made to have prepared and made public periodio balance sheets and income and expense statements covering the governmental production of nursery stock.

On short notice, and due to attendance at the 79th annual meeting of the board of directors followed by sessions of the board of governors, in Minneapolis, Minn., at which all of the administrative and executive staff will be in attendance, we are unable at this time to present to the committee documented information regarding our efforts to rid the industry of Federal, State, and local competition. It is our philosophy, however, that no Government agency either Federal, State or local, should engage in activities which private taxpaying enterprises are also engaged in for profit in a legal and competitive manner.

The nurserymen have a long and consistent record of opposition to Government in the nursery business as the record will show.

(1) It opposed the shelter belt program of the 1930's as it was then operated under emergency relief appropriations and under the guise that the commercial nurserymen could not produce the material needed. The sun shone and the rain fell on the privately owned nursery land as frequently as on Government-operated nurseries. Commercial nurserymen had experience and land available. In fact, the shelter belt project hired many commercial nurserymen to manage their nurseries. The idea of shelter belts in the middle west was not new-commercial nurserymen had been planting shelter belts and farm woodlots in that area ever since the old Homestead Act days of the last century.

(2) When the Congress voted to liquidate the shelter belt operation, a rubber stamp changed the name to the Prairie States Forestry Project of the United States Forest Service and it continued without abatement. The association continued its opposition on the basis on which the project was operated, with the Government buying land, renting office space, investing in buildings and equipment, and growing nursery stock for free distribution which the commercial nurseries were also producing for the same rural market.

(3) The association has opposed the production and distribution of nursery stock in the Federal-State Clarke-McNary Nurseries authorized under section 4 of the Clarke-McNary Act of 1924, because production and distribution was made to farmers and others at a subsidized cost with which commerical concerns could not compete. The original intent of the act, we have always believed, was to stimulate production and planting of trees and shrubs for shelter belt and farm woodlot planting. The association did not oppose this objective, but found later,

that some of these jointly supported nurseries were producing stock of a strictly ornamental character which could not be used for reforestation, shelter belt or farm woodlots. When a surplus existed, the stock was offered free in some instances.

When commercial nurserymen complained to the Federal Forest Service, the answer was that since these nurseries were operated on a matched-fund basis with the States, we would have to take the matter up with State officiels, since the nursery stock about which we were complaining was obviously produced on State funds. Our complaints to the States were considered in reverse mannerthe stock being produced that we objected to was not produced by State funds, but on the Federal allotment.

(4) In recent years we have had difficulty with various segments of the Armed Forces growing nursery stock for landscaping Army and Air Force bases or posts or for soil erosion purposes. The objectives are laudable, but we see no more reason for this branch of government to produce nursery stock, using Government paid personnel and equipment than for it to grow its own cereals for food, produce its own cotton and wool for clothes or cut and manufacture its own lumber for its barracks and other shelters.

Cases illustrating this competition have been experienced at the United States Marine Corps Depot of Supplies, Albany, Ga.; the Robbins Air Field Base, Macon, Ga., San Diego Naval Base, San Diego, Calif.

Investigations indicate that insofar as the sale of garden supplies is concerned by PX's there is plenty of congressional authority in various enactments. In other cases, justification for the production of nursery stock is attempted as an alleged operation to protect the Government's investment in land or buildings.

The scope of government competition with the nursery industry is indicated by these few instances. The major competition, however, comes from the Forest Service which seems to have the opinion that commercial nurserymen either are not producing the type of stock needed for reforestation, shelter belt, farm woodlot or soil erosion purposes, or do not wish to expand their operations to supply the stock needed.

In 1952, as reported in data originating in the Forest Service, USDA, in their annual tabulation of the production of seedlings for reforestation purposes, the following figures are given: Produced by: Forest Service

38, 701, 000 Soil Conservation Service

18, 000, 000 Tennessee Valley Authority.

18, 000, 000 Federal-State Clarke-McNary.

322, 000, 000 Paper and lumber companies

9, 600, 000 Commercial nurseries.

48, 600, 000 1 The Soil Conservation Service has liquidated its nurseries since 1952, and is no longer in heavy produce tion.


Commercial nurseries would increase their production if the constant threat of competition from Federal and State Governments was eliminated. This is proved by a current experience in Kansas as follows:

"The constitution of the State of Kansas prohibits the State from entering into any business in direct competition with the citizens of that State. It was determined that the production of forest tree seedlings and shrubs for distribution to farmers in their State nursery, partly supported by Federal funds under section 4 of the Clarke-McNary Act was in direct violation of this State's constitution, Consequently, the State nursery at Fort Hays, Kans., has been liquidated over a period of a few years.

“The commercial nurserymen, with the threat of Government competition removed, have entered the field and are now supplying forest tree seedlings and shrubs for the purposes for which the Fort Hays Federal-State nursery was established. Three nurseries have jointly organized 'The Associated Seedling Growers of Kansas.' In the spring of 1953, they supplied to farmers, 485,500 trees and shrubs for farm plantings. In addition to that, the three nurseries themselves directly through their own catalogs, radio, newspaper and periodical advertising have supplied many more seedlings to the same sources. One of the participating nurseries in the Associated Seedling Growers of Kansas has reported that they themselves sold direct, 369,735 trees and shrubs. We have no records of the other two participating firms in the Associated Seedling Growers of Kansas, except from the Willis Nursery Co., which reports that ‘many more seedlings were available had the planters wanted them.'”

“The Kansas Landscape and Nursery Co., Salina, Kans., another participating firm in the Associated Seedling Growers of Kansas, reports that 'field counts show that we have 1,088,300 seedlings ready for distribution for spring 1954.'

"This evidence indicates that as soon as the threat of Government competition is removed from this field of the production and distribution of tree and shrub seedlings for farm use, the commercial nurserymen then step into the field and supply the demand adequately.

"The result is a saving to the Federal Government of appropriations needed under section 4 of the Clarke-McNary Act for the support of Federal-State nurseries. A matching amount, or usually more, is saved for the taxpayers of the respective States. Furthermore, the participating nursery firms contribute additional tax moneys on their operations to the local, State and Federal Governments.

"The farmers get the tree and shrub seedlings which are needed at a competitive cost since this field is a highly competitive one and will become more so if more States and the Federal Government would remove the Federal competition involved distributing these commodities at a subsidized cost."

With the real need for additional reforestation on public lands, both Federal and State, at the headwaters of our major watersheds, it is our belief that the Federal and State agencies could profitably devote all of their efforts in the planting of trees on public lands for timber production and watershed protection, withdrawing from activities on the local level. They still would have a long-time job ahead of them, but at least their total effort would be concentrated and not scattered.

This would leave to the commercial taxpaying nurseries the farm market for shelterbelt, soil erosion and farm woodlot plantings. The commercial lumber concerns are already doing a highly commendable job in the timber producing areas on land that they control.

It would seem that if a division of effort could be agreed upon, as outlined above that vastly more trees and shrubs would be planted annually, having its beneficial effect on checking erosion, disastrous floods, and maintaining our public and private forest lands in a productive state.

We recommend to the committee that steps be taken along these lines.

Mr. Osmers. We have a statement, which I think is more of a letter, addressed to our chairman, from the National Federation of Independent Business, over the signature of George J. Burger, vice president.


INDEPENDENT BUSINESS In view of the hearings now being held on H. R. 8832, it would be our desire to appear personally and present this statement orally, but due to prior commitments on the Senate side it will be impossible for me to be present and make the presentation.

Let it be understood for the record that no officer or group of officers of the federation is permitted to speak officially for the federation on any legislative or economic problems until the entire nationwide membership is polled on the proposition. In this procedure, the federation's position is strictly neutral. The pro and con is presented in a neutral way giving both sides to the proposition in a fair and impartial manner. We state this in view of the fact that the federation doesn't attempt to present the proposition in such a manner as to obtain a directed answer. The members themselves make up their own minds pro or con.

On the present bill before your committee, the proposition was presented to our nationwide membership through its official publication, the Mandate, No. 203.

You will note in presenting this question to the members, the pro read:

"Federal agencies are in so many business-type activities that they are a threat to private industry and labor, endanger our tax structure, and are, in many industries, a step toward socialism. Many of these businesses employ thousands of people and have capital assets running into billions upon billions of dollars, Actually, Uncle Sam is our largest insurer, our largest holder of grazing land, our largest owner of grain, our largest warehouse operator, our largest shipowner, and our largest truck-fleet operator. This competition should be curtailed or eliminated."

The con read:

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