cent of the banks now control 89 percent of the resources of the Nation. If this be true and please note I say if-then I believe Mr. Ballinger proves a very good case against Federal control as preventing monopoly.

Senator O'MAHONEY. It must be proper for the record to make note of the fact that Mr. Ballinger expressly stated that he was not giving his opinion for or against any particular bill.

Miss CURTIS. I did not recall that he made that statement.

Senator O'MAHONEY. He was very careful to avoid committing himself about it.

Miss CURTIS. I recall that he said he was not appearing officially for the Commission.

Senator O'MAHONEY. That is true.

Miss CURTIS. As the Chairman himself has cited, our banking system has been under steadily increasing Federal control for 74 years. Yet, says Mr. Ballinger, 1 percent of the banks control 89 percent of the resources. After 74 years of Federal control. Does that seem to be preventing monopoly?

Senator O'MAHONEY. You speak of Federal banking control, but you have the J. P. Morgan Bank, which is in a very dominant position and does not operate under a Federal charter, but is what is known as a private bank.

Miss CURTIS. Did Mr. Ballinger intend to list any of those banks? It seems to me there was some reference to that made by Senator Borah.

Senator O'MAHONEY. I do not recall about that. might have made such a suggestion.

Senator Borah

Miss CURTIS. It would be very interesting to see it. Senator O'MAHONEY. He might have been referring to the wellknown compilation of Berle and Means, in which they made an analysis of some 200 large nonbanking corporations. This twentieth century fund study to which I referred earlier this afternoon also refers in one place to the 574 largest corporations, including banks, and then to the industrial corporations, numbering about 275, as I recall.

Miss CURTIS. Of course, there are a good many people, Senator O'Mahoney, that are not quite reconciled to the material set forth in that book of Berle and Means. You have undoubtedly heard that discussed.

In view of all these facts, women frankly are wondering just what is the underlying purpose of this bill. They are beginning to feel that the recent editorial of the Chicago Tribune perhaps best sets forth the case:

THE CORPORATION AND THE STATE

The O'Mahoney-Borah bill for Federal incorporation has been changed so many times that it no longer represents the original or complete intentions of the authors and their backers. The purpose first revealed was to regulate wages and hours, have something to do with quotas of production, influence prices, control distribution of earnings and profits and level off incomes. The Federal Trade Commission

was to administer this authority. It is to be recalled that Rexford Tugwell, when No. 1 brain truster and program maker, suggested Federal chartering of corporations to enable such a body as the Trade Commission eventually to fix quotas of production and to provide capital.

If the Federal incorporation bill as the result of numerous trimmings has become a trial horse rather than a van containing all the equipment it is simply because the proponents are now persuaded that they cannot at this time move in with

the house furnishings complete. The retreat has no other meaning. The bill is not, even now, just for a general incorporation act. Its ulterior purposes are indicated.

Senator O'MAHONEY. May I ask you whether you are adopting these phrases and complements which are being passed along by the Chicago Tribune?

Miss CURTIS. Senator, I am putting this in the record. It is very important, and in connection with this bill.

Senator O'MAHONEY. Do you think the authors of this bill have any ulterior purpose, which means, of course, a hidden purpose, which means, of course, that they are not frank?

Miss CURTIS. Senator O'Mahoney, I do not think you or Senator Borah have. We disapprove of the philosophy behind this bill. Senator O'MAHONEY. Then you do not understand it thoroughly, because if you did you would approve it.

Miss CURTIS. I have been listening to these hearings for 3 weeks. I am very anxious to go home. I am tired. There is a certain philosophy in the bill which we feel is important and which we do not approve.

Senator O'MAHONEY. Do I correctly understand that you do or do not adopt its complimentary terms?

Miss CURTIS. Well, we are just placing it in the record, Senator O'Mahoney.

Senator O'MAHONEY. Very well.

Miss CURTIS (reading):

When a politician speaking for Government attacks corporations he is acting on an instinct more profound than he realizes. The corporation is not, as its average political opponent would have his hearers believe, a modern creation. It is almost as old as trade. A corporation properly conducted undertakes in cooperative enterprise large projects which except for it can be undertaken only by Government, only by the State.

We say properly conducted. Improperly conducted it may undertake such enterprises, but do so unfairly. The assumption against the corporation is that government is never improperly conducted, whereas we know that its misconduct has been notorious.

Probably the greatest of corporations was the British East India Co. chartered by Queen Elizabeth. It enabled adventurous and enterprising Englishmen of private means to conduct trading enterprises beyond the reach of any one individual. The Dutch under similar charter succeeded. The French failed because their wealth was absorbed by the State. Private individuals did not have the money. The state which had it failed in competition with the English and Dutch corporations because of natural governmental incompetence wherever there was no competent private enterprise.

Colonial America owed its founding to corporations of which the state became jealous and envious, and quickly in the case of the Virginia Co., more slowly in Massachusetts, suppressed and destroyed. They reemerged as democratic States. Government will create these instruments of private enterprise because it itself is incompetent, corrupt, lacks enterprise and understanding. Then when it observes the success of what it has chartered its deep instinct is to destroy the organization of citizens or seize its profits to break it up, take over its affairs, or control them.

The subject cannot be discussed in brief, but one point can be suggested. A properly conducted corporation not only offers to an almost unlimited number of citizens the opportunity to join in a great enterprise and share in profits, using savings for that purpose, but so long as that corporation can be profitably managed it affords social security through investment. Thrifty people have provided for their future by buying stocks and bonds. If the corporation is honestly managed, competently conducted, and does not encounter governmental opposition or unexpected economic misfortune, the social security offered is reliable.

The Government now is in the social-security business. It supports itself in this enterprise by pay-roll taxes. Its innate hostility, its centuries-old hostility to

organizations of private enterprise in competition causes the Government, whether it really understands what it is doing or not, to break down the system of private investment and security by a series of attacks, direct or oblique.

The State's instinct of self-preservation causes it to view the more competent corporate organization of its citizens with envy and alarm. worthiness, and incompetence of government do not permit it to have or exercise creative talents, but it has authority and it has public money. The sloth, untrustto destroy. For illustration, we need look no farther than T. V. A. and what it is intended to do to the public utility corporations. These it can use

It is the savings of our people invested in corporate securities that provides for the development and expansion of business. If investors Tack confidence and will not purchase the securities of industry, the investment bankers offering these securities to the public are unable to dispose of them because of the investors' unwillingness to buy. It is fear that is freezing our capital and capital markets. Increase that fear and you will bring the industrial and economic life of the Nation to its knees, its very life-strength so weakened that it will be a ready and easy victim of any new developments.

The women of the Nation will not exchange their present right to individual ownership of basic property rights for a tiny piece of a Federal license revocable at the will of some Federal commissioner appointed to office and not elected as a representative of the people.

Pass this legislation and I believe the women investors of the Nation will demand the return of their capital investments in corporate securities which will be affected by this measure and once more they will return to the old days of "sugar bowl hoarding." Gentlemen, we are serious in these declarations.

If you wish to protect the women of this Nation-and we believe you do we beg you to drop consideration of this Federal principle. You have asked repeatedly for a counter plan to aid the Nation in its recovery from the present slump. We believe we have one. it is:

Here

1. Let Congress halt its investigation of the acts of industry and investigate its own acts which have been harmful to industry.

2. Declare a moratorium on all legislation harmful to industry. We believe that much legislation has been passed in the last several years that has provided brakes to the capitalistic system thereby restraining it from functioning normally.

3. We urge you to name a capable nonpartisan fact-finding committee to study these various laws and their effect upon our industrial and economic life in order to determine what ones are retarding the economic machinery, then repeal them at once.

Only in this way, we believe, will this repression of the natural forces of capitalism and private enterprise from which we are suffering today be corrected.

As the largest group of capitalists in the country we look to you to withdraw this Federal licensing bill and to devote your time and energies to a constructive program that will bring us out of our present repression while preserving for use the fundamental system of private enterprise provided for in our Constitution. The women of the country would wholeheartedly cooperate with you in such a program. Gentlemen, we appreciate your cooperation and consideration. [Applause.]

We would like the opportunity of adding for the record some additional statistics which might be of interest to you, and possibly several resolutions that will be short.

Senator O'MAHONEY. Make them short. We do not want to burden the record.

Miss CURTIS. I want to say again how much we appreciate your cooperation. We know how busy you are.

STATEMENT OF MRS. GLADYS B. STEWART, AVA, MO.

Senator O'MAHONEY. Mrs. Stewart, we will hear you now.

Mrs. STEWART. Mr. Chairman, I feel that I would not be justified in taking up the time of the committee. The two speakers who have just finished have covered the points I would have covered. I am sure I would not be able to add any knowledge to the

Senator O'MAHONEY. You might very easily do that.

Mrs. STEWART. These two ladies have brought out the points I had in mind if I said anything to the committee. I think it would be repetition for me to do it, and I do not think I would be justified in taking up your time.

Senator AUSTIN. In order to have the benefit of your background, do you endorse what they said?

Mrs. STEWART. Largely.

Senator AUSTIN. I would like to have the record show your residence. You are from Missouri?

Mrs. STEWART. Yes.

Senator O'MAHONEY. Of course, she would not wholly.

Senator AUSTIN. What is your town?

Mrs. STEWART. Ava, Douglas County.

Senator AUSTIN. Have you served on the judiciary of the State of Missouri?

Mrs. STEWART. I am a member of the State legislature judiciary committee.

Senator AUSTIN. Have you been a circuit judge in Missouri?
Mrs. STEWART. Yes.

Senator AUSTIN. You are now the only woman member of the Legislature of Missouri?

Mrs. STEWART. Yes.

Senator AUSTIN. And you have been assistant United States attorney?

Mrs. STEWART. Yes.

Senator O'MAHONEY. We would be very happy to let you make a statement, if you care to.

Mrs. STEWART. Thank you. I do not think I should take up your time, for the points I have in mind have already been covered.

Senator OMAHONEY. We would be very glad to have you point out the instances in which you disagree with the other witnesses. Mrs. STEWART. I do not think they would be important enough to justify taking up your time.

Senator O'MAHONEY. I want to make the public announcement that the committee will now recess until Thursday morning at 10:30, at which time two witnesses are expected to appear. With the testimony of those witnesses, the hearing will close, for the present, at least.

(Whereupon, at 4:30 p. m., a recess was taken until Thursday, March 24, 1938, at 10:30 a. m.)

FEDERAL LICENSING OF CORPORATIONS

THURSDAY, MARCH 24, 1938

UNITED STATES SENATE,

SUBCOMMITTEE OF THE COMMITTEE ON THE JUDICIARY, Washington, D. C. The committee met, pursuant to recess, in room 318, Senate Office Building, at 10:30 a. m., Senator Joseph C. O'Mahoney (chairman) presiding.

STATEMENT OF B. L. KNOWLES, ASSOCIATED GENERAL CONTRACTORS OF AMERICA

Senator O'MAHONEY. You may proceed, by first giving your name. Mr. KNOWLES. My name is B. L. Knowles. I am field engineer of the Associated General Contractors of America, a nonprofit association of general contractors who perform possibly in excess of 65 percent of all the contracting that is done by contractors in the United States. This statement is made in behalf of our managing director, Mr. Edward J. Harding.

The Associated General Contractors of America presents this statement in opposition to the bill, S. 3072, of course, because its members are vitally interested in any effect that its passage might possibly have upon the corporate structure of firms engaged in construction operations. The association's most serious concern, however, lies deeper than that; namely, in the disastrous effects that the enactment of this measure would in our opinion inevitably have upon the market for construction, and hence upon reemployment of labor and capital in private industry. That the Government has sought relief from the unemployment evil chiefly through the medium of construction is a well-known fact. Many of those high in the administration have repeatedly asserted that a revival of the construction industry through the investment of private capital would provide the most efficient means of effecting immediate reemployment. The very basic character of our industry and the tremendously widespread influence upon the nation of its propserity or lack thereof makes it most important to give careful consideration to the effect which the passage of any proposed legislation might have upon the construction market.

The members of this committee have frequently requested throughout these hearings that the witnesses manifest a cooperative spirit in the attempted solution of the problems which this measure is designed to bring about. That we may qualify as a cooperative. witness, we should like to state that our association has from its very inception placed at the disposal of the Government and all its bureaus, departments, and commissions having any connection whatsoever with

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