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ation that we have a dozen companies in this country today that are more powerful than the Congress of the United States, and it may in fact be too late.

Mr. BEDELL. You understand I do not disagree with you. You believe the best way to attack this problem is through our legal system.

Mr. BIDDLE. I used to believe that, but I do not. I think our legal system is a placebo, it makes people think that the system works, when in fact it does not. In this morning's paper, there was a story that the attorneys had a cocktail party last night celebrating the fact that the FTC v. Exxon is in its fifth year and has moved nowhere.

I have been looking for an answer. Frankly, I am increasingly coming around to the fact that perhaps we need to look seriously at a progressive corporate income tax, one that charges a premium to the giant corporation and through that encourages its own shareholders to break it up.

Mr. BEDELL. You must have done your work well because that is what I have been promoting for a long time.

Mr. BIDDLE. Frankly, I was not aware of it. There are a lot of us promoting it.

Mr. BEDELL. I have a proposal for progressive corporate income tax. I think some progressivity will be put into a corporate income tax. It is a step in the right direction, but until we make that really progressive so the little fellow has a chance, all we are doing is kidding ourselves.

I guess I tend to come out at the same place that you do, that is to depend on our legal system to straighen out, partly because of the politics that get involved in our legal system, partly because of the way the whole legal profession operates, if you will. As you say, there are as many of them on the one side as on the other side of the Government, or more, frequently; that to rely upon that is pretty questionable.

I have the opinion that until we come to where we have a truly, truly progressive corporate income tax, until we truly tax big business sufficiently, I do not think small business is going to have a chance.

Mr. BIDDLE. I think that is right.

Mr. BEDELL. I think until we get to where we tax big business sufficiently so that the little guy does have a chance, we are not going to correct this problem in our society.

I am usually pretty good at leading witnesses. I did not think I led you into that one.

Mr. BIDDLE. Most conglomerates, most corporate giants in all probability would be more efficient if they were returned to a narrower product line and a smaller entity, and, of course, corporate management is motivated in the opposite direction because the bigger the whole, the higher their salary, the bigger the fringes. And the counterbalance could well be that if, for example, pretax profits were in excess of $2 billion a year, and they experienced a 75-percent tax rate, their shareholders would say, in essence, hey, wait a minute, this is nonsense; break yourselves into two or three new companies, spin the shares out to us, the shareholders, we will be more profitable, you will be more efficient and

we are sorry Mr. de Butts; we will give you the medal of honor for building a magnificent company; retire happily.

Mr. BEDELL. It is pretty hard to justify where business gets into fields other than that which is its principal field, such as an oil company buying Ringling Brothers Barnum & Bailey. It is pretty hard to justify the contention that that lends itself to improvement in our society.

Mr. BIDDLE. Several ironies have developed to where a corporation which has special privileges granted it by being a corporation, an infinite life, other resources, has now gathered unto itself all the constitutional rights and privileges of a natural citizen; the due process protections that we allow the corporation are mindboggling

Mr. BEDELL. I guess the final thing I would say, is that if indeed you are right and I am right, the final answer would seem to be sufficient progressivity in our income taxes; the only way that is going to come to be in terms of laws passed by the Government, is if there are sufficient pressure and interest for that, then it becomes possible to get such a bill passed.

Mr. BIDDLE. That is right.

Mr. BEDELL. Do not think for a minute that the big corporations are not going to be here battling every way they can to keep that from happening.

I guess what I am saying is, if that is right, the burden kind of goes from me back to you, that the burden is to generate among the people the feeling that “We do not want this type of a society, we are going to change it."

Most of my people do not want the type of society that they see developing. Most of them do not know how to go about trying to do much to change it, so they elect me or somebody else and say "You go to Washington and change it." They do not realize that the only way we can change it is if they organize themselves sufficiently to bring the word through strongly enough so it is possible to get the Members of Congress to vote accordingly. I think that is pretty clear to me as to what has to be done if that is the case.

I really appreciate your testimony. We sit here as this committee that is really not a powerful committee to get things accomplished. We have people such as yourself come forward with testimony which I believe is getting at a basic very, very critical problem in our society. We talk to one another, but you know we are really not changing very much by our talking to one another.

I think what has to be done is somehow, some people out there across the land have to say "We do not want things the way they are moving now.” IBM wants to continue them.

Mr. BIDDLE. I think we have to modernize our language to where the people out there have a better comprehension of what the real struggle is all about. Antitrust is a term they do not really comprehend; antimonopoly, perhaps they do.

Small business sounds like a nice phrase, but as I keep telling Milt Stewart, small is relative and my $500 million member company is damned small relative to the giant he must face in the marketplace.

Mr. BRECKINRIDGE. Thank you very much, Mr. Bedell. I am sorry I missed your discussion with our witness.

What you all are talking about, of course, is much larger than antitrust, it is the health and growth of our economy and its future. And I happen to subscribe to that "if any" language because I think it is in serious jeopardy, both at home and abroad. So I do not believe we waste our time by addressing ourselves to the proposition and by bringing to bear the best information and best minds that we have.

It is easy for the legislature to meet and adopt laws and establish offenses and create penalties, but, as your testimony has so clearly shown, law enforcement is a no-win game-we could turn to any of a dozen other areas besides antitrust from juvenile delinquency to white collar crime. One reason it is a no-win game is the area you are addressing contains white collar crimes and offenses which have yet to arouse the public to the extent that all of the other inequities that confront our society have.

We have gone through a decade or so of revolution, I think. Our view now includes an understanding and expectation of the equitable application of law and the protection of the rights of the individual, the handicapped, the ethnic minority, the economically deprived, but we have not reached this level. One reason I take it we have not reached it is that it is, as Mr. Bedell was suggesting, a sort of recondite area to which the average citizen does not address his attention.

Would you like to address yourself to the question of penalties?

Mr. BIDDLE. I think before I do I would like to add to your point about the American public's perception of the problem. I know some years ago I went to one of our major foundations and tried to urge them to fund an equivalent to "Face the Nation" that would address the question of economic concentration and where our country was headed. I thought it was a great idea and that we would bring in people from both sides to debate on a Sunday afternoon on the national television our Nation's economic direction.

They said, we have one small problem, our funding comes from the Fortune top 50. You do not think that we could sponsor such a show? And yet if you turn on your prime-time television you will see institutional advertisements by the giant corporations, extolling the virtues of giantism; the wonderful things that they have brought America and in most instances, if the truth were known, the wonderful things they brought America were copied from some small company and, in fact, they resisted for years because it would have obsoleted their installed plant, equipment, or assets.

I think there is a dilemma. Under our profit system the management of a corporation, under the game rules that now exist, is motivated to be a monopoly. Every manager wants to be a monopolist, because if he does he can protect his profits, he can protect his shareholders, he can stabilize his employment; he is a good man if he can achieve that level of performance in the eyes of his peers and everyone else.

Wall Street looks with favor on him because there will be no surprises. He can adjust his profits or his prices with impunity to reflect changing economic circumstances.

So on the one hand we are telling him you are a hero by monopolizing; on the other hand, we tell him he is in violation of the law if he is successful. That is why I was suggesting to Mr. Bedell perhaps we need a carrot and not a stick.

We need a motivation that says at a given point, you are too big, break yourself up and it is more profitable to break yourself up than it is to get bigger. It is further compounded by the fact that the unions love a monopoly because they can pass on wage increase with impunity to the consumer.

One of the difficulties with the IBM situation is the fact that if the suit proceeds, as I think it should, to the ultimate resolution of that case, it will lead to a finding of guilt on the part of IBM in violating the antitrust laws. At that point IBM faces treble-damage suits for overpricing their product in the range of 20 to 30 percent for a period of more than a decade.

The treble-damage suits that their consumers could bring in that case could result in awards of $30 billion and wipe out a major U.S. corporation. I think that would be a travesty. We have got to find some solutions. There has to be a way of restructuring this industry without destroying it, and Senator Hart's approach to industrial reorganization had great merit; although as he often said, however, politically its time had not yet come. I have had some encouragement in the last 6 to 9 months in this country I think the people are beginning to say, “Hey, we are tired of this nonsense, we are tired of wasteful expenditures, we are tired of being pushed around.”

It could well be within the next couple of years that politically the time will come for something in the nature of the Industrial Reorganization Act where we can look-industry by industry-at what are the structural problems, correct them, and go on about our business.

Mr. BRECKINRIDGE. I want to make a statement that I am going to couch very carefully and clearly because I do not want to misstate Dr. Galbraith. But I am familiar with the quotations which you attributed to him and with the line which it reflects in his thinking over the years. He talked quite differently before this committee. And I will see that a copy of that testimony is available to you.

Mr. BIDDLE. I appreciate it.

Mr. BRECKINRIDGE. We brought him forward, speaking for myself only, as a witness because we thought he did reflect that view and that side of the equation. We wanted it for the record. On the other hand, we also were most interested to see him trim that sail, and, I felt, come down on the side of small business and recognition of the fact that it was not necessarily dead, maybe just sleeping; that perhaps it could be propped up and saved and that perhaps it had a significant and a major contribution to make to the reestablishment, if you will, or the insuring if you prefer, of an open and a competitive society and that it was a component part and perhaps the sine qua non to the effective administration by both Justice and the Federal Trade Commission of the antitrust statutes on the books and as they may be amended.

I hope I am not misstating him or misinterpreting him.
Mr. BEDELL. No; I think not.

Mr. BRECKINRIDGE. I was impressed with that turnaround, because whatever one thinks of his views from a subjective point of

view, we all recognize his fine qualifications and I was encouraged by that, shall we say, more mature view coming upon him in his latter years. I just have a couple of questions here. I was particularly interested in your observation to the effect that some 80 percent of the Department of Justice's work is disposed of by consent decree; and totally ineffectual it is in enforcing a decree which is the basis on which theoretically the law is enforced. I am sure that is something that the committee and the department, and the Congress will want to address its attention to, and will.

Now let me ask you what you see from the vantage point of your industry, not limiting your views to your industry because you have a wide range of association just by the very nature of the communications data processing industry; what do you see, absent a turnaround and/or a change in such things as Mr. Bedell was talking about on the one hand which does not relate to the antitrust laws, Sherman-Clayton, Robinson-Patman on the other hand and as it relates to them say 20 years down the road and 10 years down the road?

Mr. BIDDLE. Mr. Chairman, I have given that a lot of thought because I came into my present job some 6 years ago out of industry. I had worked with major corporations like ITT, Boeing, and others, on long-range corporate strategy, how to grow. And after a sabbatical and reexamining what I thought the world was all about I came around to the other side, moved to Washington 3/2 years ago, and thought that the political process moved less glacially. I lobbied very hard for the passage of S. 782, The Antitrust Procedures And Penalty Act which would at least place a public interest responsibility in the consent decree process; I lobbied very hard for substantial increases in the budget of the Department of Justice only to be followed by the then Assistant Attorney General saying: “Gee, we couldn't use all that money if we got it,” which was mindboggling, because at that time they were paring back travel of their attorneys on one major case because they did not have the funds and they could not computerize the data because they did not have a big enough computer to do it, and so forth.

So we tried to get them more money to do the job. We have sought to provide them with information about violations of the law and aid and abet in the preparation and the prosecution of their cases only to see the defendants harass and intimidate thirdparty witnesses to the point that in the future third parties will do their best not to testify for the Government in antitrust cases; the price is to high.

Twenty years down the road if something major does not happen

Mr. BRECKINRIDGE. May I interrupt just at that point? Could you make available for the record your communications with the Department of Justice with regard to all the matters you have touched upon which have to do with funding and enforcement?

Mr. BIDDLE. Yes.

Mr. BRECKINRIDGE. And particular examples of harassment and failure to comply, could you make that record available?

Mr. BIDDLE. Be happy to.

Mr. BRECKINRIDGE. Without objection we will keep the record open and incorporate that.

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