Excerpts from the Press Conference

THE PRESIDENT: I got, a few minutes ago, the report from the Attorney General which resulted from the study of the identical steel bids. It has not been mimeographed as yet. I will give a copy of it to Steve (Early) and he can have it mimeographed. That is all the news there is on it for the moment.

I will just give you one or two high spots of the two and a half pages. The Federal Trade Commission made a report in June, 1936, reaching the conclusion that collusion in maintaining prices accounted for the identical bids. This was evidenced by the agreement of the steel producers in June, 1935. The question with which the Department of Justice is concerned is whether the administrative remedies in the control of the Federal Trade Commission by way of cease and desist orders should be superseded by criminal and civil proceedings to be instituted in the courts by the Department of Justice. The Department of Justice has conducted an extensive investigation, etc., and, after examining the information obtained, has concluded that the investigation has not produced sufficient evidence admissible in civil and criminal litigation as it is conducted by the courts. They feel that the administrative and quasi-judicial remedies in the hands of the Trade Commission may be better adapted to the purpose. (Reading)

The identical bids in the steel industry are produced, in part, by the basing point system of price determination. This system, long used in the steel industry, not only affects the manufacturers who utilize it anti the consumers who are subject to it, but it also presents economic and social questions due to the fact that communities as well as plants have been located and developed with reference to the price structure developed by this system. The machinery of the courts is not geared to the handling of the social and economic factors necessarily involved; and many persons and communities seriously affected cannot be parties to a court proceeding under the anti-trust laws. It appears therefore that a problem is presented which can be more satisfactorily investigated and dealt with through the more flexible remedies of the Federal Trade Commission.

The question before us is broader, however, than that of identical bidding in the steel industry. The type of practices complained of in this instance is widespread throughout many of the basic industries of the country. The difficulty in correcting this situation raises the whole question as to the adequacy of the present anti-trust laws for the solution of the monopoly problem as it now exists in the United States.

In my opinion, the time has come for the Federal government to undertake a restatement of the law designed to prevent monopoly and unfair competition. This proceeds from the conviction that the present laws have not operated to give adequate protection to the public against monopolistic practices. After 24 years' experience with the Sherman Law and its judicial interpretation, the Congress enacted the Clayton Act and set up the Federal Trade Commission.

After nearly 20 years' experience, in 1933, the National Recovery Administration was established. Many other laws dealing with phases of the industrial question have been enacted and others are in contemplation. A review of the accumulated experience of the last 47 years would indicate many things to be avoided, as well as many to be accomplished, by a revision of our anti-trust laws.

Moreover, these laws have been subjected to court interpretations which from time to time have limited their application, modified their meaning and imposed upon the government impossible burdens of proof.

A long experience with the difficulties of enforcement furnishes a sound basis for improving the enforcement machinery. This Department has labored with inadequate means to enforce laws that do not provide sufficient legal weapons to make enforcement effective. In the face of a present tendency to increase prices and a necessity for a corresponding increase in the vigilance of the Department the question is forcibly presented as to whether the country can afford to leave the enforcement of a vital economic policy so poorly sustained. The present machinery of enforcement through the Federal Trade Commission also should be made more adequate and effective, and the devitalizing effect of some of the court interpretations upon its powers should be overcome by legislation.

I therefore recommend that there be set up a Committee to study the anti-trust laws as to their adequacy, their enforcement and the desirability of amendment, extension and clarification. The Committee should have power to enlist the aid of consultant groups both within and without the government, as the studies will naturally cover a wide area including the relation of antimonopoly policies to such subjects as patents, taxation, commerce, manufacturing, farming and labor. You will get a copy of the letter and as I said before, that is all the news there is for the moment.

Q. Did you say, sir, that such a committee will be appointed?

THE PRESIDENT: I said that is all the news for the moment. Obviously there will be something done.

Q. There has been much speculation about your letter to the Civil Service Commission yesterday on speculation. Can you enlighten us on any part of it?

THE PRESIDENT: No, except that it means what it said.

Q. Any specific instance that caused this letter?

THE PRESIDENT: No.

Q. Any complaints from anybody?

THE PRESIDENT: No, just the general good, and a very obvious general good. All the older people in the room know what happened to the American public in 1927, 1928 and 1929.

Q. The immediate reaction from the rank and file of Government clerks was, "We don't have enough money to speculate." (Laughter)

Q. Or perhaps you meant somebody else.

Q. Have you any comment to make on Senator Byrd's suggestion to consolidate the HOLC with the Housing Administration to reduce expenses? They claim that you can save about twenty-five million dollars.

THE PRESIDENT: The thing to do is to add up what they spend now for Administration purposes and see if you can figure it out on the basis of twenty-five million dollars.

Q. There seems to be almost universal approval of your economy movement until you get down to individual cases.

THE PRESIDENT: Yes, it depends on whose baby gets the measles.

Q. Mr. President, with the rain coming down outside and with thunder and lightning in the offing, may we ask for your plans on flood control this year outside of the thirty million dollars in the budget? Have you any other plans?

THE PRESIDENT: Yes, I think I can tell you that. I have not written the letter yet, but I have told the two Chairmen already what the letter is going to be. I have here in my basket the report of the Army Engineers on various projects. The total of those projects is about eight hundred million dollars, and, as I said in my budget message of last week, I hope very much that the continuance of authorizations in large amounts is going to be stopped. We are working, in other words, towards a definite recommendation for an appropriation on which work can be started within the next fiscal year after they are made by Congress. This report of the Army Engineers, of course, will be transmitted to the Congress just the way they made it. However, I am sending the report back to the Army Engineers, asking them, in cooperation with the other agencies of the Government that deal with floods, soil erosion, reforestation, etc., and so on, to let me have a list of things that obviously should be started very soon, in the order of priority. That will probably include the various items that amount up to the thirty million dollars that has just been mentioned, so that that work can be undertaken during the coming year.

Q. Mr. President, can you tell us why you asked the House leaders to hold back on legislation—on price maintenance bills they have up there?

THE PRESIDENT: What is that, the Miller-Tydings Bill?

Q. Yes, sir.

THE PRESIDENT: Well, I think, anybody reading the bill has a question in his mind at once as to whether the bill will really serve the public interest or will strengthen price-fixing by monopoly. I think that question ought to be resolved first before we can all agree on the bill. It might have just the opposite effect from the effect desired. . . .

Q. Going back to speculation for one minute, have you in mind that 'what is good for Government workers is good for the public generally?

THE PRESIDENT: I have been saying that since 1927. I always remember a little survey of a certain upstate community that I had made when I was Governor. In this community there were a hundred and twenty-five families. In 1931, about a year and a half after the smash, it was found by a personal check on those hundred and twenty-five families that one hundred and five of them were in the market—mind you, that means an average of seven hundred or eight hundred people. It was not in Dutchess County, although it might have been so far as the results went. One hundred and five out of the one hundred and twenty-five families were in the market, on margin, and one hundred and four out of the one hundred and five either lost their homes, lost their savings or were very badly nicked—so much so that they were in debt for a great many years. One family came out ahead. He was the baggage boy down at the railroad station, and he married a girl at the moment that his brokerage account was fifteen hundred dollars to the good, and she persuaded him to draw it out and buy a little house. But a hundred and four families out of a hundred and five that were in the market lost their money, and there were only twenty families in the village not in the market. That is only a little experience ....