Post exchanges and commissaries sell goods and services
at or near cost to the government, often underselling even
wholesalers because they often buy direct from manufacturers. They pay no rent for either warehousing or selling
space; the salaries of military personnel whose services are
often utilized are not charged; no account is taken of
wastage, spoilage, theft, or depreciation. No interest is
paid on the government investment. The enterprise pays
no federal or state income taxes.
The Commission calls the right to buy at these substantial savings a "fringe benefit" to government employees
and recommends that where such benefit ought to be
given, it should be paid in the form of additional salaries.
Except in isolated areas, post exchanges and commissaries
should be liquidated.
The Commission says 1,000 of the business facilities
operated by the Defense Department could be eliminated
without injury to national defense.
Most of the government enterprises were begun in
war time; nearly all the others were created as temporary
agencies to meet the depression; but in virtually every
case, when the time for liquidation came, the bureaucracy
— supported by the benefited individuals, pressure groups,
and communities — found excuses to continue the enterprises.
Medical Empire: The federal government already has
assumed partial or total responsibility for the medical care
of thirty million persons. Hospital facilities costing one
billion dollars are used for the care of veterans with non-
service connected illnesses. The annual expense for non-
service cases is half a billion dollars. Some veterans' hospitals, because of unwise locations, still lack patients, cannot be operated efficiently and should be closed. Others
The government maintains 381 facilities in the United
States for manufacture and repair of medical and dental
supplies. Private industry has both the ability and the
capacity to meet the requirements now being supplied by
For 19.54 the varied federal medical services involved
the employment of more than 6 per cent of active medical personnel in the country. In 1953, the last year for
which full figures were available, the 7.000 hospitals in
tin- country were shown to have 1,573,014 beds, with
200.535 in federal institutions.
GOVERNMENT COMPETITION WITH PRIVATE
Although it is the declared congressional and executive
policy to foster free enterprise, the federal government is
competing with private business on a wide front. Investigation of federal business in competition with private
enterprise was required by the Act creating the Hoover
One of the major problems is the continuation of government enterprises after the emergency that engendered
tin-in has terminated. Because of vested interests, misleading or incomplete accounts, or other reasons, some of these
enterprises have established an astonishing longevity.
These enterprises include shipbuilding and ship repair
yards, peacetime transportation in aircraft and seagoing
vessels, commissary stores and post exchanges, bakeries,
coffee roasting plants, meat cutting plants, laundries, dry
cleaning plants, tailor shops, clothing factories, dental
manufactories, dental manufactures, watch and jewel' I
repair shops, and many others.
The Commission recommended the gradual liquidation
of the postal savings system; deposits have declined stead Hie (
ily since 1947. *hich 1
The Commission raised questions as to permitting th '' ~ tha
Tennessee Valley Authority to continue to produce al* fte into
sell fertilizer in competition with private producers. It re' ecomme
ommended that TVA discontinue chemical research ai* ,fc'era' ;
that its fertilizer research facilities be transferred to tn1 "e pub
Department of Agriculture. The Commission noted th' Sl,Pporti
the government had disposed of its other World War ' While
nitrogen and other chemical plants. Pxpayer
One of the principal recommendations of the Comrni' [mission
sion was that all public laws which require or permit th ty rcqu
Armed Services to engage in business operations whic flH'nsos
can be performed by private industry be reviewed a"1 ""posinc
amended to enable private business to supply militat ^Haling
needs to a greater extent. The Commission acknowledge Sencies
with commendation that, while its report was being prf "^nt set-
pared, the Department of Defense reviewed its own offer1 an non-:
to reduce competition with private enterprise, with »• *°uld b<
result that ninety-seven facilities in twenty categories w# In its :
either discontinued or scheduled for discontinuance. Tt" '°Und tl
action of the Department is rated as most construct^' '•evelopei
Huge air transport fleets in 1954 carried 3,900,000 p;li ^c-iencv
sengers, besides 4,784,000 military hitchhikers, the to» c«ntril,ut
cost of which was $204,400,000. The large majority of * <jUr Ccoi
transport paralleled the routes of established private a" ^"leiicau
lines. At the same time, Congress was subsidizing ma" The C
of the private airlines, by payments for carrying mail 0t""liii._r <
build up the- strength of the commercial airlines, tM
equipment and personnel, for time of war. The Mil'1'1.
Sea Transport, in 1954, operated 221 ships carrying m" °nh- in (,
than two million passengers and 23 million tons of caff Tl,,.,,,
with operating costs of considerably more than halt
billion dollars, while Congress subsidized the private ffl
chant marine with a view, among other things, to Pr°vl,
ing a fleet for military emergencies. Much of the caf
and traffic (from both air and sea transport) could 'iiie-e-
diverted to private carriers with probable economy to ."' Vete
a 1 - _.. At .■_ _ _r i_. ,oi » '11';,In ,.
gpvernment and a strengthening of wartime reserves
Due to the distressed condition of the private ship'"'1,',
.rr ,'...1. ..-A ., 1 »1 ,-r in... M«n(llln« « ^« ,1 , ,,-,'l 1
ing industry and the serious competition engender©"
government shipyards, the
private industry i.s weaken^ j
a war reserve. Congress should appoint an indepcf"'„
Commission to shidy the effect on the industry of ,
construction and repair of naval vessels in govern111
The Subcommittee on Business Enterprises discusse0!
length the problems of 288 large industrial facilities i"'■',.
military departments which were mostly held over &\
World War II and now constitute the National ^fj
Industrial Reserve. Beyond these, 148 plants have Indisposed of to private enterprises on conditions that 1
tect the military interest. The government investmen «
about $9 billion; annual maintenance of the reserve P1 J
are in excess of $200 million. The subcommittee P01IL)
put that six of the plants disposed of have paid more >
$100 million in taxes during a six-year period. The De* j'
ment of Defense, with the aid of outside experts, sh *
review these plants as to their value, future require!"
and possibilities of disposal. J
There were twenty-two recommendations in this p"
from the Commission.
Facts Foiium News, May.
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