Electrical Co., of Los Angeles. In that case we failed to get any evidence of Government interest in the Schloemilch & Von Bronck patent, but our attorneys presented that patent to the court, and argument was had on the 4th of January on a preliminary injunction, and the court has not yet decided the case, but it certainly looks hopeful.

The CHAIRMAN. You have never been enjoined by reason of not paying the 72 per cent, so far by any court?

Mr. SCHUETTE. Another of our members was sued in New Jersey, in the same district where the patent had been adjudicated, and the injunction has been held up there because in that court we raised the issue that they had no right to join four complainants under 11 different patents, of which this was one, against one defendant. In that case they joined the American Telephone & Telegraph Co., the Radio Corporation of America, the General Electric Co., and the Westinghouse Electric & Manufacturing Co., in one suit against one defendant. The purpose was to make him face a $5,000,000,000 aggregation in one issue, instead of fighting out one patent at a time. The district court there decided that it was not a misjoinder, and the case is now on appeal to the United States Circuit Court of Appeals, Philadelphia, where it has not as yet been decided.

The CHAIRMAN. And the defendant is still operating?

Mr. SCHUETTE. The defendant is still operating.

The CHAIRMAN. Under bond, of course?

Mr. SCHUETTE. Yes; having given bond. There is another adjudication against a dealer in Brooklyn, which is also in the New York jurisdiction, but that was against a company which stopped making tuned radio frequency sets.

The CHAIRMAN. What proportion of the radio industry is not paying the 71⁄2 per cent royalty?

Mr. SCHUETTE. Well, I doubt whether it represents more than 10 or 15 per cent, maybe 20 per cent at the outside.

Senator DILL. That is, the manufacturers of sets.

Mr. SCHUETTE. Yes. The 27 set makers that they licensed, plus the Radio Corporation of America itself and its affiliations, as testified in those tube proceedings, control about 85 to 90 per cent of the radio set business of the United States.

The CHAIRMAN. The organizations you represent, are they makers of radio sets?

Mr. SCHUETTE. They are makers of sets and parts, including tubes and accessories. They are manufacturers of

The CHAIRMAN (interposing). Are they paying this 7%1⁄2 per cent royalty?

Mr. SCHUETTE. They are not.

The CHAIRMAN. What percentage of the radio industry do they represent?

Mr. SCHUETTE. I should say we represent the largest share of that 10 or 15 per cent I referred to a while ago.

Senator DILL. In the tube business the people you represent are making from 10 to 15 per cent of the tubes, would you say?

Mr. SCHUETTE. Oh, more than that. I thought you meant set makers. In reference to that, there was an announcement the other day by one of our members that they had agreed to pay the 7% per cent royalty, and I understand agreements are being rewritten for all other set makers as a result of that.

Senator DILL. Are they going to have to pay the 71⁄2 per cent royalty on packing boxes?

Mr. SCHUETTE. I understand they will take it off of packing boxes. The CHAIRMAN. But it will still be on the cabinets?

Mr. SCHUETTE. No; I understand they are going to reduce that to a nominal sum. So as a result of the fight we have made against this outrageous license charge, those set makers who last year paid royalties amounting to somewhere around $6,000,000, will get this benefit.

Senator WAGNER. How much will that benefit be?

Mr. SCHUETTE. In some sets a difference, in the royalty I mean, of a reduction from $10 to $2.

Senator WAGNER. I thought you might have it in a lump sum. Mr. SCHUETTE. Of the lump sum of $6,000,000 I should say it would be between $3,000,000 and $4,000,000.

Senator DILL. As I understand it, in reference to these radio set makers a few make the furniture, and I understand that one paid more to the Radio Corporation of America in royalties on the furniture for the sets and the packing case than on the sets covered by the patents, nearly $1,000,000.

Senator BROOKHART. If the United States Government would assert its right, and establish it, as was done in the Canadian court, it would stop all that, would it not?

Mr. SCHUETTE. We think it would. But, of course, with 3,500 patents and $5,000,000,000 to go on, if we beat them on any particular patent, and they spend $10,000,000 doing it, they are able to keep on fighting.

Senator BROOKHART. But that would not be the same thing if they came to fighting Uncle Sam.

Mr. SCHUETTE. Oh, no. If Uncle Sam should get into the fight, then it is all over. All that we need is to have the Department of Justice take down the antitrust laws and dust them off, and prosecute these people, and it will be quickly at an end.

The CHAIRMAN. Why don't they do it?

Mr. SCHUETTE. That is a thing I have not been able to understand. I have a letter here from Attorney General Daugherty

Senator BROOKHART (interposing). Well, you knew why he would not do it.

Mr. SCHUETTE. That letter seems to have stayed in the files there. The CHAIRMAN. Have you applied to other attorneys general since Daugherty's time?

Mr. SCHUETTE. Yes, sir; to Attorney General Sargent, and we have been trying to get Attorney General Mitchell interested. I noticed yesterday that the Department of Justice has finally appointed an assistant attorney general to take charge of antitrust prosecutions. We hope that when he gets in office he will take the matter up. Senator DILL. Who is that?

Mr. SCHUETTE. Mr. O'Brien.

Senator WAGNER. It is Mr. John Lord O'Brien, one of the most eminent lawyers of our State.

Senator BROOKHART. On which side of the trust question is he? Senator WAGNER. Well, I will say that he is a very high class, conscientious citizen.

Senator BROOKHART. And you really think that he will do some business in these matters?

Senator WAGNER. I am not attempting to speak for him, but I had the honor to serve with him in the constitutional convention of New York, and in the State Legislature of New York, and know that he has always been highly esteemed.

The CHAIRMAN. You could not get Colonel Donovan interested in it?

Mr. SCHUETTE. They always said they had to investigate it. Every time we asked about it they would say they had not finished investigating it.

Senator BROOKHART. And just as soon as an investigator found out anything they dismissed him and got a new one. That was the Daugherty method.

Mr. SCHUETTE. Well, I will say that they had no trouble putting the candy racketeers in Chicago in jail, but they have not been able to get after the patent racketeers.

Senator WAGNER. Senator Brookhart, are you speaking for your party now?

Senator BROOKHART. I am speaking on the facts as they were brought out, no matter what the party may be that is affected.

Senator DILL. Since you have been speaking of these suits you might state your experience in regard to the tube provision of the contract.

Mr. SCHUETTE. I think there is evidence of the failure of the Department of Justice to act in the interest of private individuals, to go into court to protect them against flagrant violations of the antitrust statutes. In this set-makers' license, under which 27 set makers agreed to pay the Radio Corporation of America a 71⁄2 per cent royalty, there was a clause providing that they must buy from the trust the tubes necessary initially to actuate the sets. Up to that time all sets had gone from the factories without tubes, and the tubes were purchased from radio dealers and put in the sets. This clause put an end to all tube making, because it forced 27 set makers to insert R. C. A. tubes in sets before they sent them to radio dealers. That was a violation of the Clayton Act. We filed a suit in the United States District Court at Wilmington, Del., and Judge Morris decided that it was a violation. The suit itself was brought for a preliminary injunction. The Clayton law provides that in case of a violation, or charge of violation, the complainant may have a preiminary injunction, so that a small competitor fighting against a arge one will not be destroyed while the Supreme Court of the United States is passing on the question. Despite the fact that this vas a preliminary injunction granted in an emergency to protect the complainants, the radio trust succeeded in obtaining an appeal to he United States Circuit Court of Appeals a year ago last December. The appeal was argued in February before the United States Circuit Court of Appeals, and then that court handed down no decision. In he meantime all these tube makers were paralyzed, by reason of the act that no decision came down. So I called a meeting of our board f directors to take up the matter of the issue which was raised, by a hange in Supreme Court rules, whereby in a case of unusual delay in he appellate court, in a matter involving public interest, the comlainant might go direct to the United States Supreme Court for

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relief. This meeting was called for the 27th of September in Chicago, and on the 26th of September the court of appeals at Philadelphia handed down a decision that the tube clause was a violation of the Clayton Act.

In the meantime, however, we had fought this case on in what we call the court of public opinion. We had stirred it up thoroughout the industry and got all the public interest we could get, and the Federal Trade Commission had issued a complaint, and although the Federal Trade Commission's complaint, which was issued in June of last year, was not half as strong as the decision of the district courtbecause if the Federal Trade Commission's complaint were finally to decide in our favor—we would have to go to the same judge in Wilmington to get an enforcement of the Federal Trade Commission's decision. Nevertheless, after the issuance of the complaint, the Radio Trust surrendered and sent a telegram to the manufacturers who had signed the license, saying that until the final adjudication in the circuit court it would not enforce the tube clause; whereupon, the independent tube makers reopened their plants, and the tube makers, thanks to this decision of the circuit court, have been able to keep on.

Senator BROOKHART. Was there an appeal to the Supreme Court in that case?

Mr. SCHUETTE. Yes. The Radio Corporation appealed to the Supreme Court on a writ of certiorari. This was denied. They filed a petition for rehearing and alleged that the question at issue was the application of the Clayton Act, and the Supreme Court again denied the rehearing. Since that time this having been brought on preliminary injunction-the matter has gone to a trial of the facts. The original hearing was on affidavits. The district court has not handed down its decision in that; it has it under advisement.

The point that we were interested in, however, was that despite the fact that there had been this adjudication by the district court and this decision by the United States Circuit Court of Appeals, we were able to get no interest on the part of the Department of Justice. That important because the original case was brought only by five tube makers. The rest of the industry had only such protection as it could get from the fact that those five tube makers would be willing to go ahead and fight.

There was a case of direct violation of the Clayton Act, and yet nothing was done.

Senator WHEELER. Why did the Department of Justice not act? Do you know?

Mr. SCHUETTE. I do not.

Senator WHEELER. Did you ever discuss it with them at all, and did they ever give you any reasons?

Mr. SCHUETTE. No; except that they were investigating thesituation.

Senator WHEELER. How long had they been investigating the situation?

Mr. SCHUETTE. Something like 10 years, I suppose; ever since this thing started.

We feel that there is a necessity for the communications commission, because every angle of radio is tied up with every angle of the wire service, and we do feel that there is an emergency require

ment for the radio features of this bill. How long it will take to pass a bill that will put all the communication companies under the control of a communications commission, I do not know; but the parliamentary situation is this, that on December 31 the present law which extended the license of the Radio Commission as an original body expires, and for that reason we feel it important that Congress should take some steps as speedily as possible to give the Federal Radio Commission real power over the radio situation and to take from the Department of Commerce the present divided authority which the Department of Commerce holds and which, after December 31, will hold, having jurisdiction over radio with its original powers. There is no other industry in which government control is as vital as it is in radio. I do not know whether that has been emphasized in the testimony or not, but the fact is that if you took off control by the Government over railroads a locomotive would still find its way down the track. If you took all the policemen off Pennsylvania Avenue or Fifth Avenue, you could still wiggle an automobile through the traffic. But if you take Government control off radio, radio will vanish. It is created by the fact that the Government and only the Government can do this. The Government lays down a track, a channel, and says, "That is your channel"; and the Government power keeps everybody else off that channel. A 12-year-old boy could destroy radio communication over an enormous area by interference which can be stopped only by the Government. Not even the trust has power enough to keep 120,000,000 people off its tracks; and therefore radio is really the creature of the power of the Government. No State can do that and no city can do it; only the sovereign power of the Government, because it also involves international relations and obligations.

That being true, the Congress of the United States need not be worried about the fact that somebody is going to be displeased by an exercise of Government control, because if the Government wants to destroy the radio trust, all it would have to do would be to lift its finger off radio, and there would be no radio either by the trust or otherwise.

Senator DILL. That is a little too broad, is it not? Because if the Government withdrew from the control of radio what would happen would be that these stations would go into court and get injunctions against interference, and that would give them vested rights in the wave lengths.

Mr. SCHUETTE. But the Government would have to enforce an injunction of the court.

Senator DILL. The courts would have to.

Mr. SCHUETTE. I mean, it is the sovereign power of the people that makes radio possible. It is not similar to laying a track over private land.

Senator WHEELER. Notwithstanding the fact that they went into court and got an injunction against one particular individual, there are 120,000,000 others that could go in and with that same device they would interfere with them.

Mr. SCHUETTE. There would be no radio.

Senator WHEELER. Notwithstanding the fact that the courts might decree that the Radio Corporation of America owned all of the chan