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v) wrr*&* MINUTES OF LUTING February 5* 194^, 11:00 A. V.. East ..ing, White House Present: The Director (Presiding) Mr. IVickard Miss Perkins Mr. Boll (Acting Secretary.'' of Treasury) Mr. S dth Mr. ^cclec Mr. Brown Mr. D&vie Green ".li- o ilurray k!r. i?atton •..•.. 0 ' K s a l . Flanders 1. The Director read a letter froiit for, Eccles outlining the progress Btade by the Federal Reserve Board in reducing outstanding consumer credit from "~- v9,7uO,000,000 to vb,4-O0,0!JO,00U. Ui. . L-Ui'ith offered to ^rvpare also a state- ment as to the pre-payir;^nt of long term indebtedness, including Land Bank mortgagee; Hoiiie Owner;1 Loan Corx>oiation indebtedness, etc. 2. ;ir. Broi bed on the possibility of reducing price ceilings wherever excessive profits exist. He rcviev/ed briefly the legal ba^is of the exercise of auch i opinion, is derived primarily troa tho original k'rice Control ••• t of iv4-- rathor thun tho Act of October 2, 19-C^. Mr. 3ro;/n reported soiiie pro^r*8a in the reduction of excessive profits, but 3>.presjed the opinion that cioi'e vigorous action was now required in order to countei--bj.uLj.iir•,other necessary increased in tho cost of living* He listed certain reductions of excessive profits alro.-idy achieved by the Office of Price iidiiinistration, vhicn total ^.Dout i,.650,000,000. Mr. BrowTi also o&lled atten- • tion to the proceedings now pending bsforo the Interstate Commerce Comraission - 2 in an effort to obtain a rescission of the rato lncre&sea <.jro.ntod early in 1942. If this effort is successful, i t v i l l rajult in an additional saving U5'J} JUu,uUv; to shippira tad j^assfnga] tar. Brova'. ul^o callod attention to tne substantial savings ^chi^ved the armed soivic^s tnrou^n tha renegotiation of contractsj and co tho r^-cint f5v,u0O,UU0 reduction in long distance toluphono ratos ixhiov^d by the Fader&l . , I £ 0 Com:..is;jion. ..ir. Bi'own pointed out tha difficulty in reducing prlcue in tho3o Indus trios ^hzra u v. irlu rpra^.a exibte botJeeci tha production costs of the moat efficient jjreducarc and those of tho marginal j'roduc^r^. In mimy juch cases, tho i/ric^ itciiuinieti'ator ta facud ffitb tho altornativ., of oithjr poraitting '^..ivj piofita to accrue to tho iov, cojt prxxlucar or forcing tho high cost x.roauc^r out of blieiiiOoS* htr. Bi ovrii pointer] to tlid r e t a i l grocery buein an fexiunplq* in that csfcSJ, howjVcr, due to tfr? largi nunbar of units existing, with the conaaqu^nt pr^ssui*^ oj ttitiv fordosi i t vma f i t probablo that tho low cost chain stores would poll btdu\« tho celling pricwj, chUL. i^flooting j.dditioaal savings to conaunaiva mid ldi..vtng : t tho siiiij cuuQJetitiva situation •would exist In tho abb one J of r r i c o control. inctu^tri .. 1 ...tod bv I t u u flugg3«tt»d that, in thoa« nparfitlvoly anull nuubor DI highl;1 lnt«^ratdd pro- duc^rSj i t would bo possible to solva thi.u probldK through u pooling rarangust^Atj whjirobj a ,'ortr.in proportion ^i the profits uf the low cost pi'oducjrs would bu capturod and pocj-^d in order to ^urmit high cost producers to operate under coiling ^ric^s. Mr. iuurray int|uirod as to tho relation btlti Office of Prico on and tho emiod ^jrvicos in connection with procurement. Mr. wn replied that rei;egoti:< tlon of contracts was within tht sole control of the procurement agencies, but that authority over the original purchase price on military articles has been defined by an agreement between the Offico of Price Administration and the services — an agreement under which a considerable p-at of the legel authority of th« Office of Price Adir.inik-;trction had been abandoned. Tho services had, however, agreed to consult the Office of Pric-i Administration in connection with their prices and policies. The arrangement, stated Mr. Brown, had not proved entirely satisfactory and was now unaer reconsideration. 3. # Mr. Murray stated that living costs wore still not under control. The only criterion by which tile worker and his wife can judge the cost of living is the contents of their market basket, hb stated. Mr. Murray called attention to the enormous incro<...;jos in food prices during the past year. ZggS; he said, have risen from 40 centa to 79 c^nts a d^zon; butter from 37 cents to 62 cents a pound; bacun from 29 cents to 59/ cents a pound; and vegetables by bU percent or mor.^. How, he inquired, can the v/orker -'.aid his v.ife reconcile thooe facts with tha re:> i the Burouu of bietic Mr, Fianaers remind.;a *.fr. Lurr; y thrt foods constitute only about one-third of the cost of living, und stated that many other items have not increased JO rapidly as food' stuffs, .hich have risen >/,. percent since 1939 and 9.7 percent since May, 1942. The total cost of living, ho st:..tjd, has risen about 16.tt percent since January, 1941. Mr. Davis agreed as to Lhe utmost trnportance of this question to the War Labor Board. There is constant controversy as to the accuracy of the figures of the Bureau of Labor Statistics. c Ivlr. Davis suggested that the Board call in the Research Directors of the various labor organizations and settle •1 • - ) ^ - 4- this question for onco and all. The Director and Miss Perkins agreed with this suggestion. Mr. Liurruy rupiijd that labor had reluctantly accepted the so-celled "Little 3t2el Formula" on tha basis of anticipated price control end rationing, TkuSi tli 6 tat act, have not.takon place. The* entire country is polluted with black markets, especially in nteat, and black market conditions are not accurately reflectjd in tag figures of tho Bureau of Labor Statistics. Mr. Murray olio ramindou tlu Board hivHiberi that u number of important casoa aro now pending before tho Vvar Uibor Board which Lre frequently uffoctod by this issud, involving ultogathur more than throe ailliun v:orkars. Llr. Ecclus stated that tho ^rubier: waj int-viLcbiy created by a situatioh in whieli the available imrchuaing pottar uxcoads tho supply of consumei goods. This discreptincy ill not be corrected by increasing wages. lather, h<j stated, W^ga increases uoulu ace.;].on.to the lack of biiance and iviaku t3 ^P problem moro difficult to jc»lve. < ...I-. laurra^' ciia not -jntir.^lv J.isc^Tco, but ^LoaajiLod tho njC3L;si'Gy of stronger jfrico control, tuora jxt^nsiva rationing ana adequate* enforcement polici-as. Thj Director stated that it wry his firm intention to stand upon the stabilization policy of fcha Act of October 2, ^.nd that w* must, in order to do t*ii3? hold prices and wog#fl in lino- and wipe out blcek auikota. , W'ickard stated th^.t, aos^ito prico inci' dieting morg bjsif than ^vor boforc in our ;U3tory. Tho real probl v are to obtain an adj^aiato distribution of the existing supplyj and thia will probably r^jquira tiio iiodnsing of slkU&htora anu rationing. thu apoody institution — 5 Wir. Pi.t-tcn reminded the Board th-:.t, v/hiio workers ere now consuming in mc.ny cajes than formerly| nu..ny of than c.lso require more food in order to maintain their productive efficiency, since millions who formerly worked on V.'Pii, or were unemployed, or v/orked pert time, are now ^ngL-god in full time or overtime work in heavy industry. Mr. Eccles etatod that the problem of the black market ia made more difficult during wintertime by the incrocsod illicit slaughtering on the f a m e . Mr. Green stated that while Living c jstjj nay huVu riaen i.ejjb thiii food prices, thj aiTviraga v/orkor and hit« f&adly buy foud trvory day <?.nd other iter.ib less frequently. Therefore, it is Vv»ry difficult to convince the f.orkar that the cost of living has not risen much m .re then the government indices wouia indicate. There followed u, gvdn^ral discussion uf the ;'Littie Steel Formula" with statements by Ur. L»recai and Mr. lviurr;..y amiiliasizing the necessity of preserving iona flexibility in tiie wugtt btructur.j m order to take ct.re of Ban power and production piobiauu?. U. The Director th^nread to t-he public repredentatiVes on the Board his proposed statement with reference to tne rationing of shoos. After general cUgcusoi'jni the Bi>ard aemboro \manimoti£ly .,L> rjved tiu proposed rationing pi;.n. Tlio B'jord adjournjd -t Li$0 to meet again at 11:00 on Friduy, February 19, 1943. I e .1
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