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CHAMBER

OF C O M M E R C E

OF T H E U N I T E D

STATES

WASH INGTON

ALBERT

W. H A W K E S

PRESIDENT




October 15, 1941.

Honorable Marriner S. Eccles, Chairman,
Board of Governors,
Federal He serve System,
My dear Mr. Chairman:
Because of the attention you have been giving
to legislation for the control of prices* I believe you
will be interested in a report on this subject submitted by a committee of the Chamber.
In accordance with our procedure, this report
is now before the organizations in our membership for a
referendum vote. Until this referendum closes, the r e port expresses the views of the committee that presented
i t . Any position of the Chamber will depend upon the
results of the referendum.
Very trtfiy yourst

/

V

President.

enclosure

A Nationwide

Federation

of American

Business

Organizations




No.

CHAMBER

OF
OF

UNITED

COMMERCE

THE

STATES

OF

AMERICA

Referendum No 75
On the Report of the
Department Committee for Domestic Distribution
on

Price-Control Legislation

September 30, 1941

BY-LAWS
ARTICLE

xiii • Submission of Questions

SECTION 1. All subjects considered or acted
upon by this Chamber shall be national in character, timely in importance, and general in application to business and industry.
SECTION 2. All propositions, resolutions, or
questions, except those which involve points of
order or matters of personal privilege, shall be
submitted for action in writing only by the organization members, or by the National Council, or by the Board of Directors: Provided,
That by consent of two-thirds of the delegates
present at a meeting a subject not so presented
may be considered.
SECTION 3. When an organization member
desires to present a subject for the consideration of this Chamber it shall commit its proposals to writing in the form of a resolution
duly adopted by said organization or its governing body and forward it to the Secretary.

mitted for consideration by the Chamber in
annual or special meeting or by referendum.
SECTION 5. R E F E R E N D U M . A subject
to be submitted to referendum shall as soon as
practicable be referred to a committee for report. If the report when received is in proper
and adequate form for submission to the membership, the Board of Directors shall order it
to be incorporated in a referendum pamphlet
without committing itself in favor or against
any of its recommendations, but if not in proper
and adequate form it shall refer it back to the
committee or appoint a new committee to report
on the subject.
SECTION 6. The referendum pamphlet shall
contain in addition to the report itself a brief
of the major arguments against the recommendations of the committee and such other matters
as the Board may deem advisable. If the sub
ject has been submitted by a member organization, said organization shall have the privilege
of incorporating in the pamphlet a brief of such
length as the Board may determine. The pamphlet shall also contain a ballot upon which the
member organizations may register their votes
respecting the questions submitted.

It shall be the duty of the Secretary to bring
this subject before the Board of Directors by
mail, or at its first meeting, whereupon the Directors shall decide whether or not the subject
is of national character, timely in importance,
and general in application to business and industry. If the Board of Directors decides that
SECTION 7. The pamphlet in the form in
a subject submitted by an organization member
is not of national character, timely in impor- which it is approved by the Board shall be
tance, and general in application to business and transmitted to each member of the Chamber in
industry, and should not therefore be submitted good standing and simultaneously the Secretary
to the membership for consideration, the pro- shall mail a copy to the National Councilor
posing member may appeal from the decision representing each organization member.
of the Board to the National Council at any
SECTION 8. The pamphlet shall be accommeeting of that body or by mail through the
office of the Secretary. If the National Council panied by a notice from the Secretary that each
decides by a majority vote that the subject organization member is expected to register its
should be referred to the membership it shall vote on the ballot in writing and mail said balbe incumbent on the Board of Directors to order lot to reach the National Headquarters within
45 days from the date of issuance of the pamits submission.
phlet. Each organization may cast one such
vote
for each delegate to which it is entitled
SECTION 4. If the eligibility of the subject
in
the
annual meeting. [An organization hav
has been determined the Board of Directors
shall decide whether the subject shall be sub{Continued on fa§e thru of cover)




No.

BALLOT
T O BE

DETACHED

C H A M B E R OF C O M M E R C E OF T H E
U N I T E D S T A T E S OF A M E R I C A
WASHINGTON, D . C., September 30, 1941.
T o THE SECRETARY:

Your organization, as a member of the Chamber of Commerce of the United States, is requested to
register its vote upon the questions submitted on this ballot, which is to be detached and returned by
registered mail at the earliest practicable date.

President
This ballot will be counted only if received at National Headquarters, Washington, D. C., on or before November
14, 1941* (See By-Laws, Article XIII,
on inside of cover«)
.1941
T o THE SECRETARY,
CHAMBER OF COMMERCE OF THE UNITED STATES, WASHINGTON.

The.

(Name of Organization)

a member in good standing, and having a total membership of
votes, desires these votes to be recorded as indicated below:

Emergency price-control legislation of a different character should be substituted for H. R. 5479—S. 1810,
now under consideration by Congress.
See page 4

2 • The substitute measure should provide that in the emergency, when government diminishes supplies needed
for civilian purposes, there should be control of prices
for the articles affected during the emergency.

entitling it to_

YES
NO

YES
NO

See pages 6 - 8

#

In such substitute measure Congress should provide for
a standard of price such as could reasonably be expected
to prevail under conditions of production existing at
the time if the intervention of the government had not
occurred.




YES
NO

See pages 8-10

(OVER)

Administration of price-control legislation should be
placed by Congress in a body of five members appointed
by the President and confirmed by the Senate according
to the manner prescribed f o r all important officials.

YES
NO

See page 12
J ,

T h e federal agency administering prices should be required always to enter into consultation with a representative committee of the industry concerned and
selected by the industry.
See page 12

YES
NO

T h e substitute measure should subject the necessary
elements in the cost of living to the same controls,
and under the same conditions, as industrial materials
and products.
See pages 1 2 - 1 4

YES
NO

T h e substitute measure should subject wage levels to
the same principles of control as are recommended
f o r prices.
See page 14

YES
NO

• In any legislation f o r control of prices and wages Congress should place definite time limitations, reserving
to itself decision as to any extension.

YES
NO

See page 14

Signature of President or Secretary

INSTRUCTIONS TO MEMBERS
THE BOARD OF DIRECTORS of the Chamber of Commerce of the United States has adopted the following instructions for
members, and directed they be printed in connection with the ballot.
1. Each organization member in good standing may cast one vote for each delegate to which it it entitled in the Annual
Meeting.
2. The ballot shall be marked by entering a cross or the number of votes to which the organization member is entitled
in the square at the left of the word "Yes" if the recommendation is favored, or at the left of the word "No" if the recommendation
is opposed.
3. If the organization member desires to have its vote recorded as divided it may do so by entering the vote to which
it is entitled in the squares to the left of the words "Yes" and "No" in such proportion as it sees fit The total vote in the two
squares must not exceed the total number of votes to which the organization member is entitled.
4. Fractional votes less than one-half shall not be entered. If so entered they shall on the canvass be carried to the
nearest whole number.
5. The ballots which are so marked as to be clearly intelligible shall be counted. Where the sum of the numbers entered
in the squares exceeds the total number of votes to which an organization member is entitled» canvassers shall in no case attempt
to divide the votes but shall enter them as "Yes" or "No" in accordance with the majority vote shown on the ballot.

METHOD OF VOTING
T H E S E C R E T A R Y of the organization is requested to enter in the space provided below a brief description of the
method the organization followed in arriving at the vote it files in this referendum. Examples of possible description
are by action of the board of directors, by action of the board after it had received a report from a special or standing
committee, by viva voce vote at a regular membership meeting, viva voce vote at a membership meeting after receipt
of a report from a special or standing committee, by mail referendum to members in which all members received copies
of the ballot, by mail referendum to members in which all members received copies of the referendum pamphlet, etc.
.„„1941
T H E O R G A N I Z A T I O N whose name appears on this ballot arrived at the vote recorded thereon in the following
manner:




Secretary

No.

DUPLICATE
BALLOT
—

N O T T O BE D E T A C H E D

—

—

C H A M B E R OF C O M M E R C E OF T H E
U N I T E D S T A T E S OF A M E R I C A
WASHINGTON, D . C., September 30, 1941.
T o THE SECRETARY:
Your organization, as a member of the Chamber of Commerce of the United States, is requested to
register its vote upon the questions submitted on this ballot, which is to be detached and returned by
registered mail at the earliest practicable date.

—

—

—

—

This ballot will be connted only if received at National Headquarters« Washington, D. CM on or before November
14, 1941. (See By-Laws, Article XIII,
on inside of cover.)

B

M

B

^

1941
T o THE SECRETARY,
CHAMBER OF COMMERCE OF THE UNITED STATES, WASHINGTON.
The

(Name of Organization)

a member in good standing, and having a total membership of
votes, desires these votes to be recorded as indicated below:

J • Emergency price-control legislation of a different character should be substituted for H. R. 5479—S. 1810,
now under consideration by Congress.
See page 4

2 • 'The substitute measure should provide that in the emergency, when government diminishes supplies needed
for civilian purposes, there should be control of prices
for the articles affected during the emergency.

entitling it to

YES
NO

YES
NO

See pages 6 - 8

In such substitute measure Congress should provide for
a standard of price such as could reasonably be expected
to prevail under conditions of production existing at
the time if the intervention of the government had not
occurred.



YES
NO

See pages 8-10

(OVER)

^ , Administration of price-control legislation should be
placed by Congress in a body of five members appointed
by the President and confirmed by the Senate according
to the manner prescribed for all important officials.
See page 12

CJ. The federal agency administering prices should be required always to enter into consultation with a representative committee of the industry concerned and
selected by the industry*

YES
NO

See page 12

The substitute measure should subject the necessary
elements in the cost of living to the same controls,
and under the same conditions, as industrial materials
and products.

YES
NO

See pages 12—14

The substitute measure should subject wage levels to
the same principles of control as are recommended
for prices*

YES

See page 14

g

t

NO

In any legislation for control of prices and wages Congress should place definite time limitations, reserving
to itself decision as to any extension.

YES
NO

See page 14

Signature of President or Secretary

INSTRUCTIONS

TO

MEMBERS

THE BOARD OF DIRECTORS of the Chamber of Commerce of the United States has adopted the following instructions for
members, and directed they be printed in connection with the ballot
1. Each organization member in good standing may cast one vote for each delegate to which it is entitled in the Annual
Meeting.
2. The ballot shall be marked by entering a cross or the number of votes to which the organization member is entitled
in the square at the left of the word "Yes" if the recommendation is favored, or at the left of the word "No" if the recommendation
is opposed.
3. If the organization member desires to have its vote recorded as divided it may do so by entering the vote to which
it is entitled in the squares to the left of the words "Yes" and "No" in such proportion as it sees fit. The total vote in the two
squares must not exceed the total number of votes to which the organization member is entitled*
4. Fractional votes less than one-half shall not be entered. If so entered they shall on the canvass be carried to the
nearest whole number.
5. The ballots which are so marked as to be clearly intelligible shall be counted. Where the sum of the numbers entered
in the squares exceeds the total number of votes to which an organization member is entitled, canvassers shall in no case attempt
to divide the votes but shall enter them as "Yes" or "No" in accordance with the majority vote shown on the ballot.




CHAMBER

OF
OF

UNITED

COMMERCE

THE

STATES

OF

AMERICA

Referendum No 75
On the Report of the
Department Committee for Domestic Distribution




on
PRICE-CONTROL

LEGISLATION

C O N T E N T S
PAGE

How Question Arises

1

Personnel of Committee

2

Report of Committee

4

Arguments in the Negative

5

Committee's Appendix Analyzing H. R. 5479-S. 1810. .

15

Text of H. R. 5479-S. 1810

18




Explanation
THE BOARD OF DIRECTORS in authorizing submission of a report to referendum neither approves the report nor dissents from it. In order to inform the members
as fully as practicable on the subject submitted to referendum a carefully selected committee is appointed to analyze
each question and report its conclusions.

The purpose

of the referendum is to ascertain the opinion of the commercial organizations of the country, not to secure the
approval of the recommendations voiced in the report.
Only the vote of the member organizations can commit
the Chamber of Commerce of the United States for or
against any of the recommendations submitted by the
committee and until such vote is taken the report rests
solely upon the authority of those who have signed it.

Referendum on a
Committee Report Respecting

Price-Control Legislation

How Question Arises
IN the summer of 1917, a representative committee of the Chamber presented a report with recommendations respecting the controls which should
be used for prices during the war in which the United States was then
engaged. The referendum which was taken upon the recommendations in
this report showed overwhelming support for the principles which were
advocated.
To conditions of supply and price the Chamber's Department Committee
for Domestic Distribution has been giving close and continuous attention.
This committee accordingly was very prompt in taking notice of legislation
which was introduced in the House and in the Senate on August 1, 1941,
for controls in respect to prices. The Committee assembled in Washington
for several special meetings devoted to study of this measure, and of the
questions which it involved. On September 19, the Committee presented
its unanimous report to the Board of Directors, dealing both with the
pending bill and with the principles which the Committee believes should
be placed in a substitute measure. The members of this Committee are:
B. F. McLain, Chairman, of Dallas, Tex.
R. E. Campbell, of Lincoln, Nebr.
A. R. Erskine, of Memphis, Tenn.
Harry C. Faulkner, of New York City
Carlyle Fraser, of Atlanta, Ga.
Kerwin H . Fulton, of New York City
Robert K. Howse, of Wichita, Kansas
C J. Whipple,

Clem D . Johnston, of Roanoke, Va.
Oswald W . Knauth, of New York City
Herbert N. Lape, of Columbus, Ohio
George R. LeSauvage, of New York City
Benjamin H. Namm, of Brooklyn, N. Y .
Hunter C. Phelan, of Norfolk, Va.
Arthur J. Walker, of Minneapolis, Minn.
of Chicago, 111.

This report the Board of Directors has voted to submit to the organization members for a referendum vote, in the manner and for the purposes
provided in the Chamber's by-laws.
There are accordingly printed in this pamphlet, with a ballot, and with
the by-laws of the Chamber respecting the procedure:




PAGE

1.
2.
3.
4.

The Committee's Report
4
Arguments in the Negative
5
Committee's Appendix Analyzing H.R. 5479-S. 1810 IS
Text of H.R* 5479-S. 1810
18

Personnel of Committee
MCLAIN, B. F., Chairman; Retail furniture
dealer, of Dallas, Texas; general manager,
Hart Furniture Company; director, Dallas
Chamber of Commerce, Retail Merchants Association of Dallas, Liberty State Bank;
formerly president, National Retail Furniture
Association and Texas Retail Furniture Association; a director of the Chamber of Commerce of the United States.
CAMPBELL, R. E . ; Department store executive,
of Lincoln, Nebr.; president, Miller & Paine,
Inc.; director, Omaha Branch, Federal Reserve Bank of Kansas City; secretary, Lincoln
Improvement Company; director, National Retail Dry Goods Association; formerly president, Lincoln Chamber of Commerce ; formerly
a director of the Chamber of Commerce of
the United States.
ERSKINE, A . R . ; Retail jeweler, of Memphis,
Tenn.; president, George T . Brodnax, Inc.;
director, Memphis Chamber of Commerce.
FAULKNER, HARRY C ;

Food broker, of

New

York City ; vice president, George A . Mendes
& Company; member, Advisory Committee,
and formerly president, National Food Brokers Association ; formerly president, Association
of Food Distributors, Inc., New York City.
FRASER, CARLYLE; Distributor of

automotive

parts, of Atlanta, Georgia ; president, Genuine
Parts Company; vice president, Southern Life
Insurance Company of Georgia, Southern Fire
& Marine Insurance Company of Georgia;
president, National Automotive Parts Association ; director, Atlanta Chamber of Commerce ;
a director of the Chamber of Commerce of
the United States.
FULTON, KERWIN H . ; Advertising executive, of

New York City ; president, Outdoor Advertising Incorporated; director, Outdoor Advertising Association of America ; member of board,
Committee on Consumer Relations in Advertising, Inc. ; a director of the Chamber of Commerce of the United States.
HOWSE, ROBERT K . ; D r y goods wholesaler, of

Wichita, Kansas; president, T h e Johnston &
Larimer Dry Goods Company; director, First
National Bank in Wichita, Wichita Wholesale
Furniture Company; president, The Wholesale
Dry Goods Institute, Inc.; director, Wichita
Chamber of Commerce.
JOHNSTON, CLEM D . ; Warehouseman, of Roan-

oke, Virginia ; president, Roanoke Public Warehouse; also president, Bristol Wholesale Grocery Company; vice president, American Warehousemen's Association and
Southeastern
Warehousemen's Association; formerly president, Virginia Highway Users Association,
Roanoke Chamber of Commerce; a vice presi-




dent of the Chamber of Commerce of the
United States.
KNAUTH, OSWALD W . ; Department store executive, of New York City; president, Associated
Dry Goods Corporation of New Y o r k ; director, National Bureau of Economic Research ; chairman of Economic Advisory Committee, National Retail Dry Goods Association ;
member, Retailers' Advisory Committee to
Office of Price Administration.
LAPE, HERBERT N . ; Shoe manufacturer, of C o -

lumbus, Ohio ; president, the Julian & Kokenge
Company; director, Lockwedge International,
Inc., Bye Chemical Company; director, National Association of Shoe Manufacturers; a
director of the Chamber of Commerce of the
United States.

LBSAUVAGE, GEORGE R . ; Restaurant operator,

of New York City; assistant to president,
Schrafft's; director, and chairman of Legislative Committee, National Restaurant Association; member of Executive Committee, Associated Retail Confectioners of the United
States.

NAMM, BENJAMIN H. ; Department store executive, of Brooklyn, New York; president, A . I.
Namm & Son; director, Brooklyn-Manhattan
Transit Corporation, Brooklyn City Railway
Company, etc. ; vice president, . Downtown
Brooklyn Association ; formerly vice president,
National Retail Dry Goods Associátion ; chairman, Retail Advisory Committee, Defense Savings Staff, United States Treasury; a director
of the Chamber of Commerce of the United
States.
PHELAN, HUNTER C . ; Chain-store operator, of

Norfolk, Virginia; president, Colonial Stores
Incorporated; director, National Food Products Corporation, Richmond Ice Company,
etc.; director, Norfolk Association of Commerce; member of Executive Committee, National Association of Food Chains; chairman
of board and director, Southeastern Chain
Store Council, Inc.

WALKER, ARTHUR J . ;

Wholesale and

retail

stationer, of Minneapolis, Minn.; president,
Farnham Stationery & School Supply Company; member of Executive Committee, and
formerly president, National Stationers Association.

WHIPPLE, C. J. ; Wholesale hardware dealer, of
Chicago, Illinois; president, Hibbard, Spencer,
Bartlett & Company; director, First National
Bank of Chicago, Mill Owners Mutual Fire
Insurance Company, Atchison, Tokepa & Santa
Fe Railway Company; formerly president, National Wholesale Hardware Association; vice
president for transportation, Chicago Association of Commerce.




Committee Report
and
Arguments in the Negative
on
Alternate Pages

Committee Report
These principles of control should, in the ComTo the Board of Directors of the
Chamber of Commerce of the United States: mittee's opinion, be applied not only to industrial
materials and products, but also to the necessary
Foreword
elements in the cost of living and to wages.
In any legislation for these controls the ComThe bill known as the "Emergency Price Control
Act of 1941" which was introduced in the House mittee believes Congress should place definite time
and Senate on August 1, and which has since been limitations, reserving to itself decision as to any
a subject for hearings before the House Banking extension.
and Currency Committee, has been studied by us.
Bill Introduced in Congress
A description of this bill appears in the Appendix
The stated purposes of the bill introduced on
to this report, together with a full text of the bill
August
1 go beyond the possibilities of price con(H.R. 5479; S. 1810).
trols.
They
extend even to preservation of the
The Committee believes that in the present
value
of
the
national
currency against inflation. In
emergency there should be provision for effective
other
words,
the
bill
stresses
price control as a subprice controls. It believes that this control can be
stitute
for
measures
of
altogether
different kinds
provided in accordance with principles well estabthat
must
be
taken
if
inflation
is
to
be
checked and
lished in our form of government, and suggests
prevented.
Without
these
other
measures
price
methods which would be appropriate to this end.
control
would
be
futile,
however
conscientiously
The Committee accordingly believes that a
measure of an entirely different character should carried out and observed.
Perhaps consistently with stated purposes unbe substituted for the bill introduced on August 1.
related
to the function of prices, the provisions of
That bill is so sweeping, is so lacking in standards
the
bill
have
such a sweep that limits in applications
by which its administration can be judged, and has
and
effects
are
not assignable. Any or all parts of
stated purposes so far beyond accomplishment
the
economy
could
be brought under regulation
through price control, that it should be opposed.
without
standards
by
which objectives or results
The direct means for attaining some of these purcould
be
judged.
Such
a
measure if enacted would
poses is for the government to take measures that
will give assurance the government has set its face in its administration be replete with surprises that
would be disconcerting and cause uncertainty and
against inflation.
In the substitute legislation which we recom- confusion to the detriment of the public interest,
mend Congress would provide for use of price —conditions adverse to the paramount need for
control in the emergency where governmental ac- sustained and increased production. Any legislation, with or without priorities, so diminishes sup- tion in its form and content should carry assurance
plies for civilian purposes that there will be price that the country's economic structure will be predisturbances. To minimize the adverse effects of served and strengthened, not only for the country's
these price disturbances the standard which Con- success in defense but also in order that the country
gress should place in legislation is the price that may be fully prepared to meet all of the new probcould reasonably be expected to prevail under con- lems of the period following the emergency.
These fundamental considerations and the naditions of production existing at the time if the
ture of provisions of the bill obvious even in any
intervention of government had not occurred.
T o administer such legislation we believe Con- condensed description such as we present in the
gress should create a board of five members, to be appendix, lead the Committee to recommend that
nominated by the President and, like all important the bill should be opposed, and a substitute measfederal officials, confirmed by the Senate. Such a ure of a different character be enacted by the Conboard should be composed of men of such experi- gress.
Inflation
ence and standing that they will exert wide leadership. The board should be required always to enter
In order to make clear our conclusions regardinto prior consultation with representative com- ing the proper place for controls over prices under
mittees selected by the fields of business that are present and prospective conditions, and the ends
concerned.
which should be sought, we {Continued on page 6)

4



Arguments in the Negative
Caution Should be Exercised
Haste in resorting to legislation for price controls should
be avoided.
The member of the recent Temporary National Economic Committee who has given most attention to prices
testified at a public meeting of that committee held at the
end of February, 1941. Contemplating current and prospective conditions under the defense emergency, he cautioned against oversimplifying the character of remedies
for complex economic situations, saying this admonition
applied particularly in dealing with prices. He then proceeded to state a series of warnings, of which the first
in the series he called the most important. It was:
"Don't tinker with prices any more than is absolutely
necessary. * * * Changes in prices exercise a farreaching effect upon the economy. They slow up production here and speed it up there. * * * Of course, there
have been and will be occasions when government must
step in directly to do something about this or that commodity. However, price control of any kind should be
resorted to only upon the clearest showing of necessity."
Other warnings in the series included:
"In any measure of price control, don't forget that
American commodity markets differ verv widely from each
other. * * * There is no simple, single control system
which is equally applicable to all,
"Don't assume that costs form an adequate yardstick
in controlling prices. They are only one guide and often
not the most useful. In the past, measures of price control
have usually been framed in one way or another in terms
of accounting costs. * * * Accounting costs can furnish only one, and a very imperfect, guide to problems of
price/Cost accounting itself is not a science but an art
which is based upon many arbitrary assumptions. * * *
"In dealing with any particular industry or group of
industries, don't forget that the economy is an interrelated whole. Changes in the price of one kind of commodity or one kind of service will affect many other commodities and many other services. * * * The effect of fixing prices for one kind of commodity or service does not
stop there. It keeps going on.
"Don't forget that price is only one of the very many
elements entering into a business transaction. When attempts were made to fix minimum prices under the
N.R.A. codes, the result was to divert competition into
many other forms, such as changes in terms of sale and
methods of delivery, modifications of quality and indirect
concessions of other kinds. Price is only one of the ways
in which competition expresses itself. * * * "




Existing Means for Price Controls
Through executive action there are now in operation
administrative means for setting maximum prices for commodities as extensive, and as well supported with legal
authority, as those used by the price-fixing committee of
the War Industries Board in 1917 and 1918, when price
controls were used as to approximately 600 articles. The
agency of 1917-1918 existed without special legislation
and solely on the basis of executive orders issued by the
President. For enforcement of the prices which were
established, essentially through agreement with industries,
there were available, in the National Defense Act, authority for the President to take over at a just compensation
plants which refused to execute compulsory orders placed
at prices set as reasonable. This was the so-called "requisitioning power." Moreover, there was power to deny
to those who disobeyed price regulations the assistance
of the priorities division needed to obtain materials and
to prevent their use of railroad transportation through
establishment of transportation priorities. That these powers were used in relatively few instances did not prevent
their being in the background as sanctions.
The same powers are behind the present Office of Price
Administration. The provision for requisitioning contained
in the National Defense Act of 1916 has merely been
reshaped and sharpened in section 9 of the Selective Service Act of 1940. The provision respecting priorities in railroad transportation of twenty-four years ago still exists.
These statutory authorities are set out in the executive
order of April 11, 1941, establishing the Office of Price
Administration and Civilian Supply, which by a process
of simple amputation performed in August now continues
as the Office of Price Administration only. By the executive order the Price Administrator is to recommend to the
President that he exercise, as a means of enforcing compliance with price orders, any or all of several statutory
authorities. These authorities are contained in section
9 of the Selective Training and Service Act of 1940
—which has been mentioned above; section 120 of
the National Defense Act of 1916—which section 9 of
the Selective Service Act does not replace and which
permits, "when war is imminent," the placing of mandatory orders through the head of any department at prices
deemed to be reasonable, with authority to requisition in
case of default; and the legislation by virtue of which the
President, "in time of threatened war," may certify to the
Interstate Commerce Commission that the Commission
should use its powers to give preference or priority in transportation to certain traffic(Continued on page 7)

s

6

Committee Report

give brief attention to the sources of inflation and
the measures that should be taken to check it.
Inflation, its causes, and measures that will best
deal with it, do not directly fall within the jurisdiction of this Committee, which is here concerned
with prices, their functions, and their control during times of emergency. Brief consideration of subjects relating to inflation is, however, a necessary
part of the background of our studies.
For inflation, government is responsible. In earlier times governments usually were driven to
finance war by printing currency in increasing
amounts, and using this paper money to pay their
obligations. They thus greatly increased the medium of exchange without adding to the volume of
goods for purchase of which the money was usable.
As a consequence, prices often rose to dizzy
heights, with disastrous effects immediately and
when the inevitable collapse occurred.
This is elementary. It is elementary, too, that
under our more complex modern conditions the
government has the highest obligation in a time of
emergency to prevent any of its policies in the
monetary, fiscal, and other fields from being inflationary. No governmental restrictions imposed
upon the people can counteract governmental inflationary policies.
As government spending is the source of inflation, there is now an urgent obligation on our government to curtail all its spending that does not
directly relate to the cause of the economic emergency,—the great requirements for defense.
No schemes of taxation designed to take away
the added receipts of individuals from excess government spending can be effective as a substitute
for rigid economy in non-defense expenditures.
Defense expenditures themselves should not be
inflated through use of public funds where private
funds can supply the need for facilities for defense
production, if given in fact the protection in connection with taxation that Congress provided.
In meeting defense requirements there should,
both in advance preparation and in execution, be
constant attention to the ever-present need of maintaining, to the maximum defense requirements will
permit, production of goods for civilian use; for
so far as the volume of goods available for civilian
use keeps pace with increase in media of exchange,
—i.e., purchasing power,—there will be no inflation.
In borrowing for defense, the government
should seek to meet its needs to the greatest extent



possible from the savings of the people, and to
that end should offer incentives for savings by ending its policy of keeping interest rates at depressed
levels. No plan of compulsory savings to be taken
by the government can be a substitute. As our great
medium of exchange is bank credit, the government should avoid to the maximum extent its creation of added bank credit for its own use and
should by legislation provide appropriate controls
over excessive bank credit. Under earlier and different conditions, legislation conferred authority
of an inflationary sort, such as power to issue
greenbacks in large amount and power to purchase
foreign silver and issue currency against it; all
such authorities should be repealed.
Inflation is devastating. It dispenses loss and
gain without regard to merits. Eventually everyone loses. In its development inflation is the most
potent source of violation of the principle for
which the Chamber has always stood,—that a few
should not be allowed to profit by war at the
expense of the many.
The Committee recommends that every measure
should be taken by the government to give assurance that the government itself has set its face
against inflation.
Needs for Defense

Needs of armaments and commodities for defense are imperative. They have to be met, whatever the part of the supply of any material or
article they take. To assure complete supplies for
defense, wherever there is any prospect of shortage for all uses, a priorities system has been placed
in operation, based upon the system developed in
1917-1918, and supported by legislation of May
31, 1941, authorizing mandatory priorities for
defense needs. The purpose is to determine the
sequence of production and delivery according to
the relative urgency of each defense need, with
all defense requirements met. All that is left for
civilian use is apportioned to such uses under a
correlative system for civilian supply.
Such a priorities system has importance in stabilizing prices; for opportunity is greatly reduced
for anyone by bidding to get supplies to which
he is not entitled under the established priorities.
Whatever effect the priorities system may have in
stabilizing prices, it is not enough. Besides, much
government buying will reduce supplies available
for civilian uses without (Continued on page 8)

Arguments in the Negative

7

Former Advisory Commission for National Defense

Disturbing Factors in 1941

The present Office of Price Administration represents
the second stage of development of means for price stabilization during the present emergency. The first stage was
in the Advisory Commission for the Council of National
Defense. The Council of National Defense exists under
the National Defense Act of 1916, which also provides
for an advisory commission appointed by the Council.
Regulations adopted by the Council were approved by
the President on May 29, 1940, and provided that the
Advisory Commission should be composed of seven advisers, one of whom was an adviser on price stabilization.
The duties of this adviser and the division which he
headed were to observe and study prices, particularly of
raw materials and the products made from them, with a
purpose of promoting price stabilization. This activity began, it will be noticed, simultaneously with adoption of
a policy of expanding defense buying on a large scale.

But in the early months of 1941 disturbing elements
were appearing. There were increasing labor controversies
and strikes, including strikes in defense plants. Shortages
in materials were leading to the first priorities for defense
production. Dislocations in some prices resulted in the
division for price stabilization urging business concerns
not to make anticipated cost increases a basis for price advances, to average the cost of new goods with the cost
of goods already in their inventories, etc., and to use
their earlier mark-ups in terms of dollars and cents rather
than apply a percentage for mark-up.
In the early months of 1941 the division for price stabilization went further and issued five schedules of maximum
prices—the so-called price ceilings—for second-hand machine tools, aluminum scrap and secondary aluminum
ingot, zinc scrap materials and secondary slab zinc, iron
and steel scrap, and bituminous coal—the last at the request of the administrator of the Bituminous Coal Act
and only during the strike in the mines.

Increase in Production
In the interest of price stabilization, and because prices
would not rise if production were increased at least as
fast as purchasing power grew under the new program
for defense expenditures, the division gave its early attention to adequacy of supplies. According to testimony of
the head of the division, cooperation with the other divisions of the Commission led to development of additional
sources of supplies. T o promote expansion of facilities for
defense production through investment of private funds,
instead of use of public funds, legislation for special amortization was supported. The division also concerned itself
with the terms of defense contracts, keeping out of them
such features having inflationary tendencies as cost-plus
terms.
The head of the division has repeatedly testified that
between the end of May, 1940, and the early spring of
1941, there was the largest expansion in production the
country has ever had in a comparable period, and with
remarkable stability of price levels.
The statistics published by the Board of Governors of
the Federal Reserve System show that in this period industrial production as a whole rose by 30%, that nondurable manufactures, in which some of the defense procurement fell for such articles as food, shoes, textiles,
etc., rose by almost 15%, and that durable manufactures
in which a great part of defense procurement comes increased by 4 6 % . Meanwhile, the general level of wholesale prices had moved upward by only three points, and
the index for the cost of living had risen by less than one
point.




Office of Price Administration
The second and present stage in the development of
means for controlling prices was thus reached and was
marked by the issue of the executive order of April 11,
1941, creating the Office of Price Administration as it
now exists, together with functions as to civilian supply
which in August were transferred to O P M , and which
are not in point here.
Neither is it particularly in point here that the executive order was expressed as in further definition of the
duties and functions of the Office for Emergency Management and that authority for O E M is in an executive
order of September 9, 1939, accompanying the proclamation of that date declaring a national emergency. The
executive order of September 9, 1939, provided for five
divisions within the Executive Office, such as the Bureau
of the Budget, and added as to a sixth division, "In the
event of a national emergency, or threat of a national
emergency, such office for emergency management as the
President may determine/' On May 25, 1940, an executive order followed giving form to the present O E M ,
with duties to assist in clearing information as to measures
necessitated by the emergency and to maintain liaison
for the purpose of securing maximum utilization and coordination of agencies.
In any event, the status of O E M would seem to be
immaterial; for executive orders were deemed sufficient
for the price-fixing committee of 1917-18, and should be
considered sufficient now as a basis for the same activities.
It is true that the country was at (Continued on page 9)

8

Committee Report

need of priorities, and consequently without any
stabilizing influences from priorities.
When supplies are reduced by governmental
action, whether through direct limitation on quantities available for civilian uses or through governmental buying affecting markets, the forces
normally determining prices are disturbed and
price controls should be instituted. Disturbance
will occur whether or not the government's intervention in the market takes the form of imposition
of priorities. For reduced supplies bidding for
what is available for any civilian use should not
be allowed to disrupt price levels. To express the
great importance business men attach to stability
in prices we can repeat the language of the Chamber's Committee on Control of Prices in its report
of 1917:

August 19,
1939
.
Farm Products
.
Foods
Hides and Leather Products... .
.
Textile Products
.
Fuel and Lighting
.
Metals and Metal Products...
Building Materials
Chemicals and Drugs
.
.
House Furnishings
.
Miscellaneous
All Above Commodities Taken
.

January 4, September 20,
1941
1941

July,
1917

60.4
66.2
92.8
67.4
73.6
93.S
89.5
74.2
87.0
73.0

71.2
73.2
102.5
74.3
72.6
97.8
99.4
78.0
90.2
77.1

91.2
88.5
111.7
89.2
80.0
98.7
106.2
87.8
98.0
85.0

134.9
105.3
122.7
102.7
107.2
178.4
94.4
164.4
77.2
124.1

74.6

80.2

91.5

123.0

For purposes of comparison the corresponding
index numbers for July, 1917, have been placed
in the last column above. They indicate the great
difference between conditions in 1917, following
protracted price increases in the preceding period,
and the much easier price conditions of today, following a period of depressed prices. When the
United States entered war, in April, 1917, the all" N o business can be satisfactorily conducted if it commodity index was 114.1 and reached 123 by
cannot ascertain its own costs and prices in advance. July. Price controls began to be operative soon
When there can be no reasonable certainty about the afterward,—through the Food Administration,
future course of costs for material and equipment every the Fuel Administration, and the War Industries
business faces unknown elements as soon as it endeavors Board,—and they were so effective because of the
to determine its scale of operations, the goods it will widespread cooperation given by industry and
make, and the prices it should ask for its product."
distribution that in the following sixteen monthsthrough November, 1918, the general wholesale
The Committee accordingly recommends that price level rose but 6%.
in the emergency when governmental action diThe prices now paid by the government for
minishes supplies needed for civilian purposes defense articles are under much control, as through
there should be provision through legislative actionuse of negotiated contracts. There is also aufor control of prices.
thority, if necessary, to place compulsory conThis recommendation is made in order that tracts to be performed for prices determined by
there may be preparation for all future contin- the Secretary of War or the Secretary of the
gencies. Some prices have shown much stability. Navy to be reasonable.
The impact of defense demand has been parLegislative Policies Regarding Prices
ticularly heavy upon metals and metal products,
but from the beginning of 1941 to September 20
Congress should itself include in its legislation
the level of wholesale prices in this critical area the principles to be followed in the controls of
has not risen by as much as one per cent, being prices within the limits we recommend. Governheld in check by voluntary action of producers. ing policies which should be made unmistakably
The most rapid rise in the period has been in farm clear in legislation can be formulated more readily
products, partly under the stimulus of price-rais- than standards which are to be of applicability
ing legislation which became operative while prices in all fields, and should include:
of farm products were relatively the lowest among
Maintenance of the fullest possible functionall groups of prices entering into the general
ing of our productive economy;
wholesale level.
Increase in all production needed for defense
The recent history of wholesale prices is perpurposes, and also in non-defense fields the
haps seen best when they are cast into index numvery maximum of production that fulfillbers, with the averages for 1926 used as 100, and
ment of defense needs will allow; the full
the index numbers are shown as of the middle of
use of maximum capacity of non-defense
August, 1939,—the bottom of a long decline,—
facilities should be a constant goal never
the beginning of January, 1941, and September
to be lost sight of; (Continued on page 10)
20, 1941. These index numbers have been:




Arguments in the Negative
war in 1917 when the first executive order on this subject
was issued» and it is not now at war. But a period of intense
preparation for defense in war is not, with respect to the
appropriateness of the powers in question here, different
from a period of actual war.
Status and Duties of OPA
The executive order of April 1! placed the Office of
Price Administration in O E M , and thus on a basis of
equality with the Office of Production Management and
its priorities and other divisions, and independent of
O P M . The Administrator of O P A , however, is now
both a member of the seven-man Board for Supply Prior*
¡ties and Allocations which was set up on August 28 to
fix priorities and allocation of the supply of materials,
fuel, power, and other commodities of all kinds in the
United States, and is head of the division of civilian
supply in O P M . Thus, there is interlocking, with a
function of allocation of production in important directions, as for automobiles, but the Office of Price Administration keep* its independence.
The duties given to the Administrator by the order
of April 11 are to take all lawful steps necessary or appropriate in order to prevent price spiraling, rising costs
of living, profiteering, and inflation resulting from
market conditions caused by the diversion of large segments of the nation** resources to the defense program,
by interruptions to normal sources of supply, or by other
influences growing out of the emergency.
In performance of these duties the Administrator is to
determine and publish, after proper investigation» such
maximum prices, commissions, margins, fees, charges, or
other elements of cost or price of materials or commodities, as the Administrator may from time to time deem
fair and reasonable, and take all lawful and appropriate
steps to facilitate their observance*
In performing these duties the Administrator is not
only subject to such policies, regulations, and directions
as the President may prescribe, but he is to act with the
advice and assistance of other federal agencies and he has,
as a committee to make recommendations to him, the
Secretary of Treasury, the Secretary of Agriculture, the
Federal Loan Administrator, the Chairman of the Tariff
Commission, the Chairman of the Federal Trade Commission, and the Director and Assistant Director of O P M ,
or such alternates as each may designate«
Schedules of maximum prices have now been issued and
are in force with wide scope, extending to iron and steel
products, pig iron, copper, tin, many cotton textiles in
the grey, combed cotton yarns, rayon grey goods, raw
sugar» many kinds of lumber» hides, and formaldehyde.




9

The Administrator of O P A estimates that the influences
of price controls now reach at least 20% of the total
value of manufactured and mining articles.
Additions Made by Bill
The bill which was introduced in Congress on August
1 would in many ways merely incorporate in legislation
the system of price control now administered by OPA,
adding a statement of further purposes for which price
control is to be exercised, provisions for appeals, ultimately
to the courts, from price-control orders, and penalties for
violation of orders.
Question of Need of Any Legislation
The need for penalties has not been demonstrated. The
Administrator has recently testified that there is at least
80% compliance with his orders, a percentage that is
sufficient for stabilization purposes and that can be increased only by procedures that will attract increased
public support. Besides, the Department of Justice has
given assurance of its readiness to proceed under the antitrust laws against any combinations in regard to prices,
receiving any evidence the Administrator has to present.
As for the procedure for appeal, there has appeared no
demand. The desire has been rather to obtain an opportunity to present data to the Administrator to show that
his decision was erroneous, cither as to the price ceiling
or with respect to differentials for grades and kinds. This
opportunity has been freely accorded, and there have been
numerous adjustments, and redsions of some orders. Increasing use of industry committees for conference may
be expected to lead to price schedules that will be in accordance with the situations existing in industries and the
nature and variety of their products.
Selective Price Controls v. Ceiling over IF hole Structure
The present OPA, the bill introduced in Congress on
August 1» and the report of the Chamber's Committee
contemplate price control of materials and commodities
as conditions may indicate control should be extended to
one and then to another. The Chairman of the War Industries Board of 1917-18 condemns such controls as
piece-meal and wholly inadequate to restrain price levels*
He considers the price controls of 1917*18 as inadequate
and believes that at the time of the Armistice in 1918 they
faced large expansion. He urges that price control cannot
be considered as a separate effort but that it should be
intimately tied up and move in step with all other controls—wage and rent controls, priorities, conservation,
commandeering, war trade, war finance, and so forth.
He urges the necessity of (Continued on page 11)

Committee Report

10

Stabilization of prices and assurance against
unpredictablefluctuationsdue to any event
or condition growing out of the emergency,
or any speculative operations for which the
emergency provides opportunity, in order
that there may be reasonable knowledge as
to costs and prices when production that is
undertaken will be completed through processes requiring time;
Fairness in prices both to seller and buyer.
Legislative Standards

The function of Congress does not end with the
laying down of such policies, but includes establishment of standards according to which the
agency it selects for the purpose of administration
may be guided and limited in activities in support
of the policies declared by Congress. Extraordinary conditions may call for extraordinary remedies, the Supreme Court has pointed out, adding
that extraordinary conditions do not create or enlarge constitutional power. Without standards any
price legislation may, when most needed, collapse
under test, and thus produce chaotic conditions.
A very simple standard has been proposed, in
the form of freezing all prices as of a particular
date. To this proposal there are numerous objections, some of which are suggested by considerations already mentioned in this report. There are
others. For instance, there is no justification for
dealing at once with all prices with creation of
tasks of enforcement beyond the powers of any
federal agency, however huge its staff. A glance
at the price indices we have presented demonstrates that at no one time are prices in balance
among themselves; some are always relatively
depressed. Besides, the freezing process would
ignore the circumstance that, according to all
experience during the World War and to recent
experience of the Office of Price Administration,
successful price fixing is always dependent upon
agreement reached through consultation with the
industries concerned. Studies of all of the experience in the previous World War period cause us
to believe that too much emphasis cannot be placed
on this point.
Neither is the standard of the Bituminous Coal
Act for maximum price acceptable for general application; for it adopts the price needed by the
highest-cost producer whose production of an
article is required,—i.e., the price necessary for




the so-called marginal producer. Such a standard
means too large profits for low-cost producers.
Like the proposal as a standard of the price necessary for "bulk-line" producers, it would involve
enormous activities in ascertainment of costs,—activities which during the World War the Federal
Trade Commission performed for the Price-Fixing Committee of the War Industries Board, and
which the present Office of Price Administration
seems to intend to perform for itself with a fastgrowing staff. No adaptation of the cost-plus
formula, long discarded in government contracts
because of the incentive to increase costs, can
avoid the faults of that formula.
Bearing in mind the circumstances under which
we believe price controls have their proper place,
—i.e., where government interventions in the
emergency have taken part of the supply and it is
necessary to replace the market influences of the
withdrawn part with action that will prevent abnormal prices for the portion of the supply remaining free,—we conclude the logical standard for
Congress to place in legislation is the price that
could reasonably be expected to prevail under conditions of production existing at the time if the
intervention of government had not occurred.
This standard for price fixing Congress can
place beyond any possibility of misunderstanding
by adding definitions of the extent and conditions
under which control is to be imposed. These definitions could be in terms of price relationships as
shown by the price data comprehensively collected
and published weekly and monthly, by a federal
agency of long experience, the Bureau of Labor
Statistics, and now utilized by other federal agencies such as the Board of Governors of the Federal Reserve System. Such data will show immediately any price within a group, and any class related to any other classes, that should have attention. If any prices that are needed are not being
collected, they should be most speedily obtainable
through this agency. There should always be opportunity for those who are interested to show
that other price data are more pertinent.
The standards which we propose would confine
price control to its proper function and prevent it
from being used for a variety of ulterior projects
sometimes advocated, and which, if undertaken,
should be accomplished by other measures that
are frank and direct in their approach.
(Continued on page 12)

Arguments in the Negative
keeping ihr price level down, not only to facilitate and
enlarge the defeme effort, but also in order that in the
poU <3cir*tw* period the United Stat« may be in a «rone
economic jKH4tu*nf with price levels at low a» possible.
Total drfcnw must contemplate survival when the war u
w t t . A Imr price structure in the post-defem* period is
estrmial if, after the war it won, u t are not Jo lose the
peace to countries with low price levels.
From this point of view Iteration for comprehensU*
ami ml of all prim is the greatest single necessity of the
emergency—far dSciency «n defense« for protect ion of
the people of the count ry from unnecessary suffering, and
for fcafrguarding the mmamic system against dissolution.
This cmrntml, it it argued, must be a ceiling over the
whole price structure, including wages« rents,
farm
prior» up to the parity Irvrl, but no higher. The date for
«hi* ceiling should be pUord as early at is practicable—
Mf, at January h 1941—«n an endeavor to reach a time
when the normal operation of supply and demand can be
*aid to have controlled prices After the ceiltng has been
#ct* »cparatr price *chcdulcs might be adjured upward or
downward by a competent tribunal to cure incidental in*
justice or undue hardship, or to increase production.
Since rvcry price is a mult'ant of the combination of all
mhet prices it it both unjust and impracticable to regulate
a segment of the industrial fabric while exempting or providing ffwial concession* for «rtber segments, At a matter
of ha*ic principle« all otiwtit should be treated alike a*
part of one nation joined in a great emergency and every
segment of our economy—agriculture, labor, business—
should be treated as part* of a single, living. sensitive whole.
Under an crrerall criling fixed by Congress the goal
of a stable, balanced, relationship among all price» is
attained and kept. The price level 11 treated as an organic
whole with only exceptional adjustment* here and there.
In a time of great preparation for war, when sacrifice« are
demanded of everyone, all are entitled to equal government protection. There should be no tampering with
labor's or agriculture*» gains or *ith the statu* of in*
dustry. The statu* quo of all should remain until the
war is ended.
Such a general cciling will he easier to police than
piecr-mral price-fixing. especially if both buyer* and sellers
are punished for violation*. Voluntary cooperation will go
far toward providing all of the policing that is needed.
With fair price-control legislation, with organized committee* of industry, and with state and local council* of
national defense--*all of which operated in 1917-18—
everyone will know what he hat to do and everyone will
do it or be reported.
The above it the tenor of the arguments made for an
overall ceiling.




11

Other Syitrmt vf Price Control
Various systems of price control exist today in many
countries. In differing degrees they embody principles of
selective control and overall control of prices, and some
keep down price* of food to the public by the government
absorbing part of the cost»—i.e., by government subsidies.
Sweden, which is in a difficult economic position, has
-variation* in its newest legislation, which went into effect
on July J. Voluntary agreements to keep down prices
art encouraged, and to that end cartels are viewed with
favor. A price-control board is authorised to require that
all prices be notified to it, and it may set a period of advance notice to it of intention to change a price—a notice
of a week or a month, as it may consider appropriate.
The board may then permit an advance if it finds that
there it justification in an increase in variable costs, provided the level from which the advance is to be made is
found reasonable. But increased scarcity of an article nor
increased unit cost by reason of restricted production does
not appear in itself to justify an increase in price.
Inflation
The first purpose stated in H. R. 5479—S* 1810 is to
preserve the value of the national currency against the
consequences of price and credit inflation. Inflationary
tendencies began to appear in some prices in the spring
of 1941. It was to these prices, «specially for basic raw
materials, that OPA turned its attention. These tendencies
have increased, and without controls the)- will increase
at an accelerating rate as the great expenditures for defense grow in scale and at the same time the goods available for civilian purchase are curtailed or at least do not
increase proportionately with the increased purchasing
power in the hands of the public by reason of the defense
expenditures. Defense expenditures arc now running over
a billion dollars a month, and are on the way to a peak
of at least two billion dollars a month. These expenditures
will largely appear in wages, salaries, dividends, and other
receipts available for trending.
As O P A has pointed out, this great increase in available purchasing power cannot be matched under emergency
conditions by a proportionate increase in the output of
goods for civilian uses. Consequently, it is reasoned, the
task of control in the succeeding months will lie in three
areas,—1) the basic raw materials already under control, 2) many other raw materials where shortages will
develop, and 3 ) a host of semi-finished and finished
goods made from an ever-widening list of materials with
shortages.
That means of enforcement of controls are needed is
insisted by O P M on the ground (Continued on page 13)

Committee Report

12
Price at Source

The price control which we advocate should be
applied at the place at which the government's
intervention occurs. Whether the application is to
a material or a finished product, the control will
thus relate to wholesale prices. This is the point
of efficient price control, both because of the effect
and because of the ease of administration. With
such a control, the distributive processes themselves can be counted upon to keep retail prices
in line because of the necessity of maintaining
volume of business through competition for the
patronage of customers. This was well demonstrated during the World War.
Any attempt to fix prices along the channels of
distribution to retail outlets becomes also a task
of such dimensions as to be forbidding. This task
would not be lessened through use of a licensing*
system, with its widespread intricacies and burdens
and the scope of bureaucratic activities inevitably
involved without any corresponding public advantage. No legislation relating to prices should provide for licensing of retail outlets.

successful, prices fixed in accordance with the policies and standards contained in the law must be
accepted by the industry as possible for its operation in accordance with the policies of the statute.
When prices are reached in this way their observance is so generally assured that enforcement activities by government agencies need be only on a
minimum scale. Advance consultation always removes difficulties.
Committees representative of an entire industry
and acceptable to the agency which deals with
prices seem to come within the ruling made by the
Attorney General in April, 1941. If there should
be found anything in that ruling, or in the antitrust laws, preventing an industry from selecting a
representative committee, acceptable as such to
the agency administering prices, Congress should
include in its legislation a specific correction of
the law.
The Committee recommends that the federal
agency administering price controls should always
enter into prior consultation with a committee
representative of the industry and selected by it.

Agency Used

Cost of Living

To administer price controls Congress should
provide an agency that is capable of acting with
speed and likewise with deliberation. It should at
all times have the widest possible knowledge of
conditions. This combination is usually found in a
body composed of several members, enough to
bring in wide experience and understanding and to
assure deliberation, and not too many for prompt
decisions once the facts are in hand. World-War
experience demonstrates that the agency should be
essentially judicial in its attitude.
We accordingly recommend that Congress provide for a body of five members, to be appointed
by the President and confirmed by the Senate, according to the manner prescribed for all important
federal officials. Members of this board should be
men of such experience and standing that they will
exert wide leadership.

The cost of living should be stabilized through
subjecting its necessary elements to price controls
of the same kind, and in the same manner, as the
prices we have been considering above. In order
that the cost of living may have a definite meaning,
it should be taken as the cost of living for wage
earners and for persons receiving salaries in the
lower range. Even for such persons there are considerable differences, according to place of residence and area. On the basis of data collected
widely and regularly, index numbers, however,
show the general level of the cost of living, and for
its main components. For months that are especially pertinent, and a month in 1917 for purposes
of comparison, these index numbers, with averages
for 1926 as 100, have been:

Industry Committees

June,
1939
Food

.,

68.1
83.1

January,
1941

August,
1941

71.2
83.5
69.7
86.0
84.2
99.3
79.7

78.1
87.8
70.5
88.0
91.0
101.2
83.8

December,
1917
91.3
85.6
61.2
65.5
74.9
69.7
77.4

Electricity and I c e . . . , . 83.2
As we have repeated several times, successful Fuel,
House Furnishings *
price controls require consultation with representa- Miscellaneous
Index for AU Items
, . 78.0
tives of the industries the prices of which are to
be fixed, as they alone know all of the differentials
In comparing some of the figures of 1917 with
that have to be observed ¡n any price. Otherwise, those of recent years it should be remembered that,
an improperly designed price system may stop all for example, rentals of 1917 did not include all of
sales instead of producing stabilization. To be the conveniences of 1941 (Continued on page 14)




Arguments in the Negative
that, otherwise, at least half the articles on which there
are now controls will in the next few months break
through their price ceilings. The position is accordingly
taken that the task of preventing severe inflation can only
be achieved if every price increase in forestalled until it can
be shown to be necessary to promote defense production.
Other

Measures

Taking the point of view that the danger is in general
price distortion caused by the enormous defense expenditures in sight, the Chairman of the Board of Governors
of the Reserve System has supported taxation as the most
important instrument of government in preventing price
inflation, by taking away excess purchasing power. He
accordingly argues that the most direct way to attack
the inflation problem is through heavy corporate income
and excess-profits taxation, as the surplus funds will thus
be reached "at their source" and before distribution. Individual income taxes, and high excise taxes on durable
goods that compete for materials, also serve to reduce
purchasing power, as well as savings which go into defense
bonds. From this point of view, price controls are next
in importance, followed by monetary and credit measures.
A Board for Administration
The Chamber's Committee recommends a board instead
of an administrator to exercise powers granted in any pricecontrol legislation. Supporters of H.R. 5479—S. 1810
advocate an administrator on the theory that the duties
to be performed will often require speedier and more clearcut action than can be expected from a board. They argue,
too, that there should not be any doubt as to the person
who is responsible for any action that is taken.
Controls for

Wages

The Chamber's Committee advocates controls for wage
levels as for prices. Advocates of H.R. 5479—S. 1810
contend that controls for wages should not be included
in legislation for price controls. They point to other countries in all of which they find prices and wages are dealt
with separately, and on different principles. Wages they
appear to believe should be stabilized through voluntary
agreements reached through collective bargaining.




13

In fact, in the course of about seven months the Labor
Division of O P M has succeeded in bringing about agreements in shipbuilding yards, first on the Pacific Coast
and successively in such yards on the Gulf Coast, the
Atlantic Coast, and the Great Lakes, that there will be
wage stabilization and no strikes for two years. There
are intimations that agreements of a similar kind may
be reached for areas.
In 1917-1918 prices and wages were treated separately.
At the time of the Armistice plans for wage standardization were being considered, labor priorities were coming
into operation, and control of occupations was in prospect.
The usual theory that rising costs of living lead to
increases in wages does not seem to hold good today.
According to available indices, average weekly earnings
in manufacturing industries, reflecting both longer hours
and higher wage rates, have risen much faster than the
cost of living. Besides, in strikes and threatened strikes
for increased wages the cost of living is seldom mentioned.
That these demands for higher wages are continuing
appears in the data of the War Department that bring
down to a recent date the man-hours lost in work on its
defense contracts through strikes. In August, 504,000
man-days were lost, a figure that was exceeded only by
the 522,000 for June and the 527,000 for May. For the
first twenty-two days of September the figure was 266,000.
Termination of the Legislation
The provision in H.R. 5479—S. 1810 undertaking to
keep the legislation in effect for one year after a proclamation by the President or a concurrent resolution of Congress is described by supporters of the bill as an effort
to have the benefits of price controls during the transition
to the posfr-defense period, and to avoid the consequences
of the abrupt dropping of controls that followed soon
after the Armistice of 1918. On the other hand, use of
a definite date for termination, with need for new Congressional action for extension, is said to involve repetition
of all the difficulties attendant upon enactment of any
legislation for price controls, as well as the dangers of
a period without controls between the expiration of legislation and its reenactment.

14

Committee Report

and that the weights given to such items as elec- sponding stabilization of wages. In other words,
tricity and refrigeration in the two periods were the government has an obligation to the public to
different. Wage levels in the later years were also provide offsetting regulation for all disturbances
much higher than in 1917. For example, the union it causes in wage levels. Wage levels should, like
hôurly rates in the building trades were in 1939 controlled prices, be at the point where they would
more than 245% of the average rates of 1917.
stand if, with other present conditions as they are,
Wherever government intervention has dis- the government's interventions and demands for
turbed, or is likely to disturb, prices entering into defense had not occurred.
the cost of living, there should be corresponding
Increasing rates of turnover among employees
offsets through price controls applied at the place by reason of shifts in employment induced by proswhere the intervention occurs. As one element of pects of higher wages elsewhere are becoming so
the cost of living, rent of real property, is within threatening to efficient production as to point to a
the jurisdiction of the states when emergency con- growing need for wage stabilization. In the last
ditions affect rents with a public interest, the fed- 12 months, there has been a steady increase in the
eral agency administering price controls can, after number of workers changing their employment,
consultations corresponding to those with industry the rate now being more than three times the rate
committees, make recommendations to state and of a year ago.
local agencies, which will usually be already conThe Committee consequently recommends that
cerned with situations needing attention.
wage levels should be subjected to the same prinThe Committee recommends that the necessary ciples of control as prices.
elements in the cost of living should be subjected
As a corollary the government has a correspondto the same price controls, and under the same con-ing obligation to discontinue all of its activities
ditions, as have been recommended for industrial that encourage increases in wage rates and to susmaterials and products.
pend for the emergency all of its limitations that
prevent hours of work that are reasonable and will
Wages
add to the production the country so greatly needs.
Because of the importance of wages in all costs
Limitation in Time
of production and distribution, rapidly rising
wages can be disruptive of any controls over prices
Any legislation of the kind we have discussed
for industrial products and any controls of the cost
should have a specified limitation in time. It should
of living. Defense necessities that must be met
should be no more an excuse for the government expire at a stated date. If as that date approaches
bidding higher and higher to obtain workers for emergency conditions persist, Congress can extend
its construction and for operation of its arsenals the legislation to a later expiration date.
The Committee recommends that in any legisand plants than its following the same course in
obtaining its supplies of defense articles, where lation for controls of prices and wages Congress
such a course should not be, and is not, tolerated. should place definite time limitations, reserving to
There should, of course, be proper allowance for itself decision as to any extension.
hardships and inconvenience often associated with
DOMESTIC DISTRIBUTION DEPARTdefense work.
M E N T COMMITTEE,
With the stabilization of industrial prices and
the cost of living we are urging should go correB. F. M C L A I N , Chairman.




Appendix
H. R. 5479—S. 1810

Provisions of the Bill
Subjects of "Price" Orders

Occasion for "Price" Orders

ORDERS may be issued respecting any commodity or material, whether or not related to
defense, and any service in connection with processing, distribution, storage, installation, repair, or
negotiation of purchases or sales, or in connection
with any service establishment. An order may deal
with margins, commissions, fees, or any other
charges, or any allowances. The two express exemptions from orders,—compensation paid by an
employer to any of his employees and rates
charged by a common carrier or other public
utility,—indicate that orders may be issued as to
any of the other elements in the cost of production
and distribution, and in prices. Any existing law
respecting prices, such as the legislation regarding
maximum prices for bituminous coal and the manner in which they are determined, could be superseded.
Services covered by the bill are undefined, and
consequently the term can be construed as extending to credit obtained by distributors or extended
by them to customers, insurance services, storage
services, use of advertising, accounting services,
brokerage services, and any other service except
those received from regulated sources, such as common carriers and public utilities.
To subjects other than those expressly mentioned, other subjects may be added through exercise of power to issue regulations, including interpretative regulations, to which no limits are set.

Whenever any price or charge for any thing or
service covered by the bill threatens to rise in a
manner inconsistent with any one of the stated
purposes of the bill an order may be issued. Stated
purposes include:
Prevention of price or credit inflation,
Prevention of unwarranted increases in prices
and the cost of living,
Prevention of economic disturbances,
Prevention of labor disputes,
Prevention of interference with long-time
commitments for production,
Maximum necessary production without undue profits to low-cost producers.

Other Orders

The subjects of orders other than "price" orders
suggest the extent to which regulation may be
carried; for orders may be directed at—
Any
Any
Any
Any
Any

selling practice,
marketing practice,
inventory practice,
change in form, or
change in quality.

Still more general regulations and orders may
be issued, too, if deemed proper to carry out any
purposes or provisions of the bill, or to prevent
circumvention or evasion.




Direction of Price Orders

Orders respecting prices, charges, and services
may be below the general market, at the general
market, or above the general market. They may
contain differentiations and classifications on any
basis.
Standards

Prices that are fixed are to be maximum, being
in the nature of "ceilings." In addition to effectuating any one of the stated purposes of the bill,
they are to be generally fair and reasonable to
buyers and sellers. Beyond these general objectives, there are no standards fixed by the bill,
although to an extent left discretionary consideration is to be given to the
Price prevailing on July 29, 1941,
Speculative fluctuations,
General increase or decrease in costs of production and transportation,
General increase or decrease in profits earned
by sellers in the year during and subsequent
to the year ending July 29, 1941,
Other factors deemed of general applicability
to the commodity or service.
Notice may be taken of any economic or other
facts.
Respecting agricultural commodities minimum
standards are set, in that there is a prohibition

15

16

Appendix

against a price ceiling for any such commodity
being placed below 110% of its parity price, as
published from time to time by the Secretary of
Agriculture, or below the market price prevailing
on July 29, 1941.
Each regulation or order is to be accompanied
by a statement of the considerations involved in
its issuance.

new ones that may be appointed. Authorities may
be distributed among agencies, bureaus, administrators, or officers, few or many, new or old.
Post-Emergency Period

All powers that can be found in the bill would
continue throughout the emergency, however long,
and would extend for a year beyond the termination
of the emergency, in this post-emergency
Government Buying and Selling
period being available for new, undefined, and unReliance is not placed only in orders and regu- limited purposes,—"to facilitate readjustment to
lations. There could be purchase and sale of any normal conditions."
commodity in any market, including organized
Pre-Existing Contracts
markets and, by virtue of the definition of "commodity," this could extend to buying and selling
An order could be issued under which it would
insurance, storage space, advertising, etc. There be unlawful to sell or deliver a commodity accordcould be entry into any market and its dominance. ing to the terms of an existing contract.
This authority could also be used for subsidies, as
Confidential Information Obtainable
in food distribution, through sale at lower prices
than at the prevailing prices at which purchases
For use in considering orders and regulations,
were made. There could be pooling through pur- any person could be required to supply such inforchases of the whole supply of an article, with pay- mation as is asked, appear to testify and produce
ment to each producer according to his cost of pro- documents, keep records, and make reports.
duction, whether low or high, and sale at the
Any information so obtained may be kept conweighted average, with quantities rationed to fidential or published as the administrative agency
users. There could also be duplication of the oper- may in its judgment decide as being in accordance
ations possible to such government corporations with the interests of national defense and security.
as the Metals Reserve Company of RFC, in buyProtests
ing the needed production of high-cost producers
at a price over the stabilized price, with absorption
Within 60 days any person subject to an order
of the difference at public expense.
or regulation may file a protest, specifically setting
forth objections, with supporting evidence in writLicensing
ing. After the expiration of 60 days, protest can
A license may be used as a condition of engaging
be filed only on grounds arising thereafter. There
in any transaction with respect to which an order
is no provision for oral argument. Within 30 days
or regulation has been issued. A license may not
there is to be a decision upon the protest.
contain any provision that cannot be prescribed in
an order, etc., under the terms of the bill, and no
Review
licenses may be required in connection with selling
In the event a protest is denied, or partly denied,
or distributing newspapers, magazines, books, or
the protestant may appeal to a special court of
other printed or written material.
appeal, composed of three or more federal judges
If there is violation of a license, warning is to
designated by the Chief Justice of the United
be sent by registered mail. If there is subsequent
States from district courts and courts of appeal.
violation, the license may be suspended or revoked
after hearing on ten days' notice. Within 30 days The written record made upon the protest will be
thereafter, the licensee may file an appeal with the filed in this court, including a statement of maspecial court of appeals mentioned below, with terials of which official notice was taken. No objurisdiction, etc., much as in the case of a protest jections not contained in the protest will be entertained, and any offer of new evidence that could
against an order or regulation.
not be presented in the protest, and is found maNew or Existing Agencies
terial, is to be ordered submitted at the point of
protest.
The special court of appeal is to have
Any of the authorities or discretions may be
delegated to any present agency or officer, or any exclusive jurisdiction to set aside, in whole or in




Appendix
part, or remand. The court may set aside an order
or regulation only as not in accordance with law,
or arbitrary or capricious.
The effectiveness of a judgment setting aside an
order or regulation is to be postponed for 30 days.
Within this period either side may petition the
Supreme Court for review. There will thus be further postponement until the Supreme Court takes
action, in denying the petition or upon review of
the case.
Prosecutions

17
Exemptions

Any buyer bringing suit as above is to be exculpated from any liability on account of the transaction.
Any person who buys a commodity for use or
consumption other than in the course of trade or
business is not to be held to have violated any of
the terms of the bill.
Nothing in the bill is to be construed as requiring any person to sell any commodity.

Quarterly Reports
Prosecutions for violations of orders and reguNot less frequently than each 90 days a report
lations are to be in the federal district courts. As
the special court of appeal is given exclusive power on operations under the terms of the bill is to be
to consider the validity of any order or regulation, sent to Congress.
there is a question if it is intended to prevent a
Rents
defendant prosecuted for a violation from raising
For purposes of simplicity the above analysis
an issue as to validity of the order or regulation.
has been confined to "commodities." The bill deals
with rents in "defense-rental areas" in much the
Injunctions
same manner as prices of commodities so far as
Application may be made to "the appropriate rents were, subsequent to August 31, 1940, at a
court" for an order enjoining violation of any rate of $15 a month or less and which, at the time
order or regulation, or for enforcing compliance. action is taken, are at least 10% higher than the
figure on August 31, 1940.
Civil Suits
For the purpose of control of such rents, a
Any person buying a commodity from a seller defense-rental area may be designated within any
that violates a price order may bring suit, in fed- state, and recommendations made for stabilization
eral or state courts, for $50 or treble the excess in or reduction. If within 60 days the recommendaprice, whichever is the greater amount, plus rea- tions have not been put into effect by state or local
sonable attorneys' fees and costs. If the buyer does regulation, a federal order or regulation is to be
not bring suit within six months, suit may within issued. In this procedure, recommendations of
the next six months be brought on behalf of the state and local officials concerned with housing or
United States. Any such suit will bar any subse- rental conditions are to be considered, so far as
practicable.
quent suit based on the same transaction.




H. R. 5 4 7 9

In the House of Representatives
August 1 , 1 9 4 1
Mr. Steagall introduced the following bill; which was referred to the Committee on Banking and
Currency

A BILL
To further the national defense and security by checking
speculative and excessive price rises, price dislocations,
and inflationary tendencies, and for other purposes.
TITLE I—GENERAL PROVISIONS AND
AUTHORITY
Purposes: Time Limit

defense and security ; except that as to offenses committed,
or rights or liabilities incurred, prior to the expiration of
one year from the date of such declaration,, the provisions of this Act and such regulations, orders and requirements, shall be treated as still remaining in force
for the purpose of sustaining any proper suit, action, or
prosecution with respect to any such right, liability, or
offense. During such one-year period the authority
granted by this Act to the President shall be exercised in
such manner as to facilitate readjustment to normal
conditions.

SECTION 1. (a) It is hereby declared that it is in the
interest of the national defense and security and the
purposes of this Act are ( 1 ) to preserve the value of the
national currency against the consequences of price and
credit inflation; ( 2 ) to stabilize prices and to prevent
speculative, unwarranted, and abnormal increases in prices
and rents; ( 3 ) to prevent economic disturbances, labor
Prices, Rents, and Market Practices
disputes, burdens upon interstate and foreign commerce,
interference with the effective use of the Nation's reSECTION 2. (a) Whenever in the judgment of the
sources for defense, and impairment of national unity
and morale, which would result from unwarranted in- President the price or prices of a commodity or comcreases in prices, rents, and the cost of living; ( 4 ) to modities have risen or threaten to rise to an extent or
eliminate and prevent profiteering, hoarding, manipula- in a manner inconsistent with the purposes of this Act,
tion, speculation, and other disruptive practices resulting he shall by regulation or order establish such ceiling or
from abnormal market conditions or scarcities caused by ceilings as in his judgment will be generally fair and
or contributing to the national emergency; (5) to prevent equitable to buyers and sellers of such commodity or comprospects of price rises from encouraging the accumulation modities and will effectuate the purposes of this Act.
and withholding of materials needed for national defense, So far as practicable, in establishing any ceiling for any
and from impeding long-term commitments for produc- specified commodity, the President shall ascertain and
tion; ( 6 ) to assure that defense appropriations are not give due consideration to the prices prevailing for the
dissipated by excessive prices; ( 7 ) to obtain the maximum commodity on or about July 29, 1941, and shall make
necessary production without undue profits to low-cost adjustments for such relevant factors as he may determine
producers; (8) to protect persons with relatively fixed and deem to be of general applicability in respect of the
and limited incomes, investors, and persons dependent on commodity, including the following: Speculative fluctualife insurance, annuities, and pensions, from undue im- tions, general increases or decreases in costs of producpairment of their standard of living; (9) to prevent a post- tion and transportation, and general increases or decreases in profits earned by sellers of the commodity,
emergency collapse of values, and the reappearance of
price and cost disparities for farmers and other primary during and subsequent to the year ending July 29, 1941.
producers; and (10) to provide procedures for admin- Every regulation or order establishing any ceiling under
istration and review which will fairly protect the interests this subsection shall be accompanied by a statement of
of those subject to this Act, without endangering the the considerations involved in the issuance of such regudominant public interest in the accomplishment of the lation or order.
foregoing purposes.
(b) Whenever in the judgment of the President such
(b) The provisions of this Act, and all regulations, action is necessary or proper in order to effectuate the purorders, and requirements thereunder, shall terminate upon poses of this Act, he shall issue declaration designating
the expiration of one year from the date of a declaration defense-rental areas and defense-area housing accommodaby the President, or the Congress by concurrent resolu- tions, and setting forth the necessity for, and recommendation, that the further continuance of the authority granted tions with reference to, the stabilization or reduction of
by this Act is not necessary in the interest of the national rents for defense-area housing accommodations within




Appendix

19

each area so designated. If within sixty days after the
issuance of any such recommendations rents for any such
accommodations have not in the judgment of the President
been stabilized or reduced by State or local regulation,
or otherwise, in accordance with the recommendations,
the President shall by regulation or order establish such
ceiling or ceilings for such accommodations as in his
judgment will effectuate the purposes of this Act. In
designating defense-rental areas or defense-area housing
accommodations, in prescribing ceilings for such accommodations, and in selecting persons to administer such
ceilings, the President shall, to such extent as he determines to be practicable, consider any recommendations
which may be made by State and local officials concerned
with housing or rental conditions in any defense-rental area.

( c ) The provisions of section 2 of this Act shall not
be construed to authorize any action contrary to the provision and purposes of this section.

(c) Any ceiling or ceilings may be established in such
form and manner, may contain such classifications and
differentiations, and may provide for such adjustments,
as in the judgment of the President are necessary or proper
in order to effectuate the purposes of this Act. The
President may establish a ceiling or ceilings below the
general market prices for the commodity or commodities,
or below the rent or rents, as the case may be, in effect
at the time of the establishment of such ceiling or ceilings.

(b) It shall be unlawful for any officer or employee
of the Government to disclose, otherwise than in the course
of official duty, any information obtained under this Act,
or to use any such information for personal benefit.

( d ) Whenever in the judgment of the President such
action is necessary or proper in order to effectuate the
purpose of this Act, he may, by regulation or order,
regulate or prohibit, with respect to any commodity,
speculative or manipulative practices, selling, marketing,
or inventory practices (including practices relating to
changes in form or quality), hoarding or other practices,
which in his judgment are equivalent to or are likely to
result in price increases inconsistent with the purposes of
this Act.
(e) Whenever in the judgment of the President such
action is necessary or proper in order to effectuate the
purposes of this Act, he may, on behalf of the United
States, without regard to any provision of law requiring
competitive bidding, buy, store, or use, or sell at public
or private sale, any commodity, upon such terms as he
shall deem necessary to obtain the maximum necessary
production of marginal or high-cost producers, or to prevent price increases inconsistent with the purposes of this
Act. The proceeds of any sale under this subsection shall
be used as a revolving fund for carrying out the provisions
of this subsection.
( f ) No power conferred by this section shall be construed to authorize any action contrary to the provisions
and purposes of section 3.

Agricultural Commodities
SECTION 3. (a) No ceiling shall be established for any
agricultural commodity below ( 1 ) 110 per centum of
the parity price or comparable price for such commodity,
as determined and published by the Secretary of Agriculture, or ( 2 ) the market price prevailing for such commodity on July 29, 1941.
( b ) For the purposes of this Act, parity prices for
agricultural commodities shall be determined and published
by the Secretary of Agriculture as authorized by law.




Prohibitions
SECTION 4. (a) It shall be unlawful, regardless of
any agreement, lease, or other obligation heretofore or
hereafter entered into, for any person to sell or deliver
any commodity, to demand or receive any rent, or otherwise to do or omit to do any act, in violation of any
regulation, order, or other requirement, under this Act,
or to offer or agree to do any of the foregoing: Provided,
that nothing in this Act shall be construed to require any
person to sell any commodity or to offer any accommodations for rent.

TITLE n—ADMINISTRATION AND
ENFORCEMENT
Administration: Personnel
SECTION 201. (a) The President may, from time to
time, issue such regulations and orders as he may deem
necessary or proper in order to carry out the purposes
and provisions of this Act, and to prevent the circumvention or evasion thereof.
(b) Wherever reference is made in this Act to the
President, such reference shall include, in addition to the
President, any department, agency, officer, or employee,
designated or appointed by the President for the execution
of any power, authority, or discretion vested in the President by this Act. Industrial, price, and other experts
appointed under this Act may be appointed without regard
to the civil-service laws.

Obtaining Information
SECTION 202. (a) The President may make such studies and investigations, and obtain or require the furnishing
of such information under oath or affirmation or otherwise, as he deems necessary or proper to assist him in prescribing any regulation or order under this Act, and in
the administration and enforcement of this Act, and
regulations and orders thereunder. For such purposes
the President may administer oaths and affirmations, may
require by subpena or otherwise the attendance and testimony of witnesses and the production of documents at
any designated place, may require persons to permit the
inspection and copying of documents, and the inspection
of inventories, and may, by regulation or order, require
the making and keeping of records and other documents
and the making of reports. No person shall be excused
from complying with any requirement under this section
because of his privilege against self-incrimination, but the
immunity provisions of the Compulsory Testimony Act
of February 11, 1893 ( U . S. C., 1934 edition, title 49,
sec. 46), shall apply with respect to any individual who
specifically claims such privilege.

Appendix

20

( b ) The President shall not publish or disclose any
information obtained under this Act that he deems confidential unless he determines that the withholding thereof
is contrary to the interest of the national defense and
security.

Procedure
SECTION 203. (a) Regulations or orders establishing
any ceiling or ceilings may be issued after such inquiry
as the President deems necessary or proper. Within a
period of sixty days after the issuance of any such regulation or order any person subject to the provisions thereof
may, in accordance with regulations to be prescribed by
the President, file a protest specifically setting forth objections to such regulation or order and affidavits or other
written evidence in support of such objections. At any
time after the expiration of such sixty days any person
subject to the provisions of such regulation or order may
file such a protest based solely on grounds arising after
the expiration of such sixty days. Statements in support
of any such regulation or order may be received and incorporated in the transcript of the proceedings at such
times and in accordance with such regulations as may
be prescribed by the President. Within a reasonable time
after the filing of any protest under this subsection, but
in no event more than thirty days after such filing or
ninety days after the issuance of the regulation or order
in respect of which the protest is filed, whichever occurs
later, the President shall either grant or deny such protest
in whole or in part, notice such protest for hearing, or
provide an opportunity to present further evidence in
connection therewith.
( b ) In any proceedings under this Act the President
may take official notice of economic and other facts, including facts found by him as a result of action taken under
section 202, and may limit such proceedings to the filing
of affivadits or other written evidence, or the filing of briefs.

Review
SECTION 204. (a) Any protestant who is aggrieved
by the denial or partial denial of his protest, may, within
thirty days after such denial, file a complaint with the
emergency court of appeals, created pursuant to subsection ( c ) , praying that the regulation or order protested be set aside in whole or in part. A copy of such
complaint shall forthwith be served on the President who
shall certify and file with such court a transcript of the
proceedings in connection with the protest which shall
include a statement of the materials of which the President
has taken official notice. Upon the filing of such transcript the court shall have exclusive jurisdiction to affirm
or set aside such regulation or order, in whole or in part,
or to remand the proceeding: Provided, that the regulation or order may be modified or rescinded by the President at any time notwithstanding the pendency of such
complaint. No objection to any regulation or order, and
no evidence in support of any objection thereto, shall be
considered by the court, unless such objection shall have
been set forth by complainant in the protest or such evidence shall be contained in the transcript. If application




is made to the court by either party for leave to introduce
additional evidence which was either offered to the President and not admitted, or which could not reasonably
have been offered to the President, and the court determines that such evidence is material, the court shall
order the evidence to be presented to the President. The
President shall promptly receive the same, and such other
evidence as he deems necessary or proper, and thereupon
he shall certify and file with the court a transcript thereof,
and any modification made in the regulation or order as
a result thereof, except that on request by the President,
any such additional evidence may be presented directly
to the court.
( b ) No such regulation or order shall be set aside, in
whole or in part, unless the complainant establishes to
the satisfaction of the court that the regulation or order
is not in accordance with law, or is arbitrary or capricious.
The effectiveness of a judgment of the court setting aside
in whole or in part any such regulation or order shall be
postponed until the expiration of thirty days from the
entry thereof, except that if a petition for a writ of
certiorari is filed with the Supreme Court under subsection
( d ) within such thirty days, the effectiveness of such
judgment shall be postponed until an order of the Supreme
Court denying such petition becomes final, or until other
final disposition of the case by the Supreme Court.
( c ) There is hereby created a court of the United
States to be known as the Emergency Court of Appeals,
which shall consist of three or more judges to be designated
by the Chief Justice of the United States from judges of
United States district courts and courts of appeals. The
Chief Justice of the United States shall designate one of
such judges as chief judge of the Emergency Court of
Appeals, and may, from time to time, designate additional
judges for such court and revoke previous designations.
The chief judge may, from time to time, divide the court
into divisions of three or more members, and any such
division may render judgment as the judgment of the
court. The court shall have the powers of a district court
with respect to the jurisdiction conferred on it by this
Act, except that it shall exercise its powers and prescribe
rules governing its procedure in such manner as to expedite the determination of cases of which it has jurisdiction under this Act. The court shall have a seal, hold
sessions at such places as it may specify, and appoint a
clerk and such other employees as it deems necessary
or proper.
( d ) Within thirty days after entry of a judgment,
interlocutory or final, by the Emergency Court of Appeals,
including a judgment under section 205 ( c ) ( 2 ) , a
petition for a writ of certiorari may be filed in the Supreme
Court of the United States, and thereupon the judgment
shall be subject to review by the Supreme Court in the
same manner as a judgment of a circuit court of appeals
as provided in section 240 of the Judicial Code, as amended
( U . S. C., 1934 edition, title 28, sec. 347). The Supreme
Court shall expedite the disposition of all causes filed
therein pursuant to this subsection. The Emergency Court
of Appeals, and the Supreme Court upon review of judg-

Appendix
ments of the Emergency Court of Appeals, shall have
exclusive jurisdiction to determine the validity of any
ceiling regulation or order, and of the provisions of this
Act authorizing such regulation or order. Except as provided in this section, no court, Federal, State, or Territorial, shall have power to consider such validity» or to
stay, restrain, enjoin, or set aside, in whole or in part,
any such provision of this Act, or any provision of any
such regulation or order.

21

this Act: Provided, that no such license may be required
as a condition of selling or distributing newspapers,
periodicals, books, or other printed or written material*

( 2 ) Whenever in the judgment of the President a
person has violated any of the provisions of a license
issued under this subsection a warning notice shall be
sent by registered mail to such person. If the President
finds, after opportunity for hearing upon at least ten
days' notice, that warning notice has been sent and that
a violation of any of the provisions of a license has occurred
Enforcement
subsequent to the receipt of such warning notice, he may
SECTION 205. (a) Whenever in the judgment of the by order suspend or revoke such person's license. Such
President any person has engaged or is about to engage suspension or revocation shall not confer any immunity
in any acts or practices which constitute or will constitute from the other provisions of this section. Within thirty
a violation of this Act, or of any regulation, order, or re- days after issuance of such order of suspension or revocaquirement thereunder, he may make application to the tion the licensee may file a petition to review such action
appropriate court for an order ^ enjoining such acts or in the Emergency Court. Thereupon the President shall
practices, or for an order enforcing compliance with this certify and file with such court a transcript of the record
Act or such regulation, order, or requirement^ and upon upon which the order complained of was entered. Upon
a proper showing a permanent or temporary injunction, the filing of such transcript the court shall have exclusive
restraining order, or other order shall be granted without jurisdiction to affirm or set aside, in whole or in part, the
bond.
suspension or revocation of the license, or to remand the
proceeding: Provided, that the President may modify or
( b ) If any person selling a commodity violates a regu- rescind the requirement of the license or the suspension
lation or order prescribing a ceiling or ceilings, the person or revocation at any time notwithstanding the pendency
who is the buyer of the commodity may either bring suit of the petition to review. The court may, upon good cause
to rescind the sale, or bring an action for $50 or treble shown, stay the effectiveness of the suspension or revocathe amount by which the consideration exceeded the tion. The revocation or suspension shall be affirmed if
applicable ceiling, whichever is the greater, plus reason- the finding of violation after receipt of warning notice
able attorneys' fees and costs as determined by the court. is supported by substantial evidence in the record.
No person who in good faith brings suit or action under
( d ) Any person who willfully violates any provision
this subsection within six months after delivery is completed shall be subject to punishment, with respect to the of this Act or any regulation, order, or requirement
transaction constituting the basis of such suit or action, thereunder, and any person who willfully falsifies in any
and no person who buys a commodity for use or con- material respect a document or report required to be kept
sumption other than in the course of trade or business or filed thereunder, shall, upon conviction thereof, be
shall be subject to punishment, for conspiracy to violate, fined not more than $5,000, or imprisoned for not more
or for aiding and abetting a violation of, any provision than one year, or both. Whenever the President has
of this Act or any regulation or order thereunder. If the reason to believe that any person is liable to punishment
buyer fails to bring such suit or action in good faith under this subsection, he may certify the facts to the
within six months after delivery is completed, the Pres- Attorney General, who may, in his discretion, cause apident may, within the succeeding six months, bring such propriate proceedings to be brought.
action under this subsection on behalf of the United
(e) The district courts shall have jurisdiction of violaStates. Institution of such action by the President within tions of this Act and of regulations, orders, or requiresuch succeeding six months or institution by the buyer ments thereunder, and concurrently with State and Terof a suit or action in good faith, shall bar subsequent ritorial courts, of all civil proceedings to enforce any
institution of any suit or action with respect to the same liability or duty created by, or to enjoin any violation
transaction. Any suit or action under this subsection of, this Act or any regulation, order, or requirement theremay be brought in any court of competent jurisdiction, under. Such civil proceedings and any criminal proceedings
and shall be instituted within one year after delivery is may be brought in any district in which any act or transcompleted. For the purposes of this subsection and sub- action constituting the violation occurred. Any such civil
section ( c ) the payment or receipt of rent shall be deemed proceedings may also be brought in the district in which
the buying or selling of a commodity as the case may be. the defendant resides or transacts business, and process
in such cases may be served in any district wherein the
( c ) ( 1 ) Whenever in the judgment of the President defendant resides or transacts business or wherever the
such action is necessary or proper in order to carry out defendant may be found. No costs shall be assessed against
the provisions and purposes of this Act, he may by regu- the United States Government in any proceeding under
lation or order issue or require a license as a condition this Act.
of engaging in any transaction with respect to which a
( f ) t N o person shall be held liable for damages or
regulation or order may be issued under this Act. No
such license shall contain any provision which could not penalties in any Federal, State, or territorial court, on
be prescribed by regulation, order, or requirement under any grounds for or in respect of anything done or omitted




Appendix

22

to be done in good faith pursuant to any provision of this
Act or any regulation, order, or requirement thereunder,
notwithstanding that subsequently such provision, regulation, order, or requirement may be modified, rescinded,
or determined to be invalid. The President may intervene
in any suit or action wherein a party relies for ground of
relief or defense upon this Act or any regulation, order,
or requirement thereunder.

TITLE HI—MISCELLANEOUS
Quarterly Report
SECTION 301. The President from time to time, but
not less frequently than once every ninety days, shall transmit to the Congress a report of operations under this
Act. If the Senate or the House of Representatives is
not in session, such reports shall be transmitted to the
Secretary of the Senate, or the Clerk of the House of
Representatives, as the case may be.

(e) The term "defense-area housing accommodations"
means housing accommodations within any defense-rental
area which are designated by the President, and ( 1 )
which were, subsequent to August 31, 1940, rented or
offered for rent at a rate of $15 per room per month, or
less, and which at the time of such designation are being
rented or offered for rent at a rate of 10 per centum or
more, in excess thereof; or (2) which are comparable in
rental value to any accommodations referred to in clause
(i)( f ) The term "person" includes an individual, corporation, partnership, association, or any other organized
group of persons, or legal successor or representative of
the foregoing, and includes the United States or any
agency thereof, or any other government, or any of its
political subdivisions, or any agency of any of the foregoing: Provided, that no punishment by fine or imprisonment provided by this Act shall apply to the United States,
or to any such government, political subdivision, or agency.

(a) The term "sale" includes sales, dispositions, exchanges, leases, and other transfers, and contracts and
offers to do any of the foregoing. The terms "sell,"
"selling," "seller," "buy," and "buyer," shall be construed
accordingly.

( g ) The term "ceiling," as applied to prices of commodities means the maximum consideration which may
be demanded or received for such commodities, and as
applied to rents, means the maximum consideration which
may be demanded or received for the use of defense-area
housing accommodations. Ceilings may be formulated in
terms of prices, rents, margins, commissions, fees, or other
charges, or allowances.

(b) The term "price" means the consideration demanded or received in connection with the sale of a
commodity.

(h) The term "documents" includes records, books,
accounts, correspondence, memoranda, and other documents, and drafts and copies of any of the foregoing.

( c ) The term "commodity," in addition to commodities, articles, products, and materials, includes services rendered in connection with the processing, distribution, storage, installation, repair, or negotiation of purchases or sales, or a commodity, or in connection with
the operation of any service establishment: Provided,
that nothing in this Act shall be construed to authorize
the regulation of ( 1 ) compensation paid by an employer
to any of his employees, or ( 2 ) rates charged by any common carrier or other public utility.

(i) The term "district court" means any district court
of the United States, and the United States Court for
any Territory.

Definitions
SECTION 302. As used in this Act—

( d ) The term "defense-rental area" means any area
designated by the President as an area where defense
activities have resulted or threaten to result in a shortage
of rental housing accommodations.




Separability

SECTION 303. If any provision of this Act or the application of such provision to any person or circumstances
shall be held invalid, the validity of the remainder of
the Act and the applicability of such provision to other
persons or circumstances shall not be affected thereby.

Short Title
SECTION 304. This Act may be cited as the "Emergency Price Control Act of 1941."

ing 25 members or less is entitled to one delegate and for each 200 additional members in
excess of 25 one additional delegate, but no
organization is entitled to more than ten delegates.] N o vote shall be valid unless received
by the Secretary within 45 days of the date of
the mailing of the pamphlet. In connection
with its vote each organization member may
file such explanation, comment, or opinion as
it may desire.
In forwarding the pamphlet it shall be the
duty of the Secretary to advise each organization member of the date on which the right to
register votes expires.
SECTION 9. If before the expiration of 45
days from the date the pamphlet was sent out
votes representing more than two-thirds of the
voting strength of the organization membership
are registered in favor of the propositions submitted or any of them, the Secretary shall immediately certify that fact to the Board of Directors. Thereupon, the propositions so approved shall be recorded as having been adopted
by the Chamber and it shall be the duty of the
Board of Directors to take such steps as may be
necessary to make effective the action taken.
If at the expiration of 45 days one-third of
the voting strength of the Chamber has been
recorded and two-thirds of the vote thus cast
representing at least twenty (20) states is in
favor of the propositions submitted or any of
them, the Secretary shall so certify to the Board
of Directors. Thereupon the proposition so
approved shall be recorded as having been
adopted by the Chamber and it shall be the duty
of the Board to make effective the action taken.

for consideration at the annual meeting a question which has not been submitted in advance
by mail as hereinbefore provided for, but such
a question shall not be considered if one-third
of the delegates present object thereto, and its
submission by mail as hereinbefore provided for
shall be ordered on the recording of a twothirds vote in favor of that method of procedure.
SECTION 12. A C T I O N A T M E E T I N G ,
(a) On all questions before a meeting of this
Chamber on which a vote is taken viva voce,
or by division, each duly accredited delegate
from an organization member shall be entitled
to one vote in person. A yea and nay vote may
be ordered on any question upon demand of
one-fourth of the delegates present officially representing such organization members and on
such ballot only the votes of said members shall
be counted. On all yea and nay votes each organization member shall be entitled to as many
votes as there are delegates present representing
said member, subject to the provisions of Article
VI, Section 3. All yea and nay votes shall be
fully recorded and published in the proceedings.
An affirmative vote of two-thirds shall be necessary to carry the approval of the Chamber of
Commerce of the United States of America
upon any proposition or resolution which may
appear upon the official program or be added
thereto as provided for by these By-Laws: Provided, That such a vote shall be void and of
no effect unless the attendance registered at the
meeting shall represent one-third of the voting
strength of the Chamber from at least twenty
(20) states.

(b) The list of questions to be considered
SECTION 10. On a question submitted to ref- at each annual meeting shall be mailed to each
erendum no organization member found to have member at least 30 days in advance of such
voted with the minority shall be deemed to meeting.
impair its standing in this Chamber by adher(c) N o question shall be received from an
ing to its position or by continuing its efforts
organization
member for submission to the
in support thereof.
Chamber at the annual meeting within 40 days
SECTION 11. Upon approval by the Council of the date of said annual meeting, except in
or Board of Directors a member may be per- case of emergency and unless by a two-thirds
mitted by petition to place upon the program vote of the Board of Directors.




October ¿5, 19A1»

Mr» Albert "ft. Hawkes, President,
Chàmber ôf Commerce of the United States,
Washington, D. C.
My dear Mr. Hawkes:
This i s t o thank you f o r your l e t t e r of October 15
enclosing a copy of the referendum which the Chamber of Commerce i s sending to i t s constituent organizations in connection with the pending price control l e g i s l a t i o n . I was
interested t o have a copy of y oui* referendum and appreciate
your courtesy in sending i t to me.
It seems t o me that there w i l l be no d i f f i c u l t y in
forecasting the unfavorable reaction that such a referendum
w i l l almost certainly e l i c i t , since i t i s cast in a way t o
bring out opposition to the pending measure, which I supported
in my testimony beforè the Banking and Currency Committee of
the House. Similarly, I do not agree that price control l e g i s lation should be administered by a board of f i v e , and would
i n f i n i t e l y prefer to place the responsibility in one administrat o r , giving him considerable discretionary latitude, rather than
attempting to f i x too rigidly the scope and terms of his authority*
To include within this authority power t o f i x wages, however,
seems t o me t o be t o t a l l y unrealistic and impractical.
I Cannot help but f e e l that an impartial referendum
would in the end add t o the Chamber1s prestige.
Sincerely yours,

M.

ET:b




Eccles,
Chairman.