The full text on this page is automatically extracted from the file linked above and may contain errors and inconsistencies.
1946 EXTENSION OF THE EMERGENCY PRICE CONTROL
AND STABILIZATION ACTS OF 1942, AS AMENDED
HEARINGS
BEFORE
THE
COMMITTEE ON BANKING AND CURRENCY
UNITED STATES SENATE
S E V E N T Y - N I N T H
C O N G R E S S
SECOND SESSION
ON
S. 2028
A BILL TO A M E N D THE E M E R G E N C Y PRICE CONTROL
ACT OF 1942, AS A M E N D E D , A N D THE STABILIZATION ACT OF 1942, AS A M E N D E D ,
A N D FOR OTHER PURPOSES
VOLUME 1
APRIL 15, 16, 17, 18, 22, 23, 24, 25, 26, 29, 30,
A N D MAY 1, 1946
Printed for the use of the Committee on Banking and Currency
UNITED
STATES
GOVERNMENT PRINTING
85721
OFFICE
W A S H I N G T O N : 1946
C O M M I T T E E ON BANKING AND
CURRENCY
R O B E R T F. W A G N E R , New YorK, Chairman
C A R T E R GLASS, Virginia
A L B E N W . B A R K L E Y , Kentucky
J O H N H . B A N K H E A D 2D, Alabama
G E O R G E L. R A D C L I F F E , Maryland
S H E R I D A N D O W N E Y , California
A B E M U R D O C K , Utah
E R N E S T W . M c F A R L A N D , Arizona
G L E N H. T A Y L O R , Idaho
J. W I L L I A M F U L B R I G H T , Arkansas
H U G H B. M I T C H E L L , Washington
E. P. C A R V I L L E , Nevada
DAVID
C H A R L E S W . T O B E Y , New Hampshire
R O B E R T A. T A F T , Ohio
H U G H A. B U T L E R , Nebraska
A R T H U R C A P P E R , Kansas
C. D O U G L A S S B U C K , Delaware
E U G E N E D . M I L L I K I N , Colorado
B O U R K E B. H I C K E N L O O P E R , Iowa
H O M E R E. C A P E H A R T , Indiana
D ELM AN, Clerk
PHILIP LEVY,
II
Counsel
CONTENTS
Statement of—
Achenbach, Lloyd, Cedar Rapids, Iowa
Anderson, Hon. Clinton, Secretary of Agriculture, Washington, D.C_
Carey, James B., secretary-treasurer, Congress of Industrial Organizations
I
Carpenter, Cliff D., president, Institute of American Poultry Industries
Cheney, Roy A., president, Underwear Institute
Colgan, Richard A., Jr., executive vice president, National Lumber
Manufacturers Association
Conover, Julian D., secretary, American Mining Congress, Washington, D. C
1
Benjamin, Earl W., president, National Poultry, Butter, and Egg
Association, and executive representative of the Washington Cooperative Farmers' Association of the State of Washington, 11 Park
Place, New York, N. Y
Besse, Arthur, president, National Association of Wool Manufacturers.
Bilharz, O. W., president, Tri-State Zinc and Lead Ore Producers
Association, Picher, Okla., and president of the Bilwil Mining Co.,
Baxter Springs, Kans
Bowles, Chester, Director, Office of Economic Stabilization, V/ashington, D. C
Boyd, William R., chairman, American Petroleum Institute
Boyle, Douglas, consultant to the American Hotel Association, representing J. E. Frowlev, president of the American Hotel Association _ _
Devereaux. F. R., vice president, Underwear Institute; president,
Oneida Knitting Mills, Utica, N. Y
Englar, George M., president, National Apartment Owners Association, Baltimore, Md
Foreman, H. E., managing director, the Associated General Contractors of America, Inc., Washington, D. C
Frowley, J. E., president, American Hotel Association
Gaumnitz, E. W., executive secretary, National Cheese Institute, Chicago, 111
Gent, Ernest V., secretary, American Zinc Institute, Inc
Corsica, Bernard, member of Local 1272, United Steel Workers,
Jones & Laughlin Corp., South Side Works, Pittsburgh, Pa
Goss, Albert S., National Grange
Green, William, president, American Federation of Labor, Washington, D. C
Groh, Mrs. Louise, Red Bank, N. J
Hallo nan, Walter S., chairman, special committee, American Petroleum Institute, Pittsburgh, Pa
Haynie, R. G., vice president, Wilson & Co., Inc., Chicago, 111
Heflebower, R. B., economic adviser to the Deputy Administrator,
Office Price Administration, Washington, D. C
Holman, Charles W., secretary, the National Cooperative Milk Producers' Federation, Washington, D. C
Howe, D. K., president, American Butter Institute, Omaha, Nebr_._
Hunter, Frank, president, Hunter Packing Co., appearing on behalf
of the American Meat Institute, accompanied bv Robert Eggert and
R. C. Haynie
I
Kelly, William J., president, Machinery and Allied Products Institute,
Chicago, 111
Kerr, Hon. Robert S., Governor of the State of Oklahoma
Kranis, Jack, chairman of a committee representing small business,
labor, and consumers, New York, N. Y
HI
Page
639
1043
573
375
348
699
436
373
275
463
6, 31
570
388
229
969
228
1017
842
479
609
673
779
644
560
1114
524
723
846
1089
209
1083
614
IV
CONTENTS
Statement of—Continued
Page
LeSauvage, George R., chairman, Government relation committee of
the National Restaurant Association
382
Lieberman, Jerome price executive, Office of Price Administration,
Washington, D. C
348
Michl, H. E., economist, Cotton Textile Institute
966
Miller, Harry L., president, Chester Dairy Supply Co., Chester, Pa__
838
Moore, Harvey W., representing the American Cotton Manufacturers'
Association, Concord, N. C
937
Morrow, Hugh, representing the Merchant Pig-iron Industry
546
Murchison, C. T., president, the Cotton Textile Institute, Inc., New
York, N. Y _ . „
948
Nystrom, Paul H., chairman, central council of National Retail
Association
861
O'Neal, Edward A., American Farm Bureau Federation, Chicago, 111
645
Paterson, Cleat, national legislative representative, American Veterans' Committee
821
Patton, James G., president, National Farmers Union, Denver, Colo__
691
Porter, Paul, OPA Administrator, Washington, D. C
77, 166
Pray, Gordon D., vice president, Globe Knitting Works, Grand
247
Rapids, Mich
Proedehl, John, Philadelphia, Pa
637
Reed, Mrs. James A., president, Donnelly Garment Co., Kansas City,
Mo
534
Ryan, M. O., representing American Hotel Association, Washington,
D. C
1022
Saccocio, John C., member of Local 301, United Electrical, Radio, and
Machine Workers, General Electric Co., Schnectady, N. Y., accompanied by Mrs. John C. Saccocio
'
604
Schmidt, Emerson P., director, department of economic research,
Chamber of Commerce of the United States
495
Sherrard, Glenwood J., chairman, board of directors, American Hotel
Association
985
Todd, Leon, secretary, Associated Poultry and Egg Industries; also
secretary of the National Poultry Producers Federation, Trenton,
N. J
339
Van Arnum, John R., secretary, National League of Wholesale Fresh
Fruit and Vegetable Distributors, Washington, D. C
326
Ware, Dr. Caroline, representing the American Association of University Women and 24 other national organizations
802
Wason, Robert R., National Association of Manufacturers
392
Went worth, W. A., treasurer, Dairy Industry Committee, New York
City
827
Whitlock, Douglas, chairman, advisory board, the Producer's Council,
Inc., Washington 5, D. C
'
301
Wormser, Felix Edgar, secretary, Lead Industries Association
481
Exhibits, statements, letters, etc., submitted for the record—
Abbott Fox Lumber Co., statement
710
Actual prices of commodities for which percentage increases were
shown in Mr. Bowles' statement
9
Aide Calls W^yatt's '46 Aim Impossible, article in the Courier-Journal,
Louisville, Ky
173
American Business Congress, letter
433
American Business Congress, list of officers and directors
931
American Business Congress, New York Citv, telegram bv Heyman
Rothbart
:
J
931
American Hotel Association, statement by Mr. J. E. Frawley
388
American Meat Institute, Chicago 5, 111., New Facts On the Meat
Black Market
1104
American Mining Congress charts:
Chart 1. Basic nonferrous metals—fixed price and subsidies on
lead, copper, and zinc
437
Chart 2. Lead
441
Chart 3. Copper
441
Chart 4. Zinc
442
American Oak Leather Co., letter
1140
; _ _.
Application for price adjustment forms
910
CONTENTS
V
Exhibits, statements, letters, etc., submitted for the record—Continued
Page
Associated General Contractors^ America, Inc., resolution
228
Bill H. R. 6042, and amendment offered by Mr. Gossett
768
BillS. 2028
2
Board of Governors of the Federal Reserve System, statement
415
Buck Privates Association, Washington 4, D. C., letter, creed, and
platform
1154
California State Apartment Conference, resolution
9K3
Chamber of Commerce of the United States of America, statement on
Price Control or Decontrol?
496
Changes in milk production on farms from corresponding months of
previous year, 1945-46, chart
829
Conservation of Tri-State Ore Reserves, summary of booklet
463
Coordinating Committee for Social Work Action Committee of
Allegheny County, etc., letter
776
Crop production reports of the United States Department of Agriculture, table
835
Current land values in 15 States which exceed the 1920 levels, statement
1083
Dairy situation, February-March 1946, by United States Department
of Agriculture, table
830
Department of Commerce statistics furnished by Senator Robert A.
Taft
42
Family food bill, Nos. 1, 2, 3, and 4, by George Hagedorn of N A M - - 396
Farmers Educational and Cooperative Union of America, letter to
Mr. Walter D. Fuller, president, Curtis Publishing Co
696
Folger, Hon. John H., letter to Hon. Kenneth McKellar
766
Gamble Bros., Louisville, Ky., statement
720
Haynie, R. G., charts submitted by;
.
* Chart A
1116
Chart B
1118
Charts Nos. 1, 2, and 3
1123
Chart No. 4
1127
Chart No. 5
1128
Chart No. 6
1129
Chart No. 7
1130
Charts Nos. 8 and 9
1131
Chart No. 10
1133
Chart No. 11
1134
Chart No. 12
1135'
Chart No. 13
1136
Chart No. 14
1137
Chart No. 15
1138
Chart No. 16
1139
Chart No. 17
1142
Chart No. 18
1147
Chart No. 19
1144
Chart No. 20
1149
Horwath & Horwath report on hotel operations in 1944
988
Holmes, Paul B., Johnstown, Pa., letter to Hon. C. Douglass Buck
on radiators
595
Institute of Boiler and Radiator Manufacturers, letter and statement932
Iowa Milk Dealers Association, Inc., telegram
73
Joint OPA Cattle, Hog, Beef, and Pork Advisory Committee, resolution
1080
Kansas Livestock Association, letter to Senator Arthur Capper
1032
Kenny, Hon. Robert W., attorney general, State of California, statement
612
Kranis, Jack:
American Business Congress, telegram
615
Butter and Egg Merchants Association, Inc., telegram
615
Joint meeting of industry, labor, and consumers for the retention
of the OPA
615
League of Women Shoppers, telegram
615
New York Appetizers Association, Inc., telegram
615
United Packinghouse Workers of America, telegrams
614
VI
CONTENTS
Exhibits, statements, letters, etc., submitedior the record—Continued
Pa&e
Lead Industries Association, table on relation of lead prices to domestic lead production
483
Livestock numbers, January 1, 1946, as percentage of January 1, 1945,
table taken from the Dairy Situation
832
Macy, R. H., & Co., Inc., telegram
779
McFarland amendment to S. 2028
456
Merchant Pig-iron Industry, tables and three charts
556
Moffat, W. H., Reno, Nev., letter to Hon. E. P. Carville
1145
National Apartment Owners Association, amendments
983
National Association of Retail Meat Dealers, Inc., Chicago 3, 111.,
letter
1101
National Cooperative Milk Producers Federation, resolutions
754
National Electrical Manufacturers Association, statement by R. L.
White
428
National Farmers Union, resolution
697
National Grange, resolution on inflation
676
National League Distributors, statement
327
National Summary of Business Conditions, by Federal Reserve System, report
870
New Council of American Business, Inc., letter to Hon. Hugh B.
Mitchell---.
346
New Council of American Business, Inc., letter'to New York Times._
581
O'Dwyer, Hon. William, Mayor of New York City, telegrams
436, 603
Office of Economic Stabilization, Washington, D. C., James F. Brownlee letter to Hon. Robert F. Wagner
75
Office of Price Administration document entitled, "The Farmer's
Stake in Price Control," etc
733
Office of War Mobilization and Reconversion, letter from Hon. John
WT. Snyder
3
Oneida Knitting Mills, statement on current costs and ceiling prices
filed in connection with SO 149
233
OPA Administrator Paul A. Porter's statement of the considerations
involved in the issuance of amendment No. 2 to Supplementary
Order No. 142
905
OPA comments on testimony of Messrs. Harvey W. Moore and C. T.
Murchison, etc
1033
OPA Document No. 51161, Part 1305—Administration, SO 142, Adjustment- Provisions for Sales of Industrial Machinery and Equipment
907
OPA Document No. 51562, Part 1305—Administration, SO 142,
Amendment 1, Adjustment Provisions for Sales of Industrial
Machinery and Equipment
906
OPA Document No. 51878, Part 1305—Administration, SO 142,
Amendment 2_ _
884
OPA staff man draws study of bar group
772
Organization Committee, National Postwar Conference, letter from
Walter D. Fuller, chairman
695
Oregon Apartment House Association, Inc., letters and statement
773
Pacific States Butter, Egg, Cheese, and Poultry Association, statement by Joseph B. Danzansky
432
Porter, Paul, OPA Administrator:
Figures on the time lag in each case, tables 1-5
141
List of personnel in the Textile Section of OPA, their background
and experience
—
118
List of 66 industry-wide actions OPA has taken to increase prices
of building materials, etc
158
Organizational chart and break-down of the professional and
other services
168
OPA Administrator Paul Porter's statement to the House Banking and Currency Committee, March 29, 1946
186
OPA Document No. 53040, part 1305—Administration, etc
86
OPA Document No. 53242, part 1305—Administration, etc
101
Principal price increases for the lumber industry
156
Production figures on textiles
^
108
Statement with respect to current inventories
198
Statistics on rapidity of handling of individual adjustment cases,
also tables
138
CONTENTS
Exhibits, statements, letters, etc., submited for the record—Continued
Price decontrol of the capitai^goods industries, statement of William
J. Kelly
Primary copper production and corresponding prices, 1920 to 1939,
inclusive (nonwar years)
Production of agricultural commodities, United States, 1940-41 and
1945-46
Rosenfeld, Benjamin, telegram to Banking and Currency Committee- _
Shopper's Instructions for Meat Shopping Survey
Shorey, E. R., president, Wisconsin-Illinois Zinc and Lead Producers
Association, statement
Small, John D., Civilian Production Administrator, statement on lowprice clothing
Southern Pine case, statement
Southwest Lumber Mills, Inc., statement
Southwest Used Car Dealers' Association, remarks
Statistical material in support of Mr. O'Neal's testimony
Study of what happened to profits, submitted by Mr. Bowles
Textile Fabrics Association, statement
•
Townsend, G. W., Minneapolis, Minn., letter
United States Copper Association, New York 4, N. Y., statement
United States Department of Agriculture report on acreage and
indicated production of commercial truck crops, etc
United States Department of Agriculture, table on consumption of
raw cotton
United Fresh Fruit and Vegetable Association, statement by C. W.
Kitchen
760,
United Packinghouse Workers of America:
Memorandum
Resolution
University Club, Washington, D. C., statement and tables
Wages During the War and After, submitted by Mr. William Green. _
West Coast Lumbermen's Association, statement
Western Auto Supply Co., Kansas City, Mo., statement by R. H.
Trewolla, letters and amendment
Western Growers Association, Los Angeles 14, Calif., letter
VII
Page
218
463
1046
603
1096
478
84
712
717
757
654
42
433
763
456
332
938
1029
642
641
871
788
722
876
765
1946 EXTENSION OF THE EMERGENCY PRICE CONTROL
AND STABILIZATION ACTS OF 1942, AS AMENDED
MONDAY, APRIL 15, 1946
COMMITTEE
UNITED STATES SENATE,
ON B A N K I N G AND C U R R E N C Y ,
Washington, D. C.
The committee met at 10 a. m., pursuant to call, in room 301,
Senate Office Building, Senator Robert F. Wagner (chairman) presiding.
Present: Senators Wagner (chairman), Bankhead, Murdock, Mitchell, Carville, Tobey, Taft, Millikin, and Capehart. <
The CHAIRMAN. The committee will come to order. As chairman
I wish to make a brief statement concerning the hearing on S. 2028,
the price control extension bill, which is now before this committee.
When I introduced S. 2028 on April 4, I stated that hearings on the
bill would begin before the Banking and Currency Committee on
Monday, April 15. It was my belief that this announcement, which
was printed in the Congressional Record of April 4 at. page 3133,
would afford ample notice to those who desire an opportunity to
present to the committ ee their views on the extension of price control.
This has been abundantly confirmed by the great number of requests
to be heard which have been received bv me.
Clearly, it is in the national interest that the country not be left
uncertain whether price control will be continued and what form it
will take after June 30, 1946. The national welfare demands that we
take action on the extension of price and rent control at the earliest
possible moment. I t is, therefore, essential that the hearing before
this committee be of limited duration, while at the same time it is
desirable that the committee have before it the relevant information
and that it be informed, to the greatest extent practicable, of the
views of the American people concerning price control and the stabilization program.
The great number of requests to be heard which the committee has
received, coupled with the fact that- it is not feasible for the committee to hold many afternoon sessions, lias made it necessary to
grant priority to requests which have been received from organizations
which are national in scope. Generally speaking, it will not be feasible
for the committee to receive oral testimony from local or regional
associations, individual companies, or individuals. However, anyone
whose request to be heard cannot, therefore, be granted will be
afforded an opportunity to file a written statement with the committee, at any time prior to the close of the hearing. Such statements
will be brought to the attention of the committee members and, so far
as practicable, will be incorporated in the record of the hearings.
1
2
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 1 9 4 2 2
Briefly, the schedule is as follows: This irforning we will h a v e the
pleasure of hearing f r o m the H o n o r a b l e Chester Bowles, D i r e c t o r of
E c o n o m i c Stabilization. T o m o r r o w , at 10 a. m . , the c o m m i t t e e will
hear f r o m the H o n o r a b l e Paul Porter, Administrator of the Office of
Price Administration. On W e d n e s d a y , April 17, at 10 a. m . , we will
h a v e before us the H o n o r a b l e Fred M . Vinson, Secretary of the
Treasury, and at 11 a. m . , the H o n o r a b l e C l i n t o n P . Anderson,
Secretary of Agriculture. T h e committee will m e e t again o n W e d n e s d a y afternoon at 2 p. m . to hear f r o m the H o n o r a b l e J o h n D . Small,
Civilian P r o d u c t i o n Administrator. H e will be followed at 3 p. m .
b y the H o n o r a b l e Marriner Eccles, Chairman of the B o a r d of G o v ernors of the Federal Reserve System.
Beginning o n April 18 and continuing on April 22, 23, and 24, the
c o m m i t t e e will hear f r o m witnesses representing organizations c o n stituting a cross section of business, industry, and c o m m e r c e .
On
A p r i l 25, 26, and 29, representatives of labor, consumers, veterans,
a n d farmers will b6 heard. A detailed schedule of the hearings is
being prepared and will be issued as soon as it is ready.
( T h e bill under consideration, S. 2028, is as follows:)
[S. 2028, 79th Cong., 2d sess.]
A B I L L T o amend the Emergency Price Control Act of 1942, as amended, and the Stabilization Act of
1942, as amended, and for other purposes
Be it enacted by the Senate and House of Representatives of the Lnited States of
America in Congress assembled, That section 1 (b) of the Emergency Price Control
Act of 1942, as amended, is amended by striking out "June 30, 1946" and substituting "June 30, 1947".
SEC. 2. Section 6 of the Stabilization Act of 1942, as amended, is amended by
striking out "June 30, 1946" and substituting "June 30, 1947".
SEC. 3. Section 2 (e) of the Emergency Price Control Act of 1942, as amended
by the Stabilization Extension Act of 1944, is hereby amended by striking out
therefrom the last paragraph thereof, effective July 1, 1946, and inserting in lieu
thereof the following:
"With respect to operations for the fiscal year ending June 30, 1947, the making
of subsidy payments and the purchase of commodities for resale at a loss, and
thereby subsidizing directly or indirectly the sale of the commodities, shall be
limited as follows:
"(1) With respect to funds of the Commodity Credit Corporation—
"(A) with respect to the dairy production payment program, $515,000,000:
Provided, That in carrying out the dairy production payment program the
rate of payment per pound of butterfat delivered shall not be less than 25
per centum of the national weighted average rate of payment per hundred
pounds of whole milk delivered;
"(B) with respect to other noncrop programs, including the feed-wheat
program, $50,000,000; and
"(C) with respect to the 1946 crop program operations, $160,000,000:
Provided, That not to exceed 10 per centum of each amount specified in clauses
(1) (A), (B), and (C) shall be available interchangeably for the operations described in such clauses but in no case shall the total subsidy payments and losses
absorbed under any one of such clauses be increased by more than 10 per centum;
and
"(2) With respect to funds of the Reconstruction Finance Corporation—
"(A) for rubber produced in Latin America and Africa for which commitments were made during the war emergencv and previous to the effective
date of this Act, $31,000,000;
"(B) for materials or commodities produced in the United States as follows:
"(i) meat, $715,000,000;
"(ii) flour, $260,000,000;
"(iii) petroleum and petroleum products, $50,000,000;
"(iv) copper, lead, and zinc in the form of premium payments,
$100,000,000;
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 1 9 4 2
3
{< (C) other domestic an*l imported materials or commodities, $170,000,000:
Provided, That in the event the entire amount of any of the above allocations is
not required for its purpose, the unused portion of such allocation, but not to
exceed 10 per centum of such allocation, may be used for making such payments
on and purchase of any item or items enumerated in this section as may be determined by the Stabilization Administrator in the Office of War Mobilization and
Reconversion.
SEC. 4. Nothing in this Act shall be construed to affect the provisions of Public
Laws 30, 88, and 164, of the Seventy-ninth Congress, or to apply to purchases by
the Reconstruction Finance Corporation of such tin ores and concentrates as it
deems necessary to insure continued operation of the Texas City Tin Smelter.
T h e CHAIRMAN. I received this m o r n i n g a letter f r o m the H o n o r a b l e
John W . Snyder, Director, Office of War Mobilization and Reconversion, Which I should like to read for the record at this time:
OFFICE
Hon.
ROBERT
F.
WAGNER,
OF W A R
MOBILISATION
AND
RECONVERSION,
April 15, 1946.
United States Senate, Washington, D. C.
At the outset of the hearings on extension of price
controls I want to take the opportunity to restate the administration's basic
policies on stabilization and to urge your committee to act expeditiously in
extending price controls for another year.
Reconversion has now advanced far enough so that we can confidently foresee
the achievement of a healthy and productive postwar economy, if we continue to
stabilize our price structure. Inflation remains the only real threat to our
success. That is why the legislation now before your committee is vitally and
immediately important to the Nation.
Expanding production is the permanent remedy that we all look to, but although
output of goods has already reached the highest point in our peacetime history,
the war-generated demand for goods still far surpsases supply. And many
seriously needed and badly wanted products, such as housing, clothing, and
consumer durables, are severely short and will remain so for some time to come.
Consumer income is being maintained at close to war levels, and accumulated
savings are at record heights. The resulting purchasing power is many times
greater than any the American public has ever had at its disposal before. This
power we depend upon to run our economic machine at a prosperous rate in the
years to come. But this power could wreck the machine today, if we let it run
wild.
Inflationary pressures are great even when strong price control measures are in
force. These pressures would become much worse if termination of price controls
were in immediate prospect. They would become severe even though price
control were extended for a year, if the measure, as passed, were seriously weakened
by curbs and limitations upon the powers granted. Either of these actions would
mean higher prices; either would c'ause businessmen to hold goods off the market
for future sale. It would simply be good business. It has happened before, and
is happening today in some industries where authorization of higher prices is
expected.
At the same time this would be happening, demand would multiply. Faced
with the prospect of rising prices, consumers and producers alike would hurry
into the market to satisfy, not only their needs of today, but their future needs.
Businessmen would scramble for inventories, as after the last war. Purchasers
would thus find the scarcity of goods far worse than it is now. Unable to obtain
supplies, or to pay the price, many small businessmen would find themselves in
serious difficulty. Soon money, and only money, would talk. Inflation—that
most dangerous aftermath of war—would be upon us.
In the interests of our expanding production, the Federal Government must
have clear authority to control prices during the year to come. And it must have
this authority as soon as possible. Uncertainty about prices can only hamper
production. If a businessman cannot be sure about his future costs, he cannot
plan—he can only gamble. And gambling does not lead to sustained production.
In the inflationary period after World War I, while prices were rising 30 percent
between January 1919 and February 1920, production only increased about 15
percent. Then all gains were sharply reversed. Production fell far below its
starting level; and in the collapse, 106,000 American businesses, 450,000 farms, and
5}i million jobs were destroyed.
D E A R SENATOR W A G N E R :
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 1 9 4 2 4
Fortunately, this time, we have a wide public understanding of the inflationary
danger. It is the people of the Nation who are fighting inflation; the businessmen, the workers, the farmers, and the man in the street. There is a tremendous
popular demand for the continuance of price control.
If it is to accomplish its purpose, it must not be blunted by impediments to its
effectiveness. Members of Congress are continually being urged to attach to the
new law various restrictions upon its administration which will favor this or that
segment of the economy. But our price structure is tremendously complex, tremendously sensitive in the interrelationship between its parts. Price administration must, above all, be flexible and instantly adaptable to changing conditions.
Under price control, as it has been administered up to now, production has
risen to unprecedented levels, both in war and in peace. Hardship upon the individual businessman has been minimized. Ceilings have been adjusted, more and
more expeditiously, as time has passed, to stimulate production of badly needed
products. And decontrol, as you all know, has been proceeding far faster than
any arbitrary law or amendment could safely have prescribed in advance.
Decontrol, in fact, is the end product and the objective of price control. Free
prices, in the long run, are an inseparable part of the free enterprise system; and
every move of the administration is designed to hasten the day when wartime
controls can be entirely eliminated.
To hasten the coming of that day we need, now, an extension until June 30,
1947, of the price control law in its present form, without the imposition of restrictions that would hamper flexible and impartial administration. We need the continuation of subsidies. And we need very early action by the Congress, to eliminate uncertainties in the business world and in the public mind.
This is the administration's policy and its minimum need for guiding the Nation
through the difficult period of readjustment. Without this legislation we will all
suffer. If the Congress will grant this year's extension of authority, the same good
work of increasing production while holding inflation in check can be continued.
Sincerely yours,
J O H N W . S N Y D E R , Director.
I believe w e are n o w r e a d y to hear M r . B o w l e s .
S e n a t o r CAPEHART. M r . C h a i r m a n , m a y I m a k e a s t a t e m e n t b e f o r e
M r . B o w l e s begins his t e s t i m o n y ?
T h e CHAIRMAN. Y e s , certainly, Senator C a p e h a r t .
Senator CAPEHART. A s m y p o i n t N o . 1: I t seems t o m e , M r .
C h a i r m a n , the statement y o u h a v e j u s t read in o p e n i n g the hearings
o n this bill will h a v e a t e n d e n c y to discourage p e o p l e f r o m trying t o
a p p e a r b e f o r e this c o m m i t t e e ; also discouraging p e o p l e f r o m filing
written statements.
M y o b s e r v a t i o n , based o n y o u r statement, is that if w e d o n o t w a n t
p e o p l e t o appear and d o n o t w a n t statements filed f o r the r e c o r d , then
w e are g o i n g to hear those in f a v o r of extending O P A and will, v e r y
p o s s i b l y discourage those that m a y b e o p p o s e d t o extending O P A .
I t was m y o b s e r v a t i o n during the TVyatt housing hearings that w e
heard those that were f o r that p r o p o s e d legislation, right u p t o the last
half of the ninth inning, and t o those others o p p o s e d t o that legislation
w e g a v e a couple or three hours, and hurried t h e m along, n o t giving
t h e m a chance to b e f u l l y heard.
T h e CHAIRMAN. I h a v e n o such intention here I can assure y o u .
Senator CAPEHART. I k n o w , M r . C h a i r m a n , that y o u h a v e n o such
intention, b u t I a m j u s t w o n d e r i n g if this s t a t e m e n t y o u h a v e m a d e
d o e s n o t m o r e or less leave that i m p r e s s i o n — t h a t w e are g o i n g t o
h u r r y the i n v e s t i g a t i o n ; that there is v e r y little time f o r p e o p l e t o be
h e a r d ; and in one part of y o u r statement y o u say, " w h e r e p r a c t i c a b l e
and p o s s i b l e , " written statements will b e received a n d printed in the
record.
T h e CHAIRMAN. T h a t has always b e e n d o n e .
S e n a t o r CAPEHART. I t w o u l d seem to m e that s o m e t h i n g as f a r r e a c h i n g as the extension of the O P A should h a v e such a t t e n t i o n b y
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 1 9 4 2
5
way of hearing statements and evidence as qualified witnesses are
willing to give.
The CHAIRMAN. And the committee will, of course, finally decide
all those instances.
Senator CAPEHART. I appreciate that, Mr. Chairman, but this
statement is being released to the press, and it is going out in all of the
newspapers, and I presume over the radio, which will have a tendency
to discourage those who might care to be heard, and have a tendency to
discourage those who might wish to file statements. I for one object
to it, and would like to have seen the statement say frankly and
openly that we encouroge people to appear, not only in behalf of
OPA, but those who may be against extending it; and that we encourage people to file statements. Let us get the facts rather than
hobble this thing, which I think the statement very plainly does.
Senator TAFT. Mr. Chairman, may I ask a question?
The CHAIRMAN. Certainly, Senator Taft.
Senator TAFT. I notice, in the first place, that you set down hearings for Wednesday afternoon of this week. Is that necessary if we
are going to have debates on the floor of the Senate on the AngloAmerican financial agreement on Wednesday afternoon? I take it
the members of the committee will want to be present during the
debate, as it is a bill reported out bv this committee. If we are
going to hold a hearing that afternoon then it would seem to me we
ought to abandon that debate at that time. That is one of the suggestions I make.
The other suggestion is this: Would it be possible for those one
might term "critics" of OPA extension to examine the applications
filed for hearings? I certainly would like to cooperate in making these
hearings as short as possible consonant with proper consideration,
and I have what I think are important requests for a hearing which
I should like to be able to urge on the committee. I would like to
get a look at the whole of the opposition so far indicated, in order
that there might be weeded out any duplication and have typical
examples or typical industries that want to be heard, given that opportunity. I suppose those requests are available?
The CHAIPMAN. Yes, they will be available. All members of the
committee will be given that information, and any member desiring
a change or an addition, will be given every opportunity to be heard
and have his request considered. As you know, Senator Taft, I have
always done whatever the committee wanted me to do. I want to
shorten these hearings as much as I can, but will give the opposition
all the opportunity possible to be heard, as I have always done.
Senator CAPEHART. I appreciate that, Mr. Chairman. I do not
make my statement to point out a criticism, but rather that we may
help the hearings rather than hurt them.
Senator B A N K H E A D . I want to second what the chairman has said.
I have not always been with Senator Wagner in these matters, but
I do say that he has always been very willing to hear people.
Senator CAPEHART. But this statement just made by the chairman
is for release to the press. It will doubtless be published in every
newspaper, and mentioned over every radio chain, and it does have a
tendency to discourage the appearance of people who may be desirous
of being heard, and does have a tendency to discourage the filing of
statements.
6
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 1 9 4 2 6
The CHAIRMAN. If there is no objection we will now hear Mr.
Bowles.
Senator CAPEHART. W e all know that Mr. Bowles, M r . Porter,
and Mr. Vinson are members of the administration and are highly
in favor of extending OPA. W e know that and the country knows
that. M y point is: W h y not get some people in here who may have
just as sensible reasons why the OPA should not be continued?
The CHAIRMAN. I can assure the Senator from Indiana that if
he has somebody in mind he thinks important to be heard, the committee will hear him, or them.
Senator C A P E H A R T . I appreciate that. I have no criticism of
that. M y only criticism is the release of this statement to the newspapers, wliich I believe I am correct in saying may have a tendency
to cause people to say, "Oh, what is the use? They are hurrying this
thing, and they have already set down whom they will hear, and given
the dates when they will hear so-and-so, and it will delay the thing
for us to hear others."
The C H A I R M A N . I think it is very important in the public interest
that people know exactly what the OPA is going to do.
Senator C A P E H A R T . I would have liked your statement much better
if you had said, " W e are willing to hear statements from every one
of the 1 4 0 , 0 0 0 , 0 0 0 Americans." Let them come forward so that we
may get the facts.
Senator TOBEY. Would you read the statements, Senator Capehart, if they were received from 1 4 0 , 0 0 0 , 0 0 0 Americans?
Senator CAPEHART. Possibly I would, or at least very many of
them. But that does not change the principle.
Senator T O B E Y . I was speaking facetiously, of course. When you
spoke of 1 4 0 , 0 0 0 , 0 0 0 Americans it rather staggered me.
Senator C A P E H A R T . Well, at least the 1 4 0 , 0 0 0 , 0 0 0 Americans are
vitally interested in this matter.
Senator TOBEY. Senator Bankhead, I suppose the cotton interests
are very much pleased with the set-up?
Senator B A N K H E A D . D O you think that?
Senator T O B E Y . I thought that might be so. [Laughter.]
Senator BANKHEAD. Then you have another guess coming.
The CHAIRMAN. Let us proceed with the hearing. W e have M r .
Bowles here this morning, whom we have always had pleasure in
hearing. W e will now be delighted to hear you, M r . Bowles.
STATEMENT OF CHESTER BOWLES, DIRECTOR, OFFICE
ECONOMIC STABILIZATION, WASHINGTON, D. C.
OF
M r . BOWLES. M r . Chairman, if I may, I should like to read this
statement through and then answer questions at the end of it.
T h e C H A I R M A N . I am sure the committee will be satisfied with that.
M r . B O W L E S . I might say that this is the first time I have come
before the committee without being equipped with charts.
Senator TAFT. Does M r . Porter have the charts this time?
M r . B O W L E S . I do not believe he has. I think y o u will be relieved
o f charts this year.
The CHAIRMAN. Y o u may proceed, M r . Bowles.
M r . B O W L E S . I open the Government's presentation on this bill
with the sense that the issues involved can be compared, in magnitude
and urgency, only with issues of international peace and security.
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 1 9 4 2
7
The action which Congress takes on this bill will in my judgment
affect the whole course of our domestic economy for years to come.
It cannot fail to affect also the economy of other nations and the
world economy.
Our people are watching to see whether or not their Government
really means business in holding down the cost of living.
Our 3,000,000 buisnessmen are watching to see if a weakened price
control act will further increase their costs of production.
Our 6,000,000 farmers are watching to see if we are to indulge in
another postwar gamble with inflation such as caused 450,000 farm
foreclosures after World War I.
Our 17,000,000 industrial workers are watching to see if the present
balance between wages and prices is to be maintained or abandoned.
Our 12,000,000 or more of white-collar workers and people living
on fixed incomes are watching to see if they are to be squeezed again
between rising rents and prices and relatively stable incomes.
Speculators by the thousands are watching for the first signs of
legislative weakness on a program which Congress has steadfastly
maintained against tremendous pressure for four weary, difficult,
war-torn years.
We stand today at one of the great crossroads of our country's
history. On the one hand is the greatest opportunity we have ever
had to lay the foundation for a future of long-range prosperity. On
the other hand is the real and imminent danger of a destructive
snowballing inflation, followed by a ruinous collapse which might well
shatter our entire economy.
T o grasp the opportunity that lies before us will not be easy.
Nothing, on the other hand, could be easier than to let it slip between
our fingers.
Congress is responsible, in the fullest sense of the word, for determining the course to be taken.
Senator MILLIKIN. Mr. Chairman, I respectfully suggest that the
administration might have a good deal to do with determining the
course to be taken.
Mr. B O W L E S . I follow with a full explanation of that.
Senator MILLIKIN. Very well. Go ahead.
Mr. BOWLES. It must decide what the situation is with which it
has to deal. It alone must decide what is to be done. And before
history and the American people it must bear responsibility for the
consequences of its decision.
The executive branch of the Government has the duty of assisting
Congress, first, by providing it with full information and sound advice
on which wise decisions may be reached; and, second, by carrying out
the policy decisions which Congress makes with all possible skill and
effectiveness.
In carrying out my part of this task, let me first outline as briefly
as possible the main facts of our economic position as I see them.
Where do we stand today? Judged by the ordinary indications of
economic well-being, the country's position as we emerge from 4 years
of war is remarkably favorable.
While some farm groups have been less fortunate than others, net
income per farm stands more than three times as high as in 1939, an
average of more than $2,300 per farm against $735 in 1939. Cash^
income from farm marketings, after adjustments for seasonable differv
ences is 22 percent higher than on VJ-day.
8
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 1 9 4 2 8
I would like to emphasize the fact that there are many farm groups
to which that does not apply; that there are many farmers not as well
off as others. In general, farmers started at a much lower base in
1939, when their income was only 9 percent of our national income
although they amounted to 24 percent of our national population.
While some workers are still working for low wages, average hourly
earnings in manufacturing are about 60 percent higher than in 1939,
and only 3 percent lower than on VJ-day. Employment is at an
all-time peak.
While some businesses, particularly in the reconversion field, have
been going through a temporarily slim-profit period, dividend payments in the first quarter after VJ-day (the last quarter of 1945) were
equal to the wartime peak, with profit prospects generally accepted
as excellent. Bankruptcies are at the lowest peacetime point in 40
years. There are at least 400,000 more businesses in operation than
2 years ago.
Senator MILLIKIN. Mr. Bowles, might I call your attention to the
fact that you read "400,000 more businesses" while your statement as
prepared shows "400,000 more businessmen in operation".
Mr. BOWLES. That was a mistake in that statement. I mean
individual businesses. The number went down in the first 2 or 3
years of the war and then came up again.
Senator MILLIKIN. All right.
Mr. BOWLES. While we naturally have some production bottlenecks and delays, industrial production, already nearly 70 percent
above the prewar average, is at record peacetime levels, with new
high levels being achieved each week. Retail sales are 110 percent
above 1939 and 18 percent above the first quarter of a year ago.
Even with due allowance for increases in the general price level since
1939, this represents a staggering increase in the actual volume of
merchandise flowing over retail counters.
The stability of our economy which we achieved in war has so far
been maintained in peace. Since August 1939, the beginning of the
war period, the eon sinner price index cf the Depart: rent of Labor
has increased 31 percent. The increase since May 1943 has been only
3.4 percent. Since VJ-day the increase has been only one-tenth of 1
percent.
Even when we allow for deterioration in quality, this record is vastly
better than that which we achieved in World War I, when the cost of
living rose by 108 percent. The record is better than most of us .
dared to hope when the stabilization program was launched a little
more than 4 years ago.
The average of wholesale industrial prices is 27 percent higher than
August 1939; 4.8 percent higher than in May 1943; and 1.4 percent
higher than on VJ-day. This compares with a total increase of 165
percent in the period of inflation during and after the First World War.
A brief comparative glance at some typical basic commodities is
also reassuring. During the First World War the price of steel plates
increased by 232 percent. Since August 1939, the increase has been
13 percent. Corresponding figures for other coir ir.odi ties are:
building materials, 218 percent and 35 percent ; plate glass, 271 percent
and zero; copper, 65 percent and 15 percent; anthracite coal, 82 percent and 44 percent; bituminous coal, 675 percent and 30 percent.
Senator TAFT. Are you there talking about the inflation peak?
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 1
942
9
Mr. B O W L E S . Yes, sir. That was the highest point, in 1 9 2 0 .
Senator M I L L I K I N . What was coal then selling for?
Mr. B O W L E S . I do not know. It must have been terribly high.
Senator M I L L I K I N . What did steel plates sell for?
Mr. B O W L E S . We can get for you all of those figures. I have not
got them in my head.
Senator M I L L I K I N . I would very much like to have them.
Mr. B O W L E S . We will get them and put them in the record.
Senator M I L L I K I N . All right. I will be glad to have you do that. •
(The following was later submitted for the record by Sen. Millikin).
Actual prices of commodities for which percentage increases were shown in
Mr. Bowles' statement
July 1914
1.1
13.5
21.0
Steel plates (cents per pound)
Copper (cents per pound)
Plate glass (cents per square foot)
Peak of
World War I August 1939 February
1946
inflation
3.8
22. 2
78.0
2.1
10.4
27.5
2.4
11.9
27. 5
Percentage changes calculated from these dollar-and-cent prices will not exactly
equal those used in Mr. Bowies' statement because of being carried to one less
decimal place.
No dollar-and-cent data for building materials or for anthracite and bituminous
coal are available corresponding to the indexes shown because each index represents
a composite of the prices of many different commodities or kinds of commodities.
The indexes for these groups, expressed as a percentage of the 1926 level,
moved as follows:
July 1914
52.9
59.0
34.8
Buildin? materials
Anthracite coal
Bituminous coal
Peak
168. 3
107.6
269.6
August,
1939
89.6
72.1
96.0
February,
1946
120.9
104.0
125.1
Mr. B O W L E S . While we have thus stabilized the prices of commodities under price control and, in so doing, maintained the general
stability of the economy, the record of uncontrolled prices by contrast
is one of instability. Current increases in commercial rents run from
30 to more than 100 percent. Urban real estate prices have shot up
by 60 to 65 percent since the spring of 1940, and by 15 to 23 percent
since September 1945 alone. Farm land values have gone up 69
percent since March 1940. Since VJ-day, stock prices have risen
over 20 percent, and the price of cotton has shot up by 25 percent.
These increases attest to the strength of the inflationary pressures
that permeate the economy. In large part they explain the sense of
rising prices which is so deeply troubling the country.
During the entire period of World War II, we have achieved relative
stability in all the commodities under price control in comparison to
the record of the First World War. We have also achieved far greater
stability in the actual cost of an hour's labor, which is measured by
"average hourly earnings."
In the First World War average hourly earnings rose 150 percent
in manufacturing industries. The increase this time has been 61
percent since August 1939 and 5.4 percent since M a y 1943 (the
85721—46—vol. 1
2
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 1 9 4 2 10
effective date of the hold-the-line order). Average hourly earnings
have dropped 3 percent since VJ-day.
Senator T A F T . T O what extent was this 61 percent affected by the
last increase?
Mr. BOWLES. I think that was in March.
Senator T A F T . H O W far does it reflect the 18% percent increase in
steel and automobiles?
Mr. BOWLES. It would not reflect steel, or at least I do not think so.
The average is for the month of February, and that increase came in
the middle of the month. The last figures apparently are for February.
Let me emphasize that these figures are not basic hourly wage
rates. They are the average of actual wages paid out per hour
by manufacturers—the actual cost of labor per hour which includes,
of course, such factors as overtime payments and shift premiums.
It was inevitable that we should pass through a period of labormanagement difficulties following VJ-day, just as we did after the
armistice in the last war. With the termination of the " n o strike"
pledge and the dissolution of the War Labor Board, direct wage
control for the economy generally ended shortly after VJ-day. Labor
and management were asked to return to our prewar system of free
collective bargaining, subject only to limitations upon the extent to
which wage increases could be reflected in price increases.
It was inevitable that some difficulties would follow. Collective
bargaining skills had become rusty. Tempers following a long,
strained period of all-out war were frayed on all sides.
Management was worried about future costs and the mechanical
problems of reconversion. Labor was deeply concerned about the
drastic cuts in take-home pay which would inevitably result as overtime work was eliminated and we returned to a normal workweek.
The new wage-price policy announced by the President on February 14 to deal with the situation which had developed is working
more effectively than I dared to hope. The details of the wage-stabilization rules which the President laid down have been carefully
worked out by the Wage Stabilization Board in conjunction with my
own office. These rules have established a basis for wage stabilization based primarily on the patterns for wage increases which have
been developed by free collective bargaining, in the particular industry
or locality involved, since VJ-day.
Between 600 and 1,000 cases are being handled by the Wage Stabilization Board each week. The increases on which approval has
been requested range between 5 cents an hour and 20 cents. The
fact that 85 percent of all the requests have fallen within the allowable
patterns, or the supplementary standards, is a clear indication that
both labor and management have been striving earnestly to cooperate
with the Government's stabilization program in this difficult field of
industrial relations.
The Wage Stabilization Board, under the chairmanship of Mr.
Willard Wirtz, has been performing, in my opinion, an outstanding
service. This tripartite board was forced to tackle a peculiarly difficult problem following the adoption of the new wage-price program.
It has been handling this task efficiently, constructively, and courageously, and with a rare sense of group tolerance and give and take.
While we have thus come a long way in the transition we are still
in midpassage.
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 1 9 4 2
11
The underlying economic pressures making for inflation, as distinguished from speculative and other psychological pressures, are
gradually lessening. They are, however, still tremendous, and they
are greater by far than we had expected to encounter.
The basic fact to be recognized is that the total of current demand
for civilian goods, based on real needs, still far exceeds the total of
current supply.
Consumer spendable income continues at 138 billion dollars, which
is roughly the wartime level. Here is the first of several respects in
which our postwar YJ-day expectations proved to be wrong. The
sharp drop in employment which we ansicipated did not materialize.
While wage and salary payments at first declined, the decline was far
less than expected because employment, after the first drop, held
steady and then increased. As a result of this increase in employment and the increase in mustering-out pay, income payments to individuals had regained by March 1946 their peak war levels.
The most astonishing development since VJ-day has been the extraordinary increase in consumer expenditures, which occurred even
while consumer income was temporarily lagging. Consumers are
spending an increasing proportion of the income they receive and a
greatly increased number of dollars.
During the first three-quarters of 1945, consumer expenditures were
at an average annual rate of $103,000,000,000. That was in the war
period. In the fourth quarter, the first full quarter after VJ-day, they
rose to $111,000,000,000. In the first quarter of 1946, they are estimated to have reached an annual rate of $120,000,000,000. This
increase has occurred before the major consumer durable goods have
become available and represents mainly increased spending for food
and clothing.
The public is saving considerably less money than during the war.
Senator MILLIKIN. Right there I would like to ask this question:
What is the purchasing value of the dollar today as compared with
1939?
Mr. BOWLES. I suppose the cost of living is up 31 percent.
Senator MILLIKIN. That would cover the increased dollar expense.
Mr. BOWLES. Retail sales are 110 percent above dollar value of
1939. When you subtract something for price increase you still have
a very much greater flow of goods. As we move out of the war we
have been spending more.
Senator MILLIKIN. The point I am making, if it is a valid point
Mr. BOWLES. It is a valid point.
Senator MILLIKIN. You have to spend more dollars to get the
same amount of goods.
Senator T A F T . I think the Government's study gives 3 3 percent
more.
Mr. BOWLES. That is a proper correction.
Senator TAFT. And it would now be about 34 percent.
Mr. BOWLES. Yes; perhaps so. I quoted the index, and I think
it proper to add 3 percent.
Senator CAPEHART. Mr. Bpwies, do you think you could get any
housewife in America to believe the things she purchases today are
only 3 1 percent higher than in 1 9 3 9 ?
Mr. BOWLES. Well, I think the people who should discuss the index
itre Department of Labor people. I t is their index. I think the
E X T E N D PRICE CONTROL AND STABILIZATION ACTS OF 1 9 4 2 12
important fact to remember, and it is a big factor in the index, is that
food generally is about the same as it was 3 years ago. I think an
interesting homely
Senator CAPEHART. M y statement was as of 1939.
Mr. BOWLES. That is correct.
Senator CAPEHART. And my question is: D o you think you could
get any housewife in America to believe that that which she buys for
her famity has not gone up more than 31 percent?
Mr. BOWLES. I think most people are very skeptical of that.
Senator C A P E H A R T . D O you think you could get Mrs. Bowles to
believe it?
Mr. B O W L E S . I think I have convinced her of it. And, perhaps,
I have more time with her. I think an interesting thing to do is to
go back and get out your grocery store advertisements in the spring of
1943 and compare them with today's. The present program did not
begin to work until 3 years ago.
Senator CAPEHART. But I am talking about 1939.
Mr. BOWLES. That was when you had no price control. And I
think it is an argument for price control because in 1942 and 1943—
the period before price controls became really effective—prices rose
rapidly. We had to learn the job and in learning it a lot of prices
went up. We must look to what we have accomplished in the 3 years
we have had relatively effective control.
Senator CAPEHART. The general impression of the public, when we
talk about these price increases, is that in their minds at least they are
comparable to what it was before the war, 1939 and 1940. I think
in many respects we are misleading the general public when we
compare 1943 with present prices. The public have in mind the
prices they paid for commodities prior to the war, back in 1939 and
1940. All of these figures, if I understand them correctly, are based
on 1943; is that correct?
Mr. B O W L E S . N O . It is based on 1 9 3 9 . but also points out what
has happened since May 1943 when the hokl-the-line order came out.
I think prices are too high. For instance, I th'nk clothing prices are
much too high, and I wish we had been able to do a better job. The
thing to do is to go back and correct the high prices that were in effect
before price control. However, that is just not possible.
Senator CAPEHART. However, when you set an OPA price, that
becomes the price, and they continue to sell at that price. As long
as there is an OPA ceiling they will continue selling at that price and
not reduce the price.
Mr. BOWLES. Some do sell below the ceiling.
Senator C A P E H A R T . I think that is one of the best arguments that
we should eliminate OPA as soon as we possibly can.
Mr. B O W L E S . I think we should eliminate O P A as soon as we
possibly can. but, first, you have to eliminate the inflationary pressures
as fast as you possibly can.
Senator CAPEHART. When you set a price they never sell lower.
Mr. BOWLES. I do not follow you on that point. Many tilings do
move below the ceiling, and when that happens we remove the ceiling.
For instance, when potatoes moved below the ceilings we removed the
ceilings, and if they want to go still lower they are free to do so.
Senator C A P E H A R T . It is pretty hard to watch 1 0 , 0 0 0 , 0 0 0 items.
Mr. BOWLES. I t is less than that.
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 1 9 4 2
13
Senator M I L L I K I N . I would suggest that the lower price is the
answer to one angle to be considered; also that statistics do not reflect
the black market price above ceilings.
M r . BOWLES. N o t wholly.
Senator MILLIKIN. There is no way to estimate that.
Mr. BOWLES. What BLS does is to ask the price just like an unknown shopper going into a store. They do not get what Mrs.
Jones, a very favored customer, might pay as a fancy price for a relatively scarce item. But it would reflect the average person going
into a grocery store and pricing an item. I think you might be interested to have BLS explain that. I do not say the index is perfect.
There is another fact. I t does not reflect bargain sales to the very
low-income groups. But there are very few of them today. The
poor family used to go into a grocery store Saturday night and buy
vegetables and meats about to spoil. Today obviously they cannot
to that; stores sell as much as they can at the ceiling. I will continue
my statement.
One of the great question marks across our future is whether and
for how long this extraordinary rate of consumer expenditure will
continue.
We know that current consumer needs are abnormally high. Millions of returning veterans have had to start from scratch or near it
to acquire a wardrobe, set up a household and furnish it. The immediate market for shirts, for example, is estimated at 320,000,000
against a production level of 160,000,000 before the war. The market
for men's suits is at least 40,000,000 a year against a prewar output of
21,000,000.
Senator TAFT. What is the present inventory of shirts on hand and
unsold?
Mr. BOWLES. I would say about zero judging by* my experience
when I have tried to get shirts.
Senator TAFT. Have manufacturers a large inventory of finished
material?
Mr. BOWLES. I do not think so. I think they are moving out pretty
fast, and I think by summer the shirt situation will be definitely better. Shirts are beginning to move through production channels, and
by June and July you will begin to see them.
Consumer stocks of almost all goods are low; and distributors7 inventories, although gradually increasing, are far below the normal
levels.
The most acute of some of these needs may be satisfied fairly quickly.
The shortage of men's shirts, shorts, and pajamas, for instance, should
cease to be a major problem by fall.
Senator C A P E H A R T . Y O U say the immediate market for shirts is
320,000,000 against a production level of 160,000,000 before the war.
What is being done to bring the production level up?
Mr. BOWLES. I suggest that Mr. Porter and Mr. Small are going to
cover that question thoroughly. I am simply repeating what I
understand the situation to be. That is a problem involving the
CPA and the OPA and they will cover it. Perhaps I should not even
mention shirts here.
Senator CAPEHART. But you contend that our national income and
our national production at the moment is at a high level?
Mr. BOWLES. At the highest level in peacetime.
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 1 9 4 2 14
Senator CAPEHART. And that employment is at the highest level
in peacetime.
M r . BOWLES.
Y e s , sir.
M r . BOWLES.
Y e s , sir.
Senator CAPEHART. And that wages are at the highest level in
peacetime?
Senator CAPEHART. If that is true how are you ever going to catch
up?
Mr. BOWLES. If you will let me finish that statement you will find
that I have covered that point. I think you will save time if you will
let me finish my statement. Then if I have not answered what you
have in mind I will be delighted to go back.
Senator CAPEHART. I hope you will answer this question. I have
been trying to make OPA responsible for production, which I think
it will be; and I think it is the only way we will cover this point.
Mr. BOWLES. If I may go on with my statement I think I will cover
that point.
Senator CAPEHART. I confess that I cannot reconcile your two
statements. You have just talked about the immediate market for
shirts, estimated at 320,000,000 against a production level of 160,000,000
before the war.
Mr. BOWLES. I think everybody is going to have all the shirts they
want. It is a headache when you have to go to eight stores to find
any, but I think, by fall, you might have to go to only two stores.
There are a lot of words here that you can pick me up on, taken b y
themselves.
Senator CAPEHART. I am not trying to pick you up on words. I am
suggesting that this problem can only be solved by production.
Mr. BOWLES. That is correct.
Senator CAPEHART. And I want to know how you are going to solve
it by production.
Mr. B O W L E S . I he thing is to get more workers at work. That is
the main thing. We have people pretty well employed now.
Senator BANKHEAD. I challenge that statement. If you get an
increase in textile production, that does not settle the bottleneck.
That has nothing to do with the output of textiles.
Mr. B O W L E S . I think it has, and your textile production is moving
up.
Senator BANKHEAD. Are you going to tell us how you are going to
get textile production up?
Mr. BOWLES. One way is to get more manpower. I believe there
are some 40,000 more workers now in the textile industry. Mr.
Small will go into that in great detail. He will tell you exactly what
is being done. I am trying to tell you about the whole broad problem
of inflation.
Senator BANKHEAD. All right. I won't ask you to go into the
details at this time.
Mr. BOWLES. Common knowledge tells us, however, that the
backlog of need for houses, automobiles, and other durable goods is
huge and that it will be a long time before it is satisfied. Prof.
Sumner H. Slichter, of Harvard, estimates the backlog demand for
consumer durable goods alone at $50,000,000,000. In our biggest
year, 1941, we produced only $10,000,000,000 worth. It will "take
14,000,000 cars simply to replace those more than 9 years old. The
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 1 9 4 2
15
acute demand for housing is estimated at 10,000,000 homes with a
sustained level of demand around a million and a quarter per year.
I might add that automobiles present a most optimistic outlook,
about 6% million cars a year, which is 50 percent higher than our
biggest year before, which was in 1941. Say there are over 14,000,000
cars more than 9 years old, you get an idea of the terrific backlog there.
Senator MILLIKIN. Are you speaking of passenger cars?
Mr.
BOWLES.
Yes,
sir.
Senator MILLIKIN. What was the largest prewar year?
Mr. B O W L E S . I believe it was 5 , 9 0 0 , 0 0 0 . I believe that represented 4 , 8 0 0 , 0 0 0 passenger cars and 1 , 1 0 0 , 0 0 0 trucks, in 1 9 4 1 . That
was our biggest year. Our capacity with present plants operating is
6% million cars.
The public is naturally impatient to get the goods which they have
gone so long without, and their feeling that supplies should be forthcoming in record time is a reflection of their faith in our huge production ability.
In 1940, before the war, our approach to production was in many
instances almost defeatist. There were those who said that 8,000,000
unemployed was a natural state of things and that we had become a
mature economy with restricted industrial horizons. Perhaps that
is why so many people reacted skeptically in 1941 when President
Roosevelt called for 50,000 planes and 5,000,000 tons of shipping in a
single year.
Senator C A P E H A R T . Y O U use that as an argument, and I think it is a
good one, that people said you could not get 50,000 airplanes in a year,
and they were wrong.
Mr. B O W L E S . We got more than 1 0 0 , 0 0 0 airplanes in a year.
Senator CAPEHART. However, if I remember correctly, within the
last few months we were asked to pass a law paying everybody $26 a
week, and the argument was that we were headed for a calamity
period; and it was estimated by the administration that there would
be millions of people out of work. And we were likewise asked to
pass a full-employment bill on the theory that there were going to be
millions out of work; that the Federal Government was going to have
to employ those people. How do you reconcile these two philosophies
in such a short period of time?
Mr. B O W L E S . A S I pointed out earlier in my statement, we were
wrong. That applies not only to people in the Government, but to
most economists in the matter of their estimates of what was likely to
happen after the war ended. W e had never done this before. I
assume if we had a war every 25 years we would become experienced,
but I hope we do not have to become experienced that way.
Senator CAPEHART. Then I suggest it might be possible for you to
be wrong in your contention that OPA should be continued.
Mr. B O W L E S . I would like to cover that later on in my statement.
Senator CAPEHART. I cannot help noticing these two inconsistencies
on the part of persons who appear before committees. It was made to
appear to us that we would have to pay $26 a week because there
would be millions unemployed, and now you come here with figures to
show the opposite situation, which figures I believe much more than I
believed those put before us at the other time.
Mr. BOWLES. On the same basis on which those figures were presented business came here last fall and urged that the excess-profits
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 1 9 4 2 16
tax should be eliminated. The excess-profits tax was eliminated because of the very feeling that the situation would work out as the Government estimated. And that was how the excess-profits tax was removed, which amounted to $5,000,000,000 or $6,000,000,000.
Senator TAFT. When we enacted the full-employment bill we did it
with our eyes open to the thought that history would repeat itself and
sometime there would be a depression. And, therefore, with our eyes
open we enacted an insurance bill to provide for a depression, which
we hoped would never come, but if it did come Ave provided that industry would take up the slack. And I have never regretted that I
voted for it.
Senator CAPEHART. I voted for it, too. Fact of the matter is that
it had to be done at that particular time, rushed through because of
the danger of millions of unemployed. It was said that it just had
to be done that day.
Mr. BOWLES. That was just the way the excess-profits tax was removed.
During the war period we have seen management and labor far
exceed the early wartime production quotas laid down in 1941. We
have marvelled at the flood of goods that have poured from our
factories. Our impatience today with shortages and delays is a reflection of our new confidence that for us no production record is
impossible. It will be easier on all of us, however, if we face up to
the cold facts of our problem. The backlogs of demand accumulated
through 4 years of war, plus the stupendous purchasing power developed by our industrial machine working at full blast, cannot be
wholly satisfied for many, many months to come—even when present
bottlenecks are eliminated and our employment rolls are increased
by three or four million additional workers.
How much of current consumer expenditures represents speculative
or frightened buying is impossible to tell. How much of this kind
of buying there will be hereafter is a major question mark across our
future. Current business demand parallels the intensity of consumer
demand. Producers have been adding heavily to their plant and
equipment and to inventories of raw materials and goods in process.
Business spending has reflected deferred demands and forward buying as well as buying to meet heavy current requirements. Manufacturers7 inventories of materials and parts appear to have been
built up substantially. However, there is evidence that these inventories are in many cases still below the requirements of present highlevel operations. Distributors' inventories, unquestionably, are still
depleted.
How long it will take to build up inventories to meet reasonable
requirements we do not know. Another major question mark across
the future is whether manufacturers and distributors will seek to
build up inventories above reasonable requirements in the hope of
speculative profits on a rising inflationary market, or purely for their
own protection.
The enormous business and consumer demand which. I have
described does not remain unsatisfied because of failure to get production. As I have said, the production of civilian goods is higher
than ever before in our history, and it is steadily going up.
The questions are naturally asked: Where are these goods? Why
do heavy inflationary pressures continue in the face of this record
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 1 9 4 2
17
production? Part of the answer to these questions is that the flow
of production has not continued long enough to satisfy urgent needs
even in the areas in which production is greatest.
The more important part of the answer, however, is that the
increase in production has been concentrated in the field of industrial
materials and equipment and in the preparatory stages of production
of finished consumer goods. It was in this area that we could utilize
directly the great expansion of capacity during the war. This is the
area, moreover, where any major increase in the production of
finished consumer goods has to begin. While we thus have a tremendous rise in the potential supply of finished consumer goods, the
result has scarcely begun to make itself felt on retail shelves.
Senator TAFT. All of this is based on the theory that we need to
know what the production is today. How can we get those statistics?
And how do we know those statistics are correct?
Mr. BOWLES. They are the index of the Federal Reserve Board.
They have been collected for a great many years.
Senator TAFT. But they are always 3 or 4 months behind.
Mr. BOWLES. This is the March estimate that we have here, and
the February figures are out.
Senator T A F T . H O W do they get those figures? For instance, how
do you estimate what the production of lumber is?
Mr. BOWLES. I cannot tell you that.
Senator TAFT. Are they based on reports from the lumber mills?
Mr. BOWLES. They are reported, I assume, from the major samples.
Mr. Eccles can tell you about that.
Senator T A F T . I have statistics furnished a year ago, but I cannot
be sure that current estimates of production, and so forth, are right.
Mr. B O W L E S . I do not think that you believe they are wholly right,
but they are in an index which is pretty well established.
It is helpful to think of the entire process of production of civilian
goods as a single pipe line, from the first stages of production of raw
materials to the point of final sale to the consumer. Since VJ-day
the input into this pipe line has been huge. The output by comparison with the demand which we face seems puny.
We are at the same stage in our conversion to peace as we were in
1942 in our conversion to war. At that time our gigantic productive
effort had thus far been reflected in only a thin trickle of tanks, guns,
and planes. Not until 1943 did the pipe line fill up and yield a flood
of finished weapons.
A similar flood of finished consumer goods will eventually pour out
of our present pipe line. Even after the outpouring begins, however,
it is evident, as I have suggested, that it will take time before the
tremendous accumulation of urgent demand can be met.
I might add that this is the basis for this tremendous hope and
belief we all have in prosperity extending over a number of years.
Our present task is to maintain our economic and psychological
equilibrium during the crucial interval while this process is working
itself out. The question presented by the bill now before this committee is how best to do this.
In the great national debate on extension of the stabilization laws
which is now in progress, three main alternative courses of action are
being urged. The first is the proposal, put forward by the National
Association of Manufacturers and others to drop price, rent, and wage
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 1 9 4 2 18
controls immediately, except in a few selected fields. The second is
the present program for the firm maintenance of controls as long as
the danger of inflation continues and their orderly liquidation as soon
as the danger subsides. The third is a compromise plan to keep the
framework of controls a while longer but to relax their restrictions so
as to remove as many as possible of the irritations and headaches that
go with them.
I think I can best set forth the essential issues before the Congress
by discussing each of these three proposals in turn.
CHOICE 1: DROPPING ALL CONTROLS
NOW
I should hesitate to take time to discuss the suggestion to drop all
price, rent, and wage controls at this stage of the transition period if it
had not been seriously advanced by representatives of a major
organization of businessmen.
fc Discussion of the suggestion, however, has the advantage of clearing
the air. Here are controls which nobody wants unless they are
needed and which nobody would tolerate as a continuing part of
American life.
Senator TOBEY. A continuing part of American life—the charge is
made so constantly and surreptitiously that what you have in mind
is a continuation of the control of the economic policies of this country
ad infinitum.
Mr. B O W L E S . I wish these people who suggest that would spend a
week in the Office of Price Administration.
Senator TAFT. The recommendations you have made, Mr. Bowles,
are just as good reasons for not continuing controls as for continuing
controls.
Mr. B O W L E S . I will come to that. I may not satisfy you but I
will try.
Senator TAFT. All these figures you present, present a case for 3
years.
Mr. B O W L E S . I think on rents, possibly, yes.
The N A M ' s proposal presents the basic issue squarely and honestly.
D o we actually need these controls or don't we? The answer to this
question turns mainly on an issue of fact. What would happen if
we let the controls go?
Even the N A M agrees that prices would go up. How far up
they would go at first is a matter of conjecture.
I would like to underline these words "at first". This, however,
is not the critical question. For the purpose of judging the proposal,
let us make the most conservative possible estimate and suppose that
the immediate impact on the cost of living and the general level of
prices and rents would not at first exceed 10 percent.
The amendments to the Price Control Act now pending before
Congress would raise prices and rents far more than that.
Senator TAFT. Which amendment?
Mr. BOWLES. All of them added together, or several by themselves.
Senator T A F T . YOU refer to those of the House committee?
Mr. B O W L E S . N O . General ones proposed.
I do not understand the N A M to suggest that the complete elimination of price control would result in any lesser initial increase than
10 percent.
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 1 9 4 2
19
The really important question is what the secondary consequences
of these initial price increases would be. In the light of the over-all
shortage of goods in relation to minimum business and consumer
needs which I have described, I believe the answer to this question
should be clear. The result would be a snowballing of further price
increases, and a destructive runaway inflation.
How could we reasonably expect anything else to happen?
With prices rising and no assurance of where the rise would stop,
the desirability of buying right away instead of later could not fail
to occur to every businessman and consumer with money to spend.
Senator MILLIKIN. Would it not occur to the businessman also that
he would be in a precarious position, assuming we rapidly increased our
production? He had the same feeling in 1920 when he overstocked
his inventory. The production caught up with him.
Mr. B O W L E S . I do not think the majority of people do it to speculate, but if they wanted to get things they would have to speculate.
A buyers' strike would stop it. A consumers' strike stopped it in 1920.
I would like to go on and show the results of what would happen.
Senator CAPEHART. And aren't you making a better case for
rationing?
Mr. BOWLES. When rationing backs up price control you get a
better job.
Senator CAPEHART. There will be a tremendous shortage for many
years and that shortage will exist in your opinion regardless of prices.
It seems to me to make a good case for rationing.
Mr. B O W L E S . I think if we had it in clothing, it would be better for
us today.
Senator T A F T . Y O U took off rationing because it was unpopular and
tried to maintain price control without it.
Mr. BOWLES. This is the first time I have ever been accused of
doing anything popular.
Senator T A F T . I feel that it was for political reasons that rationing
was dropped.
Mr. B O W L E S . I do not know what the political reasons were but I
heard no disagreement in the Senate or the House.
Senator TAFT. I criticized it. It seemed to me that it was done
because millions of people are affected by rationing and only a few
businessmen suffer by price control.
Mr. BOWLES. Yes. You did mention it. I was opposed to removing rationing.
Senator M I L L I K I N . I would like to say that I agree with you that
with prices rising and no assurance where the rise would stop, the
desirability of buying right away instead of later could not fail to
occur to every consumer with money to spend.
I am counterbalancing that in a tentative way with the thought
that production is the answer to that.
Mr. BOWLES. Production is the answer.
Senator MILLIKIN. I would agree with the very thing you speak of,
but production has been the answer, and that induces a certain degree
of prudence in the buyer. I do not believe that any merchant who
overloaded his shelves in the last war and who is still alive, would
deal with his problem in the same imprudent fashion.
Mr. BOWLES. I think that is right.
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 1 9 4 2 20
Senator MILLIKIN. We cannot ride these horses in two different
directions at the same time. We are talking of the merchants overloading the shelves, but we have a shortage.
Mr. BOWLES. He can hold back the sale of goods and develop his
inventories. I will develop that point, Senator Millikin, as I go along
here.
But my point is this—in addition to $138,000,000,000 of current
spendable income, consumers now have $145,000,000,000 of liquid
assets which they can try to turn into goods if they think goods are a
better bet than money. Businessmen, in addition to high current
profits, have $80,000,000,000 of liquid assets and further borrowing
power as well. This vast reservoir of funds which now are safely out
of the market would begin to pour into it the moment a general rise in
prices began, and it became clear that goods were a better bet than
money.
Senator CAPEHART. Mr. Chairman, may I ask a question there?
Our people have $145,000,000,000 of liquid assets. It seems to me
that what we would like to have them do is to keep it. That, the
economy we are going into with terrific shortages and the fact that, as
you have mentioned, employment is at its peak with wages the best in
the history of the Nation, and civilian goods at their peak, and the
people going to accumulate out of savings and earnings and profits a
sum over the next 3 or 4 years equal to what they have been able to
do in the past 3 or 4 years; and at the end of 3 years, aren't we going
to have twice a hundred and forty-five billion?
Mr. BOWLES. Of course, some of it will go into housing and business
expansion.
Senator TAFT. W e expect it to be spent for these purposes.
Mr. BOWTLES. But you do not want this reservoir of funds to start
competing for consumer goods.
Senator C A P E H A R I . Y O U want to multiply this by 2 . The hundred
and forty-five billion they have and trie hundred and forty-five billion
they will accumulate.
Mr. BOWLES. They are not going to accumulate it if you have
inflation. They will sell their war bonds and savings and try to get
goods and real estate and anything tangible.
Senator CAPEHART. We are going to force ourselves into another
deflation.
Mr. B O W L E S . N O . What we are going to try to do is to avoid having that money become frightened. If the people have confidence that
the Government will maintain stable prices then that money is not
going to be frightened and it will not go into goods. If we can keep
stability we will get goods moving.
The point is today that people are saving much less than their
income. They are starting to turn their bonds into goods.
Senator CAPEHART. During the war period they spent more money
for civilian goods for the 5-year.period.
Mr. B O W L E S . I think you will make it much easier and more
logical if you permit me to read this statement because many of the
questions you are bringing up I am about to bring out.
Senator C A P E H A R T . G O ahead.
Mr. BOWLES. While buyers with available funds were deciding to
buy right away instead of later, sellers with available goods would be
deciding, for the same reasons, to sell later rather than right away.
E X T E N D PRICE CONTROL AND STABILIZATION ACTS OF 1 9 4 2
21
Speculative bidding for goods, in other words, would start to climb at
precisely the same time as speculative withholding. The existing gap
between total supply and total demand would quickly be multiplied.
Senator T A F T . Mr. Bowles, what makes you think of no more than
a 10-percent increase?
Mr. B O W L E S . If the cost of living went up 10 percent you think
that wages and profits would just settle down and everybody would
not ask for more money?
Senator T A F T . They asked for more money when there was no
cost-of-living increase. And they are just as likely to ask for it next
year. It is one arguing point in the general battle.
Mr. B O W L E S . If you will forgive me, I do not think that is a good
argument. I think we will have stabilized wages if we stabilize prices.
Senator T A F T . Why did you support a 20-percent increase?
Mr. B O W L E S . I did not know I did.
Senator T A F T . Your economist informed the President it could be
done.
Mr. B O W L E S . What economists? I deny that. It is not correct.
What makes you say that?
Senator T A F T . Because your economists of the OPA and Mr.
Wallace support this theory.
Mr. B O W L E S . Y O U start out by saying I advocated it. M y advocacy of it extends as long as wage increases could be granted without
raising prices.
Senator T A F T . And your economists said they could pay a wage
increase of 20 percent.
Mr. B O W L E S . I would like you to document that and say what
economist and at what time.
Senator T A F T . That was the impression given in the papers. The
President stated 20 percent and it was set up, I do not know whether
it was the Office of Price Administration's economists but Mr. Wallace
said the statement was one issued or came from an economist who
was with OPA.
Mr. B O W L E S . Isn't that getting a little bit away?
Senator M U R D O C K . Can't we leave Mr. Wallace out of this?
Mr. B O W L E S . N O W , we are back where we started.
Senator C A P E H A R T . Y O U were opposed to an 18% percent increase?
Mr. B O W L E S . I am opposed to wage increases that will force the
raising of the general price level. I think some wage increases could
be granted with prices limited to the present price level.
Senator M I L L I K I N . I would like to ask the witness whether he
opposed an 18% percent.
Mr. B O W L E S . I had no part in the wage increase. I think the
stabilization of the economy is the important thing for wage earners,
farmers, consumers, and everybody. Any increases that result in
higher prices are dangerous.
We have a new wage-price policy which I am trying to carry out.
The Wage Stabilization Board is doing an excellent job in getting
stability back in that picture, and I intend to stand firmly on the
policies I now have, regardless of whom they affect.
Senator M I L L I K I N . Y O U are making an argument now as to the
effects of an advocated 10-percent increase in price levels. Haven't
we a 10-percent increase by black market?
M r . BOWLES.
NO.
N o t a t all.
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 1 9 4 2 22
Senator MILLIKIN. Will someone following you give us an argument on that?
Mr. BOWLES. I think BLS, which collects the data, made a survey
on meat in the last 3 weeks.
Senator MILLIKIN. I think price levels—your price levels—are a
theory.
M r . BOWLES. That is an indictment of business.
Senator MILLIKIN. I am not indicting you nor business but I would
like to get facts as to how much black market is increasing your price
level.
Mr. BOWLES. Building materials present the worst situation.
When we lost control of allocations and priorities with the removal of
L - 4 1 — a n action with which I disagreed at the time—a scramble for
materials resulted. As these allocations go back in, we will have a lot
of that corrected—never perfectly.
Senator MILLIKIN. It is bad in meat, is it not?
M r . BOWLES. B u t n o t as b a d as a year ago.
Senator B A N K H E A D . T O what extent has the Civilian Production
Agency exercised the power to make priorities on lumber?
Mr. BOWLES. They are working it out with Wyatt's office. They
have put out new rules as to who can and who cannot get lumber on
priorities.
Senator B A N K H E A D . I understand your previous statement was
that they had lost it.
Mr. B O W L E S . I was opposed to the removal of the L - 4 1 controls.
Senator BANKHEAD. But the Government still has that power and
is exercising it?
Mr. BOWLES. Some of the controls were put back into effect
recently. I would like to say at this time that a lot of people before
the war pointed out with apprehension that people would never obey
these rules. They were difficult and onerous. I heard of it, but it
has not worked out that way.
Senator T A F T . I said they would do it in wartime but not in peacetime.
Mr. BOWLES. They are doing it pretty well. The average department store does a pretty good job.
Senator TAFT. They have to.
Mr. BOWLES. Take your chain grocery stores and the independent
stores, they do a pretty good job. W e have all been hampered by
lack of people to enforce the rules, but still they have done a good job.
Senator CAPEHART. Would you advocate a 10-percent average price
increase if it would, in your opinion, increase production in America
from 33 to 50 percent?
M r . BOWLES. A n d if it did n o t g o a n y further?
S e n a t o r CAPEHART. Y e s .
Mr. BOWLES. Yes. If you could get out of this whole mess and
all its difficulties and your prices moved up only 6, 7, 8, or 10 percent,
it would be worth while.
There is no magic about this price level. I t is not something
sacred. But I do not think you would have only a 10-percent increase
and nothing more. I think you would cut the whole thing loose and
begin an upward spiraling of prices.
Senator CAPEHART. The businessmen maintain, the reason they
cannot get production, or greater production, is that the prices are too
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 1 9 4 2
23
low. You, by your figures, have proven to us that production is at
an all-time high, and yet it is short from 33 to 50 percent of meeting
the requirements.
Mr. B O W L E S . N O . I would not say that. In some lines, it is a
lot better than that.
Senator CAPEHART. Twenty-five percent. W h y would not the
sensible thing to adjust prices be a 10-percent over-all increase?
Mr. BOWLES. There have been so many adjustments, I am scared
to death. W e have gone so far in adjustments that we are on the
verge of real difficulty.
Senator C A P E H A R T . HOW^ are you going to get production?
Mr. BOWLES. W e are getting production. It is coming more
rapidly. Where do you get more labor? W e hope to get workers
back to a 40-hour week. They are averaging 42 hours.
Senator CAPEHART. Would you advocate 48 hours, as you did
during the war?
Mr. BOWLES. Whatever workers and management want to work
out
Senator C A P E H A R T . I thought you were the head man.
Mr. BOWLES. W e do not set the hours of labor. Labor and management decide the hours they want to w^ork. If you really want to
get back to a free economy, let us get back to it.
Senator C A P E H A R T . Y O U should be held responsible for production
and should make recommendations to Congress on how we can increase production.
Mr. BOWLES. W e need additional workers.
Senator CAPEHART. If what you say is true, the situation is hopeless, and we will have trouble for 25 years.
Mr. B O W L E S . Y O U are getting a lot of men out of the Army for
months to come. They all go into the plants as workers.
Senator CAPEHART. W e could get that by having a 48-hour week.
Mr. BOWLES. If you feel that way, why don't you propose a law
requiring men to work 48 hours?
Senator CAPEHART. And pay them for it?
Mr. B O W L E S . I would say that would be a long step toward the
totalitarian state, in my opinion.
Senator CAPEHART. What 's the difference between 40 and 48?
Mr. BOWLES. That is worked out by co lective bargaining.
Senator TAFT. I t is the law.
Mr. B O W L E S . Y O U can work 3 0 or 2 0 or 10. You are suggesting
making it mandatory that whether they like it or not they must work
48 hours.
Senator C A P E H A R T . I do not make anything mandatory.
Mr. BOWLES. Well, that is perfectly ridiculous. I am probably
more hopeful for the future. W e have more hope if we follow that.
Y o u seem to be advocating a ripping off of these controls.
Senator C A P E H A R T . I am not advocating. I am asking you.
Y o u said if, by raising prices 10 percent, production could be increased
33 percent that you would be in favor of it.
Mr. BOWLES. That ; s what Mr. Roosevelt called an " i f f y " question.
Senator T A F T . I think it was an " i f f y " answer you gave. You said
"if it did not go up any more."
Mr. BOWLES. It is bound to go up more.
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 1 9 4 2 24
Senator TAFT. The dilemma I see is this: Your own figures show
that wage rates have gone up 62 percent in the cost of labor per hour.
Prices have only gone up 34 percent by the press.
Mr. BOWLES. That is not my claim.
Senator T A F T . H O W can you hope to maintain prices at 3 4 percent
and wages at 62 percent when wages amount to 70 percent of the
national income? How can you hope to do that?
Mr. BOWLES. I am surprised that you would ask that question.
All you would have to do is to read the history of the United States,
with which you are familiar.
Senator T A F T . Y O U are talking about increase of productive
capacity, and there is no evidence of that since 1939 and 1940. I
have gone through all the figures you can find, and there are none to
prove anything of that sort since 1939 and 1940, because these are
wartime-production figures, and there is no increase in productive
capacity in civilian goods.
Mr. BOWLES. Look at your volume. Y o u had 8,000,000 unemployed in 1939.
Senator TAFT. What has that to do with it? I am asking you if
prices can go up 34 percent and wages can go up 62 percent.
Mr. BOWLES. In 1919, average hourly earnings in manufacturing
were 48 cents per hour. In 1944 they were $1.02 per hour, on the
average. Yet price levels were the same in 1919 and in 1944.
Senator T A F T . 1 9 1 9 was a peak.
Senator MURDOCK. Let's get the answer from the witness.
The CHAIRMAN. Let Mr. Bowles answer.
Mr. BOWLES. Your wages increased while the price levels stayed
the same. Even today, in spite of the figures you point to, profits
are infinitely greater than they were in 1939, so business did not suffer.
Volume is one of the greatest pullers down of costs. As volume goes
up, costs go down.
I will agree with you that for a period of time you have to pay
increased wages as a way to get our whole standard of living higher.
But ultimately costs go down and profits do not suffer. As to how we
have done it—take the automobile, the vacuum cleaner, the electric
refrigerator, and the washing machine. They increased wages,
decreased prices, and increased profits.
Senator TAFT. Assuming there has been no increase in productivity
of labor per man.
Mr. B O W L E S . I do not assume it.
Senator TAFT. And the general history of productivity in waitime
is the same. How can you hope to maintain a 60-percent increase
in wages and a 34 percent increase in prices? Isn't an increase in
prices inevitable?
Mr. BOWLES. Of course it is not. If the competitive system
works the way I think, it does not. Selling costs go down with
volume, and distributing costs go down. Overhead goes down per
unit.
Senator TAFT. Percentage-wise—no.
M r . BOWLES. I n dollars.
Senator TAFT. If you want to get efficient salesmanship you have
to get the same percentage of sales before you can say the profits are
bigger. They are not bigger on invested capital then.
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 1 9 4 2
25
Mr. BOWLES. Take 1939. Since then wages have increased 61 percent and prices have increased 31 percent. Profits have not suffered,
as far as I can see. Profits are infinitely bigger, anyway.
Senator TAFT. That must be because your price control is inefficient; but in other lines, there are heavy losses. M a n y people have
gone out of business. You can only be talking of general average
profits.
Mr. BOWLES. Where is this hardship? Y o u have fewer bankruptcies and 4 0 0 , 0 0 0 new businesses. Where is all this hardship?
Senator TAFT. Bankruptcies have gone out of style.
M r . BOWLES. That is a strange and new idea.
Senator BARKLEY. What happens to the creditors if they do not go
through the courts? There is bound to be some sort of liquidation.
Senator TOBEY. What happens to the lawyers?
Mr. B O W L E S . A lot of these questions I can answer if I am allowed
to finish my statement.
Senator T A F T . Y O U have #ot answered my question.
Mr. BOWLES. I obviously have not satisfied you.
Senator TAFT. Wages and salaries constitute 70 percent of the
national income, and you cannot cut profits in half and not justify
more than a 4 percent increase in wages.
Mr. BOWLES. What do you mean?
Senator TAFT. They are 6 percent, of the national income.
Mr. BOWLES. After taxes?
Senator TAFT. Y e s .
Mr. BOWLES. Before taxes they are about 13 percent.
Senator TAFT. But the Government takes that away.
Mr. BOWLES. Congress decided that, not the Office of Price Administration. Price-cost relations are reflected in profits before, not
after, taxes.
Senator TAFT. M y point is this: You cannot hope to increase
wages, which are 70 percent, while our profits are 6 percent of the
national income.
Mr. BOWLES. If you assume the necessity of a high profit, lowvolume economy, I agree with you.
Senator T A F T . Y O U cannot increase this 70-percent item of the
national income without increasing prices 60 or 50 percent in the long
run if you have a free economy—if you allow the farmers what they
have to have, which is not counted in wages and salaries, and allow
the businessman to keep the thing going. I think you are trying to
do something which is absolutely impossible.
Mr. BOWLES. Let me take your proposal and let prices catch up to
wages as you suggest.
Senator TAFT. It is going to happen regardless.
Mr. BOWLES. Where does the money go? Does it go into profits?
Senator TAFT. Oh, I could not tell you.
Mr. B O W L E S . Y O U do not know where it goes?
Senator T A F T . T O the farmer or other operators, or to capital.
Mr. BOWLES. Labor is not going to get any of this on your own
assumption.
Senator TAFT. Labor has 70 percent.
Mr. BOWLES. Yes. You are going to increase prices 30 percent.
Would you like to figure out where it is going?
Senator T A F T . I am not interested in profits.
85721—46—vol. 1
3
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 1 9 4 2 26
Mr. BOWLES. Where is the money going?
Senator TAFT. When you get all through the money will go where
it has always gone.
Mr. BOWLES. Back to labor?
Senator T A F T . T O capital, to the farmers, to the individual small
businessmen. That is the way it has gone before and that is the way
it will go in the future.
Mr. BOWLES. But what is the answer to this question of mine?
You say, keep wages the same and increase prices more to the consumer.
The CHAIRMAN. I think you should let Mr. Bowles answer.
Senator TAFT. Mr. Bowles and I always get along together.
Senator BARKLEY. I would like to ask Mr. Bowles this question and
have the attention of Senator Taft. Assuming wages have gone up
62 percent and the cost of living 34 percent, and 70 percent of our
annual income is wages and salaries, it does not by any means follow
that 70 percent of the cost of any article produced is wages. We all
know the total cost of the wage element in the cost of anything is not
70 percent.
Senator TAFT. The figures stated on the floor of the Senate are
80 percent. Y o u mean wages but do not count materials in the labor
involved in the prior production of the raw goods, and so forth, but
you have to count all that because these wage increases will be general
for everybody, including Congressmen and Senators, I hope.
Senator BARKLEY. I am afraid that would be inflationary.
Mr. B O W L E S . Y O U have increased wages 6 1 percent and profits a
little over twice what they were after taxes.
Senator MURDOCK. Mr. Chairman, may the witness have a little
opportunity to answer the question. I am going to insist that the
rest of us have the right to hear the answer.
Mr. BOWLES. Profits have increased over double what they were
in 1939. Wages have gone up 61 percent. Your proposal is to raise
prices 30 percent. I do not know where the money is going to if it
is not going into profits.
Senator TAFT. May I first question some of your figures? You
say profits have increased 100 percent or double?
Mr. B O W L E S . 1 9 3 9 as against 1 9 4 4 , after taxes.
Senator TAFT. Wages have increased three times. What we were
asking about was the wage-rate increase. You will have to increase
it three or four times.
Mr. B O W L E S . Y O U had 8 , 0 0 0 , 0 0 0 unemployed. Y o u do not want
that.
Senator T A F T . Y O U are using two parallels that are not parallel.
If you take the gross increase
Mr. BOWLES. Let us take a particular business. You are talking
in terms of wages per individual. Your profits for business are a
way up. Certainly, they are up two and a half times per business.
Senator TAFT. What I want to suggest is that in that profit is such
a small percentage of total national income.
Mr. BOWLES. Then why double it?
Senator TAFT. If you increase your wages, your 70 percent item
of the national income by 60 percent, you have to raise the 60 percent
in prices. I do not see how you can escape it.
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 1 9 4 2
27
Mr. BOWLES. And, then, that money goes some place. If it goes to
profit, it goes where it is not needed. I do not think businessmen
whom I know want a profit increase that is a windfall.
Senator TAFT. I t can go to the farmer to the extent of 10 percent.
The independent operator gets around 10 percent profits; 10 percent, roughly speaking for all averages.
Mr. B O W L E S . Y O U would not get 10 percent on that basis.
Senator TAFT. I am advocating the increasing of prices, not profits.
Profits are always controlled by competition. If the competitive
system works, profits will be held to a perfectly reasonable figure
whatever it may be. How the rest of the income would be divided I
do not know.
M r . BOWLES. Labor would go out to get a big share of these prices
and so would the farmer. He would go back to a much higher level.
There would be a higher level for everybody. With that proposal
your bonds are worth 30 percent less, and we asked the people to
invest in them.
Senator TAFT. All y o u have to do is take your arithmetic with a
30-percent increase in wage rates and it will be reflected one way or
the other in an increase in prices.
M r . BOWLES. I think y o u leave out many other elements—selling
prices and sales costs. You may have lower unit profits and still make
a much larger total profit. I think you leave those things out.
Senator TAFT. While we are on the subject of wage increases, I have
been shown a letter—I do not know whether it is a response written
by you to Mr. Murray—in which you approve, as Economic Stabilization Director, of a wage increase up to 18% percent for steel workers.
M a y I read it?
Mr. B O W L E S . I am familiar with it.
Senator TAFT. T h e letter is dated February 15, 1946, and is ad-
dressed to Mr. Philip Murray, president of the United Steelworkers
of America, Washington. It reads:
D E A R M R . M U R R A Y : Y O U have discussed with me the problem of securing a
prompt application of the President's Executive order of yesterday to the present
steel wage controversy so as to make possible an immediate settlement of the
strike. After considering the problem, I have come to the following conclusions
as to the proper course of action.
Immediately upon taking office as Economic Stabilization Director, I will issue
an order under section 3 of the new Executive order providing that any wage settlement resulting from a wage agreement, arbitration award, or recommendation
of a publicly appointed fact-finding agency involving a company in the steelproducing, processing, or fabricating industry or in the iron-ore-mining industry,
whose employees are now on strike, and providing an increase not in excess of
18^ cents per hour, shall be deemed approved within the meaning and for the
purpose of the Executive order.
The result of this order will be that companies in the foregoing industries whose
employees are now on strike will be excepted from any requirement of application
to the National Wage Stabilization Board to secure approval of an adjustment not
exceeding 1
cents per hour. Other companies in these industries, however, will
be required to make application, if not otherwise excepted. In acting on these
latter applications, the Board may, but will not be obliged to, accept the 18}^
cents per hour figure as representing the established pattern for the particular
type of company involved.
The general pattern of adjustment in the basic industries involved has already
been established. In those circumstances, the spirit and purposes of the new
Executive order, in my judgment, require that new procedural requirements should
not be permitted to complicate issues which are already on the verge of settlement.
Sincerely,
C H E S T E R B O W L E S , Administrator.
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 1
942
28
Senator T A F T . I am told that letter was shown to many companies
throughout the steel industries as a justification for an 18% cent order.
If the men had gone on strike they were to get the 18% cents, but if
they had tried to settle peacably they would not get it but had to
go through all the complicated procedure of the Stabilization Board.
Don't you think that was a general encouragement to strike?
Mr. B O W L E S . N O . I think you have to consider the background.
W e had a long strike that devasted the steel industry and that
was rapidly bringing the whole country to a standstill. The President
said there should be an 18%-cent increase. We simply took the situation as it was that night and tried to get these people back to work
and this terrific bottleneck open. We had to get people back to work:
and producing goods. That letter succeeded in getting them ba^k
immediately.
Senator T A F T . SO you said that anybody who struck automatically
gets the wage increase with no further action but if you had not
struck you did not get it.
Mr. B O W L E S . It had been approved by the President and he himself had made the statement. As far as your red tape was concerned,
I believe the cases as they came in were handled within 48 hours.
They were handled quite rapidly.
Senator T A F T . Where there had been no strike. I never heard of
a case where if they did not strike, they got it.
Mr. B O W L E S . The approval by the Wage Stabilization Board of the
decisions was given very rapidly and the whole backlog went through
very fast.
I agree with Senator Capehart that we should have the opportunity
to tell our story. I would like to tell mine in sequence and I think I
am entitled to that opportunity^
I have not had that opportunity yet.
Senator C A P E H A R T . One more question. Why did you not give the
factories whose employees did not strike the same rights and privileges
as those that struck?
Mr. B O W L E S . They applied to the Wage Stabilization Board and
got fast action. We were trying to get the country started up again,
trying to get people back on the job and production started.
Senator C A P E H A R T . Wouldn't it be just as well to say that to all
the factories that did not strike?
Mr. B O W L E S . The others were handled*very rapidly.
Senator C A P E H A R T . I understand they may have been handled
rapidly but I cannot understand any administrative officer in this
Government who would make one rule that applies to one group and
another rule that applies to another.
Senator T A F T . This letter was never published.
Mr. B O W L E S . Everybody in the country has seen it.
Senator T A F T . Why did you write to Mr. Philip Murray so he could
show the letter.
Mr. B O W L E S . We ourselves made the letter available to anybody,
to steel companies all across the board.
Senator T A F T . Why was it addressed to Mr. Murray?
Mr. B O W L E S . He was head of the steel workers' union.
Senator T A F T . He was not an official and he was not on the Board.
Mr. B O W L E S . We were trying to stop the bottlenecks and we took
action rapidly. If I had not taken it, it would have dragged on a
week or more.
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 1 9 4 2
29
Senator T A F T . I do not see why the public were not informed.
Senator CAPFHART. I have no objection to your action but I do
object to the fact that you did not treat everybody alike.
Mr. BOWLES. The order was public.
Senator CAPEHART. But not this letter.
Mr. BOWLES. The order carrying out that letter was published.
Could I finish my statement? I am trying to develop a logical
thing. We have something important and I think as Stabilization
Director I might have an opportunity to tell my story, whether the
gentlemen agree or disagree.
Senator TAFT. I am sorry. I have to be on the floor of the Senate
for a House bill. I ask to be excused for that purpose.
Senator MTJRDOCK. Maybe you can tell your story now.
[Laughter.]
Senator T O B E Y . I know what you are saying in your mind, Chester;
you are repeating the words, "For which relief, much thanks."
Mr. B O W L E S . I think the National Association of Manufacturers
should have an opportunity to be heard as well as others. And I am
only asking the same opportunity.
An increase of no more than 10 percent in the cost of living could
not fail to set off a wave of demands for wage increases and of strikes
in support of those demands. The further spurt of prices would
double and redouble these demands. Higher wages would force up
whatever prices had not gone up already.
The CHAIRMAN. Mr. Bowles, excuse me for interrupting.
Mr. BOWLES. Always, Senator.
The CHAIRMAN. Many of the Senators want to be on the floor for
the House bill. I have conferred with the ranking Republican
member, Mr. Tobey, who agrees with me that we ought to go over
until tomorrow. This will give you an idea how this is going to prolong
these hearings.
Senator MILLIKIN. It is very helpful to have prolonged hearings of
this kind. I invite the chairman's attention to the fact that since
Senator Taft left he lost half his audience.
Senator TOBEY. Mr. Bowles has been the leader in this movement
and has the major story to tell. I should think many of those others
who will testify could accomplish their whole objective in half an
hour's time; but this is the text of the picture—the over-all picture.
The others are specialists in certain phases. I think we can ask them
to boil it down to its lowest terms.
Chester Bowles speaks as one having authority and we will give
him all the time he needs.
Mr. BOWLES. I think I can finish my statement in about 40 minutes.
Senator CAPEHART. May I say, in view of the fact that Mr. Bowles
is the expert, that we likewise should have sufficient time to ask him
questions. Senator Tobey claims lie is the expert, so we should have
sufficient time to discuss the matter with him at some length.
The CHAIRMAN. We will recess. When we are through with Mr.
Bowles, Mr. Paul Porter will be here.
We will recess until 10 o'clock tomorrow morning.
(Thereupon at 12 o'clock noon, the hearing recessed until 10 a. m.
the following day, Tuesday, April 16, 1946.)
1946 EXTENSION OF THE EMERGENCY PRICE CONTROL
AND STABILIZATION ACTS OF 1942, AS AMENDED
T U E S D A Y , APRIL 16,
1946
U N I T E D STATES S E N A T E ,
C O M M I T T E E ON B A N K I N G AND C U R R E N C Y ,
Washington, D. C.
The committee met at 10 a. m., pursuant to recess on yesterday,
in room 301 Senate Office Building, Senator Robert F. Wagner
(chairman) presiding.
Present: Senators Wagner (chairman), Barkley, Bankhead, Radcliffe, McFarland, Taylor, Mitchell, Carville, Taft, Buck, Millikin,
Hickenlooper, and Capehart.
The CHAIRMAN. The committee will come to order.
Mr. Bowles, will you continue, and we hope to conclude your
testimony in a very short time.
STATEMENT OF CHESTER BOWLES, DIRECTOR, OFFICE OF
ECONOMIC STABILIZATION, WASHINGTON, D. C.—Resumed
Mr. BOWLES. If I may, Mr. Chairman, I would like to review very
briefly where I was at the recess yesterday, because I am afraid we
strayed quite a bit.
Yesterday I outlined the main facts of our present economic position. Chief of these is the fact that the total demand for goods,
based on real needs, still far exceeds the total supply.
The most encouraging fact in the situation is our huge and steadily
increasing production of civilian goods. This is still mainly concentrated in the earlier stages of production, but will eventually result
in a tremendous outpouring of finished consumer goods.
Senator BANKHEAD. Mr. Bowles, where are you reading in your
prepared statement?
Mr. BOWLES. This is just a brief review of what I presented yesterday.
S e n a t o r BANKHEAD. A l l right.
Mr. BOWLES. Our present problem is to keep our heads and our
economic balance until this coming flood of goods has a chance to
develop and to flow long enough to take the dangerous edge off the
tremendous accumulated demand.
When the committee adjourned yesterday, I was in the middle of a
discussion of what would happen, at this crucial stage of the transition, if we suddenly dropped all price, rent, and wage controls.
I pointed out that, if we did this, our already short supply of goods
would shrink because those with goods to sell would wait for higher
31
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 1 9 4 2 32
prices before selling them. At the same time our already enormous
demand would become even more swollen because those with liquid
assets in reserve would try to protect themselves against rising prices
by turning the assets into goods.
I pointed out that, with fewer people willing to sell and more people
trying to buy, the existing gap between supply and demand would be
widened still farther, and that prices would spurt up accordingly.
I pointed out that the upward spurt of prices could not fail to produce demands for further wage increases to match the increase in the
cost of living, with an outburst of strikes to enforce the demands.
B y this time the country would be launched upon a free-for-all fight
of industry, labor, and agriculture to get their share in the general
scramble—with consumers and fixed-income groups holding the bag.
The stage would be set for a collapse which might be even more disastrous than that which followed the last war.
I want now to turn to the question whether, considering the present
pressures, there would be anything which might stop this process of
spiraling inflation and collapse from getting under way, if all the controls were removed. The answer of the N A M is that increased
production and the expectation of increased production would stop it.
Senator CAPEHART. Mr. Chairman, may I propound a question
here in connection with what Mr. Bowles just said?
The CHAIRMAN. Certainly, Senator Capehart.
Senator CAPEHART. Mr. Bowles, as Economic Stabilizer, what is
your position on a possible coal strike? Are you going to permit an
increase in wages and an increase in coal prices?
Mr. BOWLES. Well, of course the problem, first of all, is a matter of
collective bargaining between the coal mine operators and the union,
and they have not yet come to an agreement. If they come to an
agreement which calls for a wage increase the mine owners would submit that agreement to the Wage Stabilization Board for a decision as to
whether or not all or part of whatever wage increase is agreed upon
may be used as the basis for an application to increase the price of coal.
Until that occurs my own office has no function, nor has the Wage
Stabilization Board any function in connection with it. The getting
together of the parties is not our affair. I can only say that the rules
as to what is approvable and what is not approvable as a basis for a
price increase application have been pretty well worked out; and those
will be the rules under which the Wage Stabilization Board will reach
any decision it is called upon to make.
Senator CAPEHART. D O the rules perm.it of an increase in the selling
price of coal based on the increase in wages to the miners?
Mr. BOWLES. If there is an increase in wages to the miners, first
of all, the Wage Stabilization Board would decide what part or all of it
was approvable. If the Board decides that the whole amount is
approvable the mine owners then could take that to the OPA and the
usual standards would be applied by the OPA to determine whether
or not a price increase on coal was required. That would be the
procedure. The point, however, is that the rules are established and
will apply to coal as well as to anything else.
Senator CAPEHART. Let us suppose that the miners and the mine
operators get together 011 a 20-percent increase, and then the operators
ask for an increase of $5 a ton on coal; does your rule permit you to
grant such an increase in wages and in prices for coal?
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 1 9 4 2
33
Mr. BOWLES. The first thing that would happen would be for the
Wage Stabilization Board to decide whether that amount came within the approvable category. I could not determine that in advance.
That is not my function. But whetever amounts are thought to be
approvable under existing rules would be the top amounts that would
be approved. I want to be clear that we will not go beyond the
amount that may be approvable.
Senator B A N K H E A D . H O W do you work that out?
Mr. BOWLES. That is worked out by the Wage Stabilization Board.
If you wish to ask them about it they will tell you.
Senator B A N K H E A D . I do not care to ask them about it. I simply
thought you might be able to tell us how it has been worked out.
Mr. BOWLES. A regular formula has been worked out. I can only
say that there will be no exception as far as we are concerned to
the wage stabilization program that has been developed. We will
arrive at a decision and stick with that decision, whatever it is.
Senator C A P E H A R T . D O you mean to say that if your formula would
permit of only a 12%-perceiit increase and they asked for an increase
of 20 percent, you would deny it?
Mr. BOWLES. We do not need to deny it. We can say that the full
20 percent may not be used as the basis for a price increase.
Senator CAPEHART. Then if the mine owners ask for an increase of
$5 a ton on coal and your figures show only an increase of $4 a ton, it
will be that?
Mr. BOWLES. Yes, sir. We will not bargain on it as far as the
Government is concerned. It is going to be a clear and definite
decision whether it is approvable or not.
Senator BUCK. On what basis do you reach a decision whether an
amount suggested is approvable or is not approvable?
Mr. BOWLES. The Wage Stabilization Board says, whatever the
amount may be that is agreed upon, whether or not it is approvable
for price purposes. In other words, the management knowing that,
knows what they can use as a base for a price increase application.
Senator CAPEHART. Then it might be that the Government would
be in the coal-mining business within the next 30 days?
Mr. BOWLES. That would be something I do not know about. But
I do want to say that a prolonged coal strike would be pretty bad so
far as production is concerned; that the whole production of the
United States would be more or less held up, unless such a strike was
settled pretty soon.
Senator BANKHEAD. Such a strike would extend further almost
than steel. In other words, steel production is largely dependent
upon coal.
Mr. BOWLES. That is correct. It would cripple the railroads, the
power and light companies, and would go all through the economy.
We have to get that settled and get on to the job of getting our production going full blast. So far as my office is concerned, I can assure everyone there will be no delays in working around the rules.
The rules will be followed vigorously as we see them.
The CHAIRMAN. All right, Mr. Bowles, you may proceed with
your statement.
Mr. BOWLES. Considering the present pressures, what is there
which might stop this process of spiraling inflation and collapse?
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 1
942
34
The answer of the N. A. M . is production and the expectation of
production.
The first difficulty with this answer is that the potential increase
in production is not enough to convince even reasonable people that,
with controls removed, prices would not keep going up, let alone
frighten people. We can never hope to produce enough to satisfy
the unnatural demand that would be generated by a panicky movement to turn the vast reservoir of liquid assets into goods.
The second difficulty is that rising prices would cripple production
instead of being halted by it. Rising prices, as we have seen, mean
rising costs, including rising wages. Rising costs are uncertain costs.
Uncertainty destroys the basis for confidence in the planning and
scheduling of production.
The expectation of rising prices, moreover, means the withholding
of materials and parts. This is a blow in the solar plexus of production.
The lack of one essential part can stop a whole production line.
The systematic withholding of parts and materials in the expectation
of rising prices would create a paralysis of production.
Rising prices mean a rising cost of living, and an outburst of strikes
to enforce demands for higher wages to keep up with it.
Finally, an increase in production, even if achieved, would be futile
to stop inflation unless the goods produced were brought promptly
to market. The expectation of rising prices means the withholding
of goods from the market or their exchange between middlemen
seeking a quick profit by buying and selling to each other.
Common sense alone should be enough to tell us that huge volume
production cannot be based on unstable prices and costs. We do
not have to rely on our common sense, however. Experience proves
it.
Senator CAPEHART. Mr. Bowles, do you think the uncertainty
you are talking about there is any worse, as far as achieving production
is concerned, than the uncertainty of a manufacturer or anyone else
engaged in business of having to operate at a loss, or not knowing
whether he is going to make a profit or not? Which is the lesser of
the two evils?
Mr. BOWLES. What I am saying here applies to everybody, because everybody would be in that boat. There may be a few people
operating at a loss at the present time but there cannot be very many.
What I think you are talking about are the on-the-fringe groups as
opposed to the whole economy.
Senator CAPEHART. But we are not getting production today.
Mr. BOWLES. I disagree with that, and disagreed with it all day
yesterday. I say that you are getting all of the production our manpower will produce. Production is going up rapidly. I went into that
in some detail yesterday. I feel that you cannot expect to satisfy
overnight the tremendous purchasing power and demand that has
accumulated after 4 years of war. However, production is at an alltime peacetime peak, and demand is at an all-time peacetime peak,
and unemployment is no more than 3 million at this time.
Senator CAPEHART. According to your figures we have reached the
peak, and yet we are short of what we need.
Mr. BOWLES. W e have not reached the peak. Of course, we could
take up your proposition of having a 48-hour week. I take it I do
not have to argue with you about that.
E X T E N D PRICE CONTROL AND STABILIZATION ACTS OF 1 9 4 2
35
Senator CAPEHART. Well, if everybody is producing and we are
not supplying the demand, you have not yet offered us a solution for
production catching up with demand.
Mr. BOWLES. If you go back and read my statement of yesterday
you will see I said there are 5 or 6 million people more coming back
into the labor force. I also .drew a comparison between 1942, when
there were very few, or at least a very limited number, of tanks and
equipment flowing out of the pipe line and in 1943 when there came a
terrific flow. Obviously you cannot get it by merely turning a switch.
You.have to build up inventories and fill the pipe line all the way
through. That is the process we are going through today. I did not
say that production was at a peak. I said it was at the highest peak
in peacetime, and in my opinion it will go very much higher next year.
Senator CAPEHART. The only way to increase production is to work
more men or work a given number of men longer hours.
Mr. BOWLES. Yes, sir; or by increasing productivity.
Senator CAPEHART. Why cannot we cure this bottleneck by working
longer hours?
Mr. BOWLES. Well, if you work it out by collective bargaining, I
am for it.
Senator CAPEHART. Men must be paid time and a half for every
hour they work over 40 hours a week.
Mr. BOWLES. Yes, sir; and they do not have to work that number
of hours.
Senator CAPEHART. During the war they worked 48 hours a week;
why not now?
Mr. BOWLES. I think if I were running a plant I would encourage
men to work 48 hours a week and get the production out. But I
maintain that we want to get back to a free economy as quickly as
we can, and it must be worked out by labor and management.
Senator MILLIKIN. Would you work out price ceilings the same
way?
Mr. B O W L E S . I would as soon as supply and demand permit.
Senator MILLIKIN. Well, at the beginning you usually see what is
going into the pipe line.
Mr. BOWLES. Mr. Small is going to testify before your committee
in the next day or two and he is Civilian Production Administrator,
He can give that to you in more detail.
Senator MILLIKIN. But the whole thesis of pipe-line build-up
depends on what is going in.
Mr. BOWLES. Mr. Small will give you that. I might say that I am
in the position of being a professor of everything in general and
nothing in particular. I think if you gentlemen will let me finish m y
statement you will get a better idea of our position, and then, having
concluded my statement, I will stay as long as you want to propound
questions to me.
Senator C A P E H A R T . I won't ask you any more questions.
The CHAIRMAN. That will be of some help. You may proceed with
your statement, Mr. Bowles.
Mr. BOWLES. After the last war we tried the experiment of lifting
all the controls to get production. Production did get a quick stimulus; but the stimulus did not last, and it certainly did not stop inflation;
From the start of the postwar upsurge in January 1919 to its peak
in June 1920, wholesale prices and the cost of living increased approxi-
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 1
942
36
mately 25 percent. During the same period production rose to a
peak in January 1920 of 15% percent above January 1919 and then,
while prices were still rising, fell off steadily until June 1920. After
that came the collapse of both prices and production.
I might add, however, that in 1918 production dropped 1 percent.
Senator M I L L I K I N . D O you mean volume or price?
Air. BOWLES. That is volume of goods produced.
The C H A I R M A N . Y O U may proceed with your statement.
Mr. BOWLES. In this war we tried the opposite experiment and
proved that huge volume production can be secured with stable prices
and costs. I need not repeat the figures on our record wartime production. Now we are in the midst of proving the point all over again
with respect to peacetime production.
In light of this record of experience, and the known facts of our
present position, I must repeat that the proposal to drop all price and
wrage controls at this stage of the transition period is reckless and
irresponsible.
On the flimsy hope that the release from control would not be premature, it asks us to gamble away the solid accomplishments of 4
years of stabilization and the expectations of a successful transition to
which they entitle us.
If against all odds we won the gamble, we would gain an earlier
release than otherwise from the irritations of control, and nothing
more.
I do not want to underestimate the irritations. There are many of
them there.
Senator MILLIKIN. That is a pretty soft word.
Mr. B O W L E S . I think it is. And I think when we get back to free
competition there will also be irritations. Y o u will then have people
who are not making any money, but who cannot blame it on the OPA.
Senator MILLIKIN. And if you have a house that you cannot
finish it goes further than irritation.
Mr. BOWLES. The irritation there is that some people will pay
twice as much for a house as it is worth.
Senator MILLIKIN. There is a whole lot covered by the word
"irritation."
Mr. B O W L E S . I do not like to use the word "irritation."
Senator MILLIKIN. There is more to it than irritation. Y o u have
picked a soft word to describe the difficulties of our economy.
Mr. B O W L E S . I have never underestimated the difficulties.
The C H A I R M A N . Y O U may proceed with your statement.
Mr. BOWLES. If against all odds we won the gamble, we would gain
an earlier release than otherwise from the difficulties of control. Y o u
see I have left out the word "irritations." If we lost, we would face
the penalty of a destructive inflation and still more destructive
collapse.
Whether the penalty would have to be paid in full, no one can be
sure. Certainly the corrective processes of democracy would begin
to work, once it became clear to everyone what road we were traveling. Certainly also the measures which an aroused public would
demand, in an effort to restore economic stability, would be much more
stringent, much less palatable, and of much longer duration than the
controls which Congress is now asked to extend for a year in order
to maintain stability.
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 1
942
37
Exactly what these last-ditch measures would have to be cannot
now be predicted. If we had the necessary determination to save the
situation, we would have to start by setting up price and wage controls
anew. But those controls alone could not be effective once inflation
had begun to run wild. Drastic fiscal and monetary measures would
have to be tried. Heavy increases in taxes on incomes—beyond
any tiling we've experienced to date—and severe taxes on capital gains
and on all liquid and capital assets would probably be necessary.
At. best, devices such as these would merely cushion the inevitable
collapse—a collapse which on top of four hard and costly years of war
would result in grave disillusionment and deep-seated bitterness.
Choice £—A continuation of our present program .—The second of the
alternatives before us is to keep meeting this danger of inflation
intelligently and courageously and to continue to do what is necessary
to stop it now.
The task we must set ourselves is to bring the total supply of available goods into reasonable balance with the total of urgent demand at
the earliest possible moment. When this balance has been achieved,
the basic economic pressures toward inflation will begin to subside.
I would underline the word "economic."
Buying will cease to be dominated by acute need, obvious shortages,
and the expectation of higher prices. Instead, it will begin to reflect
anticipation of postwar improvement and better prices. At this
point, the bulk of the controls can be safely lifted, even though
shortages of particular commodities remain.
; What is the quickest and surest way to bring the total supply of
goods into balance with total demand? The experience both of this
war and of the last gives us an unmistakable answer. We must
maintain a stable economy in which people are confident that prices
and costs are not going to run away.
Such an economy is necessary to build up the supply side of the
supply-demand balance. Only when prices and costs are reasonably
stable can businessmen plan production schedules with confidence
and then meet them. Only under stable prices will goods move to
market freely and in normal channels as fast as they are produced.
T o increase the supply of goods to the maximum we must, of course,
adjust price ceilings whenever they stand in the way of production.
Here again, however, we need a stable economy to make this method
of increasing production work.
Increases in selling prices do not help production if they are canceled out by increases in buying prices or other related prices. To be
effective, in increasing production, a price increase must be selective—
that is, the particular price must be raised in relation to other prices—and the selection must be made carefully to be sure that other factors
permit production to expand.
A stable economy is equally necessary to keep the demand side of
the balance from being inflated by abnormal and speculative buying.
I repeat: We can never hope to produce enough to satisfy the unnatural demand that would be generated by a panicky movement to
turn the vast reservoir of liquid assets into goods. T o lick inflation
we must keep the gambling money and the frightened money out of
the market.
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 1 9 4 2 38
What is the best way to establish an atmosphere of stability in
which people are confident that prices and costs are not going to
run away?
The first and indispensable step is for the Congress promptly and
firmly to extend the stabilization laws for a full year, substantially
as they now stand. Given firm action by the Congress, the way will
be cleared for a period of firm administration which will complete
the sense of confidence and stability which we need so badly.
Senator MILLIKIN. Mr. Bowles, 1 cannot help asking you a "question
at that point: You say, "Given firm action by the Congress, the way
will be cleared for a period of firm administration which will complete
the sense of confidence and stability." D o you feel that there is now
that sense of confidence and stability?
Mr. BOWLES. Lack of confidence stems from the fear of inflation.
That is what worries a man. It exists principally, not in the areas
under price control, but in areas not under control, such as the real
estate market. Take commercial rents; veterans coming back and
wanting to rent a store or a dental office are forced to pay as much as
50 or 100 percent, or even 150 percent in many cases more than was
charged before. I think all those areas where inflation has begun
to take hold present dangers to our economy. When you have price
control you have a pretty good stability and a sense of confidence.
Senator MILLIKIN. The notorious black market in meats, corn,
building materials, and in the textile field, has struck a body blow
at the feeling of confidence.
Mr. BOWLES. W e would be better off without those, obviously. I
think the black market in meat has been very wildly exaggerated,
and the OPA will have some testimony on that to present to you—
factual testimony based on store checks. As I pointed out to you
yesterday, the black market in building materials is something we
are not proud of. But I think with the new controls going m it will
be better.
Senator MILLIKIN. In those that have been subject to your control there has been, perhaps, a feeling of lack of confidence because
they have not worked.
Mr. B O W L E S . Y O U have mentioned two or three areas where confidence is not so good; in the building-material field it is not good.
At the same time, your building material price level shows a 35 percent gain since 1939, and in the last war it went up over 200 percent. Notwithstanding the fact that you do have, perhaps, some
black-market buying, you are still a long way from where you^ were
in the twenties, where wild speculation in building materials went on.
Senator TAFT. Mr. Bowles, your statement is, first, that an indispensable step is to extend the law?
M r . BOWLES.
Yes.
Senator TAFT. At the same time the first and indispensable step
is not to increase the purchasing power and encourage people to spend
a lot more money, and to balance the budget. That is the first and
the indispensable step to prevent inflation.
Mr. BOWLES. Senator Taft, I will get to that in a moment if you
will permit me to proceed with my statement. But it is up to you
if you want to go on with this now.
Senator TAFT. It is not up to me, but I want to understand your
position. It seems to me you are fundamentally wTong in thinking
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 1 9 4 2
39
that prices are the key to inflation. Prices are only the result of
inflation.
Mr. BOWLES. Congress passed a law last year and withdrew the
excess-profits tax. Was that inflationary?
Senator T A F T . I would not say that it had any particular effect
on inflation.
Mr. B O W L E S . I do not know why not.
Senator TAFT. That was a reduction of taxes.
M r . BOWLES. Certainly.
A n d I say
Senator TAFT. Reduction of taxes is, perhaps, inflationary. On
the other hand, it is proposed to create about $4,000,000,000 of
British purchasing power tomorrow. That would have far more
effect on inflation than would continuation of price control.
Mr. B O W L E S . Y O U do not create that amount of purchasing power
in the first year.
Senator TAFT. W h y not? They could draw it tomorrow if they
wanted to. They could withdraw the entire $3,750,000,000.
Mr. BOWLES. That would be only two-thirds as inflationary as the
action of the Congress last year in taking off the excess-profits tax.
Senator TAFT. On the other hand, you are suggesting the saving
of money. What you do on taxes has nothing to do with the way you
are spending money.
M r . BOWLES. B u t
Senator TAFT. The first and indispensable step is not the passage
of this law we have before us, but to remedy the costly policy of the
Government.
Mr. B O W L E S . Y O U put yours first and I will put mine second.
The point is they are both equally important.
Senator TAFT. W e have had during the war a certain amount of
wage controls. Are we not entirely removing wage control today, at
least for all practical purposes?
M r . BOWLES.
N O , sir.
Senator TAFT. Does an extension of this law in a way regulate
wages?
Mr. BOWLES. Very clearly you do under the Wage Stabilization
Board, and I think they have done a remarkable job.
Senator T A F T . A S I understand the present rule there is no rule to
prevent me from paying any wages I want to pay.
Mr. BOWLES. If you absorb it in the price.
Senator TAFT. Then you are relying on prices to keep wages down?
Mr. BOWLES. Except in the construction field, where you have
direct wage control.
Senator T A F T . H O W have you that control?
Mr. B O W L E S . Y O U have a board in that whole field.
Senator TAFT. What board do you have?
Mr. BOWLES. The tripartite board, in the whole construction field.
There are direct wage controls in that area.
Senator T A F T . IS it a legal rule that a man may build and yet not
pay labor over a certain amount?
Mr. BOWLES. It is up the tripartite board.
Senator TAFT. And in any other field it is off?
Mr. B O W L E S . N O . If you open a new plant you have to get wages
approved, and there are various other phases. But they are minor
I agree against the whole economy.
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 1 942 40
Senator TAFT. YOU say:
The first and indispensable step is for the Congress promptly and firmly to
extend the stabilization laws for a full year, substantially as they now stand.
And you preceded that by asking us the question:
What is the best way to establish an atmosphere of stability in which people
are confident that prices and costs are not going to run away?
What confidence is there that costs in the sense of wages will not
increase?
Mr. BOWLES. Your Wage Stabilization Board has tackled that
whole problem, and is handling 600 to 1,000 cases a week
Senator TAFT. If you violate prices today you are violating the
law. Yet you can pay men, except in the building field, any wages
you want to pay without violating the law.
M r . BOWLES. I f y o u a b s o r b it in the price.
Senator TAFT. There is no law fixing wages today.
M r . BOWLES. What you have are indirect wage controls in the
most of the fields, and direct wage control in the construction field.
But those are predicated upon
Senator TAFT. And they are not effective?
Mr. BOWLES. Yes, they are. An increase of 18% cents, I believe,
is in slightly more than half of the wage agreements that have been
reached since the new program went into effect the middle of February, and the others have been below 18% cents.
Senator TAFT. M y point is that you are asking us to extend the law
to control prices and yet you are not asking us to extend any law fixing
wages.
M r . BOWLES. I t h i n k
S e n a t o r TAFT. W h e n y o u s a y
M r . BOWLES. L e t us b e p r a c t i c a l a n d , first of all
S e n a t o r TAFT. B u t m y p o i n t is
M r . BOWLES. L e t m e finish, please.
Senator TAFT. I am trying to get an'answer to my question.
Mr. BOWLES. And I am doing my best to answer and will do so if
you will give me an opportunity.
Senator TAFT. GO ahead.
Mr. BOWLES. First of all, what made for wage control during the
war? The no-strike pledge. You had a few wildcat strikes, it is true,
but they were few in number. Then you also had the mandatory
power of the Government to intervene in labor disputes and directly
fix wages in such cases. Both labor and management were anxious
to get rid of that after VJ-day. The Government was then dropping
controls too rapidly, in my opinion. I have every confidence that the
present program will work. I have far more confidence today than
ever before. If we go to work and raise the cost of food and the things
people buy, all bets are off, and you are back on another round of wage
increases.
Senator TAFT. I think you are imagining that you can control
prices when the administration has stimulated general increases of
wages 50 percent over war wages.
M r . BOWLES. S i x t y - o n e p e r c e n t .
Senator TAFT. These are factory wages.
will find
Take all wages and you
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 1 9 4 2
41
Mr. BOWLES. Profits were raised to three or four times what they
were before the war.
Senator TAFT. Some people make large profits and }7et there are
some that do not.
Mr. BOWLFS. So OPA does not control profits. I am glad to hear
that established in the record so clearly.
Senator TAFT. The other day we hear where the}" fixed prices so
low that only a special person in industry could meet the prices and
get a return.
Mr. BOWLES. OPA could not have fixed profits very successfully
because they have gone up very substantially.
Senator TAFT. M a y I call your attention to the fact that corporation profits of 1939 were 6 percent of the national income; 7.11 percent
in 1940; 8 percent in 1941; 6.3 percent in 1942;
percent in 1943;
6.2 percent in 1944, and 5.9 percent in 1945. In other words, as far
as percentage of national income is concerned that is what corporation
profits were.
Mr. B O W L E S . D O you think they should go up at a steady rate with
the national income?
Senator TAFT. If the system is going to work in the long run the
chances are that you will have to have a fairly stable percentage going
along with wages of farmers and individuals, I mean as to return on
capital. I think you have to compare it to the national income.
Mr. BOWLES. The return on capital has gone up substantially.
Senator TAFT. Let me give you the figures: The return on capital,
and this is percentage of national income again, ran during the
thirties about 20 percent. That is including interest, rents, and
dividends. It ran about 18 percent in 1936, 17 percent in 1937, 16
percent in 1938, 15 percent in 1939, 14 percent in 1940, 12 percent in
1941, 10.3 percent in 1942, 9 percent in 1943, 9 percent in 1944, and
10.3 percent in 1945. That does not seem to me to be an unreasonable
figure by way of return on capital in a capitalistic system, where people
have to have a return to do anything.
Mr. BOWLES. Of course they do.
Senator T A F T . That 1 0 percent in 1 9 4 5 amounted to $ 1 5 , 0 0 0 , 0 0 0 , 0 0 0
on a total investment of somewhere in the neighborhood of
$ 3 5 0 , 0 0 0 , 0 0 0 , 0 0 0 , which is something less than 5 percent return to
the people who invested money and owned property.
Mr. B O W L E S . Corporate profits before taxes in 1 9 3 6 - 3 9 were 3 . 4
percent of net worth, and in 1944 they were 16.2 percent, which is
almost five times as great as in 1 9 3 6 - 3 9 .
Senator MILLIKIN. Was that before or after taxes?
Mr. BOWLES. Before taxes.
Senator CAPEHART. What were they after taxes? Taxes on the
average were 80 percent in 1944.
M r . BOWLES. O h , n o .
CAPEHART. T O
Senator
war manufacturers,
I
mean.
M r . BOWLES. Y e s , b u t n o t o n the average.
Senator CAPEHART.
Mr. B O W X E S . I will
pened to profits in the
that, Mr. Chairman.
The CHAIRMAN. All
85721—46—vol. 1
That was at least half of your volume.
be delighted to put a study of what has haprecord if you wish it done. I would like to do
right.
4
That may be done.
42
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 1 9 4 2
(The figures furnished by Mr. Bowles are as follows:)
Corporate profits before Federal income
and excess-profits
taxes
Corporate profits after
Federal income and
excess-profits taxes
Billions of
dollars
Percent of
net worth
Billions of
dollars
4.6
5.5
8.4
15.7
19.8
24.3
24.9
22.0
3.4
4.2
6.5
11.9
14.2
16.5
16.2
+14.2
3.4
4.2
5.8
8.5
8.7
9.8
9.9
900
1936-39
1939
1940
1941
1942..
1943
1944
1945
Percent of
net worth
2.6
3.3
4.5
6.4
6.3
6.7
6.4
+5.8
Source: Dollar profits figures from Department of Commerce. Net worth figures used in computing
percentages are for end of year and are estimates b y O P A based on Bureau of Internal Revenue data and
sample data on corporations.
Senator TAFT. And, Mr. Chairman, I would like to put these figures
in the record, which I have had compiled from Department of Commerce statistics.
The CHAIRMAN. All right. That may be done.
(The figures afterward furnished by Senator Taft are as follows:)
EXHIBIT
B.—Table showing the percentage of national income paid out to various
types of recipients from 1929 to 191+5
[Department of Commerce Statistical Abstract]
1929
1930
1931
1932
1933
1934
1935
1936
1937
EXHIBIT
Wages
and
salaries
Farmers
Other individual
business
and professional
men
Return on
capital
including
interest,
rent, and
dividends
63.7
70.0
74.0
78.0
70.0
69.0
67.0
66.0
67.5
6.2
5.5
4:4
3.7
5.3
5.4
7.3
6.8
7.0
10.2
9.4
8.9
8.4
10.0
9.8
9.5
10.0
9.5
18.4
21.2
22.9
24.5
20.7
19.0
18.0
18.3
17.0
1938
1939
1940
1941
1942
1943
1944
1945
Wages
and
salaries
Farmers
Other individual
business
and professional
men
Return on
capital
including
interest,
rent, and
dividends
70.0
68.0
67.0
67.0
70.0
70.0
72.0
70.5
6.2
6.0
5.6
6.5
8.1
7.9
7.4
8.0
9.5
9.7
10.0
9.7
8.6
7.7
7.7
8.1
16.3
15.6
14.7
12.8
10.3
9.3
9.3
10.3
C.—Table showing net corporation profits after taxes, and the percentage
of national income represented thereby from 1929 to 19J+5
[Department of Commerce Statistical Abstract]
National income
1929
1930
1931.
1932
1933.
1934.
1935.
1936.
1937.
Corporation
profits
$83,326, 000,000 $7,194,000,000
68,858, 000,000
1,723,000,000
54,479, 000,000 -1,614,000,000
39, 963, 000,000 -3,646,000,000
42,322, 000,000
- 6 2 5 , 000,000
49,455, 000,000
549,000,000
55, 719, 000,000
1, 668; 000,000
64,924, 000,000
3, 767,000,000
71, 513, 000,000
3,943,000,000
Percentage
2.6
-3.0
-9.1
-1.5
1.1
2.9
5.8
5.5
1939.
1940.
1941.
1942.
1943.
1944.
1945.
National inincome
Corporation
profits
$64,200,000,000
70,829,000,000
77, 809,000,000
95,618,000,000
119, 791,000,000
149,400,000,000
160,700,000,000
157,000,000,000
$1,658,000,000
4,228,000,000
5,844,000,000
7,668,000,000
7, 600,000,000
9, 800,000,000
9,900,000,000
9,300,000,000
Percentage
2.5
6.0
7.5
8.0
6.3
6.5
6.2
5.9
Senator TAFT. The question I raise is this: What is the best way of
establishing an atmosphere of stability, where people will be confident
that prices and costs will not run away? Under present conditions
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 1 9 4 2
43
how can people hope that costs will not run away? Is not every
businessman today expecting costs to run away?
Mr. BOWLES. Perhaps so, but I think it is because they think
Congress will stop price control.
Senator TAFT. They think there is no restraint over all practices
in this law, no restraint on the part of the administration in connection
with costs.
Mr. BOWLES. Just wait a minute, please, and let me have an
opportunity to answer your questions or observations.
Senator TAFT. Well, I am asking you
Senator BARKLEY. Mr. Chairman, I suggest that we allow Mr.
Bowles to finish his statement.
Mr. B O W L E S . I would like to correct Senator Taft on the facts.
He is very well aware that that is not a fact. We covered that ground
yesterday and the committee knows exactly where I stand on it.
Senator TAFT. Mr. Bowles, may I say this: I don't distinguish you
from the administration. The administration has one policy; you are
the Director of Economic Stabilization. What your particular views
are make no difference to me. You are carrying on the policies of the
administration. When I say " Y o u , " I should be more explicit. I
mean the administration. I am not attacking you personally on it,
or anything of the sort. I am criticizing your analysis of the situation which is only affected by administration policy; not by what you
personally think. That makes no difference to me.
Mr. BOWLES. Before you attack my point of view why don't you
listen and hear what I have to say and then go after me as hard as you
want to? It seems to me that is the only fair way to do it. It is the
only courteous way to do it. If you disagree with me on that, that is
your privilege.
Senator T A F T . I disagree with you. I think the proper way, when
you bring out a statement of principle is to discuss that principle when
you lay it down. Here you lay down the principle that people are
confident costs are not going to run away if we extend this law. I say
that is not so.
Mr. B O W L E S . I will make a bet, Senator Taft, if you were to become
the Administrator of OPA tomorrow I think you really would have
trouble. At least people know that we are trying to firmly hold this
line.
Senator B A R K L E Y . Y O U offered to make some bet as to what
would happen if Senator Taft were Administrator of OPA. I would
like to kno>v myself what would happen.
Senator T A F T . I know what would happen. I would remove twothirds of the price control—two-thirds of the price controls tomorrow,
on everything except where there was an exceptional scarcity, and I
say it would have a very beneficial effect on production.
Senator B A R K L E Y . Y O U mean you would remove two-thirds of the
price controls, or that you would remove all price controls from twothirds of the commodities?
Senator TAFT. That is correct, all price controls from two-thirds
of the commodities.
Senator B A R K L E Y . I move that Mr. Bowles be allowed to read
another paragraph.
The CHAIRMAN. The motion is granted.
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 1
942
44
Mr. BOWLES. During the dangerous period immediately ahead,
the principal existing subsidies must be continued intact. This will
give us a chance of preventing food prices from increasing materially.
If we succeed, 40 percent of the cost of living for the average lowincome and middle-income family will remain stabilized.
Senator T A F T . D O you discuss the subsidy question further on, or
is this the only reference to it?
Mr. BOWLES. It is the only reference to it. I believe I have got
some casual reference to it later.
Senator TAFT. Well, I will postpone consideration of that.
Mr. BOWLES. Rents can and must be held firmly. An additional
16 percent of the cost of living will thus be stabilized. Firm control
must likewise be maintained with respect to all other commodities
which are important in the cost of living or in business costs. The
bulge in the prices of metal-using goods must be held to a minimum.
Existing policies must also be followed with respect to decontrol.
The primary principle must be to decontrol particular commodities
only when the purposes of the stabilization laws will be served by doing
so. This principle will permit the steady relinquishment of controls
over commodities which are unimportant either in the cost of living or
in business costs. With respect to more important commodities, however, the controls can be relinquished during the dangerous period
immediately ahead only in those cases in which prices will not rise as
a result of the action.
These price policies are the necessary foundation for a firm wage
policy. The present round of wage-rate increases based on the patterns already established must be completed on an equitable basis.
President Truman's Executive order of February 14 makes this possible. The order contemplates, however, that there will be no second
round of wage-rate increases forcing further price increases.
The success of the stabilization program depends on the achievement of this objective. A new round of wage-rate increases, before
they are justified by demonstrated increases in labor productivity
would be ruinous to stabilization. And let there be no question about
this fact: Unless we continue firmly to control the cost of living, new
rounds of wage increases, each feeding back into higher and still
higher prices, are inevitable.
By following these policies courageously I believe that we can
continue to maintain the general stability of the economy and of the
cost of living under the laws as they now stand. But even though
the present law is renewed as it stands, inflation will continue to flow
unchecked through serious existing gaps in the laws—unless Congress
acts to close them.
I particularly want to emphasize the need for curbing real-estate
prices through adoption of the Patman housing bill—including
control of speculative increases in the prices of existing homes. I
want to repeat again the pleas I made in November 1944, that action
be taken to check the rise in commercial rents. Sharp increases in
rentals for business spare have seriously hamstrung many thousands
of veterans who want to start new ventures and have pinched more
thousands of existing small businesses.
If we are wise, moreover, we wull buttress the program of firm price
and wage controls which I have outlined by using, or being ready to
use, all the other powers of government that can strengthen us in the
fight against inflation.
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 1 9 4 2
45
The Second War Powers Act must be extended for a full year; and
we must stand read}7 wherever necessary to exercise the powers it
confers.
The present regulations of consumer credit must not be relaxed.
President Truman gave us good news the other day when he told
us that the budget will be in balance even sooner than we expected.
We must bend every effoit, by reducing Government expenditures, to
• speed the day when this balance is achieved.
Taxes, as the President stated, must not be reduced. Whether or
not higher tax rates are called for, it is too soon to tell. Present
consumer income does not seem too high for the economy's long-run
needs, once the production of consumers' goods really begins to pour
out. But we must be quick to act when and if the need becomes clear.
This program of firm price and wage control, coupled with firm
use of all supporting powers, will give us our best chance for an early
end to the need for controls. The more resolute our action in the
present time of danger, the sooner the danger will be over. Other
factors permitting, these policies will give us a period of full civilian
production at stable prices of the kind which is essential to give total
supply a chance to come into balance with urgent demand.
There is solid ground to hope that, by following this course which
I have outlined, we will be out of the woods of extreme inflationary
danger by the end of 1946. If this happens, controls can be lifted
generally by June 30, 1947. in all but the areas of acute shortage.
I state this onfy as a hope and expectation. I wish I could give
you a firm assurance that the expectation will come true. I cannot.
And I do not apologize for being unable to do so. Neither I nor
anyone else has a crystal globe that tells the future course of complex
economic events in this unsettled postwar world.
Apart from questions which depend upon the decision of Congress
on this bill, there are obvious uncertainties which make definite prediction impossible.
We have no measure of unsatisfied consumer needs.
We do not know how long consumers will continue to spend the
present high proportion of current income.
We have no exact measure of the inventory requirements of manufacturers and distributors, and none at all of what they will regard as
reasonable requirements.
We cannot foresee the exact rate or pattern of production.
We can be confident that businessmen, farmers, and industrial
workers will respond to the urgent need for production, but we cannot
tell with assurance what the strength of the response will be.
We are in the midst of a coal strike, the duration and outcome of
which we cannot predict. We do not know the duration of other
pending stoppages of production nor what stoppages will occur in the
future.
We have not yet gaged the effect upon our own economy of discharging our obvious obligation as a nation to help feed the starving
millions abroad. Our estimates of world food supplies were upset by
last season's short crops in other countries. Obviously, we do not
know what this year's crop is going to be, either in this country or
abroad.
These are only examples of uncertainties and contingencies which
might confound our best guesses.
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 1 9 4 2 46
We cannot determine in advance, by act of Congress or otherwise,
the date on which supply will come into balance with demand and the
need for these emergency controls will be gone. To attempt to fix
the exact date in advance is to take at least the chance of making a
bad guess and at worse the chance of disabling the Nation from
protecting itself against economic disaster.
Although we cannot tell the time table of events, we can tell their
general direction and destination, assuming reasonable stability in the'
economy. The current rate of production gives us solid assurance that,
assuming this stability, supply will move steadily and rapidly toward
a balance with urgent demand.
Many of the most pressing needs of buyers are already being satisfied as production continues.
We know beyond doubt that the proportion of production which
takes the form of finished consumer goods will steadily and surely
increase. What goes in the pipe line must come out. The military
take from the production we secure will steadily decrease.
Still assuming reasonable stability, we know also that total production will steadily increase. As demobilization continues, more workers
will be added to the labor force. Labor productivity will rise as it
always has after a war. Both capacity and output will expand as the
organization of production improves, as new plants and facilities are
added, as bottlenecks are eliminated by the building up of adequate
inventories, and as the flow of materials and finished products assumes
more normal relationships.
In the stable economy which we seek these developments are certain
and dependable. Only their timing is in doubt.
Choice Three: An effort to compromise.—The third and last of the
main alternatives before us is an inviting one on the surface.
Those who urge .this course of action have the realism to recognize
that the lifting of all price and wage controls is not a practical possibility at this time, but only a pipe dream of wishful thinkers.
What they propose is a compromise—keep the controls a while longer,
but relax them in order to get rid of the irritations and headaches
that go with them.
A great variety of plans for doing this will be urged upon you in
the next few weeks. Here, for example, are a few of the proposals
that have already been advanced:
Raise the parity standard so as to provide a basis for widescale
increases in farm prices, even at the cost of a 15-percent increase in
the consumers' food bill.
Jump food prices 8K percent by dropping all food subsidies right
away, or force the subsidies to be dropped according to a rigid'Schedule, regardless of whether the stabilization program can absorb the
shock of the resulting price increases.
Prevent the stabilization of cotton prices and let textile and clothing prices escalate upward as speculators bid up the price of raw
cotton.
Require price ceilings to yield a profit to every producer in every
product or to every industry on every product.
Raise the profit floors that industry price ceilings are required to
protect.
Give clothing manufacturers a license to concentrate their production on high-priced, long-margin lines.
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 1 9 4 2
47
Raise hotel rates 10 percent.
Raise rents 5 percent, 10 percent, or 15 percent.
Require price ceilings to reflect prewar unit profit margins in all
cases, regardless of huge increases in volume.
Abolish cost absorption altogether, or abolish it for some on all
retailers for 6 months.
Write a decontrol standard into the law which will assure that price
ceilings will be taken off while there is still a chance for prices to go up.
Senator BUCK. Mr. Bowles, before we leave that phase, I assume
that these are things which you do not approve of.
Mr. B O W L E S . I very definitely don't.
Senator BUCK. Take the one in the middle of the page:
Require price ceilings to yield a profit to every producer in every product or to
every industry on every product. «
D o you mean by that that some industries should operate at a loss?
Mr. BOWLES. On some items they have always operated at a loss,
that is, individual operators.
Senator BUCK. The point is should any man make anything at a
loss?
Mr. BOWLES. Mr. Porter's testimony tomorrow is going into just
that sort of thing and explain just what these price standards do. He
will go into it in detail. The OPA is better able than I am to go into
it at this point, but I will be glad to discuss it.
Senator BUCK. W h y should any manufacturer in any manufacturing business make something at a loss?
Mr. BOWLES. In the first place 55 percent of all industries before
the war operated at a loss on some items, and 25 percent of all items
sold at a loss before the war. Obviously some namufacturers for
certain reasons made and sold some items at a loss and made up the
difference on other products.
Senator BUCK. Well, the economic and business conditions were
very different at that time. He could do that or not, just as he
pleased. But here the Government says, " Y o u have to produce this
at a loss."
Mr. B O W L E S . N O ; the Government does not say that. The standard for any industry is the 1936-39 level. That is, for the whole
industry prices cannot push profits below that. Then they have other
special standards which apply to individual cases and individual
prices. For instance, any product, even though it is made by multiple
line manufacturers is guaranteed at least total cost. Any individual
operator who is operating at normal volume, except in a very few
isolated cases, is given price ceilings that will at least enable him to
break even.
Senator H I C K E N L O O P E R . Mr. Chairman,'I take definite issue with
the statement of Mr. Bowles because I know too many individual
manufacturers and producers who are today operating at a demonstrable loss.
Mr. BOWLES. They may not be operating at normal volume.
Senator H I C K E N L O O P E R . They are operating at the greatest
maximum volume they can operate at with the available materials.
They are operating at a definite loss. That cannot be argued either
b y OPA or anyone else.
Mr. BOWLES. In a case of that nature you ought to take it to OPA.
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 1 9 4 2 48
Senator H I C K E N L O O P E R . W E have a number of cases that have
been over there for over 5 months, with losses that are not even disputed by OPA, where no regulation has been issued and no authorization has been made to put those people in at least just a cost position, even considering anticipated volume.
Mr. BOWLES. OPA standards have been relaxed and changed
tremendousfy since the war period—since VJ-day. Mr. Porter will
go into that in detail. I don't think there are many cases of anybody
operating at normal volume who is in a loss position.
Senator H I C K E N L O O P E R . I grant you people are not operating at
normal volume, but they are operating at the maximum volume they
can operate under conditions as they exist today.
Mr. BOWLES. Well, that is the kind of a case I think they ought to
take up.
Senator H I C K E N L O O P E R . Well, those are the particular kind of
cases that they have been taking up, some of them for over 5 months,
with no relief yet.
Mr. B O W L E S . I don't like to say what O P A shall do and shall not
d o ; those are OPA problems, and you ought to go into it with them.
I know they have worked out a good many thousands of them, plus
several hundred industry-wide adjustments since VJ-day, something
like 400 industry-wide adjustments in the last year. Those are in
addition to many, many thousands of individual cases.
Senator H I C K E N L O O P E R . Well, I was just inclined to take some issue
with } r our statement that producers operating at a loss are being taken
care of.
Mr. BOWLES. Generally, I believe that is right. There may have
been administrative delays or some other problems involved. I can
only say that operating at a loss is not a new problem. Many, many
very successful manufacturers have many items they sell below total
cost, which are traditionally sold that way. They are called loss
leaders.
Senator H I C K E N L O O P E R . That is true, but that was under an
independent economy where they elected to sell at a loss because they
in the operation of their business determined it to be better for their
over-all operation.
Mr. B O W L E S . I agree with your distinction.
Senator H I C K E N L O O P E R . The distinction is that the Government
through its regulatory power places a price ceiling so that the individual operator has no leeway, no possible judgment or independent
operating judgment, to say which articles he may sell at a loss to
benefit his business.
Mr. B O W X E S . I think your distinction is quite right. For instance,
in some areas of the country you have people going into business
today at very high costs, high labor and other costs, and.starting to
make products which they haven't had much experience in making.
Your transportation costs are high. I think over a period of time in
a competitive economy a lot of them will probably go broke. However, I do think they have a right to say, " I "don't w^ant to go broke
on a Government price rule," therefore, we have given price adjustments in those areas.
In many cases we have made adjustments which are probably
uneconomic over a period of time, just to take them over the hump.
I think later they may find themselves in all kinds of difficulties but
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 1 9 4 2
49
adjustments have been made in many cases which are probably
uneconomic prices. We have been accused by some people of putting
prices too high.
Senator H I C K E N L O O P E R . Here is exactly what has happened in a
number of instances. I don't say this happens in all instances, but
I have quite a number of examples of where a new man comes in—
now, you might call him a fly-by-night—a new man in the field, and
makes a product that is in direct competition with the product of an
old-line manufacturer, and he gets a price that is a way above any
reasonable price in some instances, and your old-line manufacturer
that has been making products for years is held at a price that at
least they allege is below the cost of production.
Mr. B O W L E S . I will tell you how cases occur where
get a price
that is way out of line. On a particular electric fan, for instance,
there was a ceiling of around $38 at one time, and the normal price
is $12 or $15. What happens there is we have tried to streamline
our procedures. We have gotten 60 to 80 percent of our staff out
in the field handling these matters locally. These things usually result
where somebody is trying to get an individual adjustment; our people
find some product that seems to be about the same product and give
the new fellow about the same "price, with the result 3^011 get some
very screwy prices.
We also have a lot of self-pricing, where they price themselves,
they don't come into OPA. Reconversion firms under $200,000 set
their own price according to a formula. A lot of these things if looked
into are a violation of the regulations. I don't think the cure for
that is to bring everybody up to an inflated price. I think the cure
for it is to try to eliminate wherever we can those lapses in administration which we have made in an effort to streamline the whole
operation.
If you investigate those cases you will usually find that they fit
that description.
Senator H I C K E N L O O P E R . Well, I have several examples.
This
would illustrate one: Figures were given me a few days ago 011
electric motors—fractional-horsepower motors. The price 011 fractional-horsepower motors of old-line manufacturers is held with some
adjustment to the 1941 level, with some increases 011 it, but there are
new manufacturers that have never made motors before now in the
market making fractional-horsepower motors that are allowed to be
sold at from 50 to 75 percent higher than the price the old-line manufacturer of these motors is permitted to sell a competing motor.
Mr. B O W L E S . I doubt they are allowed to, but I think some of them
may do it. One way to cure that is to vote us a good appropriation
so that we can go out and clean these things up. I think you will find
it happens as a result of our efforts to streamline our operation and
get as much of our work outside of Washington as we can, but the
result in some cases is a lot of very funny prices. You can get up a
good show on that and I am still trying to find a cure, but that is
another issue.
Senator BANKHEAD. Mr. Bowles, why should there be any difference 011 that old operator the Senator is talking about and the new one?
Mr. BOWLES. Well, the only thing is we have hundreds of thousands
of people in this country trying to get the thing done fast. We have
taken the little fellows under $200,000 and given them automatic
E X T E N D PRICE CONTROL AND STABILIZATION ACTS OF 1 9 4 2 50
prices and we say if your contemplated volume is $200,000 or under
you price yourself. Obviously there is a chance there——
Senator BANKHEAD. What does that apply to?
Mr. BOWLES. Reconversion items in that particular field, that is,
electrical appliances and that sort of thing that is being made today.
Senator B A N K H E A D . D O you not think it would be more fair to
put them all on the same basis?
Mr. BOWLES. If you did you would put a lot of fellows out of
business.
Senator BANKHEAD. If you put some of them out of business that
would reduce your work. It seems to me if you would give everybody
the same ceiling for the same product that would cut down your work,
too.
M r . BOWLES. What you would have to do there is to take the highest-cost producer in the United States; you would have to give a price
that the most inefficient, high-cost fellow, operating in the worst spot
from all the strategy of selling and merchandising, could operate on.
The result of that would be that your, price would become fantasitc
for everybody else in the United States.
Senator B A N K H E A D . Y O U don't have to do that in order to give
everybody the same ceiling. Y o u could apply it to the bulk of the
industry and give them all the ceiling.
Mr. BOWLES. That is exactly what we do. We give the great
bulk—I would say that 85 percent of all the industry in the electrical
field gets the same price.
Senator B A N K H E A D . I thought the distinction was based somewhat
on whether they were new or old dealers.
M r . BOWLES. The new ones don't represent any more than 5 or
6 percent of your whole volume. If you compiled all those cases
together, and they represented over 5 percent, I would be very
much surprised.
Senator BANKHEAD. M y observation is in other lines they discriminate against new lines.
Mr. BOWLES. In other words, w^e are doing what you suggest, taking
the whole bulk of industry, giving them a clear flat-price increase.
Then, in addition, we take care of individual cases, but in taking care
of individual cases there is inevitably some looseness and inevitably
some places where a lot of people violate, one way or the other, knowingly or unknowingly, and get around your rules. Y o u get some very
funny prices, but it is a very small percentage of the whole industry.
Senator T A F T . Y O U say:
Require price ceilings to yield a profit—
Y o u say you object to that, and I object to that. If you are going
to fix prices I think that is an improper method of pricing because
there were many producers who just came out even or lost money
under a normal competitive economy. Then you say:
To every producer in every product or to every industry on every product.
In that case you object to a rule that would say in every industry
every product should be priced so that there was, well, a normal
profit to industry as a whole.
Mr. BOWLES. What they have got now is total costs—guaranteed
total costs.
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 1 9 4 2
51
Senator TAFT. Guaranteed total costs. Industry is guaranteed
total costs. Y o u mean the most efficient operator in the industry
has a guaranty that he doesn't have to sell any one product at a loss?
Mr. BOWLES. Well, take any major product that he sells that is
sold in general. We price that so that total costs for the whole
majority of the industry are covered. It might run 60, 70, or 80
percent of your industry. That was a C E D proposal, I believe.
Senator T A F T . I remember you had a rule
Mr. BOWLES. It used to be factory costs.
Senator TAFT. It used to be factory costs.
Mr. BOWLES. They have moved it to total cost.
Senator T A F T . D O you add in overhead; is that what you mean?
You would not object to a requirement in this law if that were proposed, that every industry should be permitted at least cost on every
major product.
Mr. BOWLES. That is what we have already got.
Senator TAFT. Of course, it is contended by some of them they don't
get that; but I mean that principle, however, you don't object to?
M r . BOWLES. That is part of the new scheme.
Senator T A F T . D O you have any controversy about what is a major
product or a minor product in determining that?
Mr. BOWLES. Perhaps Mr. Brownlee can answer that.
Mr. BROWNLEE. Yes; I think they always get kind of fuzzy in
certain concepts of anything that is a principal product in industry
where that particular theory is carried out.
Senator TAFT. I have always objected to the theory that because
they sold some things at a loss in peacetime, they could be made to
sell them now at a loss, unless it is a byproduct of some sort. It
seems to me that every industry was trying to sell every product at
a profit or else after a while they quit making it.
M r . BOWLES. That is right.
Senator T A F T . SO I have never agreed to that theory.
M r . B O W L E S . Y O U see, we went to total costs, first of* all, on a
limited basis last fall; then we went to total costs on a much broader
basis recently, and our standard we have now is a C E D proposal.
Senator TAFT. Would you object to an amendment
M r . BOWLES. Excuse me. Mr. Brownlee has a point he wants
to make.
Mr. BROWNLEE. On the point you just brought up, Senator Taft,
an industry which has historically had some type of byproduct or
for other reasons has sold at historically less than the total cost, I
think we would take exception to the fact we should then raise that
up to total costs.
Senator BANKHEAD. Mr. Bowles, will you have put in the record
the new regulation that you said had been adopted?
Mr. BOWLES. Mr. Porter will cover all of those with you tomorrow
and will have all the standards of the agency which have been changed.
Y o u will find, Senator Taft, that they have been changed quite
materially from those you looked at last spring. After VJ-day we
had a different kind of condition.
Senator TAFT. Would you object to a provision that in every
industry no price should be fixed on a major product below the cost
of production plus, we will say, the historical margin in some period
to be fixed, prewar; would you object to such an amendment?
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 1 9 4 2 52
Mr. BOWLES. Well, I think we would. 1 don't know what the
impact of that would be.
Senator TAFT. In other words, that would mean if it was historically sold at a loss there would be no margin, only where it was
historically sold at a profit. Would you object to a rule that every
major product—that means to me nearly everything except very
minor stuff—should be priced at a figure which would return costs
plus historical margins in the industry?
Mr. B O W L E S . I think
Senator TAFT. Would you be willing to discuss, at least, some such
amendment?
Mr. B O W L E S . I would like to know what the impact of it would be.
I have the feeling that the impact would'be rather great.
Senator CAPEHART. Mr. Chairman, may I say this? I am delighted
to hear Mr. Bowles say that OPA had made some mistakes and many
things were wrong. I think that is a splendid sign. I think maybe
at this period we ought to thank God and offer up a prayer because Mr.
Bowles has finally admitted for the first time to my knowledge, that
there have been mistakes in OPA.
Mr. B O W L E S . I think if you go back and look at the record of this
committee you will find I stated that there had been mistake^ made
on very occasion I have been up here.
Senator BARKLEY. If you are going to offer up a prayer I want to
know whether you thank God there were mistakes, or thank God
because he has admitted it.
Mr. B O W L E S . I would like to say this: Of course, there are errors
in a thing of this kind. How in the world could you expect us to set
all the prices we have set and not make errors?
Senator C A P E H A R T . I say I think it is a splendid sign,
Mr. BOWLES. It is not a new sign. I have said that for the last 4
years. This is not the occasion to try to analyze the precise effect of
each of these proposals or of similar proposals. If the committee
wishes such an analysis of any particular proposal, I shall be glad to
furnish it. M y purpose here is only to make some general comments
upon what is involved, from the point of view of stabilization as a
whole, in proposals of this type.
Some of the proposals would make continued stabilization flatly
impossible. Revision of the parity standard or abolition of cost
absorption are examples. Others might or might not tip the balance
toward inflation.
All of the proposals which would involve any considerable unsettling
of prices would certainly jeopardize our ability to prevent inflation,
and at the least postpone the time when the controlsv can be safely
removed.
Congress has the responsibility of deciding whether the advantages
of making any of these changes in the law, whatever the advantages
be, are worth the risks. M y responsibility is to give clear and
unmistakable warning of what in my judgment the risks are.
As I read and hear of these proposals, they seem to me to be based
on a genuine misunderstanding of the country's position. All the
proposals assume that the present stabilization balance has a solidity
which in fact it does not have. They are made out of an impression
of safety which is an illusion. If we put aside that illusion and look
at the facts, it becomes apparent that these suggestions of relaxation
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 1 9 4 2
53
in the laws involve risks which even their proponents would not wish
to take with their eyes ppen.
Two things only are needed to appreciate these risks: a clear view
of the tenseness of the present situation; and a realization of the explosive possibilities in the midst of this tension, of a decision by Congress
that price and rent controls should now be loosened.
Let us review briefly the factors in the present situation which
create the tension.
The pressures on almost all price ceilings, as I have pointed out, are
strong and in many cases tremendous.
Partly these are pressures of demand. We thought these pressures
would ease for a while after VJ-day, but they did not. The extraordinary increase m consumer expenditijres ha^ kept thep^ up.
"We feel incidentally, and so reported to the Appropriations Committee of the House of Representatives last September, we thought we
would be out of most food controls by this summer. We very much
under-estimated the pressures that were going to be holding these
prices up.
Partly also the pressures come from costs. The transition bulge in
production costs has not yet subsided. As volume production is
attained; as labor productivity improves; as temporary elements in
labor costs, such as overtime, disappear; as parts and materials once
again become available from normal sources and in steady supply,
these,costs will inevitably go down. Until they do, however, business
is naturally uneasy.
With pressures high, very few prices have softened since VJ-day.
As a result, the increases in price ceilings which have been allowed
since then have caused a net increase in the general level of prices.
The index of wholesale prices has gone gradually but steadily up.
Only because egg prices softened were we able to keep the cost of
living substantially even.
That is not quite a factual statement. It has been much more than
that. We have had a few items that have softened, that have enabled
us to hold the cost of living to about one-tenth increase since VJ-day.
Senator T A F T . Y O U mean one-tenth of 1 percent?
Mr. BOWLES. Yes; one-tenth of 1 percent up.
Further price increases are in prospect,on some commodities-^and
in the immediate future not much softening of prices on others. As
I have said, the price increases we can see ahead will not by themselves upset our stability or even threaten to do so. On top of the
steady rise in the general level of prices, however, they do definitely
narrow our margin of safety.
This steady rise in prices is the background of the most dangerous
factor of all. We must face the blunt fact that the country is showing
signs of inflation jitters. Everywhere men and women are beginning
to bet on inflation. We can see the consequences most clearly in the
markets where prices are controlled—in the stock market, the realestate market, and the cotton exchange. The expectation of rising
prices is abroad and the contagion of speculation is spreading.
In this situation we have to ask ourselves what the effect would
be if Congress were to legislate additional price increases now.
It is no overstatement, I think, to say that the effect on the morale
of stabilization would be devastating. This effect would carry far
beyond the particular price increases which Congress legislated.
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 1 9 4 2 54
Stabilization is, in every sense of the word, a common enterprise
of the American people. Its success depends upon general recognition
of a common danger by all economic groups and the fair and uniform
application of the controls to all of them.
A decision by Congress that price controls should be relaxed in
favor of one or more special groups would undermine the basis for a
firm policy to others.
A decision by Congress that price controls should be relaxed
generally would amount to a denial that any serious common danger
does exist and thus put in question the basis for the program as a
whole.
Either decision would encourage new and more insistent demands
upon OPA for price increases. The weight of either decision would
break down the will as well as the ability of the agency to resist the
demands effectively.
Let me repeat: During the next crucial months of intense inflationary pressures, prices must be held firmly or we will be starting
up the wage-price spiral with the lines of retreat blocked.
Another round of wage rate increases before they have been justified
b y increased productivity and lowered costs, would have a disastrous
effect upon the general price level.
Any substantial increase in the cost of living during the rest of this
year would build up unbearable pressures on wages. A decision by
Congress to relax price controls at this time, and a serious upward
movement of prices following that decision, would take away the
basis for resisting those pressures.
Even more dangerous than these relatively slow-moving pressures
would be the instant effect of a decision to relax controls upon the
psychology of inflation.
The decision would tell people that prices are going up, and the only
question would be how fast and how much. Those who have goods
would keep them to see. Those who have not would try to buy as
much and as fast as they could. Speculative withholding of parts
and materials would slow down production. The multiplication of
orders in anticipation of higher prices, the building up of excessive
inventories, the growth of speculative trades between middlemen, the
withholding of finished goods from consumers—all taken in combination with a production slow-down—would destroy our hopes of an
early balance between supply and demand and threaten a break-down
of controls.
Senator MILLIKIN, Mr. Chairman, may I ask a question?
T h e CHAIRMAN.
Yes.
Senator MILLIKIN. Mr. Bowles, will you have statistics as to the
withholding of inventories at the present time?
Mr. BOWLES. We have inventory controls administered by CPA.
S e n a t o r MILLIKIN. Y e s .
Mr. BOWLES. The figures are hard to get because your whole
standard of what is a proper inventory is hard to arrive at.
Senator MILLIKIN. Will you have statistics?
Mr. BOWLES. Mr. Small, of CPA, will give you the whole story of
what they have done on that. I think there has been some inventory
hoarding. I don't know that it has been serious yet. Personally—
and this is my personal view—and I want a chance for everybody to
come here and say all they have to say—but certainly any delay in
e x t e n d price c o n t r o l a n d s t a b i l i z a t i o n a c t s o f 1 942
55
extending this Price Control Act is bound to result in hoarding inventories and speculative inventories by people who are wondering what
is going to happen on July 1.
Senator M I L L I K I N . I was wondering if there is any appreciable
degree of speculation in such inventories?
Mr. B O W L E S . I would say there is not too much. There is some,
and it is growing. C P A has some controls on most areas. They are
examining those controls and they are checking up on industry after
industry to see just what will happen. Mr. Small will probably be
able to give you a good deal here.
Senator MILLIKIN. He will appear here?
Mr. BOWLES. Yes, he will. It is a hard thing to do to keep that
under any kind of control.
Senator TAFT. In general everybody is putting their inventory into
the product as fast as they can get the materials.
Mr. BOWLES. That is right.
Senator T A F T . SO that there isn't too much danger there, it seems
to me.
Mr. BOWLES. But don't you agree with me that efforts to hoard
will increase rapidly in M a y and June if the price situation remains
uncertain? It seems to me it can increase very rapidly if the act is
delayed too long.
Senator TAFT. They cannot increase too much because they cannot
get the materials.
Mr. B O W L E S . Y O U just don't have to sell your stuff. Y o u can
take your finished product and hold it back.
Senator TAFT. Not when every customer is shouting his head off.
Mr. BOWTLES. You don't have to give it to them. You just hold
back and don't sell. You hang onto your inventory whether it is
raw materials or finished goods, or parts, or what.
Senator C A P E H A R T . Y O U cannot build new warehouses today under
the executive orders of the Housing Expediter, so I don't know where
37ou can store it.
Mr. B O W L E S . I think they could store plenty of that between now
and July 1. You have some of that in wheat and corn, withholding
inventories in anticipation of higher prices.
Senator T A F T . Y O U also have some hoarding of products on account
of OPA; they are to some extent hoarding stuff hoping that OPA will
see the light in the end and give them an increase.
Mr. BOWLES. OPA has relaxed on prices. I would say if OPA
had relaxed anymore I would start to get extremely worried.
Senator B A R K L E Y . I was just about to suggest that they are not
only hoping that OPA will see the light, but that Congress will not
see the light and thereby abolish it.
Mr. BOWLES. That is very true.
No half-hearted extension of the stabilization laws will be sufficient
to remove this danger. Buyers and sellers everywhere will study
the action of Congress on this bill and the continued ability of the
stabilization agencies to do their job under it in the light of hard
realities. Only determined and unequivocal action will stand up under
this scrutiny, in the present state of inflation jitters, and carry the
conviction of stability.
It often seems to be assumed that a runaway inflation cannot take
place as long as the stabilization laws are on the books and a frame-
e x t e n d p r i c e c o n t r o l a n d s t a b i l i z a t i o n a c t s o f 1 9 4 2 56
work of price control is maintained. No belief could be more unfounded or more dangerous.
The developments I have described, if they occurred, would generate enormous pressures on top of these the stabilization agencies
are already resisting. I know of no basis for assuming that new
pressures of this magnitude could be resisted successfully.
Exactly where the breaking point in the stabilization line is neither
I nor anyone else can say. Nor is there any means of calculating just
how much pressure on the line any particular relaxation in the law
would develop.
Unless I completely misjudge the position, however, we have too
much to lose and too little to gain to warrant the risks that would be
involved in any one of these price-raising amendments.
What we have to gain from any weakening of the laws is at most a
temporary advantage, or an easing of temporary restrictions, for a
relatively small group of sellers. What we have to lose is a stable
and prosperous economy and our hopes for a stable and prosperous
future.
The policy of stabilization has carried us successfully through more
than 3% years of war and 8 months of peace. Past experience and
present production give us solid assurance that if we adhere to this
policy we shall be moving by next fall or winter steadily and surely
out of danger.
T o legislate further price increases now would be to put this prospect in jeopardy and perhaps t o lose it. In the months to come,
instead pf stability, continued prosperity, and growing confidence
that inflation will be definitely and finally licked, we would have instability, increasing hardship from higher living costs, and fear that
inflation is finally going to get the better of us.
The American people are entitled to expect that they will not be
subjected to these risks for the benefit only of minorities greedy to
cash in on the opportunities created by the common disaster and
sacrifice of war.
Congress has steadfastly adhered to the principle of stabilization.
Through more than four difficult years and in the face of heavy pressure from special interest groups its wisdom and firmness have borne
fruit in a stable economy which contributed to the winning of the
war and has already laid the foundation for the winning of the
peace.
In deciding the issue before it today Congress carries an enormous
responsibility. On its decision may well depend the future prosperity of our people and the health of our free enterprise system.
With the facts of our present position before it, I am confident
that Congress will continue to be wise and firm and will extend for
the benefit of the American people as a whole the full measure of
protection of the stabilization laws.
Mr. C H A I R M A N . Well, thank you very much, Mr. Bowles. That
is a very fine presentation. I am sure the majority of our committee
feels the same way, and I hope that it may be distributed so that
people may know about what your statement contains for their
benefit.
Mr. Paul Porter.
Senator T A F T . Wait a minute. M a y I recur to the subsidy
question, because I take it the subsidy question is the over-all policy
e x t e n d price c o n t r o l a n d s t a b i l i z a t i o n a c t s o f 1 942
57
of the economic stabilization plan and not particularly related to
M r . Porter; is that correct?
M r . BOWLES. It is primarily our office.
Senator T A F T . Y O U are the proper person to address this to?
M r . BOWLES. That is right.
Senator T A F T . Y O U propose here to continue subsidies at the rate
of about $2,000,000,000 a year. I think clearly all of it relates to
consumer goods; is that correct?
M r . BOWLES. That is correct.
Senator TAFT. And it is contended that that will prevent inflation.
W h y does not the additional expenditure of $2,000,000,000 Government money contribute as much inflation as if the consumer had to
pay the $2,000,000,000 for the real cost of the goods he is getting?
M r . BOWLES. Well, Senator Taft, you have to view the cost of food
and the cost of living as^part of your whole over-all stabilization program. During the war we were able to hold the line with reasonable
stability from the period of the hold-the-line order on, because we held
food costs and held rents, and average hourly earnings went up only
5.4 percent from the hold-the-line order until VJ-day.
Senator TAFT. The average hourly earnings went up what?
M r . B O W L E S . 5 . 4 percent.
Senator T A F T . I figured about 10 percent.
M r . BOWLES. M a y b e it is 5.4 from the hold-the-line order until
February 1946" but 10 percent from the hold-the-line order until
VJ-day.
Senator TAFT. From what period is that?
M r . BOWLES. F r o m M a y 1943.
Senator TAFT. From M a y 1943 to M a y 1945 it went up from 88K
to 97% cents. W e are now nearly another year beyond that, so it
went up 9 percent or 10 percent.
M r . BOWLES. But it has gone down since VJ-day.
M r . SALANT. The 5.4-percent figure was from M a y 1943 to February 1946. February is about the same as January.
M r . BOWLES. In other words, I gave it to you wrong. Instead of
being from M a y 1943 to VJ-day, it is from M a y 1943 to February 1946.
It went down about 4 percent since VJ-day.
Senator TAFT. The figures you gave yesterday didn't show any
reduction in average hourly earnings.
M r . BOWLES. Y e s ; it d i d .
M r . SALANT. A t the top of page 4 in the statement.
Senator TAFT. That doesn't take into account the last 18%-cent
increase.
M r . BOWLES. I t takes in part of it.
Senator TAFT. It takes in practically none of it in February.
M r . BOWLES. It took in some. It will be a little more after that,
but I don't think enough to restore your VJ-day level.
Senator TAFT. M r . Chairman, are we going to have the Bureau of
Labor statistics here, because there is a substantial difference. Their
figures, I understand, show at least a 10-percent increase before this last
18-cent increase.
M r . BOWLES. These are the Bureau of Labor Statistics figure^. I
think where the confusion is is this: Between M a y 1943 and VJ-day,
I think you have got 9 or 10 percent. Then there was a drop from
85721—46—vol. 1
5
e x t e n d p r i c e c o n t r o l a n d s t a b i l i z a t i o n a c t s o f 1 9 4 2 58
that point on of three or four points which brings it down to five or
six, which I was talking about.
Senator TAFT. Well, I haven't seen that and I have seen the last
figures—since February. You say the average hourly rate
Mr. BOWLES. This is hourly earnings. It is not a rate.
Senator TAFT. Oh, well, I am talking about the cost of labor. That
is the only significant figure.
Mr. BOWLES. The wage rate is not the cost of labor. It is the earnings, the average amount they pay per hour including all your premium payments and your overtime.
Senator TAFT. Oh, well, your take-home pay is something entirely
different.
Mr. BOWLES. This is average hourly earnings, not take-home pay.
Senator TAFT. Well, the average hourly earnings I don't think have
decreased.
Mr. BOWLES. Well they have. To finish my point, the hold-theline order attempted to establish the line of wages and prices in line
with the Stabilization Act of September or October 1942. During the
winter following that act food prices went up substantially. Subsidies
were then introduced to hold the line on food in order to keep wages
from moving up and starting to spiral back into the whole cost stucture.
Now today we have worked out another program which we hope will
stabilize wages and prices. I think if we cannot stabilize wages, we
cannot possibly stabilize the economy at the same time. If we do not
stabilize the cost of living, we cannot stzbilize wages.
Senator TAFT. Mr. Bowles, you said that a year ago.
Mr. BOWLES. The function of subsidies is to prohibit and avoid an
8^-percent increase in food prices following July 1. If you get that,
in my opinion, you cannot stabilize wages.
Senator TAFT. Mr. Bowles, you have just allowed an 18-percent
increase in wage rates generally throughout the country. Why should
not half of that be used in paying this additional 8 percent?
Mr. BOWLES. It is not general throughout the country.
Senator TAFT. Well, it is getting very general, probably more
general than any wage increase we ever saw. It is inevitable. We
are going to give it to the Government employees. We are going to
permit it everywhere.
Mr. BOWLES. All I am telling you is if food prices go up 8% percent,
in my humble opinion, having worked and lived in this thing for 4
years, you are going to have a second round of wage increases with all
the additional costs that are going to feed back into the economy.
Senator TAFT. That is what you said a year ago. What happened
after the war? You immediately had a demand for a 30-percent
increase in wages, wage rates, although there had been, as you say,
no increase in the cost of living practically.
Mr. BOWLES. Three or four percent.
Senator TAFT. And yet the Government approves a 20-percent
increase in wage rates, and costs of labor, although there was only a
3-percent increase in the cost of living.
Mr. BOWLES. Well, you don't buy groceries out of rates. You
buy them out of earnings, out of the money you take home. Takehome pay went down very sharply after VJ-day.
Senator TAFT. But comparing everything with prewar, the wage
rates with the same amount of hours have increased 60 percent.
e x t e n d price c o n t r o l a n d s t a b i l i z a t i o n a c t s o f 1 942
59
Mr. B O W L E S . Y O U don't buy groceries out of rates. Last fall the
OPA and Department of Agriculture figures showed a contemplated
drop in food prices from possibly 100 on VJ-day down to 92 in June,
a very major drop in food prices. That was part of the general false
thinking, erroneous thinking, that we were going to get a very big
drop in take-home pay, a lot of unemployment, a lot of down-grading,
a lot of people out of work. However, that did not take place to the
extent expected. Also, we expected last fall if we could equal the
1944 figures on retail sales for the last quarter of 1945 we thought
we would be lucky. The National Retail Dry Goods Association
estimated we were going to have a very drastic drop in retail sales, all
going back to the fact that purchasing power was going to hit the
toboggan slide, and that you were going to have a lot of people out
of work.
Senator T A F T . Y O U were all wrong then. D o you think you are all
wrong now?
Mr. BOWLES. Well, if farm prices have stayed up, if retail prices
stayed up, it is largely because purchasing power has stayed up.
Purchasing power has held at a high level and there isn't a merchant
or farmer in the country that didn't benefit, but it did increase inflationary pressures. There is no question about that.
Senator T A F T . I suggest that these strikes, so far as labor is concerned, have decreased purchasing power up to this moment, more
than they have increased purchasing power.
Mr. B O W L E S . I think strikes are always unfortunate, but I don't
think it is proper to blame strikes entirely on labor. They are the
result of labor-management disputes. I think the habit we get into
of saying every time some workers stop work that it is the workers'
fault is unfair.
Senator T A F T . I am simply saying that the net result is that we
haven't got any more purchasing power.
Mr. BOWLES. Well, the purchasing power is infinitely more than we
expected.
Senator TAFT. Greater than you expected, but not because of this
20-percent increase you have granted.
Mr. BOWLES. If you are saying to me that you expected it, you are
a wiser man than anybody I know.
Senator TAFT. Oh, I never predicted one way or the other. I predicted nothing. I listened to your predictions.
Mr. BOWLES. That is one of the benefits of being a Senator, not
having to run an agency and make plans.
Senator TAFT. That is right.
Mr. BOWLES. We have to make plans. We have never been through
this before.
Senator BARKLEY. I would like to ask, with reference to these increases in wages, although a request was made for a 30-percent increase
they got about an average of 18%?
Mr. BOWLES. Oh, an average of considerably less than that.
Senator BARKLEY. Well, that may take into consideration an average of those who have not been on strikes, but those who went out on
strikes got an average of around 16 to 18 percent, did they not?
Mr. BOWLES. Well, I don't know what the average would be*
M y guess would be it would be something like 15 percent.
e x t e n d p r i c e c o n t r o l a n d s t a b i l i z a t i o n a c t s o f 1 9 4 2 60
Senator BARKLEY. Well, this is the point: When they asked for
30 percent and accepted 18%, did they not base that in part upon the
contention that the cost of living had gone up more than 30 percent,
around 35 percent, whereas under the Little Steel formula wages had
only gone up 15 percent during the same time when the cost of living
had gone up 35 percent? So that you have to take into consideration
these figures, when you say that the 18% percent that they got is more
than the increase in the cost of living of 3 or 4 percent over a long
period of time.
M y recollection is that most of these claims for an increase in wages
were based upon the fact that the cost of living had gone up during
the war more than the rate of wages had gone up; is that not true?
Mr. BOWLES. Well, taking the automobile industry, I believe the
rates went up there during the war about 23 percent and your cost of
living went up 35, or 34.
Senator BARKLEY. But is not the general answer to my question
"Yes"?
M r . BOWLES. Y e s , s i r ; i t is.
Senator TAFT. On this same thing, your own figures yesterday,
Mr. Bowles, showed that the wage rates since prewar had gone up 62
percent as compared to 35 percent in the cost of living.
Mr. BOWLES. Those are average hourly earnings.
Senator TAFT. Average hourly earnings. That is right; 62 percent.
Presumably the hours are rather better now than they were prewar.
Mr. BOWLES. Forty-two against thirty-nine.
Senator TAFT. Correct. So as against prewar you have had an increase of 62 percent and only 35 percent in the cost of living. W h y
under those circumstances should the Government or the taxpayer
pay $2,000,000,000 of the consumers' bill? Why should not the consumer pay himself this additional increase in the cost of living rather
than to put the cost on the taxpayers? W h y isn't that less inflationary on the whole?
Mr. BOWLES. It is my belief that if we have an increase in the cost
of living you are going to have another round of wage increases and
you are going to have inflation.
Senator T A F T . Y O U say a second round of wage increases. That
gets back to my other point, the fact you don't have any justification
in your own figures for this 20-percent increase in wages did not prevent you or did not prevent the Government from granting them.
Mr. BOWLES. The Government didn't grant them.
Senator TAFT. Well, the Government approved it.
Mr. BOWLES. What the Government said was that they thought
labor and management could bargain to decide their own wages under
the present price structure. That was last October.
Senator TAFT. That was last October, and then they changed it.
Mr. BOWLES. Then they changed it. A lot of increases, rather
high increases, went through, a lot of pressures built up, and there was
a retreat from that position, a retreat which I, in charge of stabilization, did not enjoy. Nevertheless, you are faced with hard practical
realities when you try to operate a program of this kind. I say you
have a practical hard reality in the necessity for continuing subsidies
as long as we are in this very ticklish and very dangerous period, but
we can get out of this thing, we can work our way out. Obviously
subsidies are unsound over a period of time. Obviously the farmer
e x t e n d p r i c e c o n t r o l a n d s t a b i l i z a t i o n a c t s o f 1942
61
doesn't like subsidies. If I were a farmer I would hate them. They
are one of the tools we have been using and if we drop them now we
are going to face disaster.
Senator T A F T . If these subsidies go in an 8-percent increase in the
cost of living will be followed by a demand for an increase in wages—1
not a justified demand because you have shown that the increase is
much more than that, but it will be built up. I ask you, don't
you think a year from now there will be a demand anyway for a 10percent increase in wages?
Mr. B O W L E S . B y that time you will have a lot of other costs going
down, and you will have your production where it will begin to balance
demand.
Senator T A F T . D O you think you will have production in these food
costs that are subsidized? D o you think the farmer is going to have
to take less for his wheat and his meat and dairy products?
Mr. B O W L E S . I think whenever you pull off your subsidies, take
dairy products for example, the price is going to have to go up. But
I think you will find at that time other items are going down. I think
you will find there is a general relaxation of this great pressure. I
think at that time there will be an increase in dairy products to the
consumer, but you have to start at some point to work your way out
of it.
Senator T A F T . In effect, your argument is that this s needed as a
psychological basis, to give the impression we are holding the line;
is that it?
Mr. BOW T LES. It would not merely give the impression we are holding the line. It is a safeguard against rising food costs—which is
more than a matter of psychology. It is factual. If we do not keep
those prices stable we are going to be faced with a terrible situat on.
W e have to face up to this question: Are we going to let the cost of
living run wild?
Senator T A F T . D O you think it is worth $ 7 1 5 , 0 0 0 , 0 0 0 to the taxpayer and the Government to keep the price of meat going up 5 cents
a pound to the consumer?
Mr. B O W L E S . I think the program is essential if we are going to
control inflation. I would say further if we do not have a weapon
of that kind, I don't think any sensible person could take the responsibility of saying that the program would not be at that point absolutely
impossible.
Senator T A F T . D o n ' t you think the increase of the Government
debt by $2,000,000,000, the creation of that much purchasing power
out of thin air, so to speak, is just as inflationary basically, just as
inflationary as increasing prices by some $2,000,000,000?
Mr. B O W L E S . If you want to say we can put some of the excessprofits tax back to pay for it
Senator T A F T . I don't think that has anything to do with the question at all.
M r . B O W L E S . Let's put another tax on to pay for it. That will
make up the difference.
Senator T A F T . That is it exactly. W h y should we tax the taxpayer
to pay the consumers' bills? Why should I get a subsidy for my food,
for instance? I don't need a subsidy for food. This subsidizes
wealthy people perfectly able to pay for their food, just as well as
subsidizing everybody else.
e x t e n d p r i c e c o n t r o l a n d s t a b i l i z a t i o n a c t s o f 1 9 4 2 62
Mr. BOWLES. Most people are not in your position. Y o u will find
that the top-income groups are few and far between statistically.
Senator TAFT. Well, I know; but surely two-thirds of the people are
able to pay the cost of the food they eat. Maybe there are a few
that ought to be subsidized.
Mr. BOWLES. It is not a question of what they can afford. It is a
very hard question to decide what you can afford to do. It is a
matter affecting the whole program. Here you have a program.
It has gone along this far. Are we going to continue it a little longer,
or long enough to get production, long enough to keep this boat from
rocking and tipping over, until we can get out of this thing in an
orderly way?
Senator T A F T . D O you think the American people approve the
levying of a tax of $2,000,000,000 in order to subsidize food? You
will get about 1 vote in 1Q for any such project.
Mr. B O W L E S . I think you would get 10 to 1 for it.
Senator TAFT. Not if you name what the tax is and show what
they are going to have to pay.
Mr. BOWLES. If you put this to a vote of the people I will bet that
they will vote 4 to 1 in favor of continuing this program.
Senator TAFT. Oh, I think the majority of the people are in favor
of continuation of price control, but they are not in favor of continuing subsidies and levying a tax to pay those subsidies.
Mr. BOWLES. Subsidies are an integral part of this program.
Senator TAFT. Subsidies are part of the theory that you have got
to fool people by selling them something for less than it is worth.
That is one part of the program that subsidies are an essential part of.
Mr. BOWLES. Without subsidies you cannot handle this program.
It is impossible to keep this whole program stabilized at a time when
it is so essential, without subsidies. If this economy blows up, I
think we are all in for plenty of trouble. I think we all understand
the risk of seeing it blown up.
Senator TAFT. Well, of course, I disagree with you on the present
condition of the economy. I think one of the worst conditions the
country has ever seen is right at this moment.
Mr. B O W L E S . I agree, but not for your reasons.
Senator T A F T . I think the idea that what you have accomplished
by what you have done since VJ-day has brought about stability or
sound economy in this country is an utter and complete misrepresentation of the real facts.
Mr. B O W L E S . A whole lot of adjustments were inevitable in this
period after VJ-day. A lot of them were painful. I think we have
gotten through those adjustments successfully as far as wages are
concerned. They have gone up far less in this 6 months than they did
in 1919, far less, with no price controls.
Senator BANKHEAD. Mr. Bowles, there has been discussion for
some time about who gets the subsidies on meat, whether the packers
get it or the farmers get it. D o you have any definite information on
that subject?
Mr. BOWLES. Well, I will say this, Senator Bankhead: W e would
have all preferred to see the subsidy paid directly to the farmer, but we
never knew practically and administratively how that could be
handled. However, the great bulk of it, I think it can be shown,
does eventually go to the farmer in the form of higher prices for
e x t e n d price c o n t r o l a n d s t a b i l i z a t i o n a c t s o f 1 942
63
livestock. I think it would have been better if it could have gone
directly to the farmer.
Senator B A N K H E A D . D O you not admit it goes to the consumer?
You have just said if you took it off meat would have to go up 5 percent. That would be to the consumer, would it not?
Mr. B O W L E S . I have never quarreled with the fact that this is a
consumer subsidy. But whatever you call it, it is essential to this
program if we are going to have stabilization.
Senator BANKHEAD. Would it not be better if you paid that subsidy to the retail merchant?
Mr. B O W L E S . Y O U mean instead of the farmer?
Senator BANKHEAD. Well, the farmer does not get it.
Mr. BOWLES. He gets it on dairy products. It is only on meat
Senator BANKHEAD. Well, they may let him have a little part of it,
but nobody can pick out what part he gets, but if you want to have it
go to the consumer, why couldn't it most effectively be paid to him
when he bought the meat—pay the butcher 5 cents a pound for it?
Mr. BOWLES. Well, I have always felt that the packers' subsidy
would have been far better if it could have gone to the farmer. I
have been told over and over again that administratively it couldn't
be done.
Senator B A R K L E Y . IS it not true that the fact that the packer gets a
subsidy enables us to maintain the price he is paying to the farmer for
livestock?
Mr. BOWLES. That's exactly the point. Livestock prices have
moved up to the extent of the subsidy which shows that the subsidy
was passed on, that the packer could pay a higher price because of the
subsidy. It would have cleared the whole problem up if we could
have done as Senator Bankhead suggests, but in my opinion that
subsidy goes through to the people raising the livestock.
Senator B A N K H E A D . I think it goes to the packer.
Mr. B O W L E S . Y O U can see it in the higher livestock prices.
Senator BANKHEAD. The consumer may get some, but it is a small
part.
Senator BARKLEY. If your eliminated the subsidy to all packers
they would have to increase the retail price or drive the price of livestock down.
Mr. B O W L E S . I think he would have to do a little of both.
Senator TAFT. He will raise the price if you let him.
Mr. BOWLES. Well, you might as well kiss this good-by if you are
not going to keep the subsidy too.
Senator T A F T . I don't think you are going to get your subsidy,
Mr. Bowles. I will tell you that frankly. I think Congress is opposed
to it. I think you may get a continuation gradually decreasing so
that you don't do it in one blow, but certainly it ought to be definitely
ended early in 1947.
Mr. BOWLES. We had a program that Secretary Anderson will
describe to you that he and I agreed on last fall to withdraw these
subsidies and have them all out by July of this year. We assumed
we were not going to have to face pressures of this type. What
happened was that the underlying economic factors making for inflationary pressure continued to exist, and.still exist, so we had to move
ahead and hold them longer. M y feeling is that during the next year
we can expect to get a lot more goods. Some prices will go down.
e x t e n d p r i c e c o n t r o l a n d s t a b i l i z a t i o n a c t s o f 1 9 4 2 64
W e can expect the pressures to begin to soften. W e can then move
out. What we want is an orderly withdrawal. If Congress forces us
to withdraw on a disorderly and rigid basis, I can only say we are
taking a terrible chance.
Senator T A F T . I don't think it is a terrible chance at all. I don't
see any reason why people should not pay the cost of their food.
Mr. BOWLES. That is what you think. I am only saying what will
happen.
Senator T A F T . I just didn't like you to make a statement without
my dissenting from it. M a y I ask you one thing more on this question
of subsidies on dairy products: What was the change that was made
yesterday?
Mr. BOWLES. The change made yesterday was this: We found that
the dairy farmer is entitled to more return. His feed costs have gone
up; some of his labor costs are up. Instead of reducing the subsidy
on the first of May as originally scheduled, dropping 35 cents off of
it, we are only dropping 15 cents off, which leaves him with 20 cents
more than he would normally have for the next 2 months.
Senator TAFT. Where are you going to get the money?
M r . BOWLES. T h e C C C .
Senator T A F T . IS it in the
appropriation for a dairy subsidy or did
you have to draw on something else?
Mr. B O W L E S . N O . It is in the appropriation.
Senator T A F T . IS it going to increase this figure of $515,000,000 on
dairy subsidies on page 2?
Mr. BOWLES. Mr. Brownlee says not.
Senator TAFT. Did Mr. Anderson approve that raise?
Mr. BOWLES. I sent a directive to the Secretary of Agriculture
last night.
Senator TAFT. In other words, Mr. Anderson did not approve it
or did not agree to it?
Mr. BOWLES. He thought it would be better to raise the price.
Senator T A F T . SO, in spite of the opposition of the Department of
Agriculture that the price of milk should be increased, because of
various increased costs, you have taken the position that the taxpayer
must pay those increased costs in the form of a subsidy; is that correct?
Mr. BOWLES. Yes; in line with my authority, under the directive
from the President to stabilize the economy and under the Stabilization Act which says the Administration shall take all steps to stabilize
the economy.
Senator T A F T . Y O U are not only proposing in this case to maintain
the subsidy, but you are actually proposing subsidizing increased costs
which have resulted from various other increased costs that have been
permitted to occur by the Office of Price Administration?
Mr. B O W L E S . I did not4 know we had permitted it. I don't think
we had anything to do with it.
Senator RADCLIFFE. Mr. Bowles, you have referred generally from
time to time to the dangers which we face and the troubles which
might come about if we did not follow out the subsidy program.
Now, could you be a little more specific about that? I know you have
touched on it from time to time. We know very well the difficulties
we have at the present time. It is pretty hard to say what might have
happened if some other course had been followed out. Y o u have
touched from time to time upon that. Could you be a little more
e x t e n d price c o n t r o l a n d s t a b i l i z a t i o n a c t s o f 1942
65
specific in regard to that? Could you more or less visualize what
would happen to us if we had not adopted the subsidy program?
Mr. BOWLES. Senator, I would be very glad to do it. I tried to do
it in the statement I have just read. I feel this would have happened:
The no-strike pledge was agreed to by labor. Congress would not have
been willing by law to regiment the entire economy during the war,
with everybody practically in uniform and told exactly where they
were going to work and just what they were going to do. I think
Congress was right in not doing that.
Y o u had to have a no-strike pledge and willingness of people to get
out goods. Labor went ahead on the no-strike agreement on the
understanding that the cost of living would be held. During the
winter of 1942-43, it became apparent that the cost of living was not
being held; it was going up rapidly. The only way the Government
could make good on its commitment to stabilize the cost of living
and save the whole situation as far as wage controls were concerned
was to subsidize the farmers' increase in costs and in that way hold
prices down. If we had not done that, in my opinion, the no-strike
pledge would have been withdrawn because it was given clearly on
the assumption of a stablized living cost.
You would have had far more strikes, far more interruptions of
production. You would have had far more ill feeling and bitterness,
and everything else. You would have paid for the war many billions
of dollars more than we did pay, because those higher wage costs
would have fed right back into the economy, into higher and higher
prices of steel, machine guns, and battleships, over and beyond what
the consumer would have had to pay.
I think subsidies were just a complete and integral part of the
stabilization program.
Senator R A D C L I F F E . T O your mind the demoralization which
would have followed from that is obviously more dangerous and more
objectionable than what resulted from the use of subsidies which, of
course, no one wants, but it is a case of emergency.
Senator T A F T . Y O U think all of this would have grown from a 3
percent increase in the cost of living for people who had already
greatly improved their standard of living?
Mr. BOWLES. Senator Taft, if you had lived through the summer
and fall of 1943 and the problems we went through in trying to get
this thing under control
Senator T A F T . I argued With you at the time. W e were opposed
to it. Congress passed a law that you could not do it, but you went
ahead and did it in spite of that.
Mr. BOWLES. What law is that?
Senator TAFT. The two laws which the President vetoed in both
cases.
Mr. BOWLES. Isn't that legal? What is illegal about a veto?
Senator T A F T . I am only saying you disagreed completely with
Congress. Y o u had this whole policy in opposition to what Congress
wanted to do.
Mr. BOWLES. W e acted in accordance with the principles of our
Government. Y o u are quarreling with the Constitution. That is
another matter.
Senator T A F T . N O . I think you are usurping power to pay subsidies. We then attempted to pass a law to say you could not pay
e x t e n d p r i c e c o n t r o l a n d s t a b i l i z a t i o n a c t s o f 1 9 4 2 66
them. Unfortunately, the President vetoed it. Finally we hitched
on a provision which said you could not do it without authority from
Congress. You have gone throughout this against the policy of Congress, and Congress has repeatedly so stated.
M r . BOWLES. W e l l
The CHAIRMAN. Last year we continued it because we were in the
middle of the war.
Mr. BOWLES. W e are still in the middle of the war, the war on
inflation. Subsidies are an integral part of our program.
Senator BUCK. Mr. Bowles, will you please explain what is the
justification for the increase in the dairy subsidy?
Mr. BOWLES. Because you have an increase in some of your feed
costs. Mixed feed costs. Therefore, the Secretary of Agriculture
urged an increase in the farmers' return to maintain milk production.
Senator BUCK. Have you made any recent increases in the subsidy?
Mr. BOWLES. Instead of dropping the subsidy on M a y 1 by 35
cents a hundredweight as we normally would do in the flush season
of dairy production, we are only dropping it by 15 cents. We are
maintaining 20 cents to the farmer to make up those costs. W e are
then going to add another 20 cents on the first of July.
What form that second increase of 20 cents will take will obviously
depend on what action Congress takes on the whole program.
Senator BUCK. Who were the ones that requested this increase?
It certainly was not the farmer, was it?
Mr. B O W L E S . I think some people would have preferred to have a
price increase rather than readjustment of subsidy.
Senator BUCK. Who appealed to you to raise this subsidy?
Mr. BOWLES. Practically every dairy farmer in the United States.
Senator BUCK. Oh, no.
Mr. BOWLES. Oh, the increase in subsidy? I thought you said the
increase in price.
Senator B U C K . N O ; the increase in subsidy for the month of May.
Except in the far Northern States they turn the cattle out to pasture
and their feed bill is much less.
Mr. BOWLES. But their labor costs have gone up. There is no
question but what they are in a squeeze.
Senator BUCK. But it was taken care of in the 35 cents you paid?
Mr. BOWLES. I don't think sufficiently to get the production we
wanted.
Senator BUCK. That was just the judgment of people in Washington?
Mr. BOWLES. Well, you had a drop in cattle numbers also that
worried us.
Senator B U C K . Y O U don't think they are going to sell their cattle
or any milk because they don't get 15 percent?
Mr. BOWLES. We want to be sure we are getting all the dairy production we can get. That seemed to be our thinking.
Senator BUCK. There was a 35-cent premium—that is 70 cents prior
to April 1—70 cents up to M a y 1?
Mr. BOWLES. That is right.
Senator BUCK. And 35 cents after that. Now you have tacked on
15 cents more.
Mr. BOWLES. Twenty cents more. We have maintained 20 cents
that would have been withdrawn.
Senator T A F T . H O W much money is that in M a y and June?
e x t e n d p r i c e c o n t r o l a n d s t a b i l i z a t i o n a c t s o f 1942
67
Mr. BROWNLEE. Between $50,000,000 and $60,000,000.
Senator TAFT. Between $50,000,000 and $60,000,000?
Mr. BROWNLEE. At an annual rate.
Senator TAFT. Oh, at an annual rate?
M r . BOWLES. The question is, there is feeling there that we are not
getting the production we want. In order to get all the production
we can and get a better adjustment and a better set-up, we are making
this change.
Mr. BROWNLEE. Of course, the Department of Agriculture very
definitely stated that the farmer's dairy return must be maintained
in order to maintain production.
Senator BUCK. Who said that?
Mr. BROWNLEE. The Department of Agriculture. The Department of Agriculture is in charge of production. Whenever they make
a recommendation on production, it is up to us to get our stabilization
program into that and work it out in the stabilization program.
Whenever they state they need production we accept their judgment.
Senator MCFARLAND. As a matter of fact, some of our dairy people
are selling their cow^s in Arizona. They say they cannot afford to
keep them.
M r . BOWLES. That is what the Department of Agriculture decided
was enough of a factor to justify the increase. I think Secretary
Anderson is the man really to ask about that. We accepted the fact.
I am sure that that extra return was needed in there.
Senator BUCK. It makes me feel we are never going to get away
from subsidies.
Mr. B O W L E S . Y O U have to get out of them.
Senator BUCK. But we are not. But we are increasing them. The
was has been over a year and here we come in in the month of M a y
and want an increased subsidy.
Mr. BOWLES. Right now you are in the most critical period.
Senator BUCK. That has been the story all along.
Mr. BOWLES. That has been the story all along, and it has been
true all along. Y o u have to decide to do a lot of things that you
don't like to do because of the difficulty of the problems. You have
to weigh them against the evils of inflation and disaster. I know of
no painless way to stabilize this economy. Clearly there is none, and
I think whenever you get out of these controls you are going to take
some risk. The only point I want to make is that we should take
that step when the risks are at a relative minimum. I don't want to
see us step out of them when the risks are so great.
Senator B U C K . Y O U are not stepping out of them. You are
increasing them.
Mr. BOWLES. We are following our present policy of not allowing
basic food process to go up if we can help it. That is the policy we are
adhering to.
Senator BUCK. Well, even though wages have all gone up
Mr. B O W L E S . I honestly don't think it is going to do us any good
if we get inflation in 1946 and then go back and try to find out who is
to blame—labor or management.
Senator T A F T . I would blame it on the Government.
M r . BOWLES. Y e s , well
Senator B U C K . I am afraid we will be paying subsidies from here
on, the way it looks now.
e x t e n d p r i c e c o n t r o l a n d s t a b i l i z a t i o n a c t s o f 1 9 4 2 68
Mr. BOWLES. We have got to get out of them. I agree with you
on that. What I am hoping and praying is that we get this production rolling, get our textiles rolling, our electrical appliances rolling.
Y o u are going to begin to get some production
Senator B U C K . Y O U certainly come into this milk subsidy in the
best month of the year for dairying.
M r . B O W L E S . I agree with that. They said we had to give the
dairy farmers more return. I picked the subsidy route rather than
the higher milk-price route. I think to raise milk prices at this point
would be very bad.
Senator H I C K E N L O O P E R . Mr. Bowles, speaking of milk production,
let's take the shortage of butter which faces us now. The fact is that
industrial producers of fats and oils are now permitted to go out in
our State and pay 70 cents a pound for butter fats, while the ceiling
price on butter is about 55 cents a pound.
Mr. BOWLES. We are taking some steps to adjust some of that.
Senator H I C K E N L O O P E R . That situation has been in existence for
some months. The price of raw cream has been above the price of
finished butter. That is why finished butter has not been made.
That is why the public has not had butter. It is not a shortage of
butter necessarily, although it is somewhat short, but it is the
miscuing of that price situation.
Mr. BOWLES. Senator, I tell you as a matter of fact, although you
may not agree with me, we really want to get out of control. Last
fall we pulled off all our orders in that whole field and allocations in
the whole cream field and ice cream and all the rest of it.
Senator H I C K E N L O O P E R . Did you pull it off butter?
Mr. B O W L E S . N O . W e pulled it off of ice cream. That, in my
opinion, was a bad mistake.
Senator H I C K E N L O O P E R . Because the ingredients for butter were
higher than you permitted the sale of the finished product?
Mr. BOWLES. Because we were really trying to get rid of those
controls. It is true w^e are now putting controls back on. W e just
announced that yesterday. I don't like to put them back on, but I
think we have got to.
Senator H I C K E N L O O P E R . Your proposal on cream, for instance,
and butterfat, must be that you will reduce the price of the butterfat and make it up in the subsidy; is that right?
Mr. BOWLES. W e announced that a ceiling would be put on cream.
W e will reduce the butterfat content going into ice cream. We will
bar heavy cream and whipping cream and push some of that back
into butter and put back some of the controls we had in the first
place.
Senator H I C K E N L O O P E R . Y O U are going to have to drop the price
of butterfat down to where it can be put, for instance, into butter,
and into ice cream, if you control the price of the finished product.
Unless you make that up with a subsidy, then your farmer is going to
take a very substantial drop in the price he gets for his raw cream.
Mr. BOWLES. Of course, raw cream has gone up terrifically since
last fall.
Senator H I C K E N L O O P E R . That is very true, but do you propose
putting down now the price of raw cream to a farmer?
Mr. B O W L E S . T O a certain extent.
e x t e n d price c o n t r o l and stabilization acts of 1
942
69
Senator H I C K E N L O O P E R . It will have to be cut down below the cost
of the finished product, butter, or you will have to make it up with a
subsidy?
Mr. BOWLES. Well, that is what we are struggling with now. W e
are having a meeting with Agriculture to find out what should be
done. We will have a program this week and we will announce it in
detail.
Senator H I C K E N L O O P E R . D O you contemplate any kind of an arrangement—do you contemplate reducing the actual price that the
farmer gets today for his butterfat?
Mr. BOWLES. What we would do is to go back as close as we can
to the September level and try to restore the balance we had in
September.
Senator H I C K E N L O O P E R . Let me ask you this
Mr. BOWLES. Obviously with a limited amount of milk you cannot
get everything as you so well know. You have to decide what you
want. We had rather thin ice cream during the war, including allocations to the Army, and we had a reasonable amount of butter.
Now we have to go back again to a little bit thinner ice cream and
whipping cream and try to get more butter. You cannot please
everybody in that field.
The CHAIRMAN. All right. Thank you, Mr. Bowles
Senator TAFT. Wait a minute.
Senator H I C K E N L O O P E R . I have another question. In fact, I have
two or three.
Mr. Bowles, in your position as OPA Administrator, and also in
your position of Economic Stabilization Director, has it been, or is it
your desire to get full production in this country at the earliest
possible moment?
Mr. BOWLES.' Absolutely. That is our biggest question we have
got today. We have got to do it.
Senator H I C K E N L O O P E R . And isn't the only way, really the only
practical way to meet inflation and to beat it is to get consumers'
goods of all kinds?
Mr. BOWLES. That is the complete basis of it.
Senator H I C K E N L O O P E R . On a basis where the supply equals the
demand?
M r . BOWLES. R i g h t .
Senator H I C K E N L O O P E R . And as quickly as we do that then the
acute danger of inflation will disappear.
Now, is there any question in your mind that the price to the
producer is a very controlling factor in that production?
Mr. BOWLES. If you are saying that by pushing prices up and
letting them get moving we will get more production, I would say no,
we will get less production.
Senator H I C K E N L O O P E R . I am saying that price to producers under
which they can operate and be reasonably certain they will not be
forced to sell at a loss.
Mr. BOWLES. They are entitled to that.
Senator H I C K E N L O O P E R . That that policy will get the most maximum production?
Mr. B O W L E S . I agree.
E X T E N D PRICE CONTROL A N D STABILIZATION ACTS OF 1 9 4 2 70
Senator H I C K E N L O O P E R . Then, if, in this country, we see many
bottlenecks, many producers actually producing where they cannot
operate at a profit, then in effect the policy is stifling production?
M r . B O W L E S . I don't see any sign of that on a general basis. There
might be isolated cases where we ought to move in and fix whenever
we hear about them, but I doubt that is true in every case. Wherever
there are cases where we should move
Senator H I C K E N L O O P E R . I think there are many lines of production
where they can produce and probably are, but I just have too many
examples where they give me the figures, they could produce an increased volume, but they are not producing more because the more
they produce the more they lose and they cannot get a price adjustment that will warrant them in producing.
M r . B O W L E S . I think a case of that kind ought to be brought to
O P A and it will be investigated. I think you will find in 19 cases out
of 20, provided their volume is at all normal, you will find adjustments
can be made, or have been made, or will be made. I think they are
really pretty much of a handful against 3,000,000 businesses in the
country as a whole. Y o u will never cure all of them. I will guarantee
that.
Senator H I C K E N L O O P E R . N O W , Mr. Bowles, I will just say this:
That a year ago you said virtually that same thing and you deplored
the fact that certain people were forced to operate at a loss. Y o u
said, " L e t us know about them, we are glad to hear about them.
W e will take care of them." In reliance upon that I have referred
a great many cases to OPA. Some of them were last summer and
last fall. I have referred a great many of them that are still in the
process of investigation where the OPA said, "Well, give us your
figures for last year and the year before, then break down this
quarter."
T h a t same old story. They still haven't gotten anywhere.
M r . BOWLES. Production is going steadily up.
Senator H I C K E N L O O P E R . They still have not g o t any price that
will let them operate.
M r . BOWLES. Production is at the highest point and bankruptcy
is at the lowest point in history.
Senator H I C K E N L O O P E R . That may be true that over-all statistics
have increased, but I am talking about the many individual cases
where production is absolutely stifled, at least in the small producers.
M r . BOWLES. Senator, as I remember it, last year you had six
letters—six or seven letters, specific cases in Iowa, out of all the
manufacturers in Iowa. Y o u may have many more now; I don't
know, but there were six or seven you had at that time.
Senator H I C K E N L O O P E R . Oh, I have many, many; I had 6 here one
morning, but you will remember I had a sheaf of 400 letters here in
one file.
Mr. BOWLES. I think you will agree that every manufacturer who
says he would like a higher price is not entitled to one. Also, I thiiik
you will agree, there are lots of other problems in the economy besides
price. There is a labor shortage; a shortage of materials; shortages of
all kinds, which must be overcome in order to get production going.
A higher price—even though price is not really the issue—a higher
price would often make people feel better, even if they don't really
need it. It just makes them feel better and they ask for it, but they
e x t e n d p r i c e c o n t r o l a n d s t a b i l i z a t i o n a c t s o f 1942
71
are not always entitled to it. When they are entitled to it, in my
opinion, I think they ought to get it. I think they are getting it.
The number of adjustments runs into very high figures. If you
have some others we will go into those. I think occasionally you will
find OPA is slow on this or that. I think you will find the average
time of adjustments, of making adjustments, is 15 or 18 days today,
isn't it, Paul? It is something like 15 or 18 days' average time.
Senator TAFT. It is like that story about the porter who said the
average tip was $2, but he was the first fellow that ever got it, and that
is my idea about OPA's average of 15 days.
Mr. BOWLES. I tell you you cannot do this painlessly. There is no
painless way to do it. If there were a painless way, I would like to
find it.
Senator H I C K E N L O O P E R . I would say probably there are cases of
that kind we don't hear about.
Mr. BOWLES. That is right.
Senator H I C K E N L O O P E R . But I hear about an awful lot of them that
have been going 4 to 5 months at the very least.
Mr. BOWLES. Some of those probably are justified and some of
them probably are not, so that narrows it down further.
Senator H I C K E N L O O P E R . Well, they know they don't have as much
money in the bank as they had when they started. They just can't
get an adjustment that will put them on a profitable basis. That is
the story that I hear about it.
Senator CAPEHART. Mr. Chairman, I would like to ask Mr. Bowles
a question.
Did you intend to state a moment ago that increased prices will
lower production?
Mr. BOWLES. What I stated was that if prices started to get away
from us and started to move up and if we dropped subsidies and these
other controls, production might come up initially, but it would tend
to go down before 6 months or a year is over, just as it always has.
After the last war—I think one of the most constructive things is to
read the history of what happened economically after the last war with
all price controls removed—production and prices started to move up
in January 1919. Prices went up faster than production. Then
with prices still moving up very rapidly, production started to fall off.
Ultimately both prices and production collapsed.
Now, with control, during this period since September, which is a
period of only 6 months, civilian production has moved up 17 percent,
just about what it did following the last war. If you go to work and
weaken this act and allow amendments to creep in here to push this
price level up, production is not going to benefit and I will gamble
anything I have on that, Senator.
Senator C A P E H A R T . Y O U said that an increase in prices will lower
production.
Mr. BOWLES. Well, no; an increase in individual prices when all
other prices are stable—will increase production of the individual item.
I said inflation and the process of inflation will not get production.
* Senator C A P E H A R T . Y O U made the blanket statement that an
increase in prices would lower production.
Mr. B O W L E S . I did not make that statement. I will contradict
that flatly. What I said was that if you start to let this price level
get away, you are not going to get more goods as a result of it. You
e x t e n d price c o n t r o l a n d s t a b i l i z a t i o n a c t s o f 1 942 72
are just going to pay through the nose. What I do say, in any case
where there is a bottleneck, where a manufacturer has no legitimate
profit, obviously he will slow up production if you hold him too tight.
That is why our whole standards have been changed to fit new
conditions.
Senator CAPEHART. Mr. Bowles, if you will read the transcript you
will find you did make that statement that an increase in prices will
lower production.
Mr. BOWLES. If the record says that I have now corrected it.
Senator CAPEHART. I am happy to call that to your attention,
because to me it was a very foolish statement. It was absolutely
untrue. I was surprised that you would make any such statement
because any 6-year-old kid knows that increased prices will not
necessarily lower production.
Mr. BOWLES. I said a general increase of the level of prices moving
up rapidly will kill production. I will repeat that as many times as
you would like to have me repeat it.
Senator CAPEHART. It is a known fact that people buy on a rising
market and they refuse to buy on a market going down.
Mr. BOWLES. IS there any question of people buying in this
market? People are buying anything they can get their hands on.
T h e CHAIRMAN. W e h a v e c o r r e c t e d it n o w .
Senator HICKENLOOPER. I would like to call this to Mr. Bowles'
attention and to the committee's attention. I have a number of
telegrams and some resolutions and two letters came into the office
this morning on this cream situation in Iowa. There has been a
very desperate situation. They have had State-wide meetings out
there for the last week because the situation is indeed desperate and
I would like to read what a thoroughly reliable dairyman of some
size wrote me. This came in this morning. He had attended a
meeting of the 56 representatives from 32 major cities and towns in
Iowa on this milk situation. I shall not read the entire letter. I will
read the first paragraph. He says:
The expressed thought of those in attendance goes about like this.
M a y I say this man is completely reliable and completely cooperative.
He is anxious to cooperate.
Mr. BOWLES. Most of them are; the great majority of them are.
Senator HICKENLOOPER. He says:
First, that we are willing to go along and give the OPA reasonable opportunity
to deal with the steps suggested in the resolution. If that is not brought about,
then within 30 days another meeting will be held asking the complete release of all
OPA controls on dairy industries. If that does not materialize, consideration will
be given to the program of completely disregarding all OPA regulations not singly,
but as a group. It was the consensus of opinion that while sympathetic to the
policies and principles of OPA the application of the policies is inflexible and so
senseless that it has resulted in the development of two economic systems in this
country today; one operating legally under the provisions of OPA and its price
controls, the other operating illegally without any regard for price controls. And
we must face the facts. The illegitimate system is rapidly absorbing the
legitimate.
He ssys he cannot operate for very much longer unless he gets relief;
M r . BOWLES. Of course, he h a d relief
Senator HICKENLOOPER. He says further:
I don't believe it is reasonable to expect that the honest and conscientious operators in the fresh milk industry who feel a proper sense of obligation to the Government and its controls, as well as a responsibility to their customers who look to
e x t e n d price c o n t r o l and stabilization acts of
1942
73
them for their daily supply of so essentiala commodity as fresh milk, can stand
by and see their business ruined. Speaking for myself as well as the others, and
when I say others I mean to the last man, one of two things, will happen out here.
Either we are given the opportunity to adjust these matters or we shall do them
for ourselves.
N o w , I d o n ' t k n o w t h a t t h e y will c a r r y o u t t h a t l a s t
M r . B O W L E S . I a m sure y o u d o n o t a p p r o v e a p r o p o s a l o f a n a r c h y
s u c h as h e m a k e s .
I t h i n k t h e p r o p e r w a y is t o c h a n g e t h e l a w .
Senator HICKENLOOPER. I d o n ' t a p p r o v e a policy of anarchy, nor
d o I a p p r o v e anyone suggesting that they go out and deliberately disr e g a r d t h e l a w , b u t b y t h e s a m e t o k e n n e i t h e r d o I a p p r o v e of t h e
G o v e r n m e n t , o r a n a g e n c y of t h e G o v e r n m e n t , o p e r a t i n g u n d e r s u c h
p o l i c i e s t h a t n o r m a l l y h o n e s t a n d h o n o r a b l e p e o p l e are f o r c e d t o this
c o n c l u s i o n b e c a u s e their G o v e r n m e n t w o n ' t let t h e m o p e r a t e .
M r . BOWLES. W e m a d e a n a n n o u n c e m e n t of a d j u s t m e n t in his p r i c e
t h i s m o r n i n g , a n d a n o t h e r o n e will b e m a d e o n t h e 1st o f J u l y w h i c h
I h o p e will s a t i s f y h i m .
I stated here b e f o r e I t h o u g h t there h a d b e e n
a s q u e e z e in m a n y d a i r y areas.
T h a t is w h y w e m o v e d t o c o r r e c t it.
S e n a t o r H I C K E N L O O P E R . J u s t t o finish this, I w o u l d l i k e t o p u t i n
t h e r e c o r d a r e s o l u t i o n t h a t I r e c e i v e d b y w i r e this m o r n i n g , w i t h t h e
r e s t o f this i n f o r m a t i o n f r o m t h e I o w a M i l k D e a l e r s ' A s s o c i a t i o n , r e p resenting the fresh fluid milk industry of the State of I o w a , s i g n e d b y
J o h n H . B r o c k w a y , executive secretary.
I w o u l d like to p u t that in
the record because it contains a resolution that was a d o p t e d , I believe,
on Saturday, or yesterday;
T h e CHAIRMAN. V e r y w e l l .
( T h e t e l e g r a m is as f o l l o w s : )
Be it resolved, That because of uncontrolled prices and buying—on the part of
dairy manufacturing plants—fluid milk for local consumption is being diverted
from local to eastern markets.
Since the OPA regulates prices both to the producer and to the consumer of
fluid milk—processing and distributing plants are unable to meet prices paid by
manufacturing plants for out-of-State markets. This alarming situation will
shortly result in many cities and towns being left without an adequate supply of
fresh bottled milk—in some cases without any milk—to correct this unfair situation, we ask and urge an immediate adjustment in prices to the producer of fluid
milk in low-priced areas to insure an adequate supply of fresh milk to the consumer. This necessitates an increase in prices to the consumer. We respectfully
recommend the following immediate remedial steps:
I. Increase price to producers of fluid milk in all areas where there is necessity
to insure adequate supplies for consumers requirements of fresh milk and corresponding increases in prices to consumers.
II. Establishment of ceiling prices on milk and sweet cream for manufacturing
purposes.
III. Eliminate sale of cream containing butterfat in excess of 20 percent for
bottling purposes.
IV. We suggest reducing the butterfat content of ice cream to 10 percent.
This resolution was unanimously passed by 56 representatives from 33 major
cities and towns. Further information in detail will follow by mail to you and other
Congressmen from Iowa. Please send copies individually to each of the Iowa
congressional Senators and Representatives.
IOWA MILK DEALERS ASSOCIATION, INC.,
(Representing the Fresh Fluid Industry of the State of Iowa.)
JOHN H . BROCKWAY, Executive Secretary.
S e n a t o r TAFT. M r . B o w l e s , I m i g h t s a y I h a d l a s t w e e k a d e l e g a t i o n of six of t h e l e a d i n g l u m b e r dealers in t h e A k r o n - C l e v e l a n d a r e a .
T h e y said 95 p e r c e n t of the l u m b e r in this area is n o w m o v i n g in t h e
black market.
They said—
We are forced out of business. We have no choice. We are completely out of
business unless some of our members choose to go into the black market them85721—46—vol. 1
6
e x t e n d p r i c e c o n t r o l a n d s t a b i l i z a t i o n a c t s o f 1 9 4 2 74
selves and operate. There is no way we can continue at all.
up because we cannot get any lumber.
We are just closing
I suggest that in addition to Senator Hickenlooper's statement that
should also be called to your attention.
M r . B O W L E S . I think in your whole building-material situation
there is more of a problem than anywhere else. But it is not 95
percent, or anything like that.
Senator TAFT. I think it is 95 percent by the time it gets up to
Akron and Cleveland.
Mr. B O W L E S . Y O U have large problems there which I explained
were due to the fact we withdrew our priority and allocations system
last fall, which I think was a mistake.
Senator TAFT. I am only adding my evidence to Mr. Hickenlooper's.
Mr. BOWLES. There is a problem in building materials.
Senator TAFT. M a y I ask one thing? What is the use of continuing the Stabilization Act as against the Price Control Act? What
powers do you get from the Stabilization Act that cannot be eliminated today?
Mr. B O W L E S . I will get Mr. Hart to answer that. He is general
counsel.
Mr. H A R T . I will be glad to give you a memorandum on that.
Senator TAFT. M y only thought is this: Every time we say anything about a price increase being justified by facts, you come back
and say Congress has established a policy that absolutely stabilizes
everything. I don't think that represents the view of Congress. If
we can indicate to you our view by repealing the Stabilization Act
power and leaving your powers remain under the Price Control Act,
I would like you to say so, unless there is some practical power that
would be wiped out.
Mr. B O W L E S . Y O U mean a general revision of the law of agricultural
commodities standards?
Senator TAFT. Oh, that is an amendment of the Price Control Act.
I meant that first section about " W e hereby stabilize everything,"
which after all, you have changed as to wages. I mean the Government has changed it as to wages and a lot of other things. So why
continue it at all?
Mr. BOWLES. If Congress wants to say they don't intend to stabilize the economy
Senator TAFT. Congress would stand by the declaration of policy
contained in the Price Control Act, which I think is a reasonable declaration applicable to the present situation in some respects, as to
some goods, but why stabilize—the freeze theory—that has gone by
the board, anyway.
Maybe Mr. Field could let us know. Well, I don't want to press it
at the moment.
The CHAIRMAN. Very well. Thank you, Mr. Bowles.
Senator MCFARLAND. May I just ask one question? I haven't
been here all the time. I am very much interested in this program
in regard to subsidies and as it affects price control, and particularly
from Arizona in regard to our bill for premiums on copper, lead, and
zinc.
Now, probably we will take that up in a separate bill.
Senator T A F T . N O ; it is in this bill, Senator; copper, lead, and zinc.
Senator MCFARLAND. Y e s .
e x t e n d price c o n t r o l a n d s t a b i l i z a t i o n a c t s o f 1 942
75
S e n a t o r TAFT. C o p p e r , lead, a n d z i n c in t h e f o r m of p r e m i u m p a y m e n t s of..$100,000,000.
S e n a t o r MCFARLAND. W e l l , t h a t is all r i g h t .
H a v e you covered
t h e s u b j e c t of t h e e f f e c t of d o i n g a w a y w i t h s u b s i d i e s ?
M r . BOWLES. I a m sorry.
S e n a t o r MCFARLAND. H a v e y o u c o v e r e d this field of t h e e f f e c t o f
d o i n g a w a y w i t h subsidies in general, t a k i n g u p e a c h a r t i c l e ?
M r . BOWLES. NO; w e haven't. W e have talked principally a b o u t
the whole food subsidy program.
S e n a t o r MCFARLAND. I d o n ' t w a n t t o g o i n t o t h a t a n y m o r e , b u t
I p r e s u m e s o m e o n e will d o t h a t b e f o r e t h e hearings are o v e r .
M r . BOWLES. W e will b e g l a d t o d o t h a t .
S e n a t o r MCFARLAND. I n o t h e r w o r d s , w e h a v e g o t t o d e c i d e a
p o l i c y h e r e in r e g a r d t o these m a t t e r s .
M r . BOWLES. T h a t is r i g h t .
T h e CHAIRMAN. A l l r i g h t , t h a n k y o u v e r y m u c h , M r . B o w l e s .
M r . Paul Porter.
S e n a t o r MCFARLAND. W h a t t i m e are y o u g o i n g t o r e c e s s ?
T h e CHAIRMAN. T h e S e n a t o r s h a v e all assured m e t h e y will s t a y
h e r e until 1:30. W e w a n t t o s a v e as m u c h t i m e as w e c a n . T h i s is
off t h e r e c o r d .
( T h e r e w a s discussion off the r e c o r d as t o c o n t i n u i n g t h e h e a r i n g . )
T h e CHAIRMAN. A l l r i g h t . W e will t a k e a recess u n t i l 10 o ' c l o c k
tomorrow morning.
( W h e r e u p o n at 1 p . m . a recess w a s t a k e n until 10 a. m . , W e d n e s d a y ,
A p r i l 17, 1946.)
( T h e f o l l o w i n g w a s later received f o r the r e c o r d ) :
OFFICE OF ECONOMIC STABILIZATION,
H o n . ROBERT F. WAGNER,
Washington, D. C., April 23, 194-6.
Chairman, Senate Banking and Currency Committee,
Senate Office Building, Washington, D. C.
DEAR SENATOR WAGNER: On April 16,1946, during Mr. Bowies' testimony on
the extension of the stabilization laws, Senator Taft asked about the availability
of funds to cover the increased payments called for by the change recently announced by this office in the dairy production payment program. In answering
for Mr. Bowles, I had understood the question to relate to the funds available
to make these payments for the balance of this fiscal year and stated that such
funds were available in the present appropriations.
On reading the transcript I realized that Senator Taft in a second question
also asked about the availability of funds for the fiscal year ending June 30,
1947, and specifically whether the $515,000,000 figure specified in section 3 of
the bill, S. 2028, now being considered by your committee, would have to be
changed. While my answer that it would not have to be changed is correct, I
did not fully appreciate the question and think that it requires some explanation.
Under the dairy production payment program, as it stood before our recent
action, the payments during May and June of this year were scheduled to be
reduced by 35 cents per hundred pounds of milk and by 7 cents per pound of
butterfat in farm-separated cream. Under the program recently announced, the
payments during May and June will be reduced by only 15 cents and 2 cents,
respectively. This will increase the returns to the dairy farmers during these 2
months by 20 cents per hundred pounds of milk and 5 cents per pound of butterfat
in farm-separated cream. At the same time we announced that we would take
further action on July 1, 1946, to increase the dairy farmers' returns by an additional 20 cents per hundred pounds of milk and an additional 5 cents per pound
of butterfat. Whether these additional increases in returns to the dairy farmers
would be effected through price increases or subsidies would, we stated, depend
upon congressional action on the pending bill.
e x t e n d p r i c e c o n t r o l a n d s t a b i l i z a t i o n a c t s o f 1 9 4 2 76
This action was taken to enable dairy farmers to meet increased production
costs and continue to maintain a high level of dairy production without at the
same time increasing the prices of dairy products.
It is clear that the action already taken increases the rate of subsidy payments
beyond what it would have been if the action had not been taken. It is also
clear that the rate of dairy subsidy payments will be further increased on July 1
if it is then decided to give the dairy farmers the promised increases in returns by
way of subsidy and not by way of price increases.
We have estimated that if the dairy production payments were continued at
these increased rates for the whole fiscal year ending June 30, 1947, the total
amount of the payments would exceed the $515,000,000 figure. To come within
this figure, therefore, the dairy production payment program will have to be
terminated in its entirety sooner than would have been necessary if the recent
action had not been taken. That is, indeed, what we plan to do. We do not
intend to ask Congress to increase the $515,000,000 figure.
Very truly yours,
J A M E S F. B R O W N L E E , Deputy Director.
1946 EXTENSION OF THE EMERGENCY PRICE CONTROL
AND STABILIZATION ACTS OF 1942, AS AMENDED
WEDNESDAY, APRIL 17, 1946
COMMITTEE
UNITED STATES SENATE,
ON BX^NKING AND C U R R E N C Y ,
Washington, D. O.
The committee met at 10 a. m., pursuant to recess on yesterday,
in room 301, Senate Office Building, Senator Robert F. Wagner,
chairman, presiding.
Present: Senators Wagner (chairman), Bankhead, Radcliffe,
Downey, Murdock, Taylor, Fulbright, Mitchell, Carville, Taft, Buck,
Millikin, and Capehart.
The CHAIRMAN. The committee will come to order. W e have the
great pleasure of having OPA Administrator Paul Porter appear this
morning, from whom we will be glad to hear.
STATEMENT
OF P A U L
PORTER, OPA
ADMINISTRATOR,
W A S H I N G T O N , D. C.
Mr. PORTER. Thank you, Mr. Chairman.
Senator DOWNEY. Mr. Chairman, I wonder if we would not make
more progress if we did impose the rule that the witness should complete his reading of his statement before being interrupted?
The CHAIRMAN. That is up to the committee to decide.
Senator DOWNEY. Unless there is some objection to such a course,
I would make that in the form of a motion.
Senator MURDOCK. I would like to second that motion.
The CHAIRMAN. Gentlemen of the committee, you have heard the
motion. What is your pleasure?
Senator CAPEHART. Mr. Chairman, I appreciate the fact that we
would get through much quicker if the presentation were placed on
that basis. On the other hand, it is difficult if a witness makes a
point and a member of the committee desires to comment on it at
that particular time, to wait until the witness has completely finished,
because it is hard to go back and find the point. Furthermore, if
there is anything against the point he makes I think it should be
placed in the record at that point rather than go to the tail-end. I
agree that we should keep interruptions at a minimum, but I do not
believe I couid agree to the motion as being an ironclad rule. I would
be glad to apply it as best we can, but there may be some things
coming up that it would be to the advantage of the witness as well
as oursevles to comment on it at the time.
Senator DOWNEY. Of course, I would not want to press my motion
against the Senator's objection.
77
e x t e n d p r i c e c o n t r o l a n d s t a b i l i z a t i o n a c t s o f 1 9 4 2 78
Senator CAPEHART. I will be glad to do the best I can along the lines
of the motion.
The CHAIRMAN. That will help a lot.
Senator DOWNEY. I was not referring to our distinguished friend
from Indiana in making my motion, but was making it merely in the
interest of saving time.
Senator CAPEHART. I understand. I realize that interposing questions takes up a lot of time, but I think it would be better to handle
the matter in that way.
The CHAIRMAN. Very well. I think we will get along all right.
Y o u may proceed, Mr. Porter.
Mr. PORTER. Mr. Chairman and gentlemen of the committee: In
my first appearance before this committee as Price Administrator, I
have to make what may be denounced as an "alarmist" statement b y
those who seem to feel we can avoid the danger of inflation simply
b y not talking about it.
It is my duty to make this statement because the facts which confront me in the performance of my job are alarming. It is risky to
shout "Fire!" but it is riskier still'to sit quietly by until the flames get
out of control. M y critics, I should add, do not want us just to do
nothing. They want us to disband the fire department, cut off the
water, and sell the fire engines.
Mr. Bowles has described our basic economic situation to you. I
shall not attempt to repeat his analysis, in which I fully concur. But
I think it necessary to record my own conviction that, after more
than 4 years of successful operation, the break-down of the price
control system is a real and frightening possibility.
The danger of complete break-down is imminent today—but not
because we can't do the job. We can do it. What is undermining
stabilization at this time is the rapidly spreading belief on the part of
business that the Congress will either scuttle price control completely
or take action which will compel OPA to raise prices drastically.
We see countless signs of that attitude every day, and so, I am sure,
must you. I propose to face it frankly.
If business believes that prices are really moving up, it won't take
long for the consuming public to reach the same conclusion. If that
happens, if business and the public alike decide that the time has come
to get out of dollars and into goods, nothing that OPA or any other
agency can do will make much difference.4 The stampede will be on.
If this country with $225,000,000,000 bulging in its pockets, goes
on an economic bender, there won't be just a comfortable little readjustment in prices. A climb of 30, 40, or 50 percent above the
present level for the first year of the boom seems to me a conservative
forecast.
However, let me be more concrete. Let's look at the situation
which w^ould face a typical American family next year if the Congress
were to take off all controls now or if, as a result of weakening amendments, the whole structure of controls should collapse. Let us examine the budget of a family which is spending $2,500 a year and see
what would happen to it if the inflation approached 40 percent in the
next 12 months.
The typical budget for such a family will run something like this:
Food, $1,000; clothing, $350; rent, $500; other goods and services^
$650.
e x t e n d price c o n t r o l and stabilization acts of 1
942
79
From experience both in this war before price control began and in
the last war after the Armistice, it is reasonable to say that the termination or crippling of price control would lead to a 25-percent increase
in food prices by the end of a year. In view of the current tightness
of the clothing situation, it is likely that clothing, costing $350 at the
beginning of the year, would jump to at least $500 in 12 months without
price control. In rents, as everyone knows, the situation is tighter
still. After the last war, when pressures were far weaker, rents climbed
by more than 50 percent. A prediction of a similar increase, if rent
controls were ripped off now, is conservative. Other prices, of
course, would go up. The $650 allocated to miscellaneous articles and
services might easily rise by $300 in the course of a year.
At the year's end our typical family would have to spend at the rate
of $250 more a year for food, $150 more for clothing, $250 more for
rent, and $300 more for miscellaneous goods and services, if it were
to maintain its standard of living unimpaired. What had cost $2,500
when the year began would cost $3,450 at its close.
Of course, such price rises would mean that the family would have
either to find a way to increase its income or to see its standard of
living sharply cut. Probably both would happen. Wages and salaries go up in an inflation; but seldom as fast as prices.
Nor would the family's troubles end there. We cannot assume that
the boom would collapse in a single year as it did last time. The rise
in prices might well continue. As they moved up to levels 75 and
100 percent above current prices, the purchasing power of the dollars
that American families have put into war bonds, insurance policies,
and other forms of savings would continue to fall. If present prices
doubled, the things which a dollar bought on September 1, 1939,
would cost $2.60. To put it another way, the dollar's 1939 purchasing
power would have shrunk to 38 cents.
When collapse came, it would be catastrophic. No administration
could let the disaster run its full course. Prices would not be allowed
to sink back to prewar or even to current levels. When, after tens of
thousands of bankruptcies and hundreds of thousands of foreclosures,
drastic Government action restored stability, it might well still take
$2 to buy the things a single 1939 dollar bought.
If a witness were to appear at this hearing with the proposal of a
capital levy of 50 percent on all the savings accounts, the life-insurance
policies, the bonds and mortgages, and the university and hospital
endowments which a generation of thrift and self-denial has amassed,
he would certainly be denounced as a crackpot or a Communist—or
both.
Yet for Congress to heed those who now advocate a serious curtailment of OPA's powers would be to invite an inflation which would
impose just such a levy.
Few of those who will propose to you any one or more of the dozen
ways of bringing this about will really want inflation. There is a
small minority, to be sure, who urge inflation as a way of reducing
the burden of the national debt. Most, however, merely want to get
what they regard as a reasonable increase in the prices of their goods
and at the same time to stop having to read and comply with OPA
regulations.
Quack remedies: Price control, particularly in a period of rapid
transition, is a problem of almost bewildering complexity. It is not
e x t e n d p r i c e c o n t r o l a n d s t a b i l i z a t i o n a c t s o f 1 9 4 2 80
surprising, therefore, that many well-intentioned people have urged
measures which those who are close to the concrete, day-by-day
issues know to be quack remedies. You hear them offered over the
radio. You read about them in your paper. Before I get down to
the brass tacks of our problem, I should like to pay my respects to a
few of them.
One of the most popular of these substitutes for thinking is "Let's
put the law of supply and demand back to work." There is something
grimly humorous about this. OPA's sole object for four long years
has been to prevent the law of supply and demand from wrecking the
Nation. If the law of supply and demand were allowed to rule in the
present period of acute shortages, that law would dictate a dizzy
climb in prices.
Another popular prescription is embodied in the much-parroted
phrase: "All we need is production * *
Of course, production is what we must have, but the problem is to get production
without starting up the inflation which would soon choke off the vast
outpouring of goods we need. Moreover, current production figures
show we are well on the way to solving that problem.
Some of our economic doctors declare that all the Nation needs is to
put the profit incentive back to work. But last year business profits
were at or close to their all-time high both before and after taxes.
This year profits after taxes may well be still higher. What I should
like to know from the doctors who write the profits prescription is just
how much more profits they think business must have before it will
buckle down to work. But my question would be rhetorical. The
fact is that most industries are producing; most are profitable; the few
which have ceased to be are getting price increases.
Another rapidly growing school is comprised of those who would
decontrol all but a few basic commodities—which ones they do not
attempt to specify. Apparently they would expect OPA to sit on the
prices of those few selected commodities while most other prices went
skyrocketing. This is a job which would be both grotesquely and
economically impossible.
Group worries: I think we can safely dismiss the panacea peddlers.
A much more serious problem is presented by the genuine worry which
I sense among the responsible spokesmen for broad economic groups
who fear that somehow in this trying period of transition the particular group each represents will be disadvantaged. I find this among
the leaders of labor, of the farmer, of industry.
The labor leader sees the price increases which have been authorized
and notes how far profits have climbed above peacetime levels. He
fears a further fall in the standard of living which labor achieved in
wartime.
The farmer sees the increases in the prices of the things he buys and
the increases in industrial wage rates which he fears will mean still
higher prices. He is fearful that the unprecedented demand for farm
products may fall just as subsidies are withdrawn, casting farm income back to the unfairly low levels which prevailed for so long before
the war.
The business leader worries about rising wage rates and is disturbed
b y prophecies that price control will become permanent. He fears
too, that all industry will be held down to the 1936-39 level of profits
which he rightly thinks would be inequitable in a high economy.
e x t e n d p r i c e c o n t r o l a n d s t a b i l i z a t i o n a c t s o f 1942
81
These fears are not unnatural. I respect them though I think each
without foundation. But every group is prosperous today to a degree
unprecedented in peacetime. And all these groups have a common
enemy. That enemy is inflation. In the fall in real wages in unemployment, in the collapse of farm values and farm prices, in the inventory and operating losses which inflation would bring in its trail,
wage earners, farmers, and businessmen, all would lose far more than
they could hope to gain from such advantages as they might secure
temporarily at the expense of stabilization.
The white-collar workers, the old people dependent on pensions or
annuities, and others with, fixed incomes have no hope of special
advantage. They can only cling to the faith that, in the fight against
inflation, their Government will not let them down.
Anti-price-control propaganda: The fact that the great majority of
American people share that faith becomes clearer as every new poll
checks public opinion on the question as to whether price control
should be continued. Yet this fact is sometimes concealed by the
unceasing barrage of demands, complaints and criticisms directed
against the OPA.
This year the drum-fire is terrific. The past 6 months have been
difficult for everyone. Never before has our economy been forced
to execute so sweeping a shift in its activities. Conversion to war
was gradual compared to the pace of reconversion to peace. Of
course, there have been hitches of one sort or another in the process.
So there were when the Nation was in total war. But then the excess profits tax took the edge off the appetite of business for price
increases. Today, however, the manufacturer who is short of materials or manpower, or the retailer who isn't able to get his orders
filled as fast as his customers take the goods off his shelves, naturally
looks for a scapegoat. As the sole wartime agency which has had to
retain much of its wartime program, OPA fills the bill.
But those who attack OPA generally look for more than psychological satisfaction. Their objectives are usually very specific.
Frequently they run to seven, eight, or even nine figures.
There are, of course, a good many industries and firms which have
had, and in the future will have, wholly legitimate grounds to seek
higher ceilings from OPA and sometimes to complain of price inequities. I am glad to get their views and to work with their advisory committees. I only wish th&t our industry relations could be
confined to such contacts.
Unfortunately, however, there are some industries which are misinforming Congress and misleading the American people. Their public relations experts inspire an outpouring of advertising copy, and
radio and press releases in which a few kernels of fact are served in
a highly seasoned stew of exaggeration, faulty analysis, half-truth,
and, now and then, what appears to be deliberate misrepresentation.
I saw something of that tactic when I was with OPA back in 1942
and with Judge Vinson in OES in 1943. But in the interim the art
of price propaganda has been advancing with such strides that, despite
m y earlier initiation, I must confess that, before I came back to
OPA, I was being taken in myself. For example, it was a very gratifying surprise, upon looking into the facts to discover that the Maximum Average Price plan was not just an instrument of oppression
and the embodiment of bureaucratic ineptitude.
e x t e n d p r i c e c o n t r o l a n d s t a b i l i z a t i o n a c t s o f 1 9 4 2 82
The more I learn about what OPA has done and is doing, the
prouder I feel to be the head of that agency. When I admit that
OPA has made mistakes, that it has created some inequities and
hardships, and that it still has plenty of unsolved problems, I am not
apologizing for its record as a whole. A shortstop can make 30 errors
in a thousand chances and still lead the league in fielding.
OPA has established, adjusted and policed maximum prices of millions of commodities handled by some 3,000,000 sellers. It has done
this through three and a half years of total war and, a still greater
achievement, through 8 months of reconversion to peace. In the last
3 years, the cost of living has crept up by about 3% percent on the
official index. In February, the last month for which we have data,
the index actually dropped a little. This record comes close to being
an economic miracle. Among other things it took long hours of hard
work and skillful planning on the part of people who have had courage
to say " N o " and take the brickbats when the easy thing to do was
to say " Y e s " and be complimented for reasonableness and realism.
Individual price adjustments: OPA is incessantly assailed for being
rigid, for refusing to recognize the need for price adjustments to speed
production, for allowing inequities to go uncorrected. I am sure that
OPA has refused a great many demands and disappointed a great
many hopes. That is why we still have a stable price level. But
the charge that OPA has been rigid does not accord with the facts.
In the 9 months between July 1, 1945 and April 1, 1946, OPA
authorized a total of 528 industry-wide price increases. Of this number, 153 were made to satisfy minimum legal requirements; 266 were
made to aid production; and 109 were made to correct particular
inequities or to assure more effective controls.
Since VJ-day, moreover, OPA has processed 12,000 individual
adjustment cases, granting 48 percent in full and 20 percent in part,
either to relieve hardship or to aid production. More than 80 percent
of these adjustments were handled by field offices.
Upon the adoption of the new wage-price policy in mid-February,
OPA adapted its procedures to handle promptly the increased volume
of price cases which was anticipated. It streamlined its operations in
many ways. It cut dowm the time required to gather necessary data.
It devised new methods for extending the use of self-pricing methods
in fields where strict controls were not essential. It stepped up its
decontrol program to allow a greater concentration of the staff's
time and energy on important commodities. The results have been
impressive. Already OPA is abreast of its industry-pricing program.
Of late, we have been hearing fewer predictions that OPA would
break down under an unmanageable load of pricing cases. That
could happen, and quickly, if OPA's existing standards were changed
by law to compel OPA to allow a profit on every product or to deny
OPA the right to require cost absorption.
One practical aspect of the proposals for sweeping changes in
pricing standards gives me very great concern. In my few weeks as
Administrator, I have come to feel that there is no part of my job
more important than to do everything possible to correct inequities
to individual enterprises. If the law .as extended required overhauling of our regulations on a broad scale to assure compliance with
new standards, it would be difficult if not impossible for the overburdened staff of the agency to devote adequate attention to the
e x t e n d p r i c e c o n t r o l a n d s t a b i l i z a t i o n a c t s o f 1 942
83
prompt adjustment of individual cases. I am convinced, moreover,
that our present standards are fundamentally fair, and that no case
has been made for drastic changes in them.
Commodity problems: Without accepting the promise on which so
many of OPA's critics appear to proceed, namely, that OPA is wholly
responsible for the solution of production problems, I should like to
outline the problems which we are facing, and, I believe, are overcoming, in the fields of clothing, lumber and building materials,
dairy products and meat.
If you now have in your minds a picture of an almost complete
break-down of regulation and supply in each of those fields, I should
not be surprised. But the stories which have been most frequently
told do not check with the situations as we see them.
Clothing: The analysis of the clothing problem most often encountered runs about like this: " I can't buy any white shirts. OPA
ceilings must be to blame. Let's get rid of price control." The
problem, however, is somewhat more complex.
T o begin with, we can't make clothes without textiles. During the
war the cotton-textile supply fell about as sharply as the demand for
cotton clothing rose. Because of wartime conditions, the cotton goods
available for civilian use in 1945 was only 25 percent of the 1939
supply. Even if the mills had been able to resume capacity production when the war came to a close, they could not soon have satisfied
civilian needs. But capacity production was impossible with a working force 20 percent below that of 1942. Fortunately, the labor supply
situation is steadily improving and a recent OPA incentive pricing
program is stimulating higher production of the low priced lines.
Senator MILLIKIN. Mr. Porter, will you give us statistics of what
is going into the so-called pipe line in this clothing matter before you
finish?
Mr. PORTER. Yes, sir. I can supply such information as we have
on that. Mr. Small I think issued a statement yesterday on low-cost
clothing, and it was very optimistic. I think it was the first week
that I was in OPA that we worked out an incentive-pricing plan for
certain primary construction of basing fabrics that go into shirts, suits,
and other textile items that have been short. It will take some time
to get them into the pipe line. We will furnish you statistical information on that.
Senator MILLIKIN. When would you say that these things will be
on the shelves of stores in reasonable quantity?
Mr. PORTER. I think it is going out now. I had brought to my
attention this morning a series of some hundreds of newspaper advertisements throughout the country of stores that are now showing
low-cost women's cotton dresses. Also shirts, work clothing and
many low-cost items that have been in short supply. I think they
are going out in increasing quantity every week, and it is may hope
and conviction that within certainly 2 months there will be a complete
change in this low-cost apparel picture. We will undertake to supply
more statistical information for the record.
Senator MILLIKIN. We have heard a lot of talk about the pipe
line. In order to judge the validity of that talk I would like to know
what is going into the pipe line. If I know what is going into the
pipe line I can judge pretty well what will be coming out.
e x t e n d p r i c e c o n t r o l a n d s t a b i l i z a t i o n a c t s o f 1 9 4 2 84
M r . PORTER. I can g i v e y o u a brief s u m m a r y of an article we hear
so m u c h a b o u t , w h i t e shirts, and o u r p r o d u c t i o n w a s 750,000 d o z e n
per m o n t h .
Our p r o d u c t i o n during the last 8 m o n t h s of m e n ' s dress
shirts has been, in J u l y 210,000 d o z e n , and f r o m that u p t o 426,000
d o z e n in D e c e m b e r .
T h e average per m o n t h f o r the f o u r t h quarter
w a s 423,000 d o z e n . T h e average per m o n t h i n J a n u a r y a n d F e b r u a r y , a c c o r d i n g t o i n d u s t r y estimates, was 600,000 d o z e n .
I m i g h t explain t h a t l a b o r has been one of the principal elements
h o l d i n g d o w n shirt p r o d u c t i o n .
I n January 1944 m e n ' s shirts e m p l o y e d 54,000 w o r k e r s . I n J a n u a r y 1945 it d r o p p e d to 4 9 , 0 0 0 w o r k e r s .
I n J a n u a r y 1946 it w a s b a c k to 50,500 workers.
I t is clear that the
l a b o r force has n o t increased materially since the w a r , a l t h o u g h it is
n o w increasing.
M r . C h a i r m a n , I w o u l d like t o insert in the r e c o r d at this p o i n t M r ,
S m a l l ' s s t a t e m e n t o n l o w - p r i c e clothing, w h i c h I think will g i v e m o r e
statistical i n f o r m a t i o n .
T h e CHAIRMAN. T h a t m a y b e d o n e .
( T h e data a f t e r w a r d s furnished b y M r . P o r t e r is as f o l l o w s : )
CIVILIAN PRODUCTION ADMINISTRATION
Advance release, for Wednesday morning papers, April 17, 1946, radio release, 7 p. m . , Tuesday, April 16
Substantial progress has been made in the past 90 days in putting low-cost
apparel back into the Nation's retail outlets, Civilian Production Administrator
John D. Small said today in announcing first-quarter authorizations of fabric for
the Government's low-cost clothing program.
"Indicative of this progress has been the amount of material ear-marked by
Government action for low-cost shirts and suits intended primarily for returning
veterans/' Mr. Small pointed out.
"Enough material was set aside in the first quarter to make 2,350,000 dozen
men's shirts which will wholesale at prices ranging from $1.37 to $2.25 each.
"Likewise, as previously announced, we authorized 12,000,000 yards of cloth
during the first quarter for men's low-cost and medium-priced suits wholesaling
from $22.50 to $28.50 each. It was estimated that between 2,500,000 and
2,800,000 low-cost suits were made up to April 1 under these authorizations,
while any unused balance of the allocated cloth is available for low-cost suits
during the current quarter.
"These are but two very important items in the entire low-cost clothing program intended to overcome the scarcity of the kind of clothing, which the Nation's
workers, returned veterans, children, and housewives can afford to buy," Mr.
Small continued. "While we are not over the hump, we are moving ahead and
it is safe to say that in the not too. distant future the normal balance between
low- and high-cost apparel will be reestablished. However, it wTill still be a long
time before supply pipe lines of low-cost apparel, which had been emptied by the
end of the war, will once more be filled with the clothing everyone needs."
Under the Government's low-cost clothing program, producers of cotton, wool,
and rayon fabrics are required to set aside specified portions of their production,
for sale only to clothing manufacturers. The clothing producers, in turn, are
committed to use the material only in production of low-cost items in specified
price ranges. No manufacturer can participate in the program without OPA
authorization.
"There is every reason to believe that a very high percentage of the CPA
authorizations for low-cost apparel are being carried out," Mr. Small said.
"While our estimates are based on the material authorized for the program
through Government assistance, we are making every endeavor to maintain a
balance between the authorizations issued and the amount of material actually
available in the market for clothing production."
Other high lights of the report show that during the first 90 days of the year,
CPA authorized a total of 227,90o,000 yards of cotton fabric for manufacture of
low-cost items. Seventy-five percent of this material had been ordered by
March 22. Among other things, this is expected to make 2,529,000 dozen dresses,
more than half of them in misses' and juniors' sizes, which wholesale from $10.50
e x t e n d price c o n t r o l a n d s t a b i l i z a t i o n a c t s o f 1 942
85
to $27 a dozen; 1,779,000 dozen men's and boys' undershorts, which wholesale
between $4.25 and $9.75 a dozen; 623,041 dozen infants^ and children's overalls
and coferalls to wholesale at $10.50 to $12" a dozen; and 446,386 dozen toddlers'
and boys' wash suits and pants, wholesaling at $13.50 to $17.25 a dozen.
A total of 143,500,000 yards of rayon fabrics were authorized for the firstquarter program, of which four-fifths had been ordered by March 22. On the
basis of these authorizations, a total of 27,900,000 girls' and women's street dresses
can be made (wholesaling from $3 to $6.75 each), in addition to large quantities
of blouses, shirts, waists, and rayon slips.
"These garments will not appear in retail stores immediately," Mr. Small
said. "An interval extending anywhere from several weeks to some months
must intervene between the time a manufacturer places his order for fabric and
the moment when the end product shows up on retail shelves. We do not anticipate that the full force of the program will be felt at the consumer end for at least
another 90 days—and, in some instances, considerably longer than that.
"Nevertheless, isolated reports show that even now shelves which had been
completely barren of vitally needed clothing are alreadv beginning to feel the
impact of the cooperative effort between business and Government to overcome
the deficiency. Low-cost shirts and shorts are moving into the market in increasing volume and as the heavy demand is met, more and more stores should begin
to stock the normal supplies. The past few weeks have seen an increasing number of suits on the market. While these are still swiftly bought up from retailers,
the encouraging fact is that shipments seem to be getting back to a regularly
scheduled basis.
" N o one knows when the unprecedented demand, which flooded producers and
retailers almost the day the war ended, will be sopped up by the supplies moving
into the market. W7e must remember that for a period of 3 to 4 vears, normal
production, normal stocks, and the normal flow through the distribution pipe
lines suffered the consequences of total war. The unsatisfied requirements of
that long period must be met before we can attain an economy of balanced supplies and demand once more."
Industry eagerness to participate in the program was illustrated by the fact that
the program was oversubscribed in every fabric in the first quarter. The 2,400
applicants for cotton fabrics requested 597,600,000 yards but available supplies
made possible authorizations for only 227,900,000 yards.
A total of 1,305 applications for wool fabric were submitted which, if all granted,
would have taken 51,000,000 yards of fabric. Actually, there were supplies
enough to authorize only 28,500,000 yards for the first quarter's production.
The rayon program was oversubscribed over two times. The 2,623 applicants
requested 302,900,000 yards, but available supplies resulted in 143,500,000 yards
authorized.
End of advance release for Wednesday morning papers, April 18, 1946.
Senator MILLIKIN. M r . Porter, w h e n w o u l d y o u say there will b e
an a b u n d a n c e of such things?
M r . PORTER. I t is o u r estimate that it will b e within 3 m o n t h s .
S e n a t o r M I L L I K I N . D O y o u m e a n t o say that b y t h a t time if a n y b o d y w a n t s t o b u y a c o u p l e of white shirts, or of a n y o t h e r k i n d of
shirts, he can g o in and b u y t h e m ?
M r . PORTER. T h e r e will p r o b a b l y b e s o m e shortage of shirts b e cause of the d e m o b i l i z a t i o n g o i n g o n and the b a c k l o g of d e m a n d .
I
s u p p o s e e v e r y b o d y w o u l d like t o b e able t o g o i n t o a store and b u y
a d o z e n shirts if that were possible. B u t y o u m u s t realize t h a t there
has b e e n a great d e m a n d w i t h 6,000,000 b o y s c o m i n g o u t of the s e r v ice. I m i g h t say t h a t I h a v e seen figures used t o the effect that there
is a 4 - y e a r d e m a n d that has i m m e d i a t e l y hit the m a r k e t .
Senator MILLIKIN. T h a t isa e x a c t l y the p o i n t I a m getting at w h e n
I ask a b o u t the time w h e n there will be an a b u n d a n t s u p p l y . I w a s
l o o k i n g f o r w a r d t o the d a y w h e n a m a n c a n g o i n t o a store and b u y
o n e shirt, or a d o z e n shirts if he desires t o b u y that n u m b e r .
Will that
b e a m a t t e r of 2 or 3 years?
E X T E N D PRICE CONTROL AND STABILIZATION ACTS OF 1 9 4 2 86
Mr. P O R T E R . NO, sir. It will be longer than 4 months, but there
will be a peak production, or a production at a point where there
won't be the scarcity that now exists.
Senator BANKHEAD. Mr. Porter, what is retarding peak production
now?
Mr. PORTER. I think it is a combination of factors. I mentioned
the labor supply, which is now important.
Can't
Senator BANKHEAD. Why do you say it is important?
you get a full supply of labor?
Mr. P O R T E R . NO, sir. I think, further, there is the question of
running second and third shifts in many of the primary mills.
Senator BANKHEAD. If you had second and third shifts you would
have a great increase in production.
Mr. PORTER. Yes, sir; and we have provision for such an allowance.
Senator BANKHEAD. Have you an incentive program?
Mr. PORTER. Yes, we have that very definitely. It is in an order
that was issued some 6 weeks ago, coupled with the allocation of
orders for CPA on some of the 19 cotton-textile products that go into
this field. The industry was given the total cost of the particular
product, plus their normal production, and plus 5 percent incentive
price.
Senator B A N K H E A D . D O you say that order was issued 6 weeks ago?
M r . PORTER.
Yes,
sir.
M r . PORTER.
Y e s , sir.
Senator B A N K H E A D . I heard only this morning that it would be
issued tomorrow.
Mr. PORTER. That is on carded yarn.
Senator B A N K H E A D . I S that the thing you are talking about?
Mr. PORTER. That is an amendment to the original order which
merely makes some changes in the original order.
Senator BANKHEAD. Will you please put the orders on that subject
in the record?
Senator B A N K H E A D . I mean, please put in the record both the
original order and the amendments, and when they became effective.
M r . PORTER. A l l right.
(The orders referred to, afterwards furnished by Mr. Porter, are as
follows:)
OFFICE OF PRICE ADMINISTRATION
SO 131
AMDT. 14
MAR. 8, 1946
(Document No. 53040)
PART 1305—ADMINISTRATION
[SO 131,1 Amdt. 14]
REVISED MAXIMUM PRICES FOR CERTAIN COTTON TEXTILES
A statement of the considerations involved in the issuance of this amendment
has been issued simultaneously herewith and filed with the Division of the Federal
Register.
Sections 1, 2, and 3 are amended and section 3a and 5 are added to read as
follows:
SECTION 1. How this supplementary order works, (a) This order supplements
and modifies the price schedules, regulations, and orders referred to in sections
3 and 4 with respect to the goods there designated. Except as they are supplemented and modified by this supplementary order, the provisions of those price
schedules, regulations, and orders remain in force.
110 F. R. 11296, 11890, 12116,13268, 13269, 13812, 14504, 14657, 15779 15004, 15383; 11 F.R. 532.
e x t e n d p r i c e c o n t r o l a n d s t a b i l i z a t i o n a c t s o f 1 942
87
(b) As originally issued, this order established a "higher" and a "lower" band
of maximum prices. These two bands, although retained in the text of section 4
of the order, are now supplanted in most cases by two new bandvS, called band A
and band B. Bands A and B, appearing in section 3, are in most instances
established in terms of increases over the original "higher" band ceilings. In
addition, a special incentive premium is provided in section 3a for a limited list
of fabrics.
(c) The applicability of the various bands is as follows:
(1) The original "lower" band of ceilings ceases to be effective on March 8, 1946.
(2) The original "higher" band of ceilings remains applicable only to those
items for which band A and B maximum prices are not established. For items
with band A and B maximum prices, the original "higher" band ceilings cease
by March 8, 1946, to be effective as maximum prices but in most cases they
constitute the basis for computation of the band A and B maximum prices.
(3) Band B ceilings may be charged by any seller.
(4) Band A ceilings may be charged only by producers who meet the requirements of section 2. In brief, band A prices may be charged only by a producer
who receives OPA's acknowledgement of the required certification that he is paying a wage increase of a specified minimum amount, except that a producer upon
becoming eligible to make the certification may charge band A ceilings for 30 days
thereafter, even if he has not filed the certification.
SEC. 2. To whom band A ceilings apply, certification, (a) Except during the
limited period of time referred to in paragraph (c) below, band A maximum prices
apply only to a producer who (1) has certified to the Office of Price Administration (on a form to be provided) that he is eligible to use them and (2) has received
from the Office of Price Administration an acknowledgment that his certification
meets the requirements of this section 2. Certifications shall be filed with the
Textile Price Branch, Office of Price Administration, Washington 25, D. C. Those
which meet the requirements of this section shall be acknowledged within 10 days
of their filing and the acknowledgments shall bear a number and the following
words: Band A OPA No.
.
(b) A producer may certify that he is eligible to charge band A ceilings only if
(1) his average hourly straight time wage 2 during any full representative period
in 1946 is at least 12}£% higher than his average hourly straight time wage during
any full representative payroll period after he first qualified to charge the original
"higher" band of ceilings established by section 4 and (2) the wage increases
involved have been approved pursuant to Executive Order 9697. If a producer
prior to March 8, 1946 had not qualified for the original "higher" band ceilings,
he may certify that he is eligible to charge band A ceilings only if (i) his average
hourly straight time wage during any full representative payroll period after that
date is at least 12}{% greater than the minimum average hourly straight time
wage 2 which would qualify 3 him for the original "higher" band and (ii) the wage
increases involved have been approved pursuant to Executive Order 9697.
(c) Notwithstanding paragraph (a) above, any producer upon becoming
eligible to make the certification there mentioned may charge band A ceilings for
deliveries made during the next thirty days thereafter or until April 8, 1946$
whichever is later.
2 A producer should compute his average hourly straight time wage by dividing his straight time payroll
for a full representative payroll period by the number of straight time man hours worked in that period.
The straight time payroll for the period should be appropriately increased to reflect accrued vacation pay,
or employee benefits such as insurance or hospitalization.
3 The qualifications for the original "higher" band appear in Appendix A.
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 1 9 4 2 88
SEC. 3. Band A and Band B maximum prices, (a) Maximum prices for the
goods named below shall be the prices established by section 4 for the "higher"
band, increased by the following percentages:
Name of goods
Bed linens
Bleached pillow tubing
Chambrays and coverts
Napped back cottonades
Napped back whipcords
Sheeting yarn fabrics
Grey soft filled sheetings
Wide sheeting, wide broken
twills, wide drills, and fourleaf twills, and wide sateens.
Warp sateens
Grey carded gabardines
Birdseye nursery products
Grey birdseye diapercloth
Denims
Pinchecks
Pinstripes
Print cloth yarn fabrics
Wide print cloths
Gauze diapers
Bunting and certain bleached
cheesecloth.
Bleached
sanitary
napkin
gauze and certain bleached
cheesecloth.
Osnaburgs
Cotton seamless bags..
Grey insulation tubing
Flannels
-_
Flannelette diapers
Terry products,
Par. in
sec. 4 of
SO 131 in
which
covered
Section in RPS or M P R in which
covered
(c) (1)
(c) (2)
(d)
(e) (1)
(e) (2)
(f)
(g)
(h)
RPS-89 1316.111 (c) (table III)
RPS-89 1316.111 (d) (3) (i)
RPS-35 1316.61 (b) (4) (table V)..._
MPR-118 1400.118 (d) (25) (iii)
MPR-118 1400.118 (d) (25) (iv)
RPS-35 1316.61 (b) (4) (table III)__
MPR-118 1400.118 (d) (3)
MPR-118 1400.118 (d) (13)
(i)
(j)
(k)
(s) (1)
MPR-118 1400.118 (d) (4)
MPR-118 1400.118 (d) (6)
MPR-118 1400.118 (d) (14) (iii) (a)_.
MPR-118 1400.101 (b) (2)
RPS-35 1316.61 (b) (4) (table IV)___
MPR-118 1400.118 (d) (32) (ii) (a)
and (b) and 1400.101 (b) (1) (ii).
MPR-118 1400.101 (b) (2)
RPS-35 1316.61 (b) (4) (table II).__
MPR-118 1400.118 (d) (23) (ii)
MPR-118 1400.118 (d) (14) (ii) ( a ) . .
MPR-118 1400.118 (d) (17) (ii)
(s) (2)
MPR-118 1400.118 (d) (17) (iv)
0)
(m)
(n)
(o)
(P)
(q)
(r)
(t)
(u)
(v)
(w)
(x)
(y)
Huck and crash towels and
(y)
corded napkins.
Ducks (in the grey)
(z)
Paper-makers dryer felts
(aa)
Certain surgical dressings
(bb)
Wide laundry cover cloth
(cc)
(dd)
Blanket linings
Certain 100% American cotton
blankets and robecloth.
Woven table and laundry felts.
(ff)
Certain woven tickings.
(chh)(l)
Certain woven tickings
(hh) (2)
Ginghams, seersuckers and re(ii)
lated fabrics.
(nn)
Grey uncut corduroy
Velveteen
(oo)
Certain broadcloths and pop(PP)
lins.
Combed bed linens
(rr) (2)
Terry products, huck & crash (rr) (3)
towels, towelling & corded
napkins made b y certain
producers.
Certain carded Class C four(ss)
leaf twills.
Knitted dish cloths
(rr) (5)
Cotton tire cord, tire cord fab(none)
ric, and cord breaker fabric.
Certain combed cotton fabrics. (rr) (1)
RPS-35, 1316.61 (b) ( 4 ) . . .
MPR-118 1400.118 (d) (31)
MPR-118 1400.118 (d) (34)..
MPR-118 1400.118 (d) (2)
MPR-118 1400.118 (d) (14) (iv)
MPR-118 1400.118 (d) (26) (v) and
1400.101 (b).
MPR-118 1400.118 (d) (29) (V) and
1400.101 (b).
MPR-118 1400.118 (d) (8)
MPR-118 1400.118 (d) (16) (i)
MPR-188 1499.166 (b) (17) (xi) (c)_...
MPR-118 1400.118 (d) (15) (ii)
MPR-1181400.118 (d) (12) (ii)
MPR-1181400.118 (d) (27) (viii) and
(ix).
MPR-118 1400.118 (d) (5)
RPS-351316.61 (b) (4) (table VI)
MPR-118 1400.101 (b) (2)
MPR-118 1400.118 (d) (10) (iii) and
1400.101 (b) (2) (ii).
MPR-1181400.118 (d) (24) (ii) ( 6 ) . . . .
GMPR
RPS-351316.61 (b) (4) (table II)
GMPR
GMPR...
MPR-118 1400.101 (b)
GMPR.
SR14E-2.il (c) (1) and (2)
GMPR
Band A,
percent
increase
e x t e n d p r i c e c o n t r o l a n d s t a b i l i z a t i o n a c t s o f 1 942
89
(b) The maximum prices for combed cotton yarns covered by § 1307.12 (b)
(Table I) of Revised Price Schedule No. 7 and by section 4 (b) of Supplementary
Order No. 131 shall be the following:
[Cents per pound]
Band A
Band B
Yarn Nos.
Singles
8s
10s
12s
14s
16s
18s
20s
22s
24s
26s
28s
30s
32s
34s
36s
38s
40s
42s
44s
46s
48s
50s
52s
Band A
Band B
Yarn Nos.
J_-
52.75
53. 25
53. 75
54. 25
55. 00
55. 75
56. 75
57. 75
59. 00
60. 25
61.50
63.00
64. 75
66.50
68. 25
70.00
71.75
73. 50
75. 25
77.00
78. 75
80. 75
83.00
Plied
Singles
55. 25
55. 75
56. 75
57. 75
58. 75
59. 75
61.00
62. 50
64.00
65. 75
67.50
69. 50
71.50
73. 50
75. 50
77.50
79. 50
81.50
83. 50
85. 50
87.50
89. 50
91.75
50.75
51. 25
51. 75
52. 25
53.00
53. 75
54. 75
55. 75
56. 75
57. 75
59. 25
60. 75
62. 25
63. 75
65. 25
66. 75
68. 25
69. 75
71.25
72. 75
74. 75
76. 75
78. 75
Plied
53. 25
53.75
54. 75
55. 75
56. 75
57. 75
58. 75
60. 25
61.75
63. 25
65. 25
67. 25
68. 75
70. 75
72. 25
73. 75
75. 75
77.75
79. 25
80. 75
82. 75
84. 75
86.75
Singles
54s.
56s.
58s.
60s.
62s.
64s.
66s.
68s.
70s.
72s.
74s.
76s.
78s.
80s.
82s.
84s.
86s.
90s.
100s
110s
120s
130s
140s
85. 25
87.50
89. 75
92.00
94. 25
96.50
98. 75
101. 00
103. 25
105. 50
107. 75
1 1 0 . 00
112. 25
114. 50
116.75
119. 75
123. 75
131. 75
155. 75
179. 75
207. 75
243. 75
297. 75
Plied
Singles
94. 00
96. 25
98. 75
101. 25
103. 75
106. 25
108. 75
111. 25
113. 75
116. 25
118. 75
121. 25
123. 75
126. 25
128. 75
131. 75
135. 75
145. 75
175. 75
205. 75
235. 75
281. 75
351. 75
80. 75
82. 75
84. 75
86. 75
88.75
90.75
92. 75
94. 75
96. 75
98. 75
100. 75
102. 75
104. 75
106. 75
108. 75
111.75
115.75
123. 75
144. 75
166. 75
191. 75
226. 75
276. 75
Plied
(c) (1) The maximum prices for the goods named below, when made of warp
yarns coarser than 40's, and which are covered by § 1400.101 (b) and/or § 1400.118
(d) of Maximum Price Regulation No. 118, and by section 4 (qq) (Table I) of
Supplementary Order 131, shall be the prices established by section 4 for the
"higher" band increased by the following percentages:
N a m c of Fabric
Ref. N o . in Par. (cc)
1
Brassiere cloth (rayon decorated)
Buff cloth (sheeting yarns)
Dimity cord
D i m i t y check
Dotted swiss
Colored yarn dress goods and shirtings, including ginghams, seersucker, chamhray, madras,
pique, and broadcloth.
Lawn
Leno bag fabrics
Laundry nets
Marquisette
Grey meads cloth of the following construction
conforming to Federal Specifications U-P-401
or any closely related construction serving the
same functional use: 40H" to 41", 74, to 75
warp ends, 86 picks, 2.85 yd. to 2.90 yd. per lb.
Finished meads cloth produced from the following grey constructions or any closely related
constructions serving the same functional use,
c o n f o r m i n g to F e d e r a l S p e c f i c a tions. U-P-401:
41" 74 x 86 2.90 (grey)
4 0 & " 74 x 86 2.80 (grey)
Grey moleskins
Oxfords, grey
Oxfords, colored yarn
Pique, grey
Play cloth
Pongee
Grey sanitary napkin gauze
Scrim (2-ply warp and filling)
Carded filling sateens and sateen yarn twills
Voile
Waffle cloth
2
3
4
5
6
7
8
9
10
11
12a-12b
12a.
12b
131415..
16-
17-
1 8 -
19-.
2 0 -
21-
22..
2385721—46—vol. 1
7
Band A
9.31
9.14
9. 31
9. 31
7. 50
5. 3S
8. 35
9.31
9.31
9. 31
9. 31
9.14
9.14
7. 50
9. 31
9. 35
9. 31
9.14
9. 31
9. 31
90.
e x t e n d p r i c e c o n t r o l a n d s t a b i l i z a t i o n a c t s o f 1 9 4 2 90
Ref. No. in Par. (cc)
Band A
N aine of Fabric
Double and tubular woven tobacco shade cloth..
Rayon decorated broadcloth
Three-leaf twills which, by virtue of thread
count, width, or weight, are excluded from
the coverage of R P S 35.
Grey fancy-bordered handkerchief cloth
Leno woven dobby broadcloth
Cotton rayon.flake fabrics
Print cloth yarn fabrics with warp yarns of
28's-32's, filling yarns of 36's-45's, average
yarn 33's -Or more, with a thread count of 161
or more pei square inch.
Natural yarn seersucker..
"Woven awning stripes
Industrial wiping towels
„
Leno woven dish cloths
24.
25.
26.
27.
28.
29.
30.
31
32
33
34
9. 31
9. 31
9. 31
9.
9.
9.
9.
31
31
31
31
9. 35
9. 35
9.14
5. 38
4.98
6.14
4. 70
1.15
(c) (2) For the goods named in paragraph (c) (1) above, when made of warp
yarns 40's or finer, the Band A and Band B maximum prices shall be the prices
established by section 4 for the "higher" band increased by 7.50% and by 1.00%,
respectively.
(d) (1) For the constructions of fine cotton goods covered by § 1316.4 (d)
(Table I) of Maximum Price Regulation No. 11 and by section 4 (gg) (1) and (2)
and section 4 (uu) (1), (2), and (3) of Supplementary Order No. 131, and which
are of the types and bear the reference numbers set forth below, the Band A
maximum prices shall be the following and the Band B maximum prices shall be
93.5% thereof:
Types
Combed broadcloth
Lawns
Reference
No. 1
AA1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
AB1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Cents
per
>ard
25.39
25.01
24.90
32. 35
36. 49
27.00
30.80
58.50
59.85
82.68
84.52
38.66
28. 77
29.93
44.46
24.12
35.58
26.60
20.55
12.52
15.26
12.56
14. 75
19.94
14.24
15.34
15.54
15.39
18.15
20. 73
30.54
23.20
23.88
28.60
30.83
16.15
18. 93
17. 55
18. 21
19. 57
20. 07
20.57
26. 42
18.78
Types
Lawns—(Continued)
Dimities.
Dimity check
Pique
Reference
No. 1
AB26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
AC1
2
3
4
5
6
AD1
2
3
4
5
AE1
2
3
4
5
6
Cents
per
yard
21.07
19.79
19.90
26.77
23.41
24.44
27.14
25.76
25.16
23.15
27. 94
28.50
24.98
23. 72
29. 71
34.14
37.44
21.18
26.19
26.90
28.13
16.62
22.15
23.13
19.70
33. 84
21. 39
15. 38
18.01
16.41
16.92
16.99
19. 55
10.89
15.10
14.08
18.10
18.32
42.67
58.46
63. 23
19. 77
21.51
44.22
e x t e n d price c o n t r o l and stabilization acts of 1
Reference
No. 1
Types
Pique—(Continued)
Pongee
..
Voile
Marquisettes
Scrim
Fine combed plains
Organdie...
Typewriter cloth
Umbrella cloth
Collar cloth
..
AE7
AF1
2
AG1
2
3
4
5
6
7
8
9
10
11
12
13
AH1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
All
2
AJ1
2
3
4
5
6
7
8
9
10
AK1
2
3
4
5
6
7
8
9
10
11
12
13
AL1
2
3
4
5
6
7
8
9
AMI
2
3
AN1
2
3
4
5
Cents
per
yard
61.13
20.43
18. 52
10. 37
10.96
13. 66
13. 35
13. 07
11.80
22.08
22. 69
24.89
23.31
42.65
47. 75
14.24
18.08
22. 74
17.95
22.16
8. 95
9. 74
9. 88
10.59
10. 94
11. 81
12.67
13. 57
14.64
12.01
13. 82
14.05
13. 87
15. 26
21.89
26. 57
9.83
21.64
29.62
36.63
6. 29
7.46
8.17
12.29
41.12
34. 32
56.48
65. 75
29. 31
48.08
22. 26
21. 57
22.07
23.93
23.82
24.35
25. 05
24.90
25.46
25.89
22.96
24.81
21.54
65. 55
64.40
41.17
39. 35
61.73
64.91
66.45
64.12
59.19
26.45
26.91
24.19
56.95
40. 71
29.00
33.33
128.20
Types
Collar cloth—(Continued)
Poplins
Beat up marquisettes
Tracing cloth
Tracing cloth
Aeroplane fabrics (ply yarn)
A e r o p l a n e f a b r i c s (mere, ply
Aeroplane fabrics (single yarns)—
942
Reference
No. 1
91
Cents>
per
yard
AN6
7
8
9
10
11
AOl
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
API
2
3
4
AQ1
2
3
4
5
6
7
8
9
AR1
2
3
4
5
6
7
AR8
9
10
11
12
13
14
15
16
17
18
19
20
AS1
2
3
4
5
6
7
8
9
36. 29
49. 76
51.84
69. 97
39. 59
56.14
34.38
37.04
35. 75
47.46
56.17
43.24
27. 45
24.95
27.68
31.71
31.85
36.45
29.39
52. 79
40.19
41.40
37. 95
39. 91
44.84
9.31
14. 6P13.53'
11.40?
22.80'
23. 76 •
27. 25 *
27. 24
29. 95 i
91.47'
113.8$
50. 58
36.23
16.69
19.63
21.77
22. 42
30.74r
24.67
28.04
34.00
31. 83
35. 84
21.24
34.89
32. 32
21.71
24. 78
34.15
37.43
26.05
28.59
36.48
51.14
52.04
49. 37
57. IT
45.16
50.18o4. 53
52. 3&
82.39'
ATI
2
3
4
5
6
7
8
9
AU1
2
3
53. 28
61. 29'
90.86106.07
150.82'
145.11
95.01
106.41
140.03.
41. 79*
35.44
43.67
92
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 1 9 4 2 92
Types
D o t t e d Swiss (undipped weights).
Jaequard b r o a d c l o t h . .
Decating apron Gloth.
Decating cloth.
Decating blanket
Aeroplane deicer cloth
Jacket cloth for rubber trade
Carrier apron for rubber trade
Printers blanket fabric -
Table cloth.
Linen warp card clothing c l o t h . .
Lapping cloth
Special combed d u c k .
Reference
No. 1
AVI
2
3
4
5
6
7
8
AW1
2
AX1
2
3
4
5
6
7
8
9
AY1
2
3
4
5
6
7
8
9
AZ1
BA1
BB1
2
3
BCl
2
3
4
5
6
7
8
9
BD1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
BE1
2
BF1
BG1
2
BH1
2
3
Cents
per
yard
25. 23
29. 48
25. 55
31.18
30. 09
35.02
34. 28
28.84
40. 20
42. 53
241. 03
210. 78
200. 46
226. 61
195. 70
346.61
230. 27
189. 23
230. 57
237. 03
199. 74
223.16
196. 35
182. 75
292.94
151. 95
181.88
260.08
126. 09
64.16
28. 48
46. 06
54.46
63. 54
72. 91
96. 40
99. 39
102.32
45. 66
57.29
68.13
86.15
100.19
125. 60
68.69
83. 27
64. 45
74.62
80. 93
74. 36
96.95
64.94
95. 45
110.83
122. 05
139. 21
84.80
76. 63
100. 29
109.40
137. 52
98. 40
113.57
77.97
109.66
45.80
51.61
321. 03
73.05
73. 67
73.71
83. 22
59. 95
Reference
No. 1
Types
Life vest (air corps, special)
Life vest (air corps special)
Insulating fabric
Acid resistant glove cloth
Bedford cord
Shade cloth
Jersey
Skip dent shirting
Filter c l o t h . . . . .
Mechanical boat cloth (ply yarns)
(American Pima)
Insect netting
Oxford shirting
...
Madras shirting (dobby weave) _ .
Shoe lining
Brassiere fabrics
Mechanical boat cloth
yarn, American Pima)
W a r p clip fabric
M o c k leno shirtings
Leno corset fabric
Radar c l o t h . . .
Sail cloth
Seersucker
Broadcloth
Chambray
(single
Cents
per
yard
BI1
2
BI3
4
5
BJ1
2
3
BK1
BL1
BM1
12
•BN1
BOl
BP1
2
127.15
114. 02
104. 30
110. 58
102. 26
10.84
27. 25
35.24
194.32
44.65
119. 06
148.31
21.64
22.55
26:24
58. 38
BQ1
BR1
2
3
4
BS1
2
3
4
5
6
7
8
9
BT1
2
BUI
BV1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
103.71
18.83
22. 05
23.17
17.31
30. 25
25. 73
28. 21
28. 73
33.61
34.12
34. 57
35. 32
28.01
32.31
39.50
46.19
38. 26
41. 27
37. 73
40. 51
39.37
42. 52
37.62
40. 36
42.43
45. 83
32.28
34. 39
32.07
33.98
34.88
88.90
BW1
BX1
2
3
4
5
6
BY1
2
3
BZ1
CA1
CB1
KB9
10
KC25
KE1
2
3
77.65
21.71
22.85
22.03
22.93
24.13
24.71
26.16
29.58
30. 35
51.70
53. 75
58.97
43.61
40. 36
31.56
72.73
28.15
29.03
i T h e capital letters heading each series of reference numbers shall be read as preceding each number in
the series.
(d) (2) The maximum prices for the constructions of colored sheetings and
seersuckers of the types and bearing the reference numbers set forth below, covered
by Table I of § 1316.4 (d) of Maximum Price Regulation No. 11, shall be the prices
e x t e n d p r i c e c o n t r o l a n d s t a b i l i z a t i o n a c t s o f 1 942
93
set forth in Table I of Maximum Price Regulation No. 11, increased by the
following amounts:
Reference
No. i
Types
Cents per yard
Types
Band A Band B
Reference
No. i
Cents per yard
Band A BandB
•
Madras..
KA 1
2
3.
4
5.
6
7.
8.
9.
10.
11
12.
13
14.
K B 1.
Seersuckers.
6.11
6. 23
6. 35
5.86
5. 40
5. 73
5. 28
6.00
5. 66
7. 24
6. 71
4. 61
4. 49
4. 65
2.
3.
4.
5.
6.
7.
8.
K C 1.
2.
3.
Broadcloth _
4.17
4.13
4. 41
4.80
4. 84
5.01
4. 44
5. 02
5.06
4.98
5. 25
2. 32
2.29
2. 45
2. 66
2.69
2.78
2. 47
2.80
2.81
2. 77
2.92
3.40
3. 46
3. 53
3.26
3. 00
3.19
2.93
3. 34
3. 15
4. 02
3. 73
2. 56
2.49
2. 58
Oxfords..
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
. KD 1
2
3
4
..
4. 65
4.82
4.94
5.04
5.16
5. 21
5. 34
5. 28
5.37
5. 69
5. 57
5.69
5.50
5.62
5. 95
6. 72
4. 32
4. 51
4. 65
4. 78
4. 72
4.63
4. 77
4. 65
4. 92
2.58
2.68
2. 75
2. 80
2.86
2.89
2.97
2.94
2.99
3.16
3.10
3.16
3.06
3.12
3. 31
3. 74
2. 40
2. 51
2.58
2.66
2.62
2.58
2. 65
2.50
2. 74
1 The capital letters heading each series of reference numbers shall be read as preceding each number in
the series.
(d) (3) In lieu of the differentials for colored shirting and seersuckers, set
forth in the footnote to Table I in § 1316.4 (d) of Maximum Price Regulation
No. 11 and in section 4 (gg) (3) of Supplementary Olrder No. 131, the differentials for Band B shall be 93.5% of the figures set forth below and the differentials
for Band A shall be the following:
Greige per
100 ends
40/r_
50/1
60/1.
40/2
40/3
40/4
50/2
60/2
. .
....
....
...
.
_ .
$0.00266
.00243
.00217
. 00532
.00798
. 01064
.00486
. 00434
Color per 100 ends
Pastel 270 Medium460
$0.00358
. 00316
.00278
$0. 00423
. 00368
. 00321
Dark 660
$0. 00491
.00422
.00367
(d) (4) In lieu of 0.180 and 0.280 set forth in paragraph (C) in the footnote to
Table I in § 1316.4 (d) of MPR No. 11, the pickage change differentials shall be
0.19^ and 0.300 per pick, respectively.
(e) In lieu of the maximum prices and differentials for standard unfinished boxloom clip-spot marquisettes, covered by § 1316.4 (d) (Table II) of Maximum
Price Regulation No. 11 and § 4 (gg) (4) of Supplementary Order 131, the band A
base maximum price shall be 12.080 per yard and the band A maximum prices for
. any standard construction other than base construction shall be the base maximum
price adjusted by the differentials set forth below. Band B maximum prices shall
be 93.5% of the prices (including all differentials) for Band A. The per yard
differentials are as follows:
A. W I D T H D I F F E R E N T I A L S
3 5 " deduct
4 6 " add
4 8 " add
$0. 0080
. 0115
. 0244
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 1 9 4 2 94
B. W A R P
DIFFERENTIALS—GROUND
(Where ground ends are more or less than 40 p§r inch)
•35"
39H"
46"
48"
40s or 60s combed
•
Gray, add or subtract for each two ends per inch
Pastel colors, add per end per inch
Empire colors, add per end per inch
$0.0018
. 00042
.00056
$0. ti020
.00048
.00063
$0.0023
. 00056
.00073
$0.0025
.00059
.00077
.00021
.00024
.00028
.00029
40s or 50s carded
Subtract from combed for two ends per inch
C. F I L L I N G
DIFFERENTIALS
(Where ground picks are more or less than 18 per inch)
I. GROUND
40s or 60s combed
Gray, add or subtract for two picks per inch
Pastel colors, add per pick per inch
Empire colors, add per pick per inch
$0.0047
.00049
.00063
$0.0049
. 00056
.00071
$0.0053
.00065
.00083
$0.0063
. 00068
. 00087
40s and 50s carded
Subtract from combed for one pick per inch
2. ROVING
Subtract
And add per pick per inch:
Gray:
4 hank
6 hank
8 hank
10 hank
12 h a n k . . .
Pastel:
4 hank
6 hank
8 hank
10 hank
12 hank
Empire:
4 hank....
6 hank
8 hank
10 hank
12 hank
.000104
. 000118
. 000137
. 00014J
.0114
. 0126
. 0142
.0156
.0074
.0057
.0047
.0041
.0038
.0081
. 0063.
. 0051.
.0046
.0042
.0092
.0071
.0057
.0050
.0046
.0100
.0078
.0063
. 0056
.0052
.0114
.0080
.0066
.0056
.0050
.0126
.0088
.0071
.0061
. 0055
.0144
.0101
.0081
.0068
.0060
.0154
.0109
.0090
.0076
.0068
.0124
.0087
.0071
.0060
.0053
.0138
. 00°7
.0077
.0066
.0059
.0158
.0110
.0087
.0074
.0064
.0168
.0118
.0097
.0081
.0073
$0.000166
.000204
$0.000204
.000256
$0.000204
.000256
D. P A T T E R N DIFFERENTIALS
Over 10 jumpers and/or 15 harness:
Per yard per pick 2 shuttles
Per yard per pick 3 and 4 shuttles.
!0.000166
.000204
20/2 carded cords (other than salvage):
Add per end (all widths):
Grey
Pastel colors
Empire colors.
Add: All widths per yard
$0.000073
000114
000129
E. LOOP C U T T I N G
1
F. P R O D U C T I O N
$0.0052
DIFFERENTIALS
After applying all necessary differentials add or subtract for each pick over or under an over-all
m i n t of 20 picks (all widths)
$0.0003
e x t e n d p r i c e c o n t r o l a n d s t a b i l i z a t i o n a c t s o f 1 942
95
(f) The maximum prices for carded cotton yarns covered by § 1307.66 (b) (2)
(Table II) of Maximum Price Regulation No. 33, and by section 4 (a) (1) of
Supplementary Order 131, shall be the following:
[Cents per pound]
Band A
Band B
Yarn numbers
Singles
6s and under
8s
10s
12s
14s
16s...
18s
20s
22s
24s
26s
28s...
30s
32s
34s
36s.
38s
40s
42s
Plied
46. 50
47. 00
48.00
49. 50
51.00
52.25
53. 50
54.75
56. 50
59.25
60.50
62. 00
63. 75
65.25
67.00
68.00
69.25
70. 75
73. 25
74.75
76. 50
78.50
80. 50
44.00
44.50
45. 25
46. 25
47. 25
48.50
49. 50
50. 50
51.75
53.00
54. 75
55. 75
57.00
58. 50
59. 75
60.75
62. 00
63.00
64. 75
66.50
68.25
70.00
72.25
44S__.-L.__.-.
46s
48s
50s...
Plied
Singles
44.25
44.75
45. 50
47.00
48.50
49. 75
51.00
52.00
54.00
55. 75
57.75
59.25
61.00
62. 50
64.00
65.00
66. 50
68.00
70.25
71.75
73. 50
75.25
77.50
41.50
42. 00
43.00
44. 00
45. 00
46.00
47.00
48.00
49.25
50. 50
52.00
53. 00
54. 50
56. 00
57.00
58. 00
59. 25
60.25
62.00
63. 50
65.50
67. 25
69. 25
(g) The maximum prices for use in establishing "in-line with" prices for
carded yarn containing low grade and/or cotton waste covered by § 1307.67 (f) (1)
of Maximum Price Regulation No. 33 and by section 4 (a) (2) of Supplementary
Order 131, shall fie the following:
[Cents per pound]
Band A
Band B
Yarn numbers
Singles
Is.
2s.
3s.
4s
5s
-
42.75
43.00
43.25
43.50
43. 75
Plied
45.25
45. 50
45. 75
46. 00
46.25
Singles
40.25
40. 50
40. 75
41.00
41. 25
Plied
43.00
43.25
43.50
43.75
44.00
(h) For the cotton rope, twine, yarn, and cord covered by section 2.9 of Supplementary Regulation 14E, producers' maximum prices shall be the prices established by that'section increased for Band A by 3 p e r pound and for Band B by
2}i0 per pound of cotton and/or cotton waste content in the rope, yarn, twine or
cord.
(i) The maximum price for sales of gem ducks by persons other than the manufacturer (covered by § 1400.118 (d) (8) (iii) (e) of Maximum Price Regulation
118 and section 4 (mm) of Supplementary Order 131) shall be the price set forth
in section 4 of Supplementary Order 131 for higher band goods, increased by the
dollars-and-cents amount by which the supplier's band A or band B ceiling (including premiums) exceeds the original higher band price.
SEC. 3a. Incentive premiums. A premium equal to 5 % of the otherwise applicable maximum price may be charged for the fabric named below (where con-
96
e x t e n d p r i c e c o n t r o l a n d s t a b i l i z a t i o n a c t s o f 1 9 4 2 96
structions are designated, the premium applies only to fabrics meeting the specified construction details):
Ref.
No.
10
Name of goods
Grey osnaburgs
Soft filled sheetings
68" 44 x 39 1.25
59" 44x39 1.65
71" 44 x 39 1.12
40M" 44x42 3.00
37" 40 x 40 3.50 and pro rata widths
and weights.
37" 36 x 36 2.00 and pro rata widths
and weights.
37" 44 x 40 3.50 and pro rata widths
and weights.
Class A sheetings—under 42"
36" 48 x 44 2.85
40" 48x 44 2.85
40" 48x 44 2.50
Class A sheetings—42" and over pro rata
widths and weights to items under ref. No.
3.
Class B sheetings—under 42"
40" 44 x40 4.25
40" 48x 40 3.25
40" 48 x40 3.75
37" 48x44 4.00
31" 48x 44 5.00
Class B sheetings—42" and wider pro rata
widths and weights to items under ref. No.
5.
Wide laundry cover cloth..
Class C sheetings—under 42"
36" 64 x 64 3.50
36" 60 x 52 4.00
36" 56 x 56 4.00
36" 48 x 40 5.50
36" 44 x 40 5.50
35" 44 x 40 6.05-6.15
35" 40 X 40 6.05-6.15
40" 64 x 64 3.15
40" 60 x 52 3.60
40" 56 x 56 3.60
40" 56 x 48 4.30
40" 44 x 40 5.50
40" 36 x 40 5.55
Class C sheetings—42" and over pro rata
widths and weights to items under ref. No.
8, and
60" 64 x 68 2.15
60" 48 x 48 3.30
Meads cloth
Grey
Finished
Grey insulation tubings
Carded poplins (sheeting yarns)
76 to 110 sley
36 to 60 picks
Three leaf pocketing twills
39"
2.58 or 3.00
Broken twills
54"
1.14
58"
1.06
Four leaf twill
37" 88 x 42 2.00 and pro rata widths and
weights
1
Drills—under 42"
2.50 and 2.75
37" 68 x 40 3.00 and pro rata widths and
weights
Drills—42" and wider
59"
1.85
59"
2.25
Wide sateens
53"
1.12
53"
1.32
54"
1.05
Para, in see. 4
of S. 0.131 in
which covered
Section in R P S or M P R in which
covered
(t).
(g)-
R P S 35, 1316.61 (b) (4) Table III.
MPR-118, 1400.118 (d) (3).
(0-
RPS-35, 1316.61 (b) (4) Table III.
(h)
MPR-118, 1400.118 (d) (13) (iv).
(f)
RPS-35 1316.61 (b) (4) Table III.
00-
MPR-118, 1400.118 (d) (13) (iv).
(cc)
(0-
MPR-118, 1400.118 (d) (15) (ii).
RPS-35, 1316.61 (b) (4) Table III.
(h)~
MPR-118, 1400.118 (d) (13) (iv).
(qq) Table I .
1400.118 (d) (18) ref. 11,
Ref. No. 11— 1[ MPR-118,
1400.118 (d) (18) ref. 20A and 20B.
Ref. No. 12a12b.
MRP-118, 1400.118 (d) (34) (i).
(v)..
MPR-118, 1400.101 (b) (2).
(None).
(p)(h)(0(f)~
RPS-35, 1316.61 (b) (4) Table II.
MPR-118, 1400.118 (d) (13) (v).
RPS-35, 1316.61 (b) (4) Table III.
RPS-35, 1316.61 (b) (4) Table III.
(h)-
MPR-118,1400.118 (d) (13) (iv).
(h).
MPR-118,1400.118 (d) (13) (vii)
e x t e n d price c o n t r o l a n d s t a b i l i z a t i o n a c t s o f 1942
Name of goods
Print cloths—Class A_._
39"
80 x 80 4.00
39"
68 x 72 4.7,5
39"
68 x 64 4.85
3 8 W 64x 60 5.35
38H" 64 x 56 5.50
38H" 60x48 6.25
Print cloths—Class B_.
38W 44x36 .60
38H" 44x40 8.20
3 8 ^ " 40 x 32 9.80
38**" 48x44 7.46
3 8 ^ " 48x48 7.15
Print Cloth—Class C: All constructions and
widths.
Bleached cheese cloth, bleached sanitary
napkin gauze and bunting.
Certain bulk surgical dressings
Carded broadcloths, classes A, B, C and D ,
80 to 136 sley, not in excess of 60 picks, not
including slub yarns.
Carded poplins, classes A , B, C and D , 80 to
116 sley, not in excess of 56 picks, not including slub yarns except 3.75 and heavier.
Denims
Mill finish Sanforized
3. 00
2. 70
2.45
2. 20
2. 20
8 oz.
9 oz.
8 oz.
10 oz.
11 oz.
Work shirt chambrays—fine yarn
Mill fi nish Sanforized
3.90
3.60
Work shirt coverts—fine yarn
Mill finish Sanforized
3.90
3.60
Work shirt coverts—coarse yarn
Mill finish Sanforized
3.20
2.90
Pants coverts
Sanforized
2.40
2.00
1.65
Whipcords
Sanforized
1.45
Work-shirt flannels
Plain color twills and plaids.
Mill fi nish Sanforized
3.00
2.70
2.28
2.00
Glove and mitten flannels 6, 8, 10, 12 oz. pro
rata to 34", unbleached and colors as specified in MPR-118, 1100.118 (d) (2) (v).
Chafer fabrics
Gem ducks
30*4" 8 oz. and pro rata widths and
weights.
30 W 9 oz. and pro rata widths and
weights.
Soft-filled twills—under 42"
37" 80 x 40 2.00 and pro rata widths and
weights.
Soft-filled twills—42" and over pro rata
widths and weights to item listed under
ref. No. 36.
97
Para, in sec. 4
of S. 0.131 in
which covered
Section in R P S or M P R in which
covered
(P)-
RPS-35,1316.61 (b) (4) Table II.
(P)-
RPS-35,1316.61 (b) (4) Table I I .
(P)~
RPS-35,1316.61 (b) (4) Table II.
(s)-.
(bb).
<P)~
MPR-118,1400.118 (d) (17) (ii) and
(iv).
MPR-188,1499.166 (b) (17) (xi) (c),
RPS-35,1316.61 (b) (4) Table II.
(P)~
RPS-35,1316.61 (b) (4) Table II.
(m).
RPS-35, 1316.61 (b) (4) Table I V .
<d)~
RPS-35, 1316.61 (b) (4) Table V.
(d)~
RPS-35,1316.61 (b) (4) Table V .
(d) —
RPS-35, 1316.61 (b) (4) Table V.
(d)--
RPS-35, 1316.61 (b) (4) Table V.
(e) (2)..
MPR-118, 1400.118 (d) (25) (iv).
<w).„.
MPR-118, 1400.118 (d) (2) (iii).
(w)_
MPR-118, 1400.118 (d) (2) (v).
(z)(z)-
MPR-118, 1400.118 (d) (8) (x).
MPR-118, 1400.118 (d) (8) (iii) (b).
(f)~
M P R - 3 5 , 1316.61 (b) (4) Table III.
(h).
MPR-118, 1400.118 (d) (13 (vi).
e x t e n d p r i c e c o n t r o l a n d s t a b i l i z a t i o n a c t s o f 1 9 4 2 98
SEC. 5. Appendix A: To whom the higher band prices apply. (a) The higher
band of maximum prices applies to those producers, and to those producers only,
who since March 1, 1945, have increased the wage rates of all their workers at
least 50 per hour and, in addition, are paying any one of the following:
(1) A minimum wage of 550 per hour for all workers except learners and
handicapped.
(2) A premium of 50 per hour for all hours worked on the third shift which
shall be operated no less than 10% of the man hours worked on the first and
second shifts combined during the second quarter of 1945, or
(3) A minimum of one week's paid vacation per year.
(b) Any producer who is qualified to charge the maximum prices in the higher
band is authorized to collect, in connection with existing contracts or deliveries
already made (but only if he lawfully reserved that right), the difference between
the maximum price prevailing on June 1, 1945, and the maximum price in the
higher band. The amount which he may so collect is limited, however, as
follows:
(1) In the case of sales and deliveries made pursuant to Supplementary Order
114, to 4 % ;
(2) In the case of sales and deliveries made pursuant to Revised Supplementary Order 114 to the applicable percentage set forth in Column II of section
5 of that revised supplementary order.
(c) A producer who is not qualified to charge the maximum prices in the higher
band shall not charge or collect any more than the maximum prices in the lower
band, notwithstanding any reservation or certification made by him under Supplementary Order 114 or Revised Supplementary Order 114.
This amendment shall become effective March 8, 1946.
NOTE: The reporting requirements of this amendment have been approved
by the Bureau of the Budget in accordance with the Federal Reports Act of 1942.
Issued this 8th day of March 1946.
P A U L A. P O R T E R , Administrator.
S T A T E M E N T OF T H E C O N S I D E R A T I O N S I N V O L V E D IN THE I S S U A N C E OF A M E N D M E N T
N O . 1 4 TO S U P P L E M E N T A R Y O R D E R N O . 1 3 1
The accompanying amendment effects a general upward revision .of the maximum prices for almost all cotton textiles. The higher prices are granted, for the
most part, to off-set labor and cotton cost increases'which have occurred since
cotton textiles were last re-priced in the late summer and fall of 1945 in conformity with the Bankhead Amendment to the Stabilization Extension Act. In
addition, higher prices are granted to the producers of specified staple cotton
goods as an incentive to insure the increased production of these fabrics necessary
to meet the requirements set by the Civilian Production Administration for low
cost men's, women's, and children's apparel, work clothing, and industrial and
agricultural uses.
On November 4, 1945, the New Bedford and Fall River Massachusetts group
of manufacturers placed into effect a general wage increase subsequent to negotiations with the union representing the employees. The wage adjustment
represented: (1) an increase in the minimum rate from 570 to 650 per hour; (2)
an increase , of 80 per hour across the board as a corollary of the increase in the
minimum rate; (3) an additional 20 per hour third-shift premium; (4) the granting
of a second week of paid vacation to employees with five or more years of service;
and (5) certain other "fringe" adjustments. This increase was approved by the
National Wage Stabilization Board on January 17, 1946 as necessary to eliminate
sub-standard wage conditions. At the same time or earlier, adjustments in wage
rates for particular jobs were made to bring them into conformity with the socalled "peg-point" rates established pursuant to the wage settlement ordered by
the National War Labor Board early in 1945. Like increases have since spread
widely, largely on a voluntary basis, throughout the industry. In addition,
cotton textile producers have been faced since last summer with a steadily increasing price for raw cotton, both parity and replacement cotton having risen to
levels not reached since the early 1920's. Since the prices last issued for major
items of cotton textiles, determined under the so-called "Net Worth Formula",
were at the minimum price level required by law, compensating price relief is
required to off-set the increased labor costs and the increase which has occurred
in parity since July 1945.
In discussions relative to the price and production problems of the cotton textile
industry held between the Office of Price Administration and representatives of
e x t e n d p r i c e c o n t r o l a n d s t a b i l i z a t i o n a c t s o f 1942
99
the cotton textile producers, strong representations were made by the leaders of
the industry that an advance in prices to the current minimum level required by
law (reflecting current wages and current parity) would be ineffectual in achieving
a desired 25% increase in cotton textile production, since the current market for
raw cotton exceeds the parity price on a considerable range of grades and staples
as much as two to three cents per pound. Although the resulting margins over
actual cotton cost would be adequate to meet the requirements of the industry
earnings standard (or, if they were not, for any cotton textile industry, necessary
adjustments would be made), nevertheless it was argued that margins would be
insufficient to cause producers to make the extra efforts, involving use of overtime
labor, operation of third shifts, special recruitment devices, etc., which alone could
yield maximum production. Although the return of manpower to the mills in the
last few months has resulted in some increase in production , overtime operations
remain at a level below the pre-V-J day peak, production has not increased as
rapidly as might be expected, and a critical shortage still exists.
In view of the foregoing, the Administrator has been faced with a dilemma.
It is imperative, he recognizes, that ceilings should not be allowed to become an
impediment to the maximum textile production physically attainable. On the
one hand, if the increase were limited to the minimum required by law, there would
be a substantial risk of impeding this maximum output. Therefore, lest ceilings
at the minimum level required by law prevent attainment of the highest possible
production, the Administrator has been impelled to grant an increase beyond that
level. However, the granting of such an increase is fraught with the probability
that it would defeat its own objective, since any large margin granted the textile
mills as an incentive to greater production might induce a further speculative
advance in the price of raw cotton and thus eliminate the incentive margin. In
other words, so long as the price of raw cotton remains unchecked, an increase in
the price of textiles in order to obtain a larger output might result merely in higher
prices for cotton and no greater supply of textiles.
It is clear that the only resolution of this otherwise hopeless dilemma lies in
stabilization of the price of cotton. This has reinforced the determination of the
government to take all measures within its power to hold the price of cotton at
or below the current market. To this end the Director of Economic Stabilization has held conversations with the Presidents of the New York, New Orleans,
and Chicago cotton futures exchanges, and asked them, on a voluntary basis, to
cooperate in the effort to stabilize prices for cotton by increasnig substantially
margin requirements on futures transactions in order to dampen the speculative element which has lately been increasing in the cotton futures market.
If an increase in trading margins is not effective in stabilizing cotton prices, the
Administrator is prepared to take whatever additional steps, including a ceiling,
are necessary to stabilize cotton prices.
These raw cotton measures are in process or in prospect. Therefore, the
dilemma mentioned above has been obviated. Under these circumstances the
Administrator, with the approval of the Office of Economic Stabilization, has
decided that in order to stimulate textile production, an increase larger than the
law requires can and should be granted with the expectation that it will be effective
in achieving that purpose. The present amendment therefore increases textile
ceilings by an amount reflecting almost the full difference between the July 1945
parity level for raw cotton and the current market level (in addition to a reflection
of the wage increase in full, which would not be required by law). In no case,
however, is a raw cotton cost used which is lower than current parity.
It should clearly be understood that this adjustment not only exceeds the
minimum required by law, but undoubtedly exceeds the level which would result
if the "net worth formula" (the operating standard used in applying the requirements of the Bankhead Amendment) were applied to costs which include the
recent market level of raw cotton prices used in this adjustment, current actual
conversion costs, and a reasonable profit, for each major item separately considered. The reasons for this include the following: (1) with the increase in the
volume of production which has occurred since conversion costs were last surveyed, overhead costs have been reduced and will be reduced further; (2) with
the increasing return to the mills of employees formerly in the armed services
or temporarily employed in war industries, the average quality and productivity
of labor has increased and will increase further; (3) the present calculations assume that mills are using the same assortments of grades and staples of raw
cotton used in the summer of 1945; however, many grades and staples have
increased in price by much less than the average, and many mills have been
able, within limits, to switch the grades and staples of cotton used in favor of
e x t e n d p r i c e c o n t r o l a n d s t a b i l i z a t i o n a c t s o f 1 9 4 2 100
those which have increased less; (4) since prices were last calculated for major
items, the size of most of the major items has been expanded by the inclusion
of many items previously considered as "minor items", and these added items
have received the same increases as the major items to which they have been
added; had the major items been re-surveyed to include the minor items later
added, the results would have doubtless shown need for smaller price increase
The revised prices are set forth in two bands, called Bands A and B. Band A
represents the former higher band of prices increased to take account of the 1946
textile wage increase and the higher market price for cotton, as described above.
Band B is derived from the former higher band of prices adjusted upward to reflect
current cotton costs. The accompanying amendment revokes the former lower
band of prices, permitting producers of such goods as are not repriced at this time
to sell uniformly at the higher band levels.
The percentage increase in labor costs attributable to the 1946 textile wage
increase was determined by an examination of pay-roll data by Office of Price
Administration accountants in a survey of 15 mills actually paying the higher
wage levels. This examination confirmed opinions expressed in discussions with
representative producers and labor-union representatives that the increases averaged 15 percent. This figure has been used. In the case of individual mills, the
increases range to above 20%, but these cases appear to be exceptional. This
uniform percentage (15%) was applied to the percentage of the selling price which
labor costs represent for each major item, as shown by previous OPA accounting
surveys.
In order to qualify to charge Band A prices producers of cotton te^ftiles will be
required to certify as to the wage increases they have granted on a form to be
provided for this purpose. Formal permission to charge Band A prices will be
achieved by the receipt of an acknowledgment from the Office of Price Administration bearing a number applicable to the particular producer. For the period
of one month required for the clearance of this form (as well as for 30 days after
an individual producer grants the wage increase) the certification requirement will
be waived, so that Band A prices may be charged immediately by those producers
actually paying the 1946 wage increase.
p In order to qualify for Band A, each mill must be able to demonstrate that it
has put into effect a wage increase which has caused an increase in pay rolls
amounting to 12}i percent above the level formerly in effect after he had qualified for the previous higher band, or, if he had not previously so qualified, 12y2
percent above a level which would have qualified him, prior to this amendment,
for that higher band.
It was noted above that wage increases granted by individual mills ranged from
zero to above 20 percent, although the average for firms already involved in the
new increase was around 15 percent, with a substantial cluster around this
figure. Since it is not administratively feasible to have more than two bands,
some line between zero and 20 percent must be drawn, above which a price increase is given covering, on the average for this group, the increase in cost due
to the wage increase. With the drawing of any such line, there will be some
mills which just fail to qualify and hence receive no price increase to cover wage
increases, even though they may experience a substantially higher wage cost.
There will be other mills which just meet the minimum qualification, yet get a
price increase which more than covers their increased labor cost. Likewise
there will be mills which pay higher wage increases than the average, and will
not be fully covered by the price increase. These inequities, if they are such,
appear unavoidable. It is the Administrator's belief that greater fairness is
secured by the method here used than if the two-band system were not used
and a single price increase were given to all firms taking into account an average
of individual increases ranging from zero to 20 percent or more.
In addition to the general increases accorded all major items, an incentive
premium of 5% is being granted to producers of specified staple fabrics in order
to divert production from specialty items to those goods, and to insure that mills
will make an especial effort to get the absolute maximum of production on these
fabrics. These goods are those designated by the Civilian Production Administration, which are vitally needed to make the low-cost apparel and work-clothing
programs successful, and to provide needed fabrics for industrial and agricultural
uses. This action represents the Office of Price Administration's part in a joint
program with the Civilian Production Administration to insure the needed supply
of these goods. On its part the Civilian Production Administration will issue
production directives requiring producers who in the past manufactured the
specified fabrics to return to their manufacture and to produce specified minimum
e x t e n d price c o n t r o l and stabilization acts of
1 942
101
quantities of these goods each quarter. In addition the Civilian Production
Administration will take steps to insure that additional production obtained
through this program is channeled to low-cost clothing or essential industrial use.
The Administrator has on several Occasions referred to the entry into the
finished goods field of mills which formerly confined themselves wholly or chiefly
to grey goods. In many instances these mills sell finished goods to cutters or t o
industrial consumers who have customarily used finished goods bought either
from independent converters or from mills themselves engaged in converting.
In other instances, however, mills have refused to offer grey goods to, and in
effect have forced the purchase of finished goods by, industrial consumers (such
as bag manufacturers, coaters, etc.) for whom in the main grey goods are better
suited than finished goods. It is obvious that this practice results in inflation
of business costs and ultimately in higher consumer prices. The Administrator
is informed that it is the intention of the Civilian Production Administration to
require that a percentage of certain classes of goods to which the 5% incentive
price applies be sold in the grey for industrial and agricultural uses. For his
part, the Administrator will provide that no converting mark-up may be taken
on goods required by the Civilian Production Administration to be sold in the
grey. These actions may be expected shortly.
It should be noted that certain cotton textile items have been omitted from this
amendment, for various reasons. Finished corduroy and slack suitings are
omitted because they had not been finally priced to reflect the last general cotton
textile increase, for particular reasons in each case. Price increases for these
items will be issued shortly, in an amount which includes allowance both for the
previous and the present adjustment.
In the case of decorative fabrics, table naperv, and bedspreads, the special'
pricing method used in granting the previous increase was unusually complicated
and the problems involved in computing the new increase have not yet been thoroughly evolved. Action in this respect will, however, be forthcoming.
In the case of part wool and part Asiatic cotton blankets, the increases given1
were based upon recent costs, and, in the absence of demonstrated need for further
increase, the present prices can be deemed adequate.
With this revision, the pricing of cotton textiles has become extremely complicated. Many sellers will have to make several calculations in order to arrive at
their new ceiling prices. These complications result from the effort to make the
adjustments effective as rapidly as possible. It is hoped that if the pressure of
events permits, simplified regulations will be issued so that ceiling prices can be
ascertained from one document, with a minimum of extra calculations.
Issued this 8th day of March 1946.
P A U L A . P O R T E R , Administrator..
S O 131
AMDT.
MAR.
OFFICE
OF P R I C E
15
19, 1946
ADMINISTRATION
(Document No. 53242)
PART
1305—ADMINISTRATION
[SO 131,1 Amdt. 15]
REVISED M A X I M U M
PRICES FOR CERTAIN COTTON
TEXTILES
A statement of the considerations involved in the issuance of this amendment
has been issued simultaneously herewith and filed with the Division of the Federal
Register.
3 10 F . R . 11296, 11890, 12116, 13268, 13269, 13812, 14504, 14657, 14779, 15004, 15383; 11 F . R . 532.
e x t e n d price c o n t r o l and stabilization acts of
1 9 4 2 102
Supplementary Order No. 131 is hereby amended in the following respects:
1. The Band B maximum prices for carded yarns in section 3 (f) are amended
to read as follows:
BAND B
(Cents per pound)
Yarn N o .
6s and under
8s
10s
12s
14s
16s_
18s
20s
22s
24s
26s
28s
Singles
Plied
42.50
43.00
43.75
44.75
45. 75
47.00
48.00
49.00
50. 25
51. 50
53. 25
54. 25
45.00
45. 50
46. 50
48.00
49.50
50. 75
52.00
53. 25
55.00
56. 75
59. 00
60.50
Singles
Yarn N o .
55.50
57.00
58. 25
59. 25
60.50
61.50
63.25
65.0G
66.75
68.50
70.75
30s.
32s
34s
36s
38s
40s
42s
44s
46s
48s
50s
62.25
63.75
65.50
66.50
67. 75
69. 25
71.75
73.25
.75.00
77.00
79.00
2. The Band B maximum prices in section 3 (g) are amended to read as follows:
BAND B
(Cents per pound)
Yarn N o .
Is
2s
3s .
Singles
41.25
41.50
41. 75
.
-
Yarn N o .
Plied
43. 75
44.00
44.25
4S
5s
Singles
42.00
42.25
__
Plied
44. 50
44.75
This amendment shall become effective as of March 8, 1946.
Issued this 19th day of March 1946.
P A U L A. P O R T E R , Administrator.
S T A T E M E N T OF THE C O N S I D E R A T I O N S I N V O L V E D IN THE I S S U A N C E OF A M E N D M E N T 1 5
TO S U P P L E M E N T A R Y O R D E R N O . 1 3 1
Amendment 14 to Supplementary Order No. 131 increased the previous maximum prices for carded cotton yarns, setting forth two new bands of prices designated as Band A and B. It was intended that the Band B prices be calculated by
adding 2.25 cents per pound to the original higher band, to offset advances in the
price of raw cotton, but inadvertently the 2.25 cent increase was added to the
former lower band. Thus, through an error, the Band B prices were lower than
the prices established by Amendment 13.
The accompany amendment corrects the Band B maximum prices for carded
yarns. This action is made effective as of March 8, 1946, the effective date of
Amendment 14.
Issued this 19th day of March 1946.
P A U L A. P O R T E R , Administrator.
SO 131
AMDT. 16
A P R . 3, 1946
OFFICE OF PRICE ADMINISTRATION
(Document No. 53693)
PART
1305—ADMINISTRATION
[SO 131,1 Amdt. 16]
R E V I S E D M A X I M U M PRICES FOR CERTAIN
COTTON
TEXTILES
A statement of the considerations involved in the issuance of this amendment
has been issued simultaneously herewith and filed with the Division of the Federal
Register.
110 F . R . 11296, 11890, 12116, 13268, 13269, 13812, 14504, 14657, 14779, 15004, 15383; 11 F . R . 532, 1771, 1888,
2635, 2972.
e x t e n d price c o n t r o l and stabilization a c t s of
103
1 942
Supplementary Order No. 131 is amended in the following respect:
Section 2 (c) is amended to read as follows:
(c) Notwithstanding paragraph (a) above, any producer upon becoming eligible to make the certification there mentioned may charge band A ceilings for
deliveries made during the next thirty days thereafter or until May 30, 1946,
whichever is later.
This amendment shall become effective April 3, 1946.
Issued this 3d of April 1946.
JAMES G . ROGERS, Jr.,
Acting Administrator.
S T A T E M E N T OF T H E C O N S I D E R A T I O N S I N V O L V E D I N T H E I S S U A N C E OF A M E N D M E N T
N O . 1 6 TO S U P P L E M E N T A R Y O R D E R N O . 1 3 1
The accompanying amendment extends the period during which a producer,
who is eligible to make the certification that he is authorized to charge Band A
ceilings, as required by Section 2 (a) of Supplementary Order No. 131, may charge
Band A ceilings even though he has not filed the certification.
This action is necessary because it will not be possible to prepare and distribute
the certification forms to the trade in time to permit filing and acknowledgment
by April 8, 1946.
Issued this 3d day of April 1946.
JAMES G . R O G E R S , J r . ,
Acting Administrator,
SO 131
AMDT. 17
A P R . 4, 1946
O F F I C E OF P R I C E A D M I N I S T R A T I O N
(Document No. 53713)
PART
1305—ADMINISTRATION
[SO 131,1 Amdt. 17]
REVISED M A X I M U M PRICES FOR C E R T A I N COTTON T E X T I L E S
A statement of the considerations involved in the issuance of this amendment
has been issued simultaneously herewith and filed with the Division of the
Federal Register.
Supplementary Order No. 131 is amended in the following respects:
1. The table of maximum prices for carded cotton yarns in section 3 (f) is
amended to read as follows:
[Cents per pound]
Band A
Band B
6s and under
8s
_ . ..
10s
12s
14s
16s
18s
20s
22s
24s
26s.__
28s
Band A
Band B
Yarn numbers
Yarn numbers
Singles
Plied
Singles
44.75
45.25
46.00
47.00
48.00
49. 25
50.25
51.25
52.50
53. 75
55. 50
56.50
47.25
47.75
48.75
50. 25
52.00
53.25
54.50
55.75
57.50
59.25
61.50
63.00
43.25
43.75
44.50
45.50
46. 50
47.75
48.75
49.75
51.00
52.25
54.00
55.00
Plied
45. 75
46.25
47.25
48. 75
50.25
51.50
52.75
54.00
55.75
57.50
59. 75
61.25
30s-----_
32s
34s
36s
38s
40s
42s
44s
46s
48s
50s
Singles
Plied
Singles
57.75
59.50
60. 75
61.75
63.00
64.00
65.75
67. 75
69.50
71.25
73.50
64.75
66.25
68. 25
69.25
70.50
72.00
74.50
76.25
78.00
80.00
82.00
56.25
57.75
59.00
60.00
61.25
62.25
64.00
65. 75
67.50
69.25
71.50
Plied
63.00
64.50
66.25
67.25
68.50
70.00
72.50
74.00
75.75
77.75
79. 75
110 F . R . 11296, 11890, 12116, 13268, 13269, 13812, 14504, 14657, 14779, 15004, 15383; 11 F . R . 532, 1771, 1888,
2635, 2972.
104
E X T E N D PRICE CONTROL AND STABILIZATION
ACTS OF
1942
2. The table of maximum prices in section 3 (g) is amended to read as follows:
[Cents per pound]
Band A
Band B
Yarn numbers
Band A
Band B
Yarn numbers
Singles
Is
2s
3s
43. 50
43. 75
44.00
Plied
46.00
46. 25
46.50
Singles
Plied
42.00
42. 25
42.50
44. 50
44. 75
45.00
Singles
4s
5s . . .
44. 25
44. 50
Plied
Singles
46. 75
47.00
42. 75
43.00
Plied
45.25
45. 50
This amendment shall become effective April 4, 1946.
Issued this 4th day of April 1946.
JAMES G .
ROGERS,
Jr.,
Acting Administrator.
S T A T E M E N T OF THE CONSIDERATIONS I N V O L V E D IN THE ISSUANCE OF A M E N D M E N T
N o . 1 7 TO SUPPLEMENTARY O R D E R N O . 1 3 1
The accompanying amendment further increases prices of carded cotton yarns
by amounts ranging from .75 to 1.50 cents per pound. The additional increases
result from a recalculation of the amounts of increase intended to have been
granted under Amendment 14 to Supplementary Order 131.
A further increase of .75 cents per pound is given to all counts of carded yarn
both in Band A and Band B. Following the issuance of the previous price revision,
members of the Carded Yarn Industry Advisory Committee requested that OPA
review the calculations leading to that increase. It was contended by them that
because of the greater importance of cotton as an element of total cost in the
case of carded yarn, and the fact that carded yarn uses the grades and staples
of cotton which have increased the most in price above July 1945 parity, carded
yarn should have received a larger percentage increase to cover increased cotton
cost than was received by any other major item. Accordingly, it was agreed to
review these calculations, using an alternative method for computation as a check
upon the method originally used. The results of this recalculation show that the
price increase previously granted did not make the proper allowance for cotton
cost increase; this correction is, therefore, being made.
In the case of Band A prices, an allowance of iy2 cents per pound was made to
cover the increase in labor costs due to the new wage increase. In the case of
almost every other major item the allowance for the wage increase was expressed
as an additional percentage of previous selling price. In the case of carded yarn,
however, the complaint had been made, and appeared to be justified, that the
coarser counts of cotton yarn were in the least favorable profit position. Accordingly, OPA determined to grant a flat cents-per-pound increase rather than a
percentage increase. This had the effect of giving a larger percentage of increase
to the coarser counts. The percentage increase required to cover the wage
increase had been determined by OPA to amount to 3.29 percent on the previous
higher band ceiling prices. This figure was applied to the previous price for 14s
single yarns and the resultant figure was rounded to l}i cents per pound. The
Committee approved, in general, of the idea of giving a larger percentage price
increase in the coarser counts and a smaller percentage for the finer counts.
However, it was felt that the application of this method went too far in discriminating against the finer counts. The Committee accordingly requested that
an increase of 3.50 percent be applied to counts through 20s, and an increase of
3.00 percent be applied to the higher counts. This request was approved. The
result of this recalculation,-when rounded to the nearest quarter of a cent and
smoothed to give an even pattern of increase, is to give an additional increase of
one quarter to three quarters of a cent per pound for some of the finer counts.
Issued this 4th day of April 1946.
JAMES G .
ROGERS,
Jr.,
Acting Administrator.
e x t e n d
price
c o n t r o l
and
stabilization
acts
of
1942
1 0 5
OFFICE OF PRICE ADMINISTRATION
AMDT.
APR.
(Document No.
PART
18
11 1946
53822)
1305—ADMINISTRATION
[SO 131,1 Amdt. 18]
REVISED M A X I M U M
PRICES FOR CERTAIN
COTTON
TEXTILES
A statement of the considerations involved in the issuance of this amendment
has been issued simultaneously herewith and filed with the Division of the Federal
Register.
Supplementary Order No. 131 is amended in the following respects:
Section 3 (j) is added to read as follows:
(j) (i) In lieu of the maximum prices set forth in § 1400.118 (d) (7) of Maximum
Price Regulation No. 118, the Band A maximum prices for the constructions of
grey coutils set forth below shall be the following, and the Band B maximum
prices shall be 93.5% thereof.
Construction:
P*r vard
40%", 104 x 84, 2.05 yd
33^
38", 112 x 56, 2.73 yd
24%
40H", 96 x 64, 2.44 yd
27^
4 0 ^ " , H2 x 68, 1.79 yd
35%
40%", 120 x 76, 1.55 yd
40%
40%", 96 x 80, 2.05 yd
33%
40%", 96 x 68, 2.05 yd
31%
40%", 96 x 64, 2.25 yd
28%
41", 104 x 68, 2.05 vd
32
38", 96 x 62, 3.00 yd
24%
(ii) The maximum prices for grey coutils determined by in-lining under §
1400.101 (b) (1) (ii) of Maximum Price Regulation No. 118 are increased for
Band A producers by 35.25% and for Band B producers by 26.46%.
This amendment shall become effective April 11, 1946.
Issued this 11th day of April 1946.
P A U L A. P O R T E R , Administrator.
S T A T E M E N T OF THE C O N S I D E R A T I O N S I N V O L V E D IN THE I S S U A N C E OF A M E N D M E N T
N o . 1 8 TO S U P P L E M E N T A R Y O R D E R N O . 1 3 1
The accompanying amendment increases producers' dollars and cents maximum
prices for particular constructions of carded coutils originally set forth in Section
1400.118 (d) (7) of Maximum Price Regulation No. 118~ These prices have
remained unchanged since May 1942.
Since coutils must meet rigid specifications for use in the manufacture of women's
foundation garments and are manufactured predominantly by producers of
combed fabrics from cotton of a type ordinarily used for combed goods, the revised
prices were derived by including carded coutils within the major items of combed
goods. The prices were built up on the basis of the same cost levels for conversion
and cotton and an allocation of the same profit per loom per week as those used in
formulating the combed goods ceilings. The new dollars and cents ceilings are
applicable only to producers qualified to charge Band A prices. Ceilings for
Band B producers are set at 93.5% of the Band A prices.
Producers' maximum prices for constructions of grey coutils which were determined by in-lining under Section 1400.101 (b) (1) (ii) of Maximum Price Regulation No. 118 are increased by the same percentages, namely, 35.25% for Band A
and 26.46% for Band B.
The Office of Price Administration has been advised that the construction of the
38 inch, 3.00 yard coutil priced in Amendment 3 to Maximum Price Regulation
No. 118 at 18% cents per yard was erroneously set forth as being 96x68. The
only 38 inch, 3.00 yard coutil made in the Maximum Price Regulation No. 118
base period or at present is a 96x62 construction. The accompanying amendment accordingly corrects the construction listing to read 62 picks.
Issued this 11th day of April 1946.
P A U L A . P O R T E R , Administrator.
i 10 F . R . 11296, 11890, 12116, 13268, 13269, 13812, 14504, 14657, 14779, 15004, 15383; 11 F . R . 532, 1771, 1888
2635, 2972.
85721—46—vol. 1
8
e x t e n d price c o n t r o l and stabilization acts of
1 9 4 2 106
OFFICE OF PRICE ADMINISTRATION
(Document No. 54002)
PART
SO 131
AMDT. 19
A P R . 17, 1946
1305—ADMINISTRATION
[SO 131,'Amdt. 19]
REVISED MAXIMUM
PRICES F O R CERTAIN
COTTON
TEXTILES
A statement of the considerations involved in the issuance of this amendment
has been issued simultaneously herewith and filed with the Division of the Federal
Register.
Supplementary Order No. 131 is amended in the following respect:
1. The table in section 3 (a) is amended to read as follows:
Ref.
No.
N a m e of goods
Osnaburgs
Soft filled sheetings and head linings; as follows or
pro rata:
40Jr£" 1.60-1.70 y d .
4 0 W ' 2.25-3.00 y d .
4 0 H " 3.25-4.18 y d .
40**" 4.80-5.50 y d .
59"
1.65 y d .
64"
1.25 y d .
71"
1.12 y d .
Class A sheetings; as follows or pro rata:
36" 48 x 44 2.85 y d .
40" 48 x 44 2.85 y d .
40" 48 x 44 2.50 y d .
Class B sheetings; as follows or pro rata:
40" 48 x 40 3.25 y d .
40" 48 x 40 3.75 y d .
37" 48 x 44 4.00 y d .
40" 44 x 40 4.25 y d .
31" 48 x 44 5.00 y d .
Wide laundry cover cloth—any construction 72"
or wider of more than 54 picks per inch.
Class C sheetings; as follows or pro rata:
36" 64 x 64, 3.50 y d .
36" 60 x 52, 56 x 56, 4.00 y d .
36" 48 x 40, 44 x 40, 5.50 y d .
36" 44 x 40, 40 x 40, 6.05 y d .
40" 64 x 64, 3.15 y d .
40" 60 x 52, 56 x 56, 3.60 y d .
40" 56 x 56, 4.00 y d .
40" 56 x 48, 4.30 y d .
40" 44 x 40, 36 x 40, 5.50 y d .
Class C sheetings; as follows or 42 inches and
wider pro rata:
60" 64 x 68, 2.15 y d .
60" 48 x 48, 3.30 y d .
57" 56 x 56, 4.10 y d .
Meads cloth; as follows or pro rata
40Vi" 74 x 86, 2.80-2.90 y d .
Grey insulation tubings:
27" 68 x 72, 3.37 y d .
27" 72 x 68. 4.15 y d .
39M" 68 x 72, 2.35 y d .
Carded poplins (sheeting yarn):
76 to 110 sley.
36 to 60 picks.
Three leaf pocketing twills; as follows or pro rata:
38"-39" 2.58-3.35 y d .
W i d e broken twills; as follows or 42" and wider
pro rata:
54" 1.14 y d .
58" 1.06 y d .
Soft filled twills; as follows or pro rata:
37" 80 x 40, 2.00 yd.
Drills; as follows or pro rata:
30" 2.50—3.25 yd.
37" 2.35—3.00 y d .
32" 72 or 76 sley, 48 pick, 2.58 y d .
Wide Drills; as follows or 42" or wider pro rata:
59" 1.85 y d .
59" 2.25 y d .
52" 2.20 yd.
Paragraph in
section 4
of SO
131 in
which
covered
(t)
(g)
Section in R P S or M P R in which
covered
RPS-35,1316.61 (b) (4) Table III.
M P R - 1 1 8 , 1400.118 (d) (3).
(f) (h)
RPS-35,1316.61 (b) (4) Table III.
MPR-118,1400.118 (d) (13) (iv) (a).
(f) (h)
R P S - 3 5 , 1316.61 (b) (4) Table III.
MPR-118,1400.118 (d) (13) (iv) (a).
(cc)
MPR-118, 1400.118 (d) (15) (ii).
(f) (h)
RPS-35, 1316.61 (b) (4) Table III.
M P R - 1 1 8 , 1400.118 (d) (13) (iv) (a).
(h)
M P R - 1 1 8 , 1400.118 (d) (13) (iv) (a).
(QO)
Table I
(v)
None
M P R - 1 1 8 , 1400.118 (d) (18) ref. 11.
1400.118 (d) (18) ref. 20A and 20B.
M P R - 1 1 8 , 1400.118 (d) (34) (i).
M P R - 1 8 , 1400.101 (b) (2).
(P)
RPS-35, 1316.61 (b) (4) Table II.
(h)
M P R - 1 1 8 , 1400.118 (d) (13) (v).
(0
RPS-53, 1316.61 (b) (4) Table III.
M P R - 1 1 8 , 1400.118 (d) (13) (vi).
RPS-35, 1316.61 (b) (4) Table I I I .
(h)
M P R - 1 1 8 , 1400.118 (d) (13) (vi).
( 0 <h)
i 10 F . R . 11296, 11890, 12116, 13268, 13269, 13812, 14504, 14657, 14779-,15004, 15383; 11 F . R . 532, 1771, 1888,
2635, 2073, 3599.
e x t e n d price c o n t r o l and stabilization a c t s of
Ref.
No.
Name of goods
16
Jeans; as follows or pro rata:
38"-39" 96 x 54 2.85 yd.
32" 96 x 64 3.28 yd.
41" 84 or 86 sley, 56 pick 2.92 yd.
Warp sateens; as follows or pro rata:
53" 1.12 yd.
53" 1.32 yd.
54" 1.05 yd.
30H"2.25yd.
34" 2.00 yd.
Four leaf twills; as follows or pro rata:
37" 86 or 88 sley, 40-46 picks 1.50-3.00 yd.
Print cloths; class A , B and C (except "fancy
draw"):
All constructions and widths
Buff cloth (except "fancy draw"); as follows or
pro rata:
40" 80 x 84 3.65 yd.
40" 80x92 3.50 yd.
Bleached cheese cloth, bleached sanitary napkin
gauze and bunting.
Certain bulk surgical dressings:
Carded broadcloths (plain, not including slubbed
yarn):
Any construction 80 to 136 sley, not in excess
of 60 picks, woven from print cloth yarns
counting 44's or less.
Carded poplins (plain, not including slubbed
yarn except 3.75 yds. or heavier) :
A n y construction 80 to 116 sley, not in excess
of 56 pickes, woven from print cloth yarns
counting 44's or less.
Three leaf twills (print cloth yarns):
Any construction or width.
Work clothing denims, 28"—30" (including solid
color, stripes and patterns made with 100%
colored filling yarn and herringbone weave); as
follows or pro rata:
Mill finish Sanforized
3.00 yd.
2.70 yd.
2.45 yd.
2.20 yd.
2.20 yd.
8 oz.
9 oz.
8 oz.
9 oz.
10 oz.
10 oz.
11 oz.
Work shirt chambrays (fine yarn):
Mill Finish Sanforized
3.90 yd.
3.60 y d .
3.20 yd.
2.90 yd.
Work shirt coverts (fine yarn) :
Mill Finish Sanforized
3.90 yd.
3.60 yd.
3.20 yd.
2.90 yd.
Work shirt coverts (coarse yarn):
Mill Finish Sanforized
3.20 yd.
2.90 yd..
Work pants coverts:
Sanforized
2.40 yd.
2.00 yd.
1.65 yd.
Whip cords:
36" 1.45 yd-1.66 yd. sanforized
Work shirt flannels:
Mill Finish
Sanforized •
Description
3.00 yd.
2.70 yd.
Plain color.
2.28 yd.
2.00 yd.
Plain color.
3.50 yd.
3.15 yd.
Plaids.
3.00 yd.
2.70 yd.
Plaids.
2.28 yd.
2.00 yd.
Plaids.
Glove and mitten flannels:
6, 8,10 ahd 12 oz. pro rata to 34", unbleached
and colors as specified in MPR-118,1400.118 (d) (2) (v).
Chafer fabrics:
A n y construction or width.
Combed broadcloths; as follows or pro rata:
37" 136 x 60
37" 128 x 68
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
Paragraph in
section 4
of SO
131 in
which
covered
(f)
1 942
107
Section in R P S or M P R in which
covered
R P S 35,1316.61 (b) (4) Table III.
(h) (i)
MPR-118,1400.118 (d) (13)(vii) 1400.118
(d) (4).
(f) (h)
RPS-35,1316.61 (b) (4) Table III.
MPR-118, 1400.118 (d) (13) (vi).
RPS-35,1316.61 (b) (4) Table II.
(P) (Q)
(qq)
(s)
(bb)
(P)
MPR-118,1400.118 (d) (23) (ii) (a).
MPR-118, 1400.101 (b).
MPR-118, 1400.118 (d) (17) (ii)
(P)
RPS-35, 1316.61 (b) (4) Table II.
(qq)
(m)
(P)
RPS-35, 1316.61 (b) (4) Table II.
MPR-118, 1400.118 (d) (11) (ii).
RPS-35, 1316.61 (b) (4) Table IV.
(d)
RPS-35, 1316.61 (b) (4) Table V.
(d)
RPS-35,1316.61 (b) (4) Table V.
(d)
RSP-35, 1316.61 (b) (4) Table V .
(d)
RPS-35, 1316.61 (b) (4) Table V.
(e) (2)
(w)
(w)
(z) (10)
(gg)
and
MPR-188, 1499.166 (b) (17) (xi) (c).
RPS-35,1316.61 (b) (4) Table II.
MPR-118, 140.118 (d) (25) (iv).
MPR-118, 1400.118 (d) (2) (iii).
MPR-118, 1400.118 (d) (2) (v)
MPR-118, 1400.118 (d) ( 8 f ( x ) .
MPR-11,1316.4 (d) Table I.
e x t e n d price c o n t r o l and stabilization acts of
1 9 4 2 108
NOTE.—The expression " p r o rata" in connection with any listed fabric refers to other widths of the same
construction (i. e. t other widths having the same thread count and the same ratio of weight to width as the
listed fabric).
This amendment shall become effective April 17, 1948.
Issued this 17th day of April 1946.
PAUL A . PORTER,
Administrator.
S T A T E M E N T OF THE C O N S I D E R A T I O N S I N V O L V E D IN T H E I S S U A N C E OF A M E N D M E N T
N o . 1 9 TO S U P P L E M E N T A R Y O R D E R N O . 1 3 1
The accompanying amendment sets forth a revised list of staple cotton
fabrics on sales of which producers may charge a 5% incentive premium. The new
list conforms Office of Price Administration's action to the current list of cotton
textile production directions as set forth in Civilian Production Administration's
Schedule B of Order L-99 issued April 8, 1946. The considerations involved in
the issuance of this amendment are identical with chose set forth in Amendment
14 to Supplementary Order No. 131 when the original incentive list was issued.
Issued this 17th day of April 1946.
P A I; L A . P O R T E R , Administrator.
ADDITIONAL
ITEMS
GIVEX
5%
INCENTIVE
[Amendment 21 to SO 131]
All grey combed or carded yarns subject to RPS #7 or MPR #33.
Tire cords subject to Section 2.11 (9 (1) and (2) of SR 14E).
Prices established by RPS 7 and MPR 33 for processed yarns and for sales of
vara bv jobbers mav be calculated by applying premiums increased 5% as provided
in RPS 7 and MPR 33.
Cotton rope, twine, yarn or cord covered by Section 29 may be increased by
premium equal to that percent of 5 percent which the cotton and/or cotton waste
content is of the rope, twine, yarn or cord.
Senator MILLIKIN. M r . Porter, please give m e y o u r best guess when
w e will reach the stage of a b u n d a n c e of s u p p l y in shirts.
I s a y shirts,
because it is impossible to talk a b o u t the whole textile p r o b l e m .
M r . P O R T E R . I think the question of an a b u n d a n t s u p p l y d e p e n d s
largely h o w y o u measure d e m a n d .
S e n a t o r MILLIKIN. I measure the time of a b u n d a n c e in the v e r y
simple w a y of saying w h e n it is possible f o r a m a n to g o into a store
and g e t o n e shirt or a d o z e n shirts.
M r . P O R T E R . I think it will be a y e a r before we will get to t h a t
point.
Senator MILLIKIN. D o e s that answer g o also to sheets and o t h e r
textile p r o d u c t s ?
M r . PORTER. P o s s i b l y ; yes. I w o u l d h a v e to review the p r o d u c tion figures o n that. I will be glad to s u p p l y them.
( T h e p r o d u c t i o n figures on textiles, afterwards furnished b y M r .
P o r t e r , are as f o l l o w s : )
Employment in the apparel industry
[1939=100]
1939
1942
194 4
194 5
1945: September
October
Source: Bureau of Labor Statistics.
100. 0 1945—Continued
November
119.0
December
118.2
116.7 1946: January
February
115. 3
March
117.5
,
117.8
118.9
121.0
125. 8
127. 8
E X T E N D PRICE CONTROL A N D STABILIZATION
Production
of selected
textile
and apparel
items,
Men's
suits
1939 .
1941..
1942..
22.0
25.4
19.4
ACTS OF
1939—first
Bed sheets
(000 linear
yards)
«• 257, 580
"""366,882
1942
quarter
109
1946
Men's
shirts
(000,000
dozen)
2 13.4
2 13.6
11.5
(Annual rate)
1945
First quarter
Second quarter..
Third quarter.
Fourth quarter..
1946: First quarter..
4
11.6
13.7
9.6
8.0
13.5
19. 2
268, 813
299,444
275, 216
247,012
253, 580
4 275,000
315
4.6
3.8
4.1
5.7
<6.6
1 Square yards from Census data divided by 2.25.
Dress and sport shirts combined.
CPA estimate,
Estimated.
2
3
4
Source: Bureau of the Census and CPA.
Senator M I L L I K I N . I would like to suggest that you make a mistake when you make optimistic estimates that are not met. I think
such estimates have made a lot of trouble when they have not been
met.
Mr.
PORTER.
W e
know
this
Senator MILLIKIN. In other words, you will help yourself if the
people get it into their heads that they are not going to get an abundance of these things right away. We can make a big mistake trying to give the impression that everything will be hunky-dorv within
3 months.
Mr. PORTER. I did not mean to say that we would be out of the
woods in 3 months.
Senator MILLIKIN. I am trying to lead you into making some kind
of long-term estimate that will give the people a proper perspective
of the problem.
Mr. PORTER. I think it is all related to the backlog of demand. W e
do know that every ounce of fabric that can be used for shirts is being
used, and that it is increasing above any peacetime level. If the pipe
lines get full we can certainly look for an easing of the situation. But
I still would qualify that with the statement that it will be sometime
before there is the type of abundance you refer to.
Senator MILLIKIN. In other words, you mean there will be some
decreasing shortage of supply for a period, say from 2 to 3 years, or
maybe I should say from a year to 2 years; would you say that?
Mr. PORTER. I would say that your retailers undoubtedly will be
able to sell everything that the textile industry can turn out in its
efforts for a period of a year or more.
Senator MILLIKIN. Later on, as you get along with your prepared
statement, will you go into other lines?
Mr. PORTER. Yes. We wrill talk about meats, lumber, and so on.
Senator MILLIKIN. I have been talking about clothing, but I have
other things in mind as well.
e x t e n d price c o n t r o l and stabilization acts of
1 9 4 2 110
Mr. PORTER. It will not be in complete detail. But we can give
you as much information on these things as you may desire to have.
Senator MILLIKIN. We are constantly hearing that ladies have to
pay $49.50 for an ensemble for which they used to have to pay $28.50,
and that it is because somebody has put a bow on, or added a little
piece of jewelry, or something of that kind. When will the ladies be
able to get $28.50 ensembles again?
Mr. PORTER. I am not an expert on ladies' ensembles except as they
appear to me. [Laughter.] But I do think it is quite apparent that
there is an increasing trend toward lower-priced ladies' wear coming
back on the market.
Senator MILLIKIN. Have you any pipe-line stuff on that?
Mr. PORTER. Yes. We can get it on low-cost cotton dresses, for
instance.
Senator BANKHEAD. Mr. Porter, how long does it take to get a
ceiling on low-cost ladies' clothing, say where a person is trying to
open up and get to work?
Mr. PORTER. I would hope that it would take anywhere from 2 to
3 weeks at the maximum.
Senator B A N K H E A D . I will say that I think you are very optimistic.
Mr. PORTER. It would depend upon whether there is an industrywide pricing on it. There are certain provisions covering that
matter, and Mr. Baker could explain that to you in more detail, in
which a newcomer can price a product himself.
Senator BANKHEAD. I will say that is very interesting. W e had
a case before a subcommittee of the Committee on Agriculture, where
a man in Florence, Ala., has been trying for 5 months to get back
into operation. He has only two commodities now.
Mr. PORTER. Was that the testimony before the subcommittee?
Senator BANKHEAD. Yes. The man I refer to first went to Birmingham and made an effort to get something, and then he went to
Atlanta, the regional office of the OPA, and there he could not do
anything, and then he came up here to Washington. I sent him to
the OPA, and they treated him with all kindness and courtesy, but
he left without anything, and in the meantime weeks had elapsed
and he does not know what to do.
Mr. P O R T E R . I S that Mr. Flagg?
Senator BANKHEAD. Yes; I refer to Mr. Flagg.
Mr. PORTER. Well, Mr. Flagg is back in business and in full production.
Senator BANKHEAD. He is back in business, yes, but with two commodities. He is in town now and trying to get something more.
Mr. PORTER. He was in yesterday, and I think we got a solution
of it for him.
Senator B A N K H E A D . I say, he is here in town now.
Mr. P O R T E R . W E will report to you fully on that case.
Senator BANKHEAD. He has been held back for about 5 months, so
I think you are unduly optimistic.
Senator CAPEHART. Mr. Chairman, might I ask Mr. Porter
Senator BANKHEAD. That kind of thing may have been all right
during the war, but now, when we are trying to speed up production,
it would seem to be inexcusable.
Mr. PORTER. I agree with you.
extend price c o n t r o l and stabilization acts of
1 942
111
Senator CAPEHART. Mr. Porter, you have been very critical, as was
Mr. Bowles, in condemning in very strong language—and I would say
if it were in the words inferred it would be unprintable—those who
have been opposing a continuation of OPA, or those who have been
trying to correct the situation. In fact, you have just about covered
the entire waterfront here this morning so far in condemning anybody and everybody who in any way whatsoever have said anything
against OPA. Now, let me ask you this question
Mr. P O R T E R . I do not want my silence to mean that I agree WITH
your premise.
Senator CAPEHART. In your statement—and I think it is also true
of Mr. Bowies' statement yesterday—you admit that you have made
several thousand price adjustments, and that you have made some
500 industry-wide adjustments. And now you have talked about one
adjustment you have made for one of Senator Bankhead's constituents. I personally have been over to OPA cn any number of occasions, and I must say that I think my batting average has been about
99 percent in the matter of getting adjustments.
Mr. PORTER. I am very glad to have you testify for me in that
respect.
Senator BANKHEAD. And, Senator Capehart, I want to get you to
help me represent some of my people before OPA.
Senator MURDOCK. It may be that down there they distinguish
between Republicans and Democrats.
Senator CAPEHART. Mr. Porter, what would have happened to all
of these thousands of adjustments, which in your statement you say
you have made because they were inequities, and that in many
instances thereby they were able to break the bottleneck and secure
production; what would have happened had not Senator Bankhead
and myself and thousands of others, including manufacturers associations, and all these fellows that you condemn here in very strong
language; I ask, what would have happened if you had not had some
opposition, if no one had said anything to you and you had proceeded
in your own way without having made a single adjustment, without
having corrected a situation in any way—yes, what would have been
the result then?
M r . PORTER. L e t m e say this
.
Senator CAPEHART. Has it not been a very healthy thing, has it
not been a healthy condition that this opposition has developed, and
is developing now? Yes, what would have happened in the case of
Senator Bankhead's constituent had that man just remained in
Alabama and said " I am going fishing. I am not going up to Washington and fight the O P A " ? Yes, what would have happened if the
manufacturers' association and other associations had simply said,
"Well, all right, if that is the way they want it we won't protest,
won't show any opposition"; what would have happened?
All of this leads me to ask: Why is it necessary to condemn in
such harsh terms those who are opposed to many things OPA is
doing and is not doing and think this job could be done better; and
especially when on your own record you admit that you have literally
thousands of adjustments? Why cannot you admit that we are all
just as sincere as you are; that Senator Bankhead's constituent is
sincere, and then go ahead and try to work out this problem on that
basis? Why do we have to inject this vitriolic language that both
e x t e n d price c o n t r o l and s t a b i l i z a t i o n acts of
1 9 4 2 112
you and Mr. Bowles used, calling people all sorts of names, when on
your own record it has positively been the result of that opposition
that the situation in OPA has improved? I would like to have an
answer to that question if you care to give it.
Mr. PORTER. I think there are probably several questions involved.
We have kept no statistical record of the number of adjustments
made as a result of particular representations made b}^ Members of
Congress or representations made by our trade association groups.
But it would be my guess that of these adjustments I have referred to,
99.9 percent would have been made in the normal process of conducting
OPA's business. That is what our staff is for.
Senator CAPEHART. Then am I to understand that if Senator Bankhead's constituent had gone fishing you would have automatically
sent him a letter saying " W e are going to give you the increase you
want"?
Mr. PORTER. Well, if we did not know about it
Senator CAPEHART. Why do you object when it is called to your
attention that people are opposed to you and opposed to OPA?
Mr. PORTER. I have said in my statement that there are a great
many inequities in OPA and in their pricing problems which we are
attempting to correct. We have no quarrel with those people.
M y comments were directed to those who would attempt to remedy
the situation by repealling price control and using some other formulae,
some other techniques, or abandoning completely the objective that
Congress has set up.
Senator CAPEHART. I have never made the statement that I
thought OPA should be eliminated. I have made the statement
that I thought it could be vastly improved. In hearings held on the
Pacific coast by the Small Business Committee I think we interviewed
150 businessmen who talked about OPA, and every one of them was
complaining that OPA had not made proper adjustments for them.
But every one of them, when we asked them should OPA be discontinued, answered that they did not think it should be discontinued,
but that they hoped OPA would take a more realistic view of the
problem. Senator Taylor was with us, and I believe he will bear me
out in my statement that every one of them answered in that vein.
That is one of the reasons why I made the statement I did and asked
the question I did: How are you going to correct the situation, these
inequities, if you do not have some opposition, if people do not call
them to your attention?
Mr. PORTER. Well, we have procedures set up for adjusting the
very type of thing I have been describing. That is what we are in
business to do. We are here attempting to meet the requirements
of relieving these inequities and hardships, but my point was made
to those who want to discard the standards under which we operate.
I attempted to point out what I think is the principal job of OPA
from here on, that we keep on the job of industry adjustment, and that
will take care of these individual adjustments. That consumes the
greater portion of my time. Those are the things you hear about and
that I hear about. Those are the ones we want to handle quickly.
Senator CAPEHART. Are you willing to admit that anyone who may
have opposed you or tried to correct inequities in OPA, were good
patriotic citizens and as vitally interested in this problem of inflation
as you are?
e x t e n d price c o n t r o l and stabilization acts of
1 942
113
' Mr. PORTER. Oh, absolutely. I welcome every case of inequity
that can be called to the attention of the office.
Senator CAPEHART. I am glad to hear you admit that, and am glad
that this record shows it; that possibly those who oppose OPA or want
to correct inequities are not devils as some people would try to make
you believe they are. I appreciate that statement from you.
Mr. P O R T E R . I would not want to be misunderstood that I am
claiming perfection for OPA. But I do think the record shows it has
done a remarkable job.
Senator BUCK. Mr. Porter, what has been the reason for the shortage in articles of clothing?
Mr. PORTER. Well, as I was stating, I think it has been a combination of a number of factors. One has been the diversion of basic
fabrics into military arid other uses. Another one has been the shift
of production groups into other lines. But we feel that we have a
program now on these basic apparels that is working and will work.
I would say that probably the principal factor, or one of the principal
factors certainly, has been the question of the labor supply. But there
is some improvement there.
Senator BUCK. And the high price of cotton has not had anything
to do with it?
Mr. PORTER. Well, cotton prices have caused us some difficulty.
As prices move up, unless we can stabilize the price of raw cotton at
or about present levels we are going to have more trouble with our
low-cost apparel problem, because you will have an escalator again in
prices, and we are hoping these requirements will keep cotton at or
near present levels.
Senator MILLIKIN. I went at first-things first awhile ago, about
ladies' clothing. Now, when will men be able to get suits?
Mr. P O R T E R . I think it is right next in my prepared statement.
Senator MILLIKIN. All right.
Mr. PORTER. Shall I proceed, Mr. Chairman?
The CHAIRMAN. Yes; please proceed.
Mr. PORTER. In wool and rayon, the fabric picture is more encouraging. The output of each is well above peacetime levels and is still
rising. Unlike cotton textiles, both wool and rayon are subject to
the maximum average price program, which, to believe its critics, is
stifling productive enterprise. However, the demand for these fabrics
has far outstripped existing capacity.
With a shortage of fabrics and an insatiable market, most garment
manufacturers with several price lines would concentrate their available fabrics in the production of their highest priced lines. That was
what was happening from 1943 to June 1945 when clothing quality
was deteriorating and prices rose over 15 percent, though ceilings
changed very little.
It was to meet this problem that OPA in the spring of 1945, issued
the apparel M A P , a regulation requiring each manufacturer to
deliver apparel at no higher average price for each categor}^ he produces than his average in a 1943 base period. Results are already
apparent. The rate of clothing price increase is flattening out. For
the 5 months between September 30, 1945, and March 1, 1946, the
total increase in clothing prices was only a fraction over 1 percent,
the smallest rise for a comparable period since the beginning of priop
control.
e x t e n d price c o n t r o l a n d stabilization acts of
1 9 4 2 114
Senator M I L L I K I N . H O W much did production increase during that
period?
Mr. PORTER. I will supply that for the record.
Senator M I L L I K I N . I think it is very important information.
M r . PORTER. Y e s ; and it is C P A i n f o r m a t i o n , b u t w e c a n g e t it.
Senator MILLIKIN. These other operations are senseless unless
they are related to production.
Mr. PORTER. I think the result of that has been that low-price
clothing has come on the market. We will try to get the volume of
production on that.
Senator B A N K H E A D . Y O U do not forbid that, do you, in any increase in textile production?
Mr. PORTER. I think it was a combination of both.
Senator BANKHEAD. M y information is that during the last 3
months there has been a reduction in textile production, or certainly
no appreciable increase that you could attribute to clothing. It
takes about 6 months to get textiles into clothing, which means dyeing, cutting, and all the different operations. You do not figure that
you can get the textiles into cloth, I mean after the textiles leave the
mill, until 6 months, do you?
Mr. P O R T E R . I think that probably is true under existing circumstances. I would say normally that would be true, at least between
4 and 5 months.
Senator BANKHEAD. Y o u would not attribute any of this holding
down of prices to an increase in textiles, would you?
Mr. P O R T E R . I would probably say that the factor involved there
was tliat there was an inventory of converters on some of these fabrics
that were interchangeable between high-cost and low-cost items;
that when the grouping came aldng they were required to devote a
certain percentage of that to these low-cost items. Now, as we fill
the pipe line with primary fabrics, we will be able to get along.
Senator B A N K H E A D . I do not see how you are going to bring about
any increase in production of garments and wearing apparel until you
get a substantial increase in the production of cloth.
Mr. P O R T E R . I agree with that.
Senator BANKHEAD. Y o u are apparently not getting it from the
report I had this morning.
Mr. PORTER. You are referring to the number of spindle hours,
that are down?
S e n a t o r BANKHEAD. Y e s .
Mr. P O R T E R . I think that is correct, and it is a source of very great
concern to us.
Senator BANKHEAD. I want to get that clear so you will not be too
optimistic about your situation: You have not touched the right spot
yet. Y o u may have played around it, but you have not done anything that has relieved the situation. You may do it at some future
date.
Mr. P O R T E R . I take it that what is in your mind is this: That if
through a price policy we could get a wider use of second and third
shifts in the primary mill?
Senator BANKHEAD. That is the chief thing I think. That is what
you had at the point of highest production in 1942, and you have not
had since any production as high. When you put ceilings on you had
the peak of production, and you have not had peak production of
cotton textiles since.
e x t e n d price c o n t r o l and stabilization acts of
1 942
115
Senator BUCK. Senator Bankhead, what do you say about increase
in price?
Senator BANKHEAD. They have to give them an incentive, of
course, because they have an increase of costs. They say they cannot
absorb that increase in cost, and OPA says they can, but I do not see
how.
Mr. PORTER. We have certainly done that on low-cost fabrics.
Senator BANKHEAD. They have put back, or many of them at least,
a third shift in order to increase their capacity, and they have been
running pretty well at capacity with the equipment they have and
with the labor they have. They lost a good deal of equipment
to rayon, and that was due to OPA giving rayon an attractive price.
They have to do something to get a third shift put back on, and that
is an expensive shift.
Senator BUCK. And an increase in price would be an incentive to do
it, you say?
Senator BANKHEAD. Y e s .
Senator CAPEHART. Mr. Porter, do you thiuk if OPA were charged
with the responsibility of production, and possibly if CPA and OPA
were merged, you would be able to get more production?
Mr. P O R T E R . N O , I don't know
Senator BANKHEAD. Senator, would you mind if I finished my questioning on this point?
Senator C A P E H A R T . I am sorry. I thought you were through.
Senator B A N K H E A D . N O . Y O U have to figure on overtime with
those plants?
Mr. PORTER. That is right.
Senator BANKHEAD. And there are large costs involved when you
go on overtime?
Mr. P O R T E R . I am fully aware of that.
Senator BANKHEAD. There are two factors I think you have got
to compensate.
Mr. PORTER. It is my understanding that from the low in November—it is due primarily to an increased labor supply—the yardage
of cotton cloth has increased somewhat. This third shift we are
talking about is the objective, but the low in the third quarter was
about 8% billion yards. The fourth quarter was slightly up, and this
current quarter, from the trade estimates that are available, will be
in excess of 9 billions. I would like to supply those detailed figures for
the record.
Senator BANKHEAD. We will have more about it before we get
through, of course, but the testimony before my committee shows—
not particularly with the yardage, because there is a difference in
measurement—some of it goes by yardage and some goes by weight—
but by baleage—we all understand that. We understand that means
so many bales of cotton.
M r . PORTER.
Yes.
Senator Bankhead. It .got up to about 123 million bales in 1942,
and now it is down to about 90 million bales.
Mr. PORTER. There are two factors there. One is the high percentage of cotton that goes into industrial uses as distinct from
consumers goods.
Senator BANKHEAD. That has nothing to do with what I am talking
about. I am takling about the grinding up of the cotton by the mill.
116
e x t e n d price c o n t r o l and stabilization acts of
1942
It comes out in some form either domestic or industrial use. I am
talking about the quantity that the mills produce, that they grind up.
Then we have to spin the cotton and make cloth out of it—yardage.
Mr. P O R T E R . Well, I didn't make myself clear. I don't think that
reduction in the total bales is necessarily related to the apparel
problem.
Senator B A N K H E A D . Well, it may not be solely related,
Mr. PORTER. Solely related.
Senator BANKHEAD. But it directly affects it. Of course, if you
cut your production off and your supply off by 25 percent it is bound
to affect it. You have got to get that increased output of the mills
before you can get back to a normal supply of material.
Mr. P O R T E R . And an increased labor supply.
Senator B A N K H E A D . Well, you have to pay for that.
Mr. PORTER. In connection with this low-cost program the figures
that are in my mind are the total costs plus the normal margin of
profit plus the 5-percent incentive. Of course, this incentive program
resulted in additional payments to the primary producers in their price
levels of something on the order of about $250,000,000. I think that
is going to show some results.
Senator B A N K H E A D . Y O U are talking about normal profits. That
depends on what basis you use. I understand you have taken 1936- 39, the lowest period you have got in the history of the industry which
you have taken as a basis. You don't use the average-sales basis.
You use a value—what do you call that?
M r . PORTER. N e t w o r t h .
Senator BANKHEAD. Net worth?
M r . PORTER.
Yes.
Senator BANKHEAD. As a basis. Certainly there is a substantial
difference in those two bases. Certainly there is an average in cotton
or anything else, but you use the basis that is the lowest for cotton it
has ever been.
Mr. PORTER. Well, I could supply
Senator BANKHEAD. In 1937 we had the biggest cotton crop in the
history of the United States. Never before, or never since, has it
equalled it. Of course, that ran prices way down, ran textile prices
down, and everything else. The President even called a special
session of Congress to enable us to put a production-control law into
effect because the situation w^as so serious.
Now that is one of your years in your basis for cotton.
Mr. P O R T E R . Well, I think the record will show, and I am quite
sure that the Senator will agree, that the earnings of the cotton-textile
manufacturers are substantially above, considerably above, any
1936-39 base.
Senator B A N K H E A D . Well, I don't knowr about that, Mr. Porter.
I haven't examined it. I haven't gone into it.
Mr. PORTER. I am sure the record
Senator B A N K H E A D . But I know7 the basis you have fixed is not
fair to the cotton industry. I have pointed that out time and time
again—to take the very lowest you can get.
Mr. P O R T E R . A S far as their earnings are concerned, I would like
to supply that figure for the record. They are much above
Senator B A N K H E A D . It depends on your basis, what period you
take as a starting point. Of course, if you take a period when they
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 1 9 4 2
117
are down in the bottom of the trough, the earnings probably have been
better. Just the same with the farmer. People come up here and
talk about what a high percentage of increase there has been in farm
prices, but you neglect to say that you started almost from scratch,
when they were running behind all the time, going into debt, and
having mortgages foreclosed. That is no fair way to determine how
much increase they have had.
Mr. P O R T E R . If you take the percent of sales, the earnings of the
cotton mills before taxes in 1936-39, they are around 2.7 on sales.
Senator B A N K H E A D . Where did you get that figure?
Mr. P O R T E R . These are figures that are taken from our own costaccounting survey.
Senator B A N K H E A D . Yes; your own cost accounting.
Mr. P O R T E R . That is right.
Senator B A N K H E A D . It is a wonder you gave them anything.
Mr. P O R T E R . I don't think the industry has challenged the accuracy
of them.
Senator B A N K H E A D . I don'T suppose you know where you got it or
how you got it.
Mr. P O R T E R . Oh, yes; they are their own certified figures.
Senator B A N K H E A D . Y O U take a cross section of some sort, I suppose.
Mr. P O R T E R . Yes; we took representative bills.
Senator B A N K H E A D . H O W do you know they were representative?
Mr. P O R T E R . The industry agrees.
Senator B A N K H E A D . I haven't heard of any of them agreeing with
anything you people say.
Mr. P O R T E R . I mean they have not challenged the validity of these
figures.
Senator B A N K H E A D . Y O U are optimistic again.
Mr. P O R T E R . They have not challenged the validity of these
figures.
Senator B A N K H E A D . They don't write me or talk to me that way,
though. They talk about your economists down there and your
theorists end the result that they work out, people who don't know
anything about the business. They complain because you haven't
put a practical businessman at the head of the Cotton Textile Section
as they think Congress directed you to do. Instead of that you have
economists down there and professors, people without any practical
experience. That was developed before my committee.
Your people have construed the law that all you have got to do is
to take a man that in the opinion of the Administrator has had sufficient. experience—not a practical businessman.
Mr. P O R T E R . Well, I think one of the
Senator B A N K H E A D . Y O U certainly failed to pick a man who had
any practical experience with the cotton business or the textile business, or the mill business, or anything of the sort, totally avoiding
what Congress thought they were directing you to do on that subject.
Mr. P O R T E R . Well, I am not familiar in detail with the background
and the experience of all the people——
Senator B A N K H E A D . I don't think you have a single man down there
with any sort of authority in that very big cotton section you have
got who is an experienced man in the cotton business or any phase of
the cotton business.
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 1 9 4 2 118
Mr. PORTER. I would like to supply a list for the record, Senator, of
those in the textile section and their background and experience. I
am sure we have a number of people who have had practical experience
in the textile business.
Senator BANKHEAD. Well, put in the record the background and
experience of all the higher-up men.
Mr. PORTER. We will take the whole division.
Senator BANKHEAD. From the top one down—the ones that have
got authority.
Mr. PORTER. I will be glad to do that.
Senator BANKHEAD. All right. I wrould like to see it.
The CHAIRMAN. It may be inserted at this point.
(The data referred to, afterward furnished by Mr, Porter, is as
follows:)
L I S T OF O P A
PERSONNEL
CONNECTED W I T H
P R I C I N G OF T E X T I L E S
INDUSTRIES
SUMMARY
Administrator: Paul Porter.
Deputy Administrator: Geoffrey Baker.
Division Director, Consumer Goods Price Division (vacant): (Formerly Jerome
M. Ney, October 1944-August 1945; Samuel W . Levitties, September 1945April 1946).
Assistant Director, Consumer Goods Price Division: Saul B. Sells.
Division Economist: Benjamin Caplan.
Agricultural Adviser: George E. Adams.
Division Counsel: Stephen Ailes.
Textile Price Branch.—Price executive, Gardner Ackley; associate price executive, Robert B. Armstrong; assistant price executive, Harold Worth; branch
economist, Henry Wohl.
Cotton Section.—Section head, formerly Thomas O'Neill; acting section head,
Max LeVinson; price analysts, Eugene Szepesi, Robert W^alker, George Von Gal,
Walter Baldwin, Jr., William Press; price clerks, Phyllis P. Kimball, Mary H.
Kurek; economist, Evelynne Gordon.
Wool Section.— Section head, Russell L. Burrus; price analysts, Victor Salloway,
Augustine Murphy, Charles McEvoy, Ethel B. Willis, Clarence E. Gibbons,
Grace P. Salloway; economist, Leslie M. Pape.
Rayon Section.—Section head, Paul A. Bosshard; price analysts, Edward
Halpin, Joe Toyshima, Pauline Mufson, Ruth Askin; price clerks, Rachelle Belliveau, Miriam Lehman.
Finished Goods Section.—Acting section head, Harry W. Gressenger; economists, Walter S. Quinn, Alcibia Wormley.
Textile Legal Staff.—Chief counsel, William Stix; finished goods, Robert Karon;
cotton, Robert O. Campbell; rayon, George Newton; wool, Louis Harris; finished
goods, Henry K. Osterman; woven fabrics, Gerald Marcus; cotton, Edwin J.
Freedman.
Baker, Geoffrey, Deputy Administrator; Born, Englewood, N. J.; legal address,
Westport, Conn. Harvard College: Bachelor of arts, cum laude, 1920;
Harvard Law School: Bachelor of laws, 1923; admitted to Massachusetts
bar, 1923; admitted to Illinois bar, 1930.
Employed for 7 years by Sargeant & Lundy, consulting engineers, Chicago,
111., as contract manager.
1933-42: Employed by General Foods Co. as assistant to president, then as
merchandising executive on institution products, specializing during the latter
part on Government sales.
1942 to date: OPA, with the exception of 3 months with the Lend-Lease
Administration.
Levitties, Samuel W., former director, Consumer Goods Price Division, Pennsylvania. University of Pennsylvania, 1917-22.
1925-44: Adella Dress Co., president and general manager, dress manufacturing company; supervised 250 employees.
1944-45: Consultant, OPA Director, Consumer Goods Price Division (WOC)
(price executive).
1945 to date: W O C consultant OPA; Director,Consumer Goods Price Division,
119
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 19,42
Sells, Saul B., assistant director, Consumer Goods Price Division, Maryland.
Bachelor of arts, Brooklyn College 1933; doctor of philosophy, psychology,
Columbia University 1936.
1934: Columbua University research assistant, Institute of Educational
Research.
1936-40: Staff of WPA Administrator, New York, Director of Educational
Research.
1939-41: Brooklyn College, lecturer, graduate school.
1940-41: Board of education, committee on work projects, New York, associate administrative assistant.
1941-42: Public Work Reserve, consultant, Washington, D. C.
1942-44: OPA, chief statistician.
1944 to date: Assistant Director, Consumer Goods Price Division.
January 1946: Date on leave from A. B. Frank Co., San Antonio, Tex.;
director of sales for textiles, apparel, domestics, notions, house furnishings, and
general line of dry goods and consumers' durable goods.
Caplan, Benjamin, division economist, Ohio. Bachelor of arts, McGill University,
Montreal, Canada, 1930; master of arts, McGill University, Montreal, Canada, 1931; doctor of philosophy University of Chicago, 1942.
1934: State labor department, C W A , supervisor of project to collect data on
employment and wages, Chicago, 111.
1934: United States Treasury, study on branch banking in United States
and Canada, Washington, D. C.
1934-35: National Labor Relations Board, studies on labor arbitration.
1935: Brookings Institute, fellowship.
1935 to date: Ohio State University, Columbus, Ohio, instructor of economics.
1941: OPA, Washington, D. C., Bureau of Research and Statistics.
1942 to date: OPA economist, Consumer Goods Price Division.
Adams, George E., agricultural economist, P-6, Texas. University of Texas
1906-14 (120 hours) Texas A. & M.
1910-16: Superintendent of schools in Chireno, Tex.; supervised schools and
taught agriculture.
1916-18: Superintendent of public school in Center, Tex.
1918-20: Internal Reveue Department, deputy collector of Taxes.
1920-43: Vice director of extension service of Texas A. & M. College, contacting
farm people and business interests in a section where primary crop is cotton;
assisted county agents who instructed cotton growers in most modern methods
of production, including cultivation, insect and disease control, fertilization, use
of modern machinery, etc.; organized cotton improvement associations and
ginning groups; experience from production through ginning and warehousing^
cotton.
1943-46: Operated own ranch in Brazos County, Tex.
1946 to date: OPA, Agricultural economist; executive department, advisory
staff, Office of Agricultural Relations.
Ailes, Stephen, division counsel, West Virginia. Bachelor of arts, Princeton
University, 1933, college of law; bachelor of laws, West Virginia University,
1936.
1936-42: General practice of law.
1937-40: Assistant professor of law, West Virginia University.
1940-42: Division attorney, Baltimore & Ohio Railroad.
1942-46: OPA legal staff.
Acklev, Gardner, price executive, Michigan. Bachelor of arts, WesternJState
Teachers College, 1936; master of arts, University of Michigan, 1937;
doctor of philosophy, University of Michigan, 1940.
1939-40: Ohio State University, instructor in economics.
1940-41: University of Michigan, instructor in economics.
1940-41: Consultant, National Resources Planning Board, on location of
industry.
1941-43: OPA, economist and section head, Price Division.
1943-44: OSS, section head, Europe and Africa Division.
1944-45: OPA, assistant to director, Consumer Goods Division.
1945 to date: OPA, price executive, Textiles Price Branch (CAF-14).
Armstrong, Robert, associate price executive, Pennsylvania. University of
Pennsylvania, bachelor of science, economics, 1936; University of Pennsylvania, master of arts, 1939.
120
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 19,42
1936-42: Textile section, industrial research department. University of Pennsylvania, Philadelphia, Pa.; analyzed the industrial organization of the textile
industries; participated in two major studies of industrial policy Vertical
Integration in the Textile Industries and Inventory Policies in the Textile
Industries.
1939-41: Gettysburg College, instructor of industrial management, manufacturing industries of the United States, and accounting (during leave of
absence).
1941: Census Bureau, consultant, wool consumption and stocks.
1942: National War Labor Board, Director of Statistical Information.
1942-43: OPA, economist, Apparel and Textiles (CAF-12, P-6).
1943-46: Military furlough, lieutenant, United States Naval Reserve.
1946 to date: Associate price executive, Textile Branch (CAF-13, CAF-14).
Worth, Harold G., assistant price executive, New York.
1906-09: Merrimack Manufacturing Co., cotton mill, clerk.
1909-17: Boott Mills, cotton, costman, fabric costs.
1917-18: Lancaster Mills, cotton, chief, cost department.
1919-45: Southeastern Cottons, Inc., manager, production department;
production control, fabric analysis and classification, statistical studies.
1946: OPA, Textiles Branch (CAF-13).
Wohl, Henry, branch economist, New York. Bachelor of science, Brooklyn College, economics.
1935: Globe Mirror & Glass Corp., bookkeeper-salesman.
1936-39: Cohen, Wachsman & Wassail, market technician; charted price movements of stocks, bonds, and commodities; analysis of price trends.
1939-40: Self-employed, distributor of soft drinks.
1940-41: Census Bureau, section chief.
1941-42: War Department, field report examiner, Army construction reports.
1942 to date: Economist, Price Department. Entire time in Textiles Branch
(P-l, P-6).
O'Neill, Thomas, section head, Cotton Section, New York. Evening courses in
textiles, textile evening high school, New York.
1925-31: Gobelin Textile Co., converter and importer of upholstery and drapery
fabrics; assistant to president and salesman.
1931-40: May Department Stores Co., buyer of sheets, blankets, towels, piece
goods; analysis of raw markets, production, and consumer units.
1941: C. B. Wood Co., manufacturer, bedspreads and sport cloaks; sales manager.
1942-46: OPA, price analyst, entire time in Textile Branch (CAF-13).
Levinson, Max, acting section head, Cotton Section, New York. Bachelor of arts,
New York University, 1937; 1937-40, night graduate work, Graduate School
of Business Administration; courses, New York Stock Exchange Institute.
1936-41: Carl M. Loeb Rhoades Co., New York, associate commodity economist; emphasis on raw cotton and wool commodities.
1941-42: OPA, business specialist, nonferrous metals, approximately 6 months;
later in import office.
1942-46: United States Army, negotiator contract terminations and renegotiations,
Szepesi, Eugene, price analyst, Cotton Section, New York. Textile economist,
Royal Polytechnicunz at Budapest and Kesmark, Hungary, textile engineering, 1904.
1904-06: Textile Mills, Budapest, textile analyst, control of fabric construction.
1906-09: Kudsheedt Manufacturing Co., New York, assistant superintendent,
spinning and weaving.
1909-10: Schuchard & Schuke Co., New York, textile engineer, supervision of
machine execution.
1910-17: Emerson Co., efficiency engineers, assistant to Warrington Emerson,
standardization of operations, production, planning.
1918-23: Cooley-Marvin Co., chief management engineer, planning and supervision of management contracts.
1924-35: Independent consulting management engineer, standardization,
planning, and cost control.
1935-40: Miller-Franklin, New York, vice president in charge of economics
and business research.
121
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 19,42
1941 to date: The Lampeport Co., economic research consultant OPA, price
analyst, entire time in Textiles Branch, cotton (P5-CAF13).
Membership American Society of mechanical engineers.
Walker, Robert, price analyst, Cotton Section, North Carolina.
1916-43: Peckett Cotton Mills, North Carolina; vice president and sales
manager; was president, treasurer, and general manager for 9 years in complete
charge of financing, manufacturing, and selling.
1944 to date: OPA, entire time in textiles, Cotton Section, (CAF-12).
Von Gal, George E., price analyst, Cotton Section, Connecticut.
1913-31: Von Gal Hat Co., treasurer; 4 years in factory learning business;
buying and selling and all around duties followed.
1914-32: Imperial Silk Works, Inc., president, treasurer, and manager; although
name of company was silk works, also manufactured cotton materials and in
manufacture of silk, used cotton yarns for the right balance; approximately 3 years
NRA, assistant deputy in manufacturing division.
1937-40: Royal Typewriter Co., learning general run of plant under general
manager.
1941-43: War Production Board, industrial specialist; liaison work with Navy
Department, worked on PRP.
1943-44: Navy Department, industrial specialist.
1945 to date: OPA, price analyst, Textiles Branch, cotton (CAF-12).
Baldwin, Walter, price analyst, Cotton Section, Maryland. 1929-31 Drexel
Institute, Philadelphia, Pa.; 1934, diploma, Philadelphia, Textile Institute;
1943-44 United States Department of Agriculture Graduate School, textile
technology.
1934: Hart & Foster, sample dyer and color matcher; made money value
determinations, piece dyed-wool, worsted, cotton, and uniform fabrics.
1934-39: Philadelphia Quartermaster Depot, inspector of textiles, laboratory
and factory inspection; check specifications, examine material for conformity to
specifications, check manufacturing operations, perform chemical and physical
tests.
1939: Penn Worsted Co., textile manufacturing, assistant superintendent;
analyze yarns, calculate quantities of raw material required; determine constructions, issue manufacturing requisitions, prepare cost figures, determine selling
price, assist in supervision of manufacture, purchase raw materials, and supplies,
approve samples, lots, shades, etc.
1939-40: Cotton Export Office, Agricultural Adjustment Agency, New York,
associate inspector; inspect, classify, analyze, and determine eligibility of cotton
and cotton products for export-subsidy payments.
1940-45: Department of Agriculture, associate cotton technologist; analyze
fabrics, prepare reports of findings, prepare specifications, establish testing procedure in connection with new-use programs, tabulate processes involved in manufacturing cotton products; prepare estimates of manufacturing costs, material
costs, margins, etc., effecting establishments of indemnity payments for development programs; make recommendations re processing of cotton and cotton products for diversion programs.
1945 to date: Price analyst, Textiles Branch, Cotton Section (CAF-12),
Press, William, price analyst, Cotton Section, New York.
1934-37: Lande & Miskeng, silk, clerk-sales.
1938-42: Board of Education, New York, teacher.
1940-41: Marbank Institute, Cornell, and WPA, research assistant, nutritional
survey.
1942-43: War Department, clerk.
1943 to date: OPA, statistical clerk in Research Division, Durable Goods Section; from October 1944 to date, price analyst in price department, Cotton Section
(CAF-4—CAF-7).
Kimball, Phyllis, price analyst, Cotton Section, Massachusetts.
1940-41: Bureau of Census, clerk, statistical calculations.
1941-44: Treasury Department, clerk, supervisor, statistical work.
1944 to date: OPA, price clerk, Textile Branch, Cotton Section
CAF-7).
Kurek, Mary, price clerk, Cotton Section, South Dakota.
1929-41: Various positions—stenographer, receptionist,
keeper.
85721—46—vol. 1
9
(CAF-6—
interviewer,
book-
122
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 19,42
1941 to date: OPA, 1941-45 stenographer in Price Department, Consumer
Goods Division. 1945 to date, price clerk, Consumer Goods Division, Textile
Branch, Cotton Section.
(CAF-2—CAF-6).
Gordon, Evelynne, Bachelor of science College of City of New York, 1939, economist, Cotton Section, New York.
1932-40: Brand & Oppenhimer, clerk, sales department, textiles convertors.
1940-41: International Business Machines, statistical clerk.
1941-42: Department of Agriculture, clerk, statistical.
1942-45: Department of Labor, economist, studying employment and occupational outlook in various industries, with emphasis on textiles.
1945 to date: OPA, Textile Branch, Cotton Section (P-3).
Russell Burrus, section head, Wool Section, Massachusetts. Bachelor of science,
Pennsylvania State College, 1923; master, bachelor of arts, Boston University, 1935; wool manufacturing and textile design, Lowell Textile School;
textile microscopy, Massachusetts Institute of Technology.
1920-22: Henry L. Ward well, in charge of purebred flock of sheep.
1923-24: University of Maryland, research fellow in animal husbandry—sheep.
1924-41: Department of Agriculture, marketing specialist, wool-marketing
reporting.
1941: Department of Agriculture, marketing specialist, wool standardization.
1942 to date: OPA, price analyst, textiles, Wool Section, entire time.
(CAF13).
Salloway, Victor, price analyst, Wool Section, Massachusetts.
1922-42: American Woolen Co., 1923-26, superintendent of carding and
spinning mill in Concord, Mass.; manager of Assant Mill in Maynard; 1926-30,
in cost department of blending room, responsible for pricing of all materials blends;
1930-38, in production department, responsible for requisitioning—inquiry and
maintaining a perpetual inventory of all raw stock, also for scheduling manufacture of some and for pricing of all stock and inventory; 1938-39, assistant to
superintendent of stock and blending department, duties apmlified to include
manufacturing responsibility for production and quality in shade pciking, stock
sorting, burn picking, dusting, miscellaneous.
1939-42: Office manager of department; also charge of pay roll and all Government reports relating to stock purchases, consumption, and content.
1942: Penn Worsted Co., mill superintendent; complete responsibility for all
phases of mill management—plant equipment, employment, manufacturing of
yarn and cloth, production and efficiency of mill, costs, inventories.
1943 to date: OPA, price analyst, Textile Branch, Wool Section, entire time
Wool Section ( C A F - 9 - C A F - 1 2 ) .
Murphy, Augustine, price analyst, Wool Section, Massachusetts.
1932-34
Towell Textile Institute.
1925-44: American Woolen Co., general foreman; supervise and direct all the
various operations used in finishing woolen cloth, control production, and quality.
1944 to date: Price analyst, entire time in Textile Branch, Wool Section
(CAF-9-CAF-12).
McEvoy, Charles. Bachelor of Arts, Brown University, 1907; 1907-10, Rhode
Island School of Design; 1915 textile design and chemistry, Providence, R. I.
1910-11: Wanskuck Co., weaving and finishing men's wear; full direction
manufacturing methods, equipment, personnel; 90 worsted looms with supplementary dyeing and finishing equipment.
1911-27: Wanskuck Co., wool combing and worsted yarn manufacturing;
superintendent, 39 worsted cards, 28 worsted combs, 60 worsted spinning frames,
and essential supplementary equipment.
1927-28: Passaic Worsted Spinning Co., wool top and worsted sales yarn,
vice president and general manager.
1928-29: Queensbury Mill, manufacturers of alpaca and mohair worsted yarns;
manager.
1930: Thomas F. Black, Jr., trustee, manufacturers of worsted yarn; investigator and appraiser.
1930-43: The Barre Wool Combing Co., Ltd., wool combing and top dyeing;
manager, 40 French combs, 64 Noble combs, 12 dyeing machines, and essential
supplementary equipment.
1943-45: War Production Board, Chief, Wool and Worsted Machinery Section.
1945 to date: OPA, Textile Branch, Wool Section (CAF-11).
123
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 19,42
Willis, Ethel, price analyst, Wool Section, Massachusetts.
1926-32: Fall River Bleachery, stenographer and invoice clerk.
1933-36: Berkshire Fine Spinning Associates, Inc., bookkeeper, stenographer.
1936-42: Social Security Board, clerk.
1942: Office of Education, statistical clerk.
1942 to date: OPA, statistical clerk in Research Division for 3 years; from
August 1945 to date, price analyst in Textile Branch, Wool Section ( C A F - 4 - 7 ) .
Gibbons, Clarence, economist, Wool Section, Ohio. Three years, Western Reserve Academy, Hudson, Ohio; bachelor of arts, Adelbert College, Cleveland,
Ohio, 1905; 1 year, United States Department of Agriculture Graduate School.
1905-6: Newspaper; reported commodity markets.
1906-16: Manager, livestock daily paper.
1916-33: United States Department of Agriculture, Bureau of Markets,
marketing specialist; opening, operating, and supervising market reporting offices
with emphasis on sheep; charge of livestock standardization, especially sheep.
1933-42: United States Department of Agriculture, Agricultural Adjustment
Administration, economist, grain and livestock.
1942-46: OPA, meat rationing.
1946: OPA, Textiles Price Branch, Wool Section (P-4).
Salloway, Grace, price analyst, Wool Section, Massachusetts.
1943-44: War Production Board, statistical work in textiles, clothing, Leather
Section.
1944-45: OPA, accounting clerk in accounts department, Textiles Section.
1945-46: OPA, price clerk, commodity specifications, apparel.
1946: OPA, price analyst, Textiles Branch, Wool Section (C A F - 4 - C AF-7).
Pape, Leslie, economist, Wool Section, Illinois. Bachelor of arts, Hamilton College,
1920; doctor of philosophy University of Chicago, 1930.
1922-23: Bankers Trust Co., analysis of corporation reports, industry studies.
1923-25: National Paper Trade Association, statistician.
1930-42: University of Chicago, instructor.
1943 to date: OPA, in Textile Branch since May 1943 ( C A F - 9 - P - 5 ) .
Bosshard, Paul A., section head, Rayon Section, New Jersey. Bachelor of arts,
economics, Cornell, 1931; September 1931-July 1932, Textile School, Zurich,
Switzerland.
Twenty-two months during college vacations in silk mills of Stehli & Co. to
obtain practical knowledge of silk and rayon mill processes.
1932-38: Stehli & Co., manufacturers and converters of silk and rayon fabrics;
complete fabric and fiber analysis, experimental and market fabric designing, cost
calcualation, mill production schedules; majority of production was filament
rayon fabrics; for last 2 years in charge of purchasing of raw materials and production of throwing plants.
1938-41: A. M. Tenney Associates, sales agents for acetate rayon yarn and
staple products of Tennessee Eastman Corp.; assisted in creation of new fabrics
of all synthetic and synthetic fiber blends; worked with mill designers to make
market fabrics out of the experimental results; worked on development of worstedtype spun-rayon fabrics.
1942 to date: OPA, price analyst, entire time in Textiles Branch ( C A F - 1 1 CAF-13).
Halpin, Edward, price analyst, Rayon Section, New York. Diploma, Philadelphia Textile School, 1916; wool, worsted, cotton, rayon, silk, weave formation, fabric analysis, dyeing, chemistry, weaving.
1917-18: Montgomery Ward & Co., apparel inspector for material quality.
1918-19: Private first-class, Chemical Warfare Service, physical testing laboratory, gas mask fabrication.
1920-29: J. A. Migel, Inc., Celanese Corp.; textile technician, fabric analysis,
costs; charge of physical testing laboratory, yarn control; throwing and winding
foreman.
1930-32: Schwarzenback-Huber Co.; textile technician; supervision of fabrics
to be manufactured, imperfections; assistant in charge of physical and research
laboratory, fabric analysis, and cost.
1933-40: Wallerstein Co., Inc.; textile field representative in application of
their enzyme products; silk soaking; rayon and acetate designing and development work.
1941-42: John McShain, Inc., contracting company; assistant paymaster.
1942 to date: OPA price analyst; entire time in Textile Branch, Rayon (CAF9 — C A F - 1 2 ) ; member American Association of Textile Technologists.
124
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 19,42
Toyoshima, Joe, price analyst, Rayon Section, California. AA Junior College,
Santa Monica, Calif., 1937; bachelor of arts, University of California, 1940.
1943 to date: OPA price analyst; entire time in Textiles Branch, Rayon
Section (CAF-5—CAF-11).
Mufson, Pauline, price analyst, Rayon Section, Virginia. Ninety-two hours
accumulated at various universities.
1929-33: S. Hamrah & Sons, retail store; sales, bookkeeping, general managing,
assisted in buying merchandise—women's accessories, lingerie, linens, etc.
1934-38: Department of Welfare, New York, clerk-stenographer.
1940-41: Steel Workers Organizing Committee, office manager and secretary.
1941-42: Bureau of the Budget, clerk-stenographer.
1942-45: War Production Board, clerk-stenographer to administrative assistant.
1945 to date: OPA, price analyst, Rayon Section (CAF-7).
Askin, Ruth, price analyst, Rayon Section, Pennsylvania.
1935-38: NYA, junior project reviewer.
1940: Railroad Retirement Board, clerk.
1941: Census Bureau, clerk.
1941 to date: OPA, 1941-43, Accounting Division; 1943 to January 1946,
rationing, January 1946 to date, Textiles Branch, Rayon (CAF-7).
Belliveau, Rachelle, price clerk, Rayon Section, Maine.
1942-43: Harold W. Russell, Goodall Worsted Mill, clerk and laboratory
assistant, yard and cloth analysis.
1943-45: OPA, administrative services.
1945 to date: OPA, price clerk, Textile Branch, Rayon Section (CAF-4—
CAF-5).
Lehman, Miriam, price clerk, Rayon Section, Pennsylvania.
1943 to date: OPA, clerk-typist in rent department, professional service
department; in 1944 transferred to price department, Administrative Branch,
Consumer Goods Division; 1945 to date, price clerk in Textiles Branch, Rayon
Section (CAF-2—CAF-5).
Gresenger, Harry, acting section head, finished goods, New York. 4 years
College of the City of New York. 2 years Philadelphia Textile.
1924-28: Gerseta Corp., textiles; full charge of weaving mills, throwing plant,
and dye house; supervised construction, production, and dying all fabrics; did
all purchasing of silk, wool, cotton, rayon, machinery, and dye stuffs.
1929-32: A. H. Sands Co., textiles; partner, supervised all construction and
production of fabrics manufactured.
1932-43: A. H. Sands Co., textiles; owner; merchandising, financing, and
production, both staple and novelty fabrics of wool, worsteds, rayons, silk, cotton,
and mixed yarns.
1943 to date: OPA, business analyst, acting section head, finished goods
(CAF-12).
Quinn, Walter, economist, Finished Goods Section, Massachusetts. Bachelor of
Science, University of Illinois, 1931; graduate work, University of Chicago,
American University.
1936-39: Works Progress Administration, assistant economist.
1939-40: Department of Labor, assistant field investigTtor, field study of
wages and hours in canning plants.
1940-42: Social Security Board, assistant labor economist, Bureau of Old Age
and Survivors Insurance.
1942-43: War Manpower Commission, liaison officer, assisted WPB Industry
Division with analyzing and formulating manpower problems.
1943-45: War Production Board, Chief, Operating Reports and Analysis Section;
worked with labor-management committees.
1945 to date: OPA, economist, Price Department, Textile Price Branch (P-5).
Wormley, Alcibia, economist, Finished Goods Section, Louisiana. Bachelor of
arts, Straight College, New Orleans, 1937; bachelor of science, Southern
University, 1941, home economics; master of arts, Howard University, 1942,
home economics.
1940-41: McKinley High School, Louisiana, teaching clothing, foods, and
physical education.
1942: Commerce Department clerk.
1943 to date: OPA, statistician in research and executive departments; economist in textiles since January 1945 (P-l, P-3).
125
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 19,42
Stix, William, attorney, price department, Textiles Branch, Missouri. Bachelor
of arts, Harvard, 1932; bachelor of law, Harvard Law School, 1936.
1936-37: Thompson, Mitchell Thompson & Young, attorneys at law.
1937: Private practice.
1937-38: Senate Civil Liberties Committee, investigator.
1938-41: National Labor Relations Board, and briefing attorney for United
States Circuit Courts of Appeals.
1942 to date: OPA, Legal Division, entire time in textiles and apparel.
Karon, Robert, attorney, Textiles Branch, Minnesota. Bachelor of law, Universitv of Minnesota. 1927.
1927-28: Law clerk of O. J. Larson.
1928-30: Member of firm engaged in general practice of law.
1930-42: Private general practice of law.
1942-44: OPA, district price attorney, Duluth, Minn.
1944 to date: OPA, price department, Textiles Branch.
Campbell, Robert O., attorney, Textiles Branch, New York. Bachelor of arts
University of Pennsylvania, 1939; bachelor of laws, Southern Methodist.
1942-43: Alien Property Custodian, attorney.
1943-46: Military service, lieutenant United States Naval Reserve.
1946 to date: OPA, price department, Textiles, attorney.
Newton, George W., attorney, Textiles Branch, Maryland. Bachelor of science,
Colgate University, Hamilton, N. Y., 1925; bachelor of laws, Harvard Law
School, 1930.
1930-34: Associate with law firm handling general corporate practice.
1934-37: General practice of law.
1937-44: Treasury Department, attorney, technical assistant, assistant chief of
Sections of Appeals and Protests, attached to staff of chief counsel, Customs.
1944 to date: OPA, price department, Textiles Branch.
Harris, Louis, attorney, Textiles Branch, New York. Bachelor of arts, Cornell,
1932; bachelor of laws, Brooklyn, St. Lawrence University, 1939; doctor of
juridical science, Brooklyn, St. Lawrence University, 1939; graduate work,
Harvard, 1932-34.
1935-36: Planet Paint Co., assistant chemist.
1938-38: Cecele, Inc., piece goods and selling.
1940-42: Private practice.
1942-44: United States Army.
1944 to date: OPA, Textiles Price Branch.
Osterman, Henry K., attorney, Textiles Branch, New York. Bachelor of science,
New York University, 1932; doctor of jurisprudence, New York University,
1934.
1934-41: Private practice.
1941-42: Assistant in Office of Corporation Counsel of New York City.
1942-45: United States Army.
1945 to date: OPA, Textiles Price Branch.
Marcus, Gerald, attorney, Textiles Branch, California. Bachelor of arts, Stanford, 1938; bachelor of laws, University of California, 1941.
1937: Manager, branch retail store, cloth goods and furs, Wat son ville, Calif.
1941-43: OPA, Textiles Price Branch.
1943-46: United States Army, lieutenant.
1946 to date: OPA, Textiles Price Branch.
Freedman, Edwin, attorney, Textiles Branch, New York. Bachelor of laws,
Brooklyn Law School, St. Lawrence University, 1937, graduate work practicing
law institute, 1937-39.
1930-36: Freedman Candy Co., general assistant.
1937-38: Albert M. DeMeo, law clerk.
1938-42: General practice of law.
1942-46: United States Army, captain, Air Corps.
Mr. PORTER. Shall I proceed?
The CHAIRMAN. Yes, go right on.
Senator CAPEHART. Pardon me, but I don't think you answered
my question as to the advisability of merging the CPA with OPA
and making OPA responsible for both production and prices. I be-
126
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 19,42
lieve you said you were opposed to it. I think you started to give
some reasons.
Mr. P O R T E R . Yes, I would say that while we primarily are concerned with the same objectives, namely, full production and stable
prices, yet the fact that CPA and OPA are both established going
concerns—I would not physically like to see the consolidation undertaken. I think you must bear in mind that the Office of Economic
Stabilization has the responsibility for the coordination of these
functions, and if you carry it to the extreme—or not to the extreme,
but if you followed it through logically, then you would have a consolidation of pricing and supply functions with the Department of
Agriculture food commodities. I don't say while sometimes we have
a few differences and rough spots, w^e get around the table and usually
are pretty well able to resolve any differences. So, I haven't seen any
real necessity for the consolidation of these functions.
Senator C A P E H A R T . In other w^ords, you feel if will work out more
efficiently as it is now?
Mr. P O R T E R . Yes, I think it is a question of coordination.
Senator C A P E H A R T . Yesterday Mr. Bowles told us that production
had reached a peak higher than it has ever been in the history of the
Nation, that employment was higher, I believe he stated, yet we are
far short of filling the needs of our people. Now you come along this
morning and say that you are fearful, and use some very strong adjectives here, if OPA was eliminated entirely that prices might go up 50
percent. You used examples here of an income of $2,500, which brings
me to this question: If the situation is as serious as you have said it
is, and I am inclined to agree with you, maybe not to the extreme you
go, but I certainly think that prices would go up. and if Mr. Bowles
is correct in his statement yesterday that the civilian production is
the greatest in the history of this Nation and that employment is
pretty much at its peak, why wouldn't it be wise to adjust all of these
prices wrhere there are inequities, much faster than you are doing, and
permit, let us say, prices to go up an average of 10 percent if that will
get production and get this job done and do it quickly, in order to
avoid this great danger you are talking about of a complete runaway
of prices of 50 percent?
Because I cannot understand how if we reach the peak, if we are
producing today—I don't agree with the statement—but let us say
we are, if we have reached the peak and are producing more than we
ever have before and our shortages are still as great as they are, don't
you think there is a real danger if we don't take some drastic action in
permitting prices to go up, say as much as 10 percent and get this job
done and get production?
I think the danger may be we don't work fast enough, that OPA
does not wrork fast enough in adjusting these prices and these inequities
in getting the job done.
Mr. P O R T E R . If I understand your question, the 1 0 percent increase is across the board; is that right?
Senator C A P E H A R T . I don't mean it would need to be given to
every item, but what I am trying to say is: What difference would it
make if some items went up 10 percent if we can double the production
by the law of supply and demand and do the job in a reasonable length
of time? What I am fearful of, using your figures and Mr. Bowies',
I don't see where you are ever going to get this production. Where
127 EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 19,42
are you going to get it? You cannot build new factories today under
Mr. Wyatt's program. You cannot build a commercial building, or
anything of the sort. Therefore, during the next 2 years, at least, we
are going to have to do this job with existing factories, the existing
warehouses and the existing retail establishments, are we not? We
are going to have to do it with the machinery we have on hand and
with the labor we have.
Now, Mr. Bowles, yesterday, painted quite a hopeless picture of
the job. Manufacturers and businessmen say if you will just adjust
these inequities and give us increases here and there and balance
this thing out, we think we can get production. Now, that is what
we all want.
Mr. P O R T E R . Well, Senator, I think that we are making adjustments, many of them more than 10 percent. I am sometimes concerned with the rapidity and the quantity of adjustments under our
existing standards we are now making. I think the difference is
between a selective type of adjustment and a general across-the-board
sweeping adjustment:
Senator C A P E H A R T . I am not talking about just raising all prices
10 percent. I am talking about fast action in adjusting inequities,
where the businessman says, "I ana losing money. If you will give
me a slight increase I can get into production and get the job done and
overcome the bottleneck.''
Mr. P O R T E R . That is the principal part of our job. That is what
we are doing every day.
Senator C A P E H A R T . I am going to say this to you: In my opinion
what Congress should do is to do something to see that you do the very
thing you said you are trying to do, and do it much faster than you are
doing it. Maybe you don't have sufficient help. Maybe you don't
have enough appropriation, but it seems to me like that is the job of
Congress, if you <don't have the power under the act, or if you don't
have the appropriation. Let me say this to you: As a manufacturer
I don't particularly care if you control my prices. I don't think
any other businessman does if the price you give me permits me to
make a decent profit. I don't think anybody in business cares—I
don't think the cotton people that Senator Bankhead talks about
care particularly whether or not you set the price—or they set it
themselves, if it permits them a slight profit. If you sat in my
seat—I thinjk it is true of every other Senator—and hear the complaints that come in, you would get just a little bit irritated about all
these fine adjectives you use, and get a little irritated at the fact you
condemn everybody
Mr. P O R T E R . That was not my purpose.
Senator C A P E H A R T . When they talk about this problem, because
it is with us from the time we arrive in our offices every morning
until we go home at night.
Mr. P O R T E R . Well, I am aware of that.
Senator B A N K H E A D . Mr. Porter, a Congressman called me a few
minutes ago, a Representative of very high standing, and said that
Mr. Small was about to issue a freeze order limiting very drastically
material for making chenille bedspreads and robes and that sort of
thing.
M r . PORTER. Y e s , sir.
128
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 19,42
Senator B A N K H E A D . Of course, there is a very great need for that
type of goods. Do you know anything about that?
Senator C A P E H A R T . Wouldn't that possibly be a good excuse for
merging these two organizations?
Senator B A N K H E A D . That is a low-cost item.
Senator C A P E H A R T . It seems to me that would be a good argument
for merging the two together. One is acting and the other doesn't
know anything about it.
Mr. P O R T E R . I think Mr. Sells here can answer your question.
Mr. SELLS. This is a joint program, Senator.
Senator B A N K H E A D . Joint with who?
M r . SELLS. O P A a n d C P A .
Senator B A N K H E A D . All right.
Mr. SELLS. The C P A is issuing
an order which puts sales yarn
under control. It freezes the spindles on sales yarn according to a
certain base period.
Senator B A N K H E A D . What do you mean by sales yarn?
Mr. SELLS. Yarn which is produced By spinning mills and sold to
users of the yarn as distinct from yarn which is produced in an
integrated mill which uses its own yarn in its own weaving and
knitting operations.
Senator B A N K H E A D . In other words, a big mill, a well integrated
mill, they don't bother it, but a little concern they clamp down on it;
is that the idea?
Mr. SELLS. NO. There is a separate industry which produces
yarn for sale as distinguished from that part of the industry which
produces its own yarn.
Senator B A N K H E A D . What is the cause of a freeze order on that
material which went into bedspreads and robes and clothing?
Mr. SELLS. The need for the order, Senator, is this: there are
many very small factories which make underwear - and hosiery and
which make tape which is very greatly needed today in the building
program, insulation tape. They have had a very serious shortage of
yarn. The purpose of this order is to provide the yarn for those
essential uses and to see that the yarn gets channeled to the persons
who need it most.
The case you cite is one of chenille bedspreads which, I believe, in
the opinion of those officials who work with the program, is much
less essential to the economy than underwear and hosiery and insulation tape.
Senator B A N K H E A D . Don't you think sleeping facilities are essential?
M r . SELLS. Y e s .
Senator B A N K H E A D .
Just about as essential as to have some clothes
on. You know you cannot buy blankets now. You cannot buy
sheets now, or even pillowcases.
Mr. SELLS. They are getting some pillowcases. As far as chenille
bedspreads are concerned, they are not necessarily in the same category with those items.
Senator B A N K H E A D . Mr. Small sets himself up to decide as to what
things people need most, and what they don't need.
Mr. SELLS. I cannot comment on Mr. Small except to say it is his
duty to take action wrhich is needed for the satisfaction of all the
essential commodities in the economy.
Senator B A N K H E A D . But I thought you said they were increasing.
Mr. Porter did. They are coming out and getting into the pipe line.
129 EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 19,42
Mr. SELLS. The increase is coming now.
Senator B A N K H E A D . But what do you want to slow it down for?
Mr. SELLS. During the third and fourth quarter production was
off 25 percent. Lt is just beginning to come up. This order, coupled
with the 5 percent premium increase which OPA is granting, will speed
up the increase in production and get it 3 or 4 months ahead of when
we would otherwise get it.
Senator B A N K H E A D . Until about the time the war closed were they
making any chenille of consequence?
Mr. SELLS. A good deal of that yarn was diverted to war goods.
Senator B A N K H E A D . I didn't ask you that. I asked you isn't it a
fact they were not making any and now you want to stop them when
a lot of people are opening up to supply the plain average people with
some bedding; you want to stop them and cut down the production
and supply.
Mr. SELLS. Senator, if there were enough to go around these orders
would not go into effect.
Senator B A N K H E A D . Y O U are cutting it down for unionsuits.
Mr. SELLS. N O ; we are increasing it.
Senator B A N K H E A D . Y O U are cutting it down in bedding to divert
it to other uses.
Mr. SELLS. That is right.
Senator B A N K H E A D . D O you think that is fair?
Senator C A P E H A R T . Did you say you were going to use this material
in the building of houses?
Mr. SELLS. Yes, sir; insulating tape is needed in construction.
Senator C A P E H A R T . Mr. Small issued this directive, I presume, in
line with the Wyatt housing plan?
Mr. SELLS. I presume so. I don't believe it has been issued yet.
Senator B A N K H E A D . What is your name, young man? Let's get
you on the record.
Mr. SELLS. Sells.
Senator B A N K H E A D . Y O U have been in the cotton section of the
OPA?
Mr. SELLS. NO, sir; I am not in the cotton section. I am Assistant
Director of the Consumer Goods Price Division.
Senator B A N K H E A D . Well, they are all consumer goods, are they
not, everything that the OPA has jurisdiction of in cotton and wool
are consumer goods?
M r . SELLS. Y e s , s i r .
Senator B A N K H E A D . SO
you are Assistant Director of that. How
long have you held that place?
Mr. SELLS. Since October 1944.
Senator B A N K H E A D . Where are you from?
Mr. SELLS. I was born in New York.
Senator B A N K H E A D . There you are.
Mr. SELLS. Senator Bankhead, I am now on leave from a business
which is in the State of Texas.
Senator B A N K H E A D . Y O U didn't have any trouble getting leave, did
you?
Mr. SELLS. I had considerable trouble, sir. Arrangements for my
remaining here have been made between Mr. Bowles, Mr. Porter, and
the president of the company. I don't know how long I will be able
to continue.
130
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 19,42
Senator B A N K H E A D . Why did you say you were from New York?
Were you ashamed to say you were from Texas?
Mr. SELLS. NO, sir. I was born in New York. That is what I
said.
Senator B A N K H E A D . I didn't ask you where you were born. I said,
"Where are you from?"
Mr. SELLS. Well, I am from New York. When I leave here I am
going to Texas.
Senator B A N K H E A D . How long have you been in Texas?
Mr. SELLS. I haven't resided there. I have been there several
times during the war, but I am on leave from this company.
Senator B A N K H E A D . Oh, yes. When you get an opportunity you
are going to Texas? So you claim Texas now because of your intention to go there?
Mr. SELLS. No, sir. I am in the employ of a company in that
State. I am on leave from that company now.
Senator B A N K H E A D . You have had no business experience so far
in Texas, have you?
Mr. SELLS. That is correct.
Senator B A N K H E A D . All right.
Mr. SELLS. I have been on leave for some time.
Senator B U C K . Mr. Porter, reference was made to the Patman bill
that this committee had hearings on for quite a while. I would like
to state this case. I have a letter which comes from a man in Pennsylvania and he is the employee of a factory that makes radiators.
They were on a strike—the CIO went on a strike. When they got
their 18% cents increase the management tried to get a price adjustment. They have never been able to do it. The factory is still
closed down.
Mr. P O R T E R . Have they settled their wage dispute?
Senator B U C K . They say they cannot pay 1 8 ^ cents increase.
They are willing to pay it if they get a price adjustment. The factory
just closed down. Here is an industry that is making a very essential
part of the building program, radiators for homes. This, as I say, is
not written by management. It is written by an employee. He
mentions here that they have been after OPA since December 1945.
That was before the strikes occurred, but they realized they were
going to have to pay an increase.
Now the factory is closed and no radiators are being produced. I
think that is an example of what is wrong with the administration
of OPA.
Mr. P O R T E R . What is the name of the company?
Senator B U C K . I don't even know that. This man's name I will
give you. His home is 147 Arlington Street, Johnstown, Pa. There
is no reason for him to write to me except I am a member of this
committee.
Mr. P O R T E R . I S this firm in Johnstown?
Senator B U C K . Yes. He says, " I am an employee of a cast-iron
boiler and radiator industry."
Mr. P O R T E R . We will make an inquiry into it. Generally, I would
say, as far as a wage dispute is concerned, that the company cannot
come to the OPA for a price increase until he has composed his labor
difficulty.
131
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 19,42
Senator B U C K . I think that is it. He cannot compose HIS labor
difficulty because he cannot afford to until he gets an increase in the
price of his product.
Mr. P O R T E R . He would get, I would hope, a very prompt adjustment once the labor dispute has been composed.
Senator B U C K . Well, you have got to help him compose it because
he cannot do it unless he gets a higher price for his product.
Senator CAPEHART. Mr. Porter, what assurance does a manufacturer have of a price increase to pay that 18% cents? Does he have
any assurance at all?
Senator B U C K . He doesn't have any unless they give it to him.
Mr. PORTER. Well, under the standards under which he operates
once he has settled his labor difficulties he can come in and make application and we are directed to give very prompt adjustment based on
the standard, which I am going into here, under which we operate.
We will give you the details.
Now, on this Johnstown case, it is the National Radiator Co. Mr.
Gordon Riley is head of our Building Material Division. Do you
want him to comment on it at this point?
Senator M I L L I K I N . Before he does, I would like to ask a preliminary
question. Couldn't the labor contract be made conditional on securing an increase?
M r . PORTER. N O .
Senator B U C K . What
is the matter with this fellow? He says, " I
am employed in the cast-iron boiler and radiator industry." That is
all he said about his connection. His letter comes from Johnstown.
Mr. R I L E Y . The cast-iron radiator increase announced a week or
two ago was 5.6 per square foot, which is an increase of about 15 or 17
percent. There are several strikes in that industry. When the remaining strikes are settled and the wage that is expected to be granted
is settled, there will be another increase of about 2 or 2.5 per square
foot of radiation.
Senator B U C K . Here we are spending $ 6 0 0 , 0 0 0 , 0 0 0 to push prices
up with incentive payments to get things out on this building pro*
gram, and here you fellows are keeping them down.
Mr. PORTER. I think Mr. Riley has described these adjustments.
Senator B U C K . This man has been after it 6 or 8 months—well,
since December 1945, anyway.
Mr. R I L E Y . The increases to cast-iron radiation which have already
been granted have been in the neighborhood of 15 percent prior to
this last increase. I believe that plant is now back at work.
Senator B U C K . Well, I hope it is, simply because it is one of the
things needed in the program we have approved, but it doesn't seem
reasonable to be sitting on the lid and keeping these people out of
work and from manufacturing these articles when on the other hand
we are trying to induce people to build by making incentive payments.
Senator M I L L I K I N . Let me just ask this hypothetical question:
Supposing you have three outfits in Johnstown making this product.
You settle your labor trouble in one of them. Do you at once give
an increase to the one that is settled, or do you hold the whole thing
up and wait for a settlement all the way along the line?
Mr. PORTER. It depends on what the industry wishes. We can
put through individual adjustments for the plant that is settled, but
usually they prefer to get all the prices settled at once, or the price
132
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 19,42
scale for the industry so that it applies uniformly throughout the industry.
Senator M I L L I K I N . When you speak of "the industry" are you
speaking of the Johnstown industry or the whole industry?
Mr. P O R T E R . In this case we are speaking of the whole industry
because there is only one plant in Johnstown.
Senator M I L L I K I N . In other words, company A at Johnstown could
make a complete settlement of its labor troubles and companies B and
C could continue to be on strike and company A would be held up?
Mr. P O R T E R . No, sir; if company A wanted to come in they could
get an individual settlement.
Senator M I L L I K I N . That is what I am asking about.
Mr. P O R T E R . They have an alternative or choice. If company A
should say, "We don't want to establish a price level for this product
until such time as the industry as a whole has settled its labor difficulties," they could wait, or they could go to work and get their adjustment.
Senator M I L L I K I N . Company A, if it wanted to, could get an increase without waiting for B and C to be settled?
Mr. P O R T E R . Precisely.
Senator H I C K E N L O O P E R . I would like to ask Mr. Porter a question
about this theory of the operation of the OPA. Now, I will say this
for Mr. Porter's benefit, and for the benefit of the committee: That
the only case I have had up personally with Mr. Porter he has done
a good job.
Mr. P O R T E R . Is that the Dexter?
Senator H I C K E N L O O P E R . That is right. I have had a number of
others up with the Department's various subheads. That was a company that had a very demonstrable loss position. There was no
question about it. I took that up with you about the last few days
in January. You very readily said if that certain things were as represented they needed relief and they would get it. They got the relief yesterday which they needed, and which their figures at that
time showed that they had to have. That was the middle of April.
Meanwhile they have gone on losing a lot of money during that period. In fact, they have been losing it since last fall. I am not too
critical of you because I think you have been in this thing personally three times that I know of, and each time the machinery jumped
over there when you said what you would do, but the trouble was
that you have other things to do than to follow that particular thing
with that company, and every time you let go of it personally the
thing began to sag and the delay occurred, and this company
suffered.
This is not critical of you, Mr. Porter. I am trying to say that you
performed very satisfactorily. I mean the things you did were
successful. You saw the problem and you said what you would do,
but it took the subordinates in your department between, say, the 25th
of January, or perhaps a few days later, because you sent a special
auditor out there; but it took them from that time until the 15th of
April to give the relief that I know you thought was necessary, after
the figures were audited, which their figures showed was necessary
and that they did get yesterday.
The thing that makes me restless—this probably goes to your
over-all supervision as Director of this bureau—that would be the only
133 EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 19,42
possible criticism I am directing to you in this particular case because
everything you said you would do, you did. That is, you got it
accomplished, but so far as I could see in this particular case there
would be no reason why this should not be granted by, say, the 15th
of February, at the latest. While I think you did a sound job eventually, there was an unconscionable delay in this case, and certainly
no businessman could continue in business if his organization didn't
move faster than that.
And it took your personal intervention every time to get something
stirring.
Mr. P O R T E R . I think I should say this about my associates at
OPA: I have found none of them in my discussions with them that
are not anxious as I am or you are to get speedy action on cases of
individual inequities or broad industry cases where it can be done,
but there is this fact, we must recognize that we are required, and I
think properly so, by the enabling legislation under which we operate
and the Executive orders that spell out in detail the specific standards,
that if we take a particular case that presents an unusual circumstance
or departure from those standards, we do have to spend what may
seem to be an unreasonable length of time in justifying that case.
Once you begin to say that this thing on its face makes a prima facie
case of injustice and inequity and therefore these results should be
immediately achieved, then you get into the questions of individual
price control by some kind of caprice and departure from standards.
So that is one of our major difficulties in attempting to inquire into
what I think are necessary standards. It is these individual cases
that cause us all so much difficulty. My recollection is that in this
particular matter that the hardship of the business was minimized
by an interim, adjustment.
Senator HICKENLOOPER. Well, the interim adjustment merely
prolonged the day of death if that was to be the policy. You got into
it yourself and you did yourself see that a reasonable, adequate
adjustment was made. As I say I have no criticism of your attitude,
nor of the thing which you eventually got done, but I fail to understand why from the time you announced the policy to be applicable
there, why these ramified delays and repeated trips to Washington—
in other words, the sworn audit was in your hands or in the hands of
your subordinates by about the 22d or 23d of last January. It was
completed out there on the 20th. It was brought immediately to
Washington along with all their other figures that had been compiled
for your department months and months ago. Yet it took three
different personal interventions on your part to get the very policy
established that you knew and I thought was sound last January, or
the 1st of February.
I realize also you had an industry-wide problem you were considering, but you also had one of the biggest producers of this particular
product in the country going broke by the day, and the more days
they ran
Mr. P O R T E R . The more days they ran the more production they got,
to the point where they could come in and get this sort of relief.
Senator HICKENLOOPER. Well, if you are under water it doesn't
make any difference whether you are an inch or a foot under. You are
still drowning.
134
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 19,42
Mr. P O R T E R . I appreciate what the Senator had said about my
personal participation, but I don't think the credit should go to me.
Senator H I C K E N L O O P E R . I think the personal credit must go directly
to you because we got no place except in the periods when you personally intervened in this thing.
Mr. P O R T E R . It was the fact my associates showed us the way to
do this. I think they worked very diligently on it.
Senator H I C K E N L O O P E R . The point I am trying to make is this:
I wondered what your policy as Administrator is going to be in connection with trying to expedite the administration of OPA in these
hardship cases. I don't have very much quarrel with OPA in its
philosophy, not nearly as much as I do with what I believe to be the
unconscionable delays and confusions in the administration of OPA
policies and also the thing that was just indicated a moment ago by
Senator Bankhead that some people over in OPA—not the gentleman
who testified, necessarily—but they over in OPA arrogate to themselves the duty of saying what the American people ought to have
and what they ought not to have and instead of leaving the demand of
the American people to supply that thing, it is like my saying olives
are good for me, therefore, they are good for you and you wrill have
to eat them.
Mr. P O R T E R . Senator, I think you and I would have no differences
as to the basic production order, that we have got to produce certain
essential products that go into everyday living. I sometimes think,
as I am talking about MAP, if we were to take off these controls,
everybody would go immediately to the highest priced line and there
would probably be no consumers' goods to fill certain basic needs we
have got to have to live.
Senator H I C K E N L O O P E R . Of course, that element is always present
and it is very troublesome. I think it is a very difficult thing to meet,
but the fact is, I believe, that the failure of OPA to give proper increases on cheaper lines of merchandise, such as shirts and underwear
and simple house dresses and those cheaper lines of merchandise that
are used by the general public, the failure of OPA to give a price
increase that would enable those to be made at a profit, which might
have been even 15 or 20 percent, has driven them off—has driven
manufacturers into making high-priced clothing, and the people have
had to buy it. They have no alternative because they have to wear
something. So they have been driven into high-priced lines.
Mr. P O R T E R . Well, extensive price relief has been afforded in these
low-cost fields. I think that is responsible for the production we are
going to get. On the Senator's point of delay, I certainly would
agree we have got a problem of administration. I don't say this in
any spirit of reflection upon my predecessor or my current associates
at OPA. We are all conscious of this, that in this transition period,
it has been said again and again, we might be able to rectify a wrong
decision, but I don't want to have that delay, too.
Senator H I C K E N L O O P E R . My experience with you has been very
satisfactory and pleasant. I have a tendency to rely on your statement, but I would feel a lot better about this question of expediting
the administration of OPA if I had not sat here last year in the committee and heard the same general statements: "We know there are
delays. We are prepared to correct them. We will expedite this
thing. We will get the job done."
135
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 19,42
Here we are today with just as much criticism, at least as far as I
can see, with the dilatory things in the administration of OPA, and
the failure to get adjustments out where they are necessary to produce
the goods the public has got to have in order to defeat inflation.
That is the thing that gives me some concern. I have heard these
things for years.
Mr. P O R T E R . I think since the wage-price policy of February 12 was
announced that the OPA and its staff have achieved a remarkable
record in the number of industry-wide adjustments that have been
made and the number of individual adjustments. One thing we are
all trying to do is to push as many of these adjustments back out to the
regional and district offices as we can where there will be finality at
that level, where these people won't have to come to Washington and
both you and me and the rest of us, but can get relief and satisfaction
at the regional and district level.
But I feel I must say this: That a substantial number—it certainly
was not true in your case—but a substantial number of these cases
that do come to Washington could have gotten relief had they been
entitled to it at the district or regional offices. They come to Washington for the sake of appealing from a decision that we later confirm
here in the national office. That in itself causes great difficulty but
I think the record will show that the steel fabricators after the decision
in Big Steel was made—that one of the outstanding jobs in price administration was done. We had meetings with 25 industry committees in some 10 days. In less than a month—or perhaps about 6
weeks—a whole new pricing schedule was gotten out for that basic
industry. While I don't take any personal credit for it, I am proud
I was associated with the group that was able to move with that
amount of expedition on that basic element in our economy.
Senator B A N K H E A D . Mr. Porter, we are all interested in one thing
and that is speed.
Mr. P O R T E R . That is right.
Senator B A N K H E A D . Y O U appear to be familiar with this case that
Senator Hickenlooper handled with you. I think it might be helpful
for us to have a statement from you about the steps that had to be
taken in that case covering the 3 months.
Mr. P O R T E R . I will be delighted to.
Senator B A N K H E A D . Because that might be helpful to us to understand the situation. It is difficult for me to understand why any
case should take three months to go through the bureau.
Senator M U R D O C K . IS it possible, Mr. Porter, that the other 9 5
Senators, 95 colleagues of Senator Hickenlooper, might have had just
as serious problems before you at that time and we were all urging
expedition at the same time?
Mr. P O R T E R . Well, I tell you, sometimes it seems that way, Senator.
I don't know that there is 95.
Senator M U R D O C K . It may seem at times that there are more than
96 Senators?
Mr. P O R T E R . . That is correct.
Senator M U R D O C K . That might, in my opinion, account for some
delay, but I am rather pleasantly shocked that Senator Capehart has
had 99 percent success. I think it would be only fair for Senator
Capehart to tell us what his system is and spread it around among
his colleagues.
136
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 19,42
Senator BANKHEAD. May Mr. Porter answer my question now?
Mr. PORTER. Well, Senator, I would have to make an analysis
and supply it for the record; that is, as to steps 1, 2, 3, and 4, as to
precisely what they w^ere in that particular case.
Senator BANKHEAD. Well, I mean similar cases. I don't mean particularly Senator Hickenlooper's case, but I think it would be helpful
and I am asking you this in a friendly spirit, you have got your problems there and I would like to know something about what they are.
I will ask you, to start with, how many people have you got working
down there?
Mr. PORTER. I think we have in the national office around 4,800.
The price department has 1,500. There is administrative service and
field operations—about 4,300 in the field.
Senator BANKHEAD. Does a case like that start at the bottom, so to
speak, and come on up toward the head office?
Mr. PORTER. Senator, it would depend 'on the circumstances of the
particular case. I doubt if I could generalize. I might ask Mr. Baker
to describe a typical case.
Senator BANKHEAD. If you don't feel prepared to do it now, you can
submit it later.
Mr. PORTER. Very well.
Senator RADCLIFFE. Mr. Porter, the question I have is somewhat
analogous to what Senator Bankhead is asking, in regard to different
steps. What I have in mind is this: Are you finding out that experience is teaching you you can more or less simplify the routine through
which these cases must go? Of course, I realize where you have a case
of special hardship justice requires that you are going to make a careful examination. You cannot give a horseback opinion in regard to
it, but it has seemed to me at times that possibly a study, a detailed
study of what you might call more or less collateral circumstances—
I am speaking from the outside—I am not at all familiar writh your
problem in that case.
M r . PORTER. Y e s .
Senator RADCLIFFE.
In some cases I have thought that the detailed
study of what you might call collateral circumstances had been possibly carried to an extent that would hardly seem to be necessary and
I was hoping as your experience went along in this matter you wrould
either, because you had already made investigations, or reached conclusions which would not require duplication of work, or for the
reason possibly that experience had demonstrated that you would
not have to make your studies as detailed as you did before, so in
that respect you could get into an economy of time.
It seems to me as you move along in this matter you ought to be
able to avoid maybe some of the detailed study you would have to
do otherwise.
Mr. PORTER. We are constantly endeavoring to do that, to simplify
and revise our procedures to the point—well, in the reconversion field
instead of in some instances detailed cost analysis that were required,
we send out and get telegraphic information on a very simple form
and use that as a basis for broad industry action.
Senator RADCLIFFE. And in some cases I take it your detailed
studies will not have to go as far as they did before and you can more
or less assume some things, without being careless at all, assume at
least some facts and some conclusions without as much study being
137 EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 19,42
necessary as was the case in the early days. I am hopeful that is
the case because it seems to me that anything along that line would
lessen the amount of work required and make for expedition.
Mr. P O R T E R . We are constantly attempting to simplify and expedite
our internal procedures to achieve just that objective.
Senator R A D C L I F F E . Of course, we all realize as Senator Murdock
pointed out, you have nearly 600 members of Congress who probably
call on you at the same time for propositions and it is not always easy
to concentrate upon one particular proposition.
Senator M I L L I K I N . Mr. Chairman, I would like to ask Mr. Porter
to give us some idea of what your system is for expediting the conclusion of cases. Let's assume John Doe came in here last January
with an adjustment case. Do you have some master file that shows
the progress in each case, or do you have a corps of expediters that are
examining what is on the desks to see what the progress is? How
does someone at the top know whether a decision is being made except
as I call you up and you say, "Well, what about this bellyache of
Millikin?" and there is a big flurry to find out about my bellyache.
But I am talking about the general administration of the office. Tell
us about John Doe's case, how someone knows it is receiving expeditious attention.
Mr. P O R T E R . Ordinarily when John Doe comes to Washington he
has been through either the district or the regional office, and he is
dissatisfied. We would then advise him and if it is an individual
case in which he is apart from the industry then he goes to the particular branch that is involved and discusses his problem with them.
If a way can be worked out to give him relief under our existing
policies and standards, he is dealt with today. If it cannot be worked
out, then he usually comes up here. But we have on industry actions,
on general rescue types of action a kind of a docketing system and
I get weekly progress reports from the various departments as to the
workloadfand the type of cases they have been handling.
Senator M I L L I K I N . H O W many adjustment cases have you at the
present time?
Mr. P O R T E R . Well, I should say as far as industry-wide cases are
concerned—Mr. Baker could correct me on this if I am wrong—we are
pretty well on top of a number of industry-wide actions.
Senator M I L L I K I N . H O W many actions have you?
Mr. P O R T E R . Since VJ-day there have been—was it 5 2 5 — I had
it in my testimony here—and over 12,000 individual adjustment
cases.
Senator M I L L I K I N . N O W , are you prepared to introduce statistics
giving us the time lag from the time an individual adjustment case
comes to you until the time it is disposed of?
Mr. P O R T E R . We have made in connection with workload statistics
a few studies in connection with the Bureau of the Budget, but in this
transition period, Senator, and particularly since the price policy has
changed, we have shifted to a new procedure. I can't give you
typical cases and all the routing on those cases.
Senator M I L L I K I N . Are you prepared to give us statistics that will
inform us as to how rapidly you are handling these individual adjustment cases?
Mr. P O R T E R . Yes, sir; we can undertake to supply that for the
record.
85721—46—vol. 1
10
138
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 19,42
Senator M I L L I K I N . I think that is very important because it goes
to the heart, perhaps, of a great part of the criticism against your
agency.
The CHAIRMAN, Yes; that is very important. We will be glad to
have it in the record.
(The data referred to, afterwards furnished by Mr. Porter, is as
follows:)
STATEMENT
OF T H E A D M I N I S T R A T O R W I T H R E S P E C T T O P R O C E D U R E S
TO R E D U C E D E L A Y
EMPLOYED
1. Delegations of authority tofieldoffices
During 1945 we increased the number of pricing and adjustment delegations
to field offices by 53 percent. Tftiis means that by January 1, 1946, the field
offices had 53 percent more pricing and adjustment authorities than they had on
January 1, 1945. As a consequence, for instance, field offices are currently
processing between 80 and 90 percent of all individual adjustment applications.
In addition, we have established a continuous review of pricing and adjustment
authorities in the national office with the idea in mind of delegating additional
authorities to field offices. One of the keys to this technique of additional delegation is our tie-up between amount of backlog existing in the national office Price
Branch and the decision to delegate. This calls for a dual approach to the
problem, however, inasmuch as the field office staffs are already overburdened
with work. Our first approach is that of attempting to devise simplified pricing
or adjustment procedures so that the total work load under a particular pricing
or adjustment provision is decreased thereby. It it is not possible to greatly
diminish the work load by such procedures without at the same time weakening
price control over the commodities involved, we then turn our attention toward
the question of delegating that authority to the field offices. It must, of course,
be recognized that there is insufficient price staff in the field offices to enable us
to send additional work load out to them without either sending additional staff
or causing them to diminish their attention to other phases of their responsibilities.
However, it merits attention, since we are continuing to delegate more and more
authority to field offices in order to enable local problems to be handled by local
staffs more quickly. Incidentally, the reinstatement of the slaughter-control
program as a field administered program indicates this trend, inasmuch as when
the slaughter-control program was discontinued last fall it was being handled
primarily by the national office.
2. Establishment of priorities
At periodic intervals field offices are issued a priority program sheet which
lists the regulations and particular provisions in regulations as well as certain
programs to which the field office staffs should give their first and major attention.
Although this does not mean that field offices are thereby relieved of responsibility
for all other price regulations, it does mean that they are given central guidance
as to those regulations and programs which, if handled appropriately, will contribute the most to stabilization. In addition, we have established priority
ratings for different types of adjustment and pricing applications so that field
offices will handle most promptly those cases involving severe hardship, threatened
supply, and low-end goods. This priority rating has been tied in directly with
the handling of applications under our wage-price policy. All field offices have
been instructed to process first applications and cases in which the applicant is
unable -to produce and sell until he receives an order from the OPA. This means
that first attention is not given applications having time limits which therefore
enable the producer or seller to take his requested price unless he has heard from
the OPA to the contrary.
8. Operation under wage-price policy
In order for there to be the most efficient use of staff manpower and, also, so
that industries and individual companies receive prompt price decisions where
wage increases are involved, the national office is giving top priority to the issuance
of industry-wide actions. It is important that the timing of these industry-wide
actions be coordinated closely with the priority system employed by the field
offices in processing their cases. As a consequence, the national office has established a system of biweekly notification of all field offices of industry-wide actions
which are in preparation. The field offices are instructed to refrain from process-
139 EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 19,42
ing individual applications if an industry-wide action is to be taken within 30 days
of the receipt of the individual application. An exception to this rule is made to
allow for the immediate processing of extreme hardship and shortage cases. In
addition to this biweekly issuance, the field offices are notified daily of all priceaction proposals with a brief resume of each proposal.
4. Elimination of backlogs
A system has recently been devised and put into operation requiring each office
to ake prompt and efficient steps in eliminating all cases over 30 days old and to
report monthly the reasons for delay in each case which has not been handled
within a 30-day period. This latter report enables the national office to direct its
attention to the areas in which backlogs have developed for the purpose of clarifying the regulation, improving the field instructions, or simplifying the pricing or
adjustment procedure. Despite the very sharp increase in the number of individual adjustment applications, this backlog elimination program has been in
operation for sufficient period to have shown excellent results.
5. Automatic pricing and adjustment provisions
The national office issued an automatic pricing provision for small manufacturers in the consumer durable goods field and, even though this provision did cut
down on the pricing work load in this field, the results were so highly inflationary
that it was necessary for the coverage of this order to be sharply curtailed. However, it has become the established policy of the agency to make the requirements
for small firms less rigorous and the processing of their applications much simpler.
We have devised an automatic adjustment provision which has not been issued
since industry-wide actions have been taken so promptly after wage patterns have
been established that in general this automatic-adjustment provision may not be
necessary. The purpose of this provision was to set up a simplified and automatic procedure for adjusting the prices of firms within specified small industries
which could not efficiently be handled by industry-wide action. This provision
will be held in abeyance but will be available for immediate use if the situation
warrants it.
6. Decontrol procedure
In order to bring the full knowledge and abilities of our national office and field
office staffs to bear on decontrol actions prior to their being taken, a system has
been established for obtaining field office recommendations on decontrol proposal
without delaying the final decision on the action. In brief, this system calls for a
teletype to be sent to the field offices at the time when the decontrol proposal is
made. Recommendations and objections are received from the field offices in
response to this teletype announcement.
7. Education of field staffs
In order for the field staffs to be in a position to operate promptly and efficiently
on new programs, series of field office meetings continue to be conducted by national office personnel. For instance, at the time of the issuance of the new wageprice policy, top members of the price department staff met in the various field
offices and explained in detail the procedural and policy developments and changes
involved in the new wage-price program. At the same time arrangements were
made for field office executives to meet with and coordinate their thinking and
procedures with Wage Stabilization Board field staffs. This method of maintaining the flexibility and increasing the efficiency of field office staffs is supplemented by explanatory memoranda and price operating instructions.
8. Improved tools
In order to obtain the maximum amount of productive output from the relatively small number of skilled staff members, continued effort is being made to
increase the number of form economic briefs and form legal orders and opinions.
Likewise, effort is being made to obtain the maximum use of form letters where
such letters can handle appropriately the trade problem involved. In addition,
effort is being made to spell out more clearly in regulations the precise types of
minimum information needed on the part of applicants, so that applications when
received can more reasonably be expected to contain sufficient data to permit
processing and thereby eliminate exchange of correspondence between the office
and the applicants. Periodic surveys of field offices are conducted so that we can,
through the experience of field staffs, improve price operating instructions,
eliminate unnecessary data requirements, etc. In order to increase the productivity of field staffs and at the same time increase the uniformity of treatment
140
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 19,42
of applicants, efforts are being made to make more uniform our adjustment and
pricing provision under the various regulations. An outstanding example of this
type of action is that of the general adjustment (general rescue) provision which
establishes a uniform adjustment provision for producers covered by approximately
200 different regulations. Such standardization enables all staff members, both
in the national office and in the field offices, to handle applications more expeditiously and in a more uniform fashion. In order to eliminate the necessity of
various branches in the national office issuing companion actions, treating similarly and concurrently a problem which characterizes various commodity fields,
the national office has relied to an increasing extent on the issuance of supplementary orders which have the force of regulation and cut across the various
organizational lines within the department. This not only results in more uniform
action, but it prevents what otherwise would be a considerable staff assignment
for each of the various portions of the department affected by the action. In
addition, a small but industrious staff is located in the Office of the Deputy for
Price with a major function of expediting urgent field office problems, thereby
increasing the efficiency of both the national office and the field offices by eliminating a considerable portion of the dissipation of time which results from failure
on the part of the agency to act promptly.
9. Tables showing individual cases handled
The first four of the five tables following show the monthly activity during the
year 1945 and the first 2 months of 1946 with respect to individual price adjustment and price authorization applications. In addition, table 5 reflects the number of receipts of price determinations with a time limit filed with OPA during
the same period of time.
The Office of Price Administration has segregated individual price applications
into four types defined as follows:
1. Adjustment.—An application for an adjustment of a present price or pricing
method.
2. Authorization.—An application for authorization of a price or pricing method
where the article may not be sold until such authorization is given.
3. Determination with a time limit.—A report of a price or pricing method which
becomes effective at the expiration of a specified period of time unless disapproved
within that time.
4. Price determinations without a specified time limit.—A report of a price or
pricing method which becomes effective immediately upon filing but subject to
nonretroactive disapproval at any time by the OPA.
In the case of actions 1 and 2, some positive action is required by the Office of
Price Administration before the applicant may sell his article either at the adjusted figure or in the latter instance sell at all. It is these particular types of
cases which are presently the subject of an ardent campaign to eliminate delays
in their pricing. The March figures will reflect some of the results of this campaign and certainly the April figures will give us a clear picture of the improvement.
In the case of price determinations, regardless of whether a time limit is specified
or not, the OPA is equally concerned, but the number of cases pending is not as
significant since price approvals are automatic and production is not hindered.
The number of cases filed under the automatic pricing provision are many times
more numerous than either in the case of adjustments or price authorizations.
Table 1 covering combined activity in the field and national office gives the
number of adjustment or authorization cases received, disposed, or pending for
the year 1945 and the first 2 months of 1946. A total of 106,326 individual
applications for price adjustment or authorization have been received as against
104,474 dispositions constituting 98 percent of the total cases received during
this period. In April 1945 almost 16,000 cases were pending which was gradually
reduced each month to a point in December where only 11,926 cases were pending.
January and February of this year show a slight increase in the pending work
load primarily due to a considerable increase in the number of cases received.
Table 2 summarizes the pending work-load figure of individual adjustment and
pricing authorizations broken down as to the length of time the cases were pending. In the case of adjustment application, it is significant to note that since
April 1945 the number of cases pending over 90 days has been cut down approximately 50 percent, while in the case of price authorizations the figure has remained relatively stable. Tables 3 and 4 are break-downs by field and national
office of table 2.
Table 5 merely indicates the number of price determinations which have been
received each month during 1945 and the first 2 months of 1946. As already
141 EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 19,42
stated, any case which might be pending in this type of action are of little importance since they are automatically approved, usually within a period of 20 to
30 days.
TABLE 1.—Summary of OPA individual adjustment and price authorization activity,
indicating number of cases receivedt disposed, and pending, by month, for year 1945
and first 2 months of 1946
Received
Total
January
February
March
April
May
June
July
August
, September
October,
November
December
7,433
8,924
9,993
11,373
11,121
8,582
9,030
8,816
8,469
7,472
8,257
6,856
1945 total.
January
February
106, 326
me
8,351
8,881
Adjust Authorment ization
2,130
2,780
2,273
4,318
2,807
'1,939
1,950
1,916
1,375
1,582
1, 612
1,407
26, (
1,978
2,056
Pending
Disposed
Adjust- Authorment ization
Total
5,303
6,144
7,720
7,055
8,314
6,643
7,080
6,900
7,094
5,890
6, 645
5,449
5,962
7,622
8,038
9, 638
11,681
10,142
8,984
9,819
9,164
8,439
7,866
7,119
1,593
2,801
2,353
3,598
2,605
2,132
2,596
2,222
1,693
1, 779
1,644
1,468
4,369
4,821
5,685
6,040
9,076
8,010
6,388
7,597
7,471
6,640
6, 222
5,651
80,237
104,474
26, 504
77,970
6, 373
6,825
7,810
7,947
1,948
1,909
5,862
Total
Adjustment
11,626
12,920
13, 340
15,853
15,292
13, 732
13, 778
12, 734
12,039
11,072
11,459
11,196
11, 737
12,670
Source: System for docketing and reporting of individual price actions, chap. 5-0601, OPA Manual.
TABLE 2.-—Summary of OPA individual adjustment and price authorization backlogs
indicating number of cases pending at the end of each month and break-down by
length of time pending
Under 30 days
Total pending
1945
January
February
March
April
May
June
July...
August
September....
October
November.
December.
January
February
1946
*
Authorization
Adjustments
Authorization
Adjustment
11,626
12,920
14, 340
15,853
15,292
13, 732
13, 778
12, 734
12,039
11,072
11,459
11,196
4,256
4,235
4,155
4,841
5,042
4,849
4,203
3,903
3,585
3,368
3, 332
3,271
7,370
8, 685
10,185
11,012
10, 250
8,883
9,575
8,831
8,454
7,704
8,127
7,925
1,506
1,419
1,497
1,400
1, 760
1,235
1,101
1,090
900
1,007
1,062
826
3,208
3,788
5,047
4,940
4,038
3,846
4, 546
4,081
2,940
2,863
3, 739
3, 219
11,737
12,670
3,301
3,447
8,436
9, 223
1,181
1,448
3,740
4,129
Total
142
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 19,42
TABLE 2.—Summary of OPA individual adjustment and price authorization backlogs indicating number of cases pending at the end of each month and break-down
by length of time pending—Continued
60 to 90 days
30 to 60 days
January
February
March
April
May
June...
July.
August
September
October
November
December
January
February
1945
1946
Adjustment
Over 90 days
Adjustments
Authorization
Authorization
828
806
714
861
869
1,025
755
610
693
493
587
731
1,341
1,473
2,020
2,791
1,832
1,665
1,774
1,735
1,626
1, 615
1,342
1,609
447
518
546
558
571
647
512
458
386
413
302
383
1,036
1,125
1,128
1,259
1,538
1,018
940
1,026
1,185
896
812
029
1,475
1,492
1,398
2,022
1,842
1,942
1,835
1,745
1,606
1,455
1, 381
1,331
1,785
2,299
1,990
2,022
2,842
2,354
2,315
1,989
2,703
2,330
2,234
2,168
451
651
1,300
2,291
414
241
1,233
721
1,255
1,107
2,163
2,082
Adjustment
Authorization
TABLE 3.—Summary of national office adjustment and authorization backlogs
indicating number of cases pending at the end of each month and break-down by
length of time pending
Under 30 days
Total pending
Adjustment
Authorization
Adjustment
5,887
6,945
8,209
8,758
7,694
5,649
5,696
4.835
4,141
4,091
4,242
4,297
1,017
1.046
1,189
1,269
1,286
1,327
1,172
1.047
1,107
1,063
1,139
4,870
5, 899
7,088
7,569
6,425
4,363
4,369
3,663
3,094
2,984
3,179
3,158
337
355
411
355
379
308
368
325
283
349
337
299
2,416
2,681
3,675
3,549
2,394
1,856
2,294
1,908
1,379
1,301
1,619
1,428
4,768
5,220
1,169
1,359
3, 599
3,861
387
541
1,783
1,661
Total
1945
January
February
March
April
May
June
July
August
September
October
November
December
1946
January
February...
30 to 60 days
January
February
March
April
May
June
July
August
September
October
November
December
January
February
1945
1946
1,121
Authorization
Over 90 days
60 to 90 days
Adjustment
Authorization
Adjustment
Authorization
Adjustment
Authorization
283
291
209
270
217
286
215
184
194
173
178
252
659
871
1,371
1,917
1,106
733
648
688
569
548
642
538
123
147
208
156
200
149
177
109
110
108
92
126
514
709
786
803
1,046
544
370
370
399
429
278
381
274
253
293
408
473
543
567
554
460
477
456
462
1,281
1,638
1,256
1,300
1,879
1,230
1,057
697
747
706
640
811
157
231
525
1,030
145
102
421
297
480
485
870
873
143
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 19,42
TABLE 4.—Summary of field adjustment and authorization backlogs indicating
number of cases pending at the end of each month and break-down by length of time
pending
Total pending
Total
January
February..
March
April
May
June
July...
August
September
October.
November..
December
January
February
Region I:
October 1945
November 1945
December 1945
January 1946.
February 1946
Region'II:
October 1945
November 1945
December 1945
January 1946
February 1946
Region III:
October 1945
November 1945
December 1945
January 1946
February 1946
Region IV:
October 1945.
November 1945
December 1945
January 1946
February 1946
Region V :
October 1945.
November 1945.
December 1945
January 1946
February 1946
Region VI:
October 1945.
November 1945..
December 1945
January 1946,.
February 1946
Region VII:
October 1945
November 1945.
December 1945
January 1946.
February 1946
Region VIII:
October 1945.
November 1945December 1945.
January 1946February 1946
1945
1946
Adjustment
Under 30 days
Authorization
Adjustment
Authorization
5,739
5,975
6,131
7,095
7,598
8,083
8,082
7,899
7.898
6,981
7,217
6.899
3,239
3,189
3,034
3, 652
3, 773
3, 563
2,876
2,731
2,538
2,261
2,269
2,132
2,500
2,786
3,097
3,443
3,825
4,520
5,206
5,168
5,360
4,720
4,948
4,767
1,169
1,064
1,086
1,045
1, 381
927
733
765
617
658
725
527
792
1,107
1,372
1,391
1,644
1,990
2,252
2,173
1.561
1.562
6,969
7,450
2,132
2,088
4,837
5, 362
794
907
1,957
2,468
310
358
194
205
180
155
194
292
311
219
155
164
96
66
45
71
79
71
101
78
618
581
2,253
2,237
2,456
2,845
3,300
104
169
91
149
222
637
865
807
1,177
1,413
644
619
599
574
574
383
387
384
367
386
261
232
215
207
185
85
67
72
73
119
83
130
70
80
78
790
691
521
440
350
294
249
195
218
176
496
442
326
222
174
72
81
55
99
73
155
133
79
73
72
361
295
276
342
381
138
147
123
160
153
223
148
153
182
228
70
73
54
95
154
85
101
138
154
638
579
540
544
519
372
316
317
321
310
266
263
223
223
209
148
120
113
161
156
144
159
114
156
182
47
40
135
30
27
38
29
40
17
13
97
37
31
18
13
21
2.1
25
91
15
260
320
314
294
282
912
1,302
1,078
966
1.071
65
136
76
125
147
311
638
451
252
464
2.843
2,855
3,037
3,433
3.844
66
71
1,172
1, 622
1,392
1,260
1,353
2,120
1,791
66
70
144
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 19,42
TABLE 4.—Summary of field adjustment and authorization backlogs indicating
number of cases pending at the end of each month and break-down by length of
time pending—Continued
30 to 60 days
January
February
March
April
May
June
July
August
September
October
November
December
1945
1946
January
February
Region I.October 1945
November 1945
December 1945
January 1946
February 1946
Region II:
October 1945
November 1945
December 1945
January 1946
February 1946
Region III:
October 1945.
November 1945
December 1945
January 1946
February 1946
Region I V.October 1945
November 1945
December 1945
January 1946
February 1946
Region V.October 1945
November 1945
December 1945
January 1946
February 1946
Region V I :
October 1945
November 1945
December 1945
January 1946
February 1946
Region V I I :
October 1945
November 1945
December 1945
January 1946
February 1946
Region V I I I :
October 1945
November 1945December 1945
January 1946
February 1946
60 to 90 days
Over 90 days
Adjustment
Authorization
Adjustment
Authorization
Adjustment
545
515
505
591
652
739
540
426
499
320
409
479
682
602
649
874
726
932
1,126
1,047
1,057
1,067
700
1,071
324
371
338
402
371
498
335
349
276
305
210
257
522
416
342
456
492
474
570
656
786
467
534
548
1,201
1,239
1,105
1,614
1,369
1,399
1, 268
1,191
1,146
978
925
504
661
734
722
963
1,124
1,258
1,292
1,956
1,624
1,594
1, 357
294
420
775
1,261
812
424
775
622
1,293
1,209
33
70
53
27
58
28
52
33
22
20
63
15
25
14
20
45
42
50
34
42
130
143
83
53
47
65
55
118
61
772
322
646
443
955
159
368
296
500
290
349
321
320
210
682
707
725
642
25
28
74
16
45
42
13
14
55
3
207
202
221
200
199
111
61
57
56
59
56
84
39
24
34
32
41
55
25
3
82
44
253
184
153
100
65
27
11
6
4
11
31
24
22
15
15
21
24
10
4
4
33
15
25
19
11
64
79
69
45
41
38
52
34
13
4
1
1
4
5
5
2
2
3
3
2
2
110
70
127
195
86
119
125
101
77
69
383
445
311
340
4
20
1
108
149
189
179
135
Authorization
2
145 EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 19,42
TABLE 5.—Monthly receipts of price determinations with a time limit during year
1945 and first 2 months of 19J+6
Received
Received
January.
February
March
April
May...
June
July
August
September
1945
Total
National
office
8, 329
7,823
10,238
8, 725
11,184
11, 751
9, 392
8, 235
6, 614
4,496
3,651
4,122
4,024
3,883
4,047
4,173
3, 554
2,989
Field
4,172
6,116
4, 701
7,301
7, 704
5, 219
4,681
3, 625
1945
October
November.
December
1945 total
1946
February
Total
National
office
10,194
11,140
8,041
4,139
3,783
3, 607
6,055
7,357
4,434
111, 666
46, 468
65,198
8,896
8,248
4,281
4,437
4,615
3,811
Field
Senator M I L L I K I N . N O W , let me get back to the mechanics of this
thing again. What are your mechanical controls for expediting
adjustment cases? Let us take a typical adjustment case and run it
through your department for me.
Mr. P O R T E R . Well, I think at the national office quite naturally
we attempt to concentrate on industry-wide actions for the entire area
Senator M I L L I K I N . I cannot understand why that would not receive
pretty fast treatment because you have organized trade associations
and attorneys that are in on your back all the time watching everyday's program. I am talking about individual cases. John Doe
mails in an appeal relating to some kind of adjustment. What is
your system whereby you know, or someone representing you,
knows that this man is receiving the fastest possible treatment you
can give him?
Mr. P O R T E R . Well, the various departments have administrative
orders and directions as to the amount of time that should be devoted
to a particular case.
Now, since this new wage-price policy we have neglected, I am sure,
a number of individual matters that are on the desks of price executives because they have been working on these broad industry-wide
actions which have taken precedence. The particular case is pretty
hard to put into a category—an individual case that comes to Washington—because our whole effort is to have these adjustments made
out in the field and of 12,000 individual price adjustments that have
been made since VJ-day, there were approximately 80 percent of these
handled by the field office.
Senator M I L L I K E N . In other words there would be a couple of
thousand handled here?
Mr. P O R T E R . That is right.
Senator M I L L I K I N . I am still keeping my mind on what is handled
here. I would like to know your mechanics. I would like to have
a description of your mechanics whereby you know or someone acting
for you knows that John Doe's case is receiving the utmost expedition.
Mr. P O R T E R . I would like for Mr. Baker who is in charge of the
price department to comment on the mechanics in his department.
Senator M I L L I K I N . It would be very helpful if we had some testimony.
146
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 19,42
Mr. B A K E R . Senator, we have in the national office in the price
department a docketing system. When this application comes in it
is recorded and docketed and then is assigned to the division, branch,
or section which is responsible for that commodity or commodities.
When it goes down into the section it is docketed there as part of
their workload and a record is maintained of the number of days that
each item remains in the section—each application.
The control is obtained by the section head and branch chief. The
section head weekly reviews with his adjustment people their older
cases. He doesn't review the current cases unless they are brought
up to date, but cases more than, let us say, 60 days' old—all the old
cases are reviewed to see why they are being held up.
Senator M I L L I K I N . What is your time—when does that factor come
up on a case?
Mr. B A K E R . That varies in the individual case. Most of our delays are due to waiting for additional information which was not submitted the first time. One of the faults of our operation consists in
waiting to ask for that information instead of getting it in the first
place. One effort that is being made now is to be sure that if additional data is required it is asked for at once. But there is no absolute time which is uniform for the department as to when a case begins
to get under strong pressure from the branch chief.
That depends somewhat on how much the backlog is and how many
people are available to handle it.
Senator M I L L I K I N . Does the branch chief have men or ladies whose
duties are to keep a constant check on the time element in these cases?
Mr. B A K E R . There are two ways it is handled. One is in some
areas we have adjustment sections with a section head responsible for
all adjustments in that branch. It is his duty to keep track of the
progress of the adjustment and to report weekly to the branch chief
his progress.
Senator M I L L I K I N . I mean if I come over this afternoon and say,
"Well, now, tell me about the case of John Doe. It was brought in
here last January." Have you a quick and ready way of telling me
what the present status of it is and why it has taken from January to
the middle of April to have it in its present status?
Mr. B A K E R . We can tell you those facts. They may not, however,
be complimentary to the organization, but we do know what has
happened to it, when additional information was requested, and so
forth.
Senator M I L L I K I N . I have had several persons who have been
employed in the OPA tell me that the delay of applications simply
being on desks unattended to has been a terrible thing. So I am
trying to figure out what you are doing about it.
Mr. B A K E R . That is a very good point, Senator. For example,
we have a training branch. Its duties are to improve work methods.
Recently an analysis of an individual adjustment operation disclosed
187 separate steps in making that adjustment. During that period
they measured the length of time in minutes that it rested on somebody's desk. It was a shocking figure.
Senator B A N K H E A D . That is the thing I had in mind when I was
asking Mr. Porter about it.
Mr. B A K E R . The result of that was that 1 8 7 steps were reduced to
about 78, with which we are not yet satisfied, but at least that is a
147
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 19,42
tremendous help. The time of sitting on desks, cutting down excessive clearances, excessive reviews by people, the physical arrangement of desks, and so forth, there is a great deal that still has to be
done along that line.
Senator M I L L I K I N . What are you going to do about cutting down
the lack of attention in those cases?
Mr. B A K E R . That, of course, is largely a question of manpower.
The best solution now, I think, is further decentralization, as Mr.
Porter has said. Our principal trouble is in the apparel branch where
new sellers' applications and adjustments constitute a large backlog.
There we will do well to move out into the regions and districts.
Senator B A N K H E A D . I think that would be a tremendous improvement. You have got your own appointees to pass on it.
Senator M I L L I K I N . What is your master central control over the
time element at the present time?
Mr. B A K E R . The control consists of a tabulation of cases by agents.
In other words, there are X cases over 30 days old in such and such'a
section. That comes up to my own office for inspection once a month.
I then call on the division branch chiefs for consultation on thoses
cases. Then those cases go through and they analyze the reasons for
delay and attempt to improve them. It would be idle for me to say
the system works well and doesn't need improvement. It does.
Senator M I L L I K I N . At the present time when would John Doe's
case come to the top; say it was filed in January?
Mr. B A K E R . His case if filed in January would come up on the first
report of cases over 30 days old and it would stay in its appropriate
category until the case was closed out.
Senator M I L L I K I N . Are you staffed at the top so that you can
review these cases and get them closed out?
Mr. B A K E R . NO, sir; we are not. We are unable to do it, and must
rely largely on periodic spot checks rather than any personal handling
by Mr. Porter or myself.
Senator M I L L I K I N . Are you under any considerable handicap in not
having the requisite staff?
Mr. B A K E R . I think the answer is a better system at the top and
better people at the bottom, good people in the boiler room doing the
work with adequate spot checking and good control at intermediate
stages such as branch and division chiefs.
Senator M I L L I K I N . D O these division heads have an adequate expediting force?
Mr. B A K E R . Not entirely, sir. I think that the administration of
our divisions from an administrative standpoint rather than from a
pricing standpoint can stand considerable improvement; that some
better control, as you point out, at division and branch levels is
indicated.
Senator M I L L I K I N . What do you want Congress to do to help you
out on that?
Mr. P O R T E R . I can answer that. More appropriations.
Senator M I L L I K I N . For that purpose?
Mr. P O R T E R . For that specific purpose. I think probably there is
likewise this question on the general personnel front which is a matter
of deep concern to all of us. That is the turn-over that we have at
this time, not only in our district and regional offices, but the separation in the national office, because the act is beginning to expire, they
148
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 19,42
look upon it not as a permanent thing. Some of them that have been
there 3 or 4 years are looking for more permanent positions.
Senator M I L L I K I N . N O W , what kind of controls do you exercise
over your regional organizations to see that they are expediting things?
Mr. P O R T E R . There is constantly liaison between the national office
and the field. As a matter of fact, when I get through I am going to
take a midnight plane to Memphis and meet there tomorrow for an
interchange of information as to a specific price adjustment. In the
field office there are reporting requirements to the national office. In
addition to this reporting system Mr. Baker has additional direct
control from his price executives.
Senator M I L L I K E N . How do you maintain control over your regions
to see that individual cases are being handled promptly in the regions?
Mr. B A K E R . The regional picture is infinitely better than the national picture on individual adjustments. We have not therefore
had to have the close supervision required in the national office,
in general, with one outstanding exception which is our New York
district office, New York-Manha'ttan, particularly there in connection
with apparel items. With that exception our field offices generally
don't have any old cases in their operation.
Senator M I L L I K E N . Do they give periodic reports to you on the
time element involved in every case?
Mr. B A K E R . N O ; they don't do that. We merely know the number
of cases more than 30 days old which are pending. When that number
rises above a nominal figure the regional price executive must report
the reasons for it. I would say our record has been to me surprisinglygood. That leads Mr. Porter and me to think that that is an additional argument for further decentralization of our overworked staff
here.
Senator M I L L I K I N . May I ask, if you can do it, that you give us the
figures on the time lags involved in each case?
Mr. P O R T E R . Yes. We will undertake to do that.
Senator M I L L I K I N . I think it might be helpful for you in getting
some help.
The C H A I R M A N . That may be inserted in the record.
(The figures referred to are the same as furnished on p. 141.)
Senator B A N K H E A D . Mr. Porter, I wanted to ask you to state
first—as a member of the Appropriations Committee, I don't recall
any occasions when Congress refused to give the OPA such appropriations as it urged. Have there been such instances?
Mr. P O R T E R . Senator, as I review the history of it, O P A was cut
down for fiscal '46 and you remember we had to come back for a
deficiency appropriation.
Senator B A N K H E A D . Was that deficiency the result of a reduction
in the original request, or was it as a result of new programs?
Mr. P O R T E R . It was a combination of both. I have no criticism to
make of the appropriations policy of Congress, with the possible
exception on enforcements. We are now preparing our budget estimates for fiscal 1947. These factors that Senator Millikin has been
talking about will be included in our presentation.
Senator B A N K H E A D . I have supported, so far as I can recall, every
appropriation that has been requested by OPA.
Mr. P O R T E R . I know you have.
Senator B A N K H E A D : I believe in keeping it if we oan.
149 EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 19,42
Senator R A D C L I F F E . Mr. Porter, the more you decentralize the
more necessity, of course, there is, that you should have, we will say,
more competent people and more of them in these regional offices.
Mr. P O R T E R . That is correct.
Senator R A D C L I F F E . Are you having any serious difficulty in keeping and maintaining a high grade of executives which would be necessary to carry on the decentralization policy such as you have just
referred to?
Mr. P O R T E R . I might put it this way: It has been my observation
in the 6 weeks that I have been there—I have covered four of the
eight regions—that the quality of personnel at the top level is very
gratifyingly high. We have a number of people who have been with
this program in top policy-making positions in the regional offices
and the district offices who have stayed there just as a matter of
personal patriotism and at a sacrifice of their own business interests.
Senator R A D C L I F F E . SO you think you have, substantially speaking, sufficiently competent people to carry out the decentralization
policy to which you referred?
Mr. P O R T E R . I hope we can get them—a number of them are quite
restless to get back to their own businesses or to get in a permanent
line of activity. It is always a continuing problem.
Senator R A D C L I F F E . D O you have many employees seeking transfers to permanent agencies due to the fact that OPA is regarded as a
temporary proposition?
Mr. P O R T E R . I would put it this way, Senator: I say this in all
deference
Senator R A D C L I F F E . I am just asking about the problem you have
got.
Mr. P O R T E R . With all deference to the necessary and inherent
delays we have had in getting our legislation, that as time goes on it is
going to become one of our most serious problems because if we get up
to May and June you will find a number of people that have been with
this program for a long time will start looking for new opportunities
and you can hardly blame them.
Senator R A D C L I F F E . N O ; I would not blame them.
Senator H I C K E N L O O P E R . Mr. Chairman, I would like to ask Mr.
Porter a question.
I have been making some inquiries recently and the best information
I can get is that price control during the last war was handled by a
total personnel of 250 people. Our difficulties occurred when we took
off price control immediately upon the end of the war. Now I
believe OPA got up to some 64,000 people in price control in this war.
We still have somewhere in that neighborhood on the total pay roll of
OPA today.
Now, here is another peculiar thing: When we took off price
controls after the last war we filled the pipe line of consumer demands
in about a year's time. At the end of about a year following the war,
maybe 14 months, consumers' goods were such a drug on the market
that they at least contributed to a substantial slump in the economic
curve at that time. The war has been over in Germany a year. The
war has been over in Japan for 9 or 10 months—since last August—
yet we have at this late date under a rigid price-control system a
tremendous shortage in many lines of merchandise, some of which,
150
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 19,42
as in cotton textiles, are lines in which the supply of raw material is
not short at all. In fact, we have a surplus, I believe.
Now, is it reasonable to say that the bottlenecks that have been
established by OPA price control have contributed directly to that
shortage that we face today, especially in those lines where the raw
material is in a long position?
Mr. P O R T E R . I think the answer probably, Senator, is taking a
look at the production figures and comparing them with some representative period. I would be the last one to say that at some stage
the price policy has not been an impediment to production. Our
job is to remove these impediments and at the same time do it in a
way that is consistent with the stabilization of the over-all picture.
Senator H I C K E N L O O P E R . But the point still remains—I am not
using this as an argument to remove price controls—I don't mean that.
I would rather see reasonable price control in this period of transition,
but we did fill the demand with our industrial set-up after the last
war in, say, 14 months, roughly.
Here we have gone with a much more ramified industrial plant in
this war, a much more highly developed production plant, and we are
struggling along with a very unsatisfactory supply of needed consumers' goods at this time. It seems to me that it follows if you run
through this situation that while in certain lines we do have production—I believe you still have price controls on oil, do you not? Someone wrote me this morning and said that you had.
Mr. P O R T E R . That is correct.
Senator H I C K E N L O O P E R . I believe there is a surplus of oil.
Mr. P O R T E R . There is no shortage of crude oil. There is a shortage
of certain residual fuel-oil products. No one uses crude oil. It is
your heating oil and your low distillates, particularly, your heavy
bunker oil for the Navy and War Shipping Administration that is
very much out of balance.
Senator H I C K E N L O O P E R . I understand that there is plenty of gasoline for everybody that wants it.
Mr. P O R T E R . Your gasoline is sloshing over the tanks.
Senator H I C K E N L O O P E R . Well, what I started to say is this: The
thing that bothers me about this program is that in a comparable
period I don't believe we have made anywhere near the progress in
producing consumer goods with a much more ramified production
system than we had after the last war.
Mr. P O R T E R . I think there are probably two answers to that question. One is that the demand in this postwar year is much greater
for all lines of consumer goods and many products than it was after
the last war.
Secondly, our production machinery, our industrial plant, was not
converted in World War I to anywhere near the extent it was this
time. So you have those two factors that I think distinguish the
existing situtation from the one a quarter of a century ago.
Senator H I C K E N L O O P E R . Well, you may be right, but my impression
is from the letters I get that everybody that had a plant to produce
stuff converted way last fall. The problem of conversion was no
insurmountable problem at that time. It was comparatively easy
because they had gone into war work that was reasonably adaptable
to peacetime work. Therefore, that was not a very big problem
Mr. P O R T E R . I think there is also the question of backlog.
Obviously they did reconvert promptly back to civilian production,
151
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 19,42
but as distinguished from the last war there is this backlog. There
has been relatively little production of consumer goods in certain
categories during the past 4 years. So you had that accumulated
demand. During World War I many lines continued to produce.
Senator H I C K E N L O O P E R . But at the same time we get letters every
day from people that say we want to produce and could produce, but
we have a pricing system that causes us to sell at a loss. I have a
letter here that I justreceived this morning. I shall not burden you
with it
Mr. P O R T E R . Senator, I want to get all of this.
Senator H I C K E N L O O P E R . From a man who outlines a number of
things. He refers to the price regulations on a cheap quality of cotton
goods. He refers to the sock manufacturer that is only making luxury
socks now because he cannot get a price on the cheaper socks that
would enable him to produce at cost. This man outlines 10 or 15
different companies that are not producing consumers' goods today
in a moderately priced line of merchandise, simply because they
cannot get a price out of it to cover the cost of production, and the
plant has just quit producing.
Mr. P O R T E R . Well, we come back to the fact that on your production figures the story is still very encouraging, when we have got
52,000,000 people at work. On any specific item the story indicates
from month to month your production levels are much higher than
they were in any previous peacetime period. There are those individual eases, to be sure, and those are the ones if you will turn them
over to us we will attempt to go to the bottom of them.
Senator H I C K E N L O O P E R . This particular letter is not a letter to
me. These individuals wrote this letter to a man compiling information that he had on these particular companies. But it seems to
me that this tremendous volume of employment that OPA has found
necessary to have in this war, a lot of it, has been not only a waste
of money, but it has resulted in greatly slowing down production in
this country rather than expediting it.
Mr. P O R T E R . Y O U can take it item by item. We have been talking about textiles here. The Federal trade index of production,
which is based on units of production, not upon dollar value, is 56
points above the 1935-39 average for February.
Senator H I C K E N L O O P E R . I don't think the industrial plant in this
country was producing at capacity at that time.
Mr. P O R T E R . This is February 1946, and it is above 1941, which
was 52.
Well, Senator, shall I proceed with my statement?
T h e CHAIRMAN. Y e s .
Mr. P O R T E R . O P A has
met the problem of the manufacturer who
could get low-priced fabrics by exempting from MAP merchandise
below specified levels. It has also set tolerances above average price
levels to protect manufacturers from intervening cost increases.
OPA channeling programs have been recently extended to direct
more production into essential low-cost fabrics.
Evidence that most manufacturers can ahd do comply with garment MAP is accumulating, despite a few notorious cases of violation. Third-quarter data showed that " surcharges"—that is, sales
above MAP—totaled only one-half of 1 percent of sales volume.
The fourth-quarter figures, though incomplete, are still better.
152
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 19,42
Neither MAP nor any other regulation can bring limited supply into
balance with a vastly expanded demand. We have a great deficit in
production to make up. To go back to those men's shirts, we made 13
million dozen in 1939 and then there was no backlog of demand to
meet. In 1945, because of wartime shortages of materials only 4}{
million dozen dress shirts and 2% million dozen sport shirts were produced. Now, with a CPA program channeling cotton fabric to dress
shirts, supply is improving, but patience and a little darning will be
necessary before a balance can be reached. For men's suits, the same
problem exists in even more extreme form.
Senator H I C K E N L O O P E R . Mr. Chairman, may I ask how many
men's shirts are in process of completion now, on the average, at this
time? I mean, what is the production?
Mr. P O R T E R . I will have to get that C P A report that was put out
yesterday, Senator. The figure is still not up as high as we would like
to see it, but it still shows a gradually accelerating trend.
Present production is now at an annual rate of 15 million suits, but
the backlog of demand is estimated at between 35 and 40 million.
Senator H I C K E N L O O P E R . What was the production rate in, let us
say, 1940, of men's suits?
Mr. P O R T E R . Twenty million, Senator Capehart says. My associate says the peak was 21,000,000.
Senator H I C K E N L O O P E R . Twenty-one million annually?
M r . PORTER. Y e s .
Senator H I C K E N L O O P E R .
SO that we are now producing at the rate
of 15,000,000?
Mr. P O R T E R . That is correct.
Senator H I C K E N L O O P E R . At the rate of 6,000,000 short of prewar
production?
Mr. P O R T E R . That is my understanding.
The women's hosiery shortage is less acute. In January 1946,
nylon production was running at the rate of 25,000,000 dozen, more
than twice the peak rate of 1941. Total production of hosiery, including rayons, is at a 41,000,000 dozen rate, close to the peak of
44,000,000 in 1939. However, after an annual production of only
35,000,000 dozen in 1945, it will take some time to eliminate the backlog.
The nylon queues—sometimes degenerating into scrimmages, are
clear evidence of the inadequacy of even peak production to satisfy
pent-up demand.
In the face of shortages like these it is obvious that the result of
eliminating MAP would be a resumption of the trend toward higher
and higher priced apparel. Our estimate is that this would add well
over a billion dollars to the consumers' annual clothing bill. This
fact has been almost entirely obscured by the sustained drive which
the garment industry, in alliance with retail dry goods associations,
has waged against MAP. Consequently, I hope that this committee
will subject this issue to the most searching examination.
Lumber and building materials: No committee of the Congress is
more familiar than yours with the desperate urgency of the need for
more lumber and building materials to meet the requirements of the
housing program. If you would believe some of the spokesmen for
these industries, you would assume that OPA's position in this crisis
was one of obstruction, or at best, indifference.
153
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 19,42
Senator HICKENLOOPER. Mr. Chairman, I would like to interrupt
again. The time is late. I hate to do it, but I would like to ask
Mr. Porter again, for instance, about this clothing and other production
records here.
Now the peak production before the war, let us take again suits,
21,000,000, or hosiery at the rate of 41,000,000, and the peak in 1939
was 44,000,000. We have several million men coming back from the
armed services, most of whom will have abnormal demands for consumer clothes. Yet we were producing some 21,000,000 suits prior
to the war. How long at this rate is it going to take us before we
can get back not only to production of the abnormal demand for
men's clothing, but to pick up the backlog on men's clothing?
Mr. P O R T E R . I would like to have Mr. Levitties, who has been
head of our consumers' good, who is familiar in detail with these
statistics, to comment on that.
Senator HICKENLOOPER. I think that would be important in knowing
how long OPA would have to continue.
Mr. L E V I T T I E S . My comment on that is that the Senate Small
Business Committee went into this in great detail several months
ago. The industry contends that it can produce 28,000,000 suits a
year once they have the fabric available. The fabrics are being produced in increasing quantities, to enable the suit manufacturers to
produce 28 million suits a year.
Now, this current demand that Mr. Porter quoted a moment ago
of 35 or 40 million suits takes into account inventory replenishment as
well as current demand and it reflects all of the needs of the returning
veterans in that 35 million. The guess on the part of the industry
that within a period of a year and a half inventories should be replenished to a point where it can meet the demand.
Senator H I C K E N L O O P E R . Well, now, is that the case in connection
with hosiery and cotton goods?
Mr. L E V I T T I E S . Well, in cotton textiles you have a different situation. In cotton textiles the current production is in excess of—or
just about what it was in 1939. Current demand, however, is far in
excess of that. Now, how soon the cotton textile industry can produce enough cotton textiles is something I am not prepared to say. I
don't know, and I don't believe the industry knows.
Senator H I C K E N L O O P E R . IS the cotton textile industry producing at
maximum capacity today?
Mr. L E V I T T I E S . It is producing at maximum capacity on a single
shift and some mills on a double shift. It is not producing at maximum capacity as it did during 1942 when they were operating three
shifts. It is my opinion that the measure of difficulty there is the
nonavailability of sufficient manpower to run a third shift, rather
than a lack of desire on the part of the mills to use a third shift.
Mr. P O R T E R . We think it is a labor problem much more than it is
a price problem, Senator. Does that answer your question?
Senator H I C K E N L O O P E R . Yes. I think it is an important element
as to how long it is going to take us to catch up with this backlog,
with this demand, a portion of which has been created by shortage in
the last few years.
Mr. P O R T E R . T O get back to lumber and building material, let me
state OPA's position broadly. We do not propose to make the
veteran pay one bit more for the house he builds than is necessary to
85721—46—vol. 1
11
154
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 19,42
provide him as quickly as possible with the materials and services he
requires for that purpose. We are not going to be stampeded into
making price increases in situations where bottlenecks of manpower or
materials, rather than price, limit the expansion of supply. But we
have repeatedly authorized, and will continue to authorize, price
increases for lumber and building materials on the basis of evidence
that price ceilings are standing in the way of increased output.
Here are the facts. Lumber production, after reaching a peak in
1941-42, declined steadily during the war because of loss of manpower,
equipment difficulties and decreased availability of stumpages.
These factors caused costs to rise and operations to decline in efficiency. Many price increases w^ere granted, so that lumber prices today are more than 75 percent above August 1939 and 25 percent above
1941.
Since VJ-day .many actions have been taken to improve lumber
production. On the price side numerous adjustments have been made
to remove price impediments to expanded output. Some of the principal price increases since August 15, 1945
Senator HICKENLOOPER. Mr. Chairman, in this lumber business, I
am told—I haven't any information that is too accurate on the whole
lumber situation, except when they come from other sections of the
country, because we do not have any lumber interests in our State of
this type, but I am told that one of the difficulties today that would
contribute to an increased price of lumber is that OPA is still maintaining an unwarrantedly high price on rough lumber, on lumber that
is not kiln dried, and is still maintaining a price below the cost of the
production on millwork, such as floorirjg and house siding and all the
various other things that go into home constiuction.
Mr. P O R T E R . Well, Senator, I have heard that criticism from a
number of sources and have made efforts personally to check into it.
It was true that during the war for cantonment construction and for
military purposes price incentives were given certain types of construction that were anomalous to peacetime civilian requirements.
We have moved as rapidly as we can to straighten these out and put
the incentive and the emphasis in line with the requirements of the
housing program.
Senator HICKENLOOPER. In other wTords, you used a price policy
to produce the type of lumber that was needed for the war effort?
Mr. P O R T E R . Corerct.
Senator HICKENLOOPER. And to discourage the production of
lumber you didn't need?
Mr. PORTER. Correct. Now we have undertaken to reverse that.
Senator HICKENLOOPER. What have you done to reduce the price
of certain lumber that should be selling at $40 a thousand, and has
been selling for $70 a thousand? Have you reduced that price?
Mr. PORTER. I would like for Mr. Holder who has had considerable
experience in that field to comment specifically on that item.
Senator HICKENLOOPER. I will include another one in the question,
then. What have you done to increase the price of house flooring
and siding and sheathing and millwwk that, at least as far as I can
understand, was intentionally and very properly during the war put
at a discouragingly low figure to discourage the production? Have
you done anything to increase these?
Mr. H O L D E R . We certainly have.
155
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 19,42
Senator H I C K E N L O O P E R . I am not saying you have not. I just
don't know.
Mr. H O L D E R . I would like to make this statement: To the best of
our knowledge, working with CPA and working with Mr. Wyatt's
office, most required adjustments have been completed and were completed some time ago.
Senator H I C K E N L O O P E R . Just give me the details. I would rather
not just have conclusions.
Mr. H O L D E R . First of all, in the case of southern pine siding, and
similar pine items, those adjustments were completed last November
and were disclosed at that time.
Senator H I C K E N L O O P E R . What price adjustments were made? I
mean how much a thousand?
Mr. H O L D E R . At that time we granted an over-all increase of $ 2 . 2 5
a thousand on finished lumber. We subsequently gave $ 3 . 2 5 a
thousand in February, a total of $ 5 . 5 0 to the end of February, or 1 2
percent.
Senator H I C K E N L O O P E R . Y O U say on finished lumber. Does that
include house siding and flooring?
M r . HOLDER. Y e s .
Senator H I C K E N L O O P E R . What about
Mr. H O L D E R . Millwork, I believe an
millwork?
increase has been under con-
sideration.
Senator H I C K E N L O O P E R . There has been an increase in the price of
millwork?
Mr. H O L D E R . Yes, there has been; but I will have to get the details
on that.
Senator H I C K N E L O O P E R . I had a letter from a mill company here
the other day. I mentioned it to the committee. They said that on
doors that would normally sell for around $4, the black market is
paying $10 or $15 for those doors. If the milling company could
get just a little bit of an increase so that they could afford to make
the doors in quantities that they would break the black market.
People would probably have to pay $5 for a door, but they are now
paying $10 or $15 in the black market.
Mr. P O R T E R . I think Mr. Riley could tell you about that.
Mr. R I L E Y . The millwork price about a week ago went up about 18
percent. Doors went up more than 25 percent per door.
Senator H I C K E N L O O P E R . Well, what I have in this report is some
3 or 4 weeks old. I don't know just how long ago it was complained
of. They simply couldn't make the doors.
Mr. P O R T E R . I would like to say this at this point in connection
with the housing program. We have organized at OPA a building
material division of which Mr. Riley, who has had long practical
experience in this field, has come down as director and he and his staff
are giving full attention to the question of the price structure you have
mentioned.
Senator HICKENLOOPER. A lumber purchaser told me some 3 weeks
ago—as I say, I have no first-hand knowledge of this. We don't have
a lumber industry of that kind in our State, but he purchases a lot of
lumber and he said we are purchasing and selling rough lumber today
at $70 a thousand that should not be over $40 at the outside, and he
said we can do it. He said on the contrary we are held below the cost
of production on a lot of stuff. So, he says, we are producing rough
156
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 19,42
lumber, that is our chief business, it is the only thing we can produce
and make a profit on.
He said the price of that lumber ought to be drastically reduced.
I don't know. I don't even recall the name of his company now, but
I know he was president of a large lumber company. I want to know
what has been done on the readjustment of this rough lumber.
Mr. HOLDER. I would guess about the Iowa producer about whom
you are speaking
Senator HICKENLOOPER. No; he is not an Iowa producer.
Mr. HOLDER. In Douglas fir we went further than adjusting prices
in helping remove inequities and getting what they needed. During
the war what they needed mostly was large green timbers. A substantial price reduction 011 green lumber was announced on February
II), over 2 months ago. Douglas fir is No. 2 in importance for construction.
Senator HICKENLOOPER. This is in the nature of a rumor to me. I
don't know anything about it, but that statement was made and I
wanted to inquire about it.
Mr. H O L D E R . Your No. 3 species for construction is western pine.
We announced some 3 or 4 weeks back a price increase for all types
of western-pine lumber. After discussing the matter with CPA,
with Mr. Wyatt and people in the industry, we reached the conclusion
that the prices were reasonably in balance and we would not need to
adjust internal price relationships further. So we put the 11-percent
price increase in effect right straight across the board.
Mr. PORTER. Some of the principal price increases Mr. Holder was
referring to are contained in this table which I will ask the reporter to
copy into the record and will not read.
The CHAIRMAN. That may be done.
(The table is as follows:)
Percent
increase
Southern pine
Same (for small mills)
Yellow cypress
Douglas
fir
Northern hardwood and softwood.
12
16
7
4
4
Percent
increase
Hardwood
flooring
Southern hardwood
Appalachian hardwood
Western pine
Red-cedar shingles
10
7
8
11
16
Mr. PORTER. In a number of these afod other actions, price relationships have been rearranged to remove premiums on grades and sizes
which had been needed by the armed forces and to increase prices on
those required for home building. Direct mill wholesalers have been
encouraged to serve small retailers by the grant of a mark-up over
mill ceilings.
But price has by no means been the only problem of the lumber
industry. There are still substantial manpower shortages in some
areas, equipment problems, stumpage shortages, and until recently
labor-management difficulties. The weather this winter was the
worst in years.
I am happy to report, however, that the picture in lumber production has become much brighter in recent weeks and the outlook is
very encouraging. In February, despite many handicaps, national
lumber production, adjusted seasonally, was running at a rate of
29 billion feet. This compares with anticipated output of 30 billion
this year—far above the prewar average—and a maximum potential
under the most favorable circumstances of 32 billion this year.
157 EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 19,42
Senator H I C K E N L O O P E R . That conflicts directly with the Wyatt
statement here that their potential was 40 billion a year.
Mr. P O R T E R . These are figures we have taken from the industry
and CPA. I didn't see Mr. Wyatt's figures.
Senator H I C K E N L O O P E R . Well, I am not disputing your statement.
Mr. P O R T E R . Well, is there a conflict?
Senator H I C K E N L O O P E R . I distinctly remember that he said, that
the potential production capacity of this country—that is in the
housing program—was 40 billion and we had produced 36 billion.
Mr. P O R T E R . I would like to check that, Senator.
Mr. H O L D E R . May I comment on that?
Senator H I C K E N L O O P E R . I just want to know who is right.
Mr. H O L D E R . Perhaps I can clarify it. The figure of nearly 4 0
billion is a capacity figure for 1941 and 1942. There is a production
capacity, a milling capacity of that amount. The figure of 32 billion
is about the production estimate of the Forest Service for 1946. Recently at hearings in the Senate they made the statement that the
available stumpage and standing timber supplies probably would not
permit an output this year of more than 32 billion feet. There are, of
course, continuing difficulties by way of manpower shortages; 1946,
furthermore, got off to a very bad start with some of the worst weather
we have ever had in the South, along with strikes out in the West.
Mr. P O R T E R . SO this 3 2 billion is a Forest Service figure, but let us
be very clear on one point—there will be a continuing lumber shortage
throughout the year. Total demand is estimated at 36 billion feet or
better. We must anticipate a deficit of at least 4 to 6 billion feet.
This will continue to create difficult problems of enforcement. We
already have a serious black-market problem on our hands—especially
in southern lumber. Both OPA ceilings and CPA channeling orders
are involved. But OPA and the Department of Justice are marshaling
their resources for a joint campaign against the black marketer on
lumber. We have broken such rackets before and we shall break this
one. Certainly this is no time to legalize the activities of the law
violators.
Senator T A Y L O R . Mr. Chairman, may I ask a question?
T h e CHAIRMAN. Y e s .
Senator T A Y L O R . It is
possible, then, Mr. Porter, for the Department of Justice to get in and help you catch these black-market
operators?
Mr. P O R T E R . Indeed it is. We have a working arrangement which
has just been recently developed whereby a series of grand juries are
going to be established in certain areas to get on top of this problem.
I would not like to talk too much about the details of it here, because
we don't want to telegraph what we are going to do in that regard,
but we are going to make a major effort to get on top of this blackmarket situation.
Senator T A Y L O R . I have come to this conclusion, you either have
got to enforce this and give some of these boys a good rap or we will
have to abandon the whole thing.
Mr. P O R T E R . Y O U have to get these supplies back into the legitimate channels or the housing program, in my opinion, is very seriously
jeopardized.
158
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 19,42
Senator H I C K E N L O O P E R . Mr. Porter, do you have any serious hope
or faith that you will be able to successfully prevent black marketing
in this, and other things, as things are going now?
Mr. P O R T E R . Well, I think we can with an allocation of orders,
with the CPA channeling orders and with policing of what has been
characterized for this period as nonessential construction. Controls
were*taken off after VJ-day and your whole lumber production just
flowed indiscriminately.
Senator H I C K E N L O O P E R . I am thinking about the black market in
meat, for instance.
Mr. P O R T E R . I am going to touch upon that a little bit subsequently.
Senator H I C K E N L O O P E R . It seems to me uncontrollable. I am
wondering if the same practice under existing conditions won't
actually exist in the supply of lumber.
Mr. P O R T E R . Well, I have some comments on meat subsequently.
In building materials, the picture varies widely with the widely
differing industry situations. Unlike lumber, many of the other
building materials were in low demand during the war, and the problem has been to restore the producing industries to high-level operation.
There have been price impediments to be sure. But a great many
price adjustments have been made. I shall file with this committee
a list of 66 industry-wide actions OPA has taken to increase prices
of building materials between VE-day and April 4, 1946.
(The following was later received for the record):
Price increases on building materials other than lumber since VE-day
Item
Increase
Vitrified clay sewer pipe and allied products.
Level
10 percent over 1942freeze prices. _. Manufacturer, reseller-
Western United States
port Pacific coast).
8 southeastern States
65 cents per net ton
Producer
6J2 percent above 1942 freeze prices.
Quarrier
Lineal sash and frame stock (used for
window and door repair).
Douglas fir stock millwork:
Screen doors (smaller sellers)
Door frames
Cast-iron soil pipe and fittings
Building, chemical, and industrial lime
(except agricultural lime).
3 percent above G M P R levels
Manufacturer
Fire clay and silica refractory brick
6 percent over 1942 level; addition
of 3 by this amendment.
Actual freight charge from Plaster co, Va., to.
Building, chemical, and industrial lime
(except agricultural lime).
Rough quarry limestone blocks
r
Gypsum lath
Do
Area
1.2 percent above G M P R
10H percent above G M P R
$5 per ton
75 cents per ton over 1942 level
"
Actual freight charge from California, Nevada, and Montana to.
Vitrified 0-1 «Y SPWPT PIPP nnH nllifid nrori- 1 nfircent
ucts.
Building, chemical, and industrial lime
(except, agricultural lime).
Concrete blocks
$1.20 per ton (from New England
and eastern New York State).
yi cent per unit
Gypsum lath and linerboard:
Linerboard
Gypsum lath
$4.25 per thousand square feet
2V2 cents
Cast-iron tube radiation
Cement
2)4 cents net per square foot
10 cents per barrel
\
J
(ex-
do
Producer, jobber_
Producer
Manufacturer
Manufacturer,
sellers.
do
Manufacturer..
re-
Arkansas, Kansas, Nebraska,
Oklahoma and western Mis
souri.
From Missouri and east of
Mississippi River.
Florida, Alabama,. Georgia,
South Carolina, parts of
North Carolina.
Oregon and Washington
Eastern and East Central..
Pioducer..
.....do.....
.do..
Manufacturer.
do
Date
Regulation
Dade County, Fla_
Eastern seaboard, California
and Nevada.
Ohio, Michigan,' West Virginia, parts of Pennsylvania,
Virginia, Kentucky.
Amendment 76, Order
A - l , M P R 188, R M P R
206.
Amendment 77. Order
A - l , M P R 188.'
Amendment
78, Order
A - l , M P R 188.
Amendment 6, R M P R
293.
May
5,1945
M a y 12,1945
M a y 17,1945
M a y 30,1945
M P R 589
June 11,1945
Amendment 3, RPS 100...
Amendment 82, Order
A - l , M P R 188.
June 14,1945
June 21,1945
Amendment 83.
A - l , M P R 188.
Amendment 85,
A - l , M P R 188.
Order
June 25,1945
Order
i July 7,1945
Amendment 86, Order
A - l , M P R 188.
Amendment 13, R M P R
206; Amendment 88,
Order A - l . M P R 188.
Amendment 1, Order 1,
M P R 592.
Amendment 2, Order 1,
M P R 592.
Amendment 3, Amendment 4, Order 1, M P R
592.
July 13,1945
July 21,1945
Aug. 13,1945
Aug. 20,1945
| Aug. 21,1945
"Amendment 5, M P R 272.. Auer. 22,1945
Amendment 11, M P R 224. Sept. 5,1945
i Effective until Jan. 31, 1945.
CO
to
0\
CO
Price increases on building materials other than lumber since VE-day—Continued
Item
Increase
Level
Area
Cast-iron soil pipe and fittings.
Refractory products
4 percent or $3 per ton..
8.6 percent
Producer, jobbei
Manufacturer, reseller.
Southern California-
Calcined gypsum plaster bag goods
$2.40 per ton.
..—do
Eastern Seaboard
Structural-clay products:
Tile
Standard brick
Building, chemical, and industrial lime
(except agricultural line).
Hinges and butt hinges
Buildeis' hardware (locks, door checks,
chains, stops, and knobs; sash, door, and
transom hardware).
Automatic electric temperature controls,...
? Effective until Mar. 31, 1946.
Ready-mixed concrete
80 cents per ton
$2 per thousand
Dollars and cents increase granted
pioducers.
10 percent
10 percent above levels in effect
Oct. 1-15, 1941.
5 percent
Dollars and cents increase,
land cement.
port-
Order 48, M P R 591.
Oct.
9,1945
Amendment 13, Order 1,
M P R 592.
Oct.
30,1945
Manufacturer..
Manufacturer, reseller.
10 cents per barrel
Dollars and cents increase, portland cement.
Producer
Manufacturer..
10 percent over March 1942 levels.
Manufacturer, reseller.
11.4 percent
$3 per thousand square feet..
Producer
Manufacturer, reseller.
Douglas fir and minor species of plywood..
$2.40 per ton.
$1.50 per ton.
$1.00 per ton.
7Yi percent.._
Retailers
Portland cement.
20 cents per barrel-
Producer, reseller.
Ready-mixed concrete.
Dollars and cents
Portland cement.
Sept. 14,1945
....do
5 to 10 percent, depending on size.
increase for
Sept. 7,1945
Sept. 10,1945
Amendment
M P R 592.
Amendment
M P R 592.
Amendment
Amendment
.do-
Portland cement
Ready-mixed concrete.
Calcined gypsum plaster
Amendment 4, R P S 100. .
Amendment 6, Order 1,
M P R 592.
Amendment 7, Order 1,
M P R 592.
O
O
Date
Jobbers, wholesalers,
agents.
Manufacturer, reseller.
do
}-
Stokers.
Low-priced builders' hardware: Certsin
cast iron, wrought steel, and some few
brass gadgets.
Douglas-fir open window sash
Gypsum lath, liner board, and plaster
East of Rocky Mountains
Regulation
Producer-
Ohio, Michigan West Virginia,
western
Pennsylvania, Kentucky.
South
Georgia, Alabama, Tennessee,
Louisiana,
Mississippi,
North Carolina, South Carolina, Florida, and parts of
Virginia.
9, Order 1,
Sept. 19,1945
10, Order 1,
Oct.
4, M P R 413
6, RPS 40...
Oct. 8,1945 2
Do.
4,1945
Amendment 1 to Order 48, Nov. 8,1945
M P R 591.
Amendment 12, M P R 224. Nov. 10,1945
Amendment 15, Order 1,
Nov. 14,1945
M P R 592.
Amendment 2, Order 1,
M P R 591.
Amendment
Except California and Nevada. Amendment
]VJPR i592.
5 eastern mills
2 Virginia mills
5 central United States mills.
Amendment
13.
Nebraska, Kansas, Oklahoma, Amendment
Arkansas, west Missouri,
Idaho, Montana, Wyoming,
Utah, Colorado, New Mexico.
Nebraska, Kansas, Oklahoma, Amendment
Arkansas, west Missouri,
M P R 592.
Idaho, Colorado, New Mex-
2, M P R 589.
17, Order 1,
1, 3d R M P R
Do.
Nov. 20,1945
Nov. 16,1945
Nov. 24,1945
13, M P R 224. Dec. 11,1945
21, Order 1,
Dec. 18,1945
M
><!
M
O
W
HH
O
H
O
o
H
W
O
TR1
>
O
00
>
W
is
!>
H
I—I
O
>
O
H
03
O
Vitrified clay sewer pipe and allied products.
Manufacturer, reseller.
9.7 percent.
Eastern and East Central areas. Amendment 15," R M P R
206; Amendment ^19,
1 .OrderJL, M P R 592.
Dec. 17,1945
H
H
H
H
Source: Office of Price Administration, Building Materials and Construction Branch, Dec. 20,1945.
S U P P L E M E N T 1, J A N . 30, 1946
Window and picture glass
Manufacturer.
$3.95 over G M P R
Vitrified clay sewer pipe, 6 inches and
above.
Cast iron soil pipe and fittings
Enameled cast iron plumbing fixture ware..
Brick and tile
Southern California.
do
11 percent over G M P R .
Manufacturer, jobber.
Manufacturer, reseller,
.-..do
Glazed brick
$6 per ton
8 percent
$2 per thousand, 80 cents per ton
over G M P R .
$2.50 per thousand
.do.,
East of Rockies
Clay drain tile
80 cents per ton.
.do.,
Ohio and Michigan.
Domestic oil burners
9 percent
.do..
Amendment 2 to..
West coast
Manufacturer, reseller.
Gas fired and liquid petroleum fired fur12.5
naces and unit heaters.
Specified items of brass plumbing fixtures 5-25 percent
supply fittings and trimmings.
Brass plumbing fixture waste trimmings 9 percent
and fittings.
do
do
Amendment 18 to Order 1
to M P R 592.
Amendment 16 to R M P R
203.
Amendment 5 to RPS
Order 48 to M P R 591
Amendment 23 to Order 1
to M P R 592.
Amendment, 24 to Order 1
to M P R 592.
Amendment 26 to Order 1
to M P R 592.
Amendment 3 to Order 48
to M P R 591.
Amendment 4 to Order
48 to M P R 591.
Amendments 5 and 7 to
Order 48 to M P R 591.
Amendment 6 to Order
to M P R 591.
Dec.
7, 1945
Dec. 26, 1945
Dec. 31, 1945
Jan.
2, 1946
Do.
Do.
Jan.
7, 1946
Jan.
14, 1946
Jan.
14, 1946
Jan.
21, 1946
Do.
Increase
Level
Gas-fired conversion oil burners.
9 percent—.
Manufacturer, reseller..
Low pressure steel boilers
Automatic nonelectric temperature controls
Specified hardware items
Builders hardware and insect screen cloth
Specified butts and hinges
Specified hardware items and insect screen cloth items..
14 percent..
5 percent...
10 percent..
do
16 percent..
do
—
do
Manufacturer
do
do
Jobbers, wholesalers, and retailers.
Regulation
Amendments 8 and 9 to Order 48 to
M P S 591.
Amendment 10 to Order 48 to 591
Amendment 11 to Order 48 to 591
Amendment 12 to Order 48 to 591
Amendment 7 to RPS 4 0 —
Amendment 5 to M P R 413.
SO-151
o
>
O
CP
>
T
>SI
H
M
O
>
Date
Feb.
H
W
W
S U P P L E M E N T 2, M A R . 25, 1946
Item
O
•D
HH
O
H
O
O
m
5
Feb. 16
Mar. 1
Mar. 13
Do.
Do.
Do.
O
02
O
^
I—4
CO
to
Price increases on building materials other than lumber since VE-day—Continued
S U P P L E M E N T 2, M A R . 25, 1946
Level
Area
10 cents per barrel..
Manufacturer, reseller.
Electrical clay conduit
$3.25 per ton
Manufacturer..
Georgia, Alabama, Tennessee,
Louisiana, Mississippi,
North Carolina, South Carolina, Florida, and Virginia.
12 construction items of softwood plywood.
20 percent.
Mill
Ready-mixed concrete
10 cents per barrel..
Manufacturer..
Valves and fittings
10-20 percent
Manufacturer, reseller.
Increase
Item
Portland cement..
Cast iron drainage staples and specialties.
12 constiuction items of softwood plywood.
do
do
20 percent
Reseller
Sand lime brick
$2 per thousand
Manufacturer, reseller.
Glazed windows and sash
1 point shorter discount from list.
Cast-iron radiation
20 percent
Manufacturer, reseller,
retailer.
Manufacturer, reseller.
Gas boilers
10V£ percent
Douglas fir doors..
Do
28 percent
Dollars and cents pass through.
Mill
Reseller.
Fireclay and silica refractory brick
11 percent..
Manufacturer, reseller.
Clay glass pots, tank blocks, and companion accessories.
General manager type grain doors
16 percent..
11 percent..
Mill
Special millwork.__
Tanks and vessels _
Portland cement.
30-40 percent.
17 percent over July 1,1941..
10 cents per barrel
-doManufacturer, reseller
do
-do-
do
Warm-air furnaces
12 percent
_dO-
Special cast iron radiation and accessories..
37 percent over October 1941..
_do-
Clay sewer pipe and allied products
15 percent
-do-
Georgia, Alabama, Tennessee,
Louisiana,
Mississippi,
North
Carolina,
South
Carolina, Florida, Virginia.
Missouri and east of Mississippi River.
Southern California.
Eastern and East Central-
Regulation
Date
Amendment 14, M P R 224. Feb. 21, 1946
Amendment 30 to Order 1,
M P R 592.
Amendment 2 to third
R M P R 13.
Amendment 34 to Order 1
to M P R 592.
Mar. 13,1946
Amendment 7 to Order 1
to M P R 591.
Amendment 6 to Order 1
to M P R 591.
Amendment
3 to
3d
R M P R 13.
Amendment 35 to Order 1
to M P R 592.
Amendment 14 to R M P R
293.
Amendment 7 to M P R
272.
Amendment 8 to Order 1
to M P R 591.
Amendment 1 to M P R 44.
Amendment 1 to M P R
44 and Amendment 11
to R M P R 525.
Amendment 36 to Order 1
to M P R 592.
Amendment 37 to Order 1
to M P R 592.
Amendment 3 to M P R
483.
R M P R 525
M P R 96
Amendment 15 to M P R
224.
Amendment 9 to Order 1
to M P R 591.
Amendment 10 to Order 1
to M P R 591.
Amendment 19 to R M P R
206; Amendment 38 to
Order 1 to R M P R 592.
Mar. 26,1946
Mar. 15,1946
Mar. 22,1946
Mar. 27,1946
Apr.
1,1946
Do.
Apr. 10,1946
Mar. 28,1946
Apr.
1,1946
Apr. 4,1946
Do.
"
Apr. 1,
1946
Do.
Apr. 16, 1946
M a y 3, 1946
Apr. 8, 1946
Apr. 17, 1946
Apr. 19, 1946
Apr. 30, 1946
Apr. 22, 1946
163
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 19,42
The important fact is that, except in minor instances, price is no
longer an impediment to production. The principal difficulties are
manpower, raw materials and equipment. Manpower is now the
key problem in the brick industry, for example. In the case of castiron soil pipe the problem is pig iron. Production control rather than
price increases is the answer here. Each day we are running into new
cases in which price and other impediments have been removed but
shortages of such raw materials as pig iron and sheet steel emerge as
the remaining principal difficulty.
In stepping up the production of building materials a great deal
more progress has been made since VJ-day than is generally realized
and the outlook is good. But even with maximum success, the demand
for building materials will run so far ahead of supply that there will
be shortages for many months to come.
OPA is cooperating wholeheartedly in the program developed by
Mr. Wyatt. We believe that program can and will succeed. But
the maintenance of stable building-material prices is crucial to the
success of that program. On the other hand, the authorization of
premiums which the Senate has voted will go far toward easing
our pricing problems. I hope the House of Representatives will
concur in the Senate action. But it is only fair to point out that
premium pricing cannot be effective unless basic price levels are held
stable. By compelling major changes in OPA pricing standards,
Congress could easily undo all the good that the premium-payment
plan promises to achieve.
Senator HICKENLOOPER. May I ask a question there, Mr. Chairman?
Your statement:
It is only fair to point out that premium pricing cannot be effective unless
basic price levels are held stable
Mr. PORTER. Right.
Senator HICKENLOOPER. Wouldn't it also follow that premium
pricing cannot be effective unless basic price levels are also sound?
Mr. PORTER. Yes. I would not dispute that for a minute. Now,
we come to dairy products.
Dairy products: Few problems which OPA confronts are more
delicate than that posed by dairy products. Fluid milk has a multitude of uses. It is not be to wondered that at times the nice machinery
of adjustment gets out of balance.
We are faced by a fall in milk production which, although not precipitous, must be promptly halted. Between January 1945 and January 1946, the number of dairy cows dropped 3 percent and milk production fell from an annual rate of 122 billion pounds in 1945 when feed
conditions were favorable to a recent estimate of a 118-billion-pound
rate, a figure still far above peacetime levels.
This is not to say that the recent difficulties with respect to dairy
products have not been real. The increases in costs for food and labor
have narrowed unduly the margin between the dairy farmer's cost and
his return. The Office of Economic Stabilization has approved two
actions, one to be taken immediately and the other by July 1, which
will increase the dairy farmer's return by a total of 40 cents per hundredweight, whether by ceiling-price increase or subsidy or by a combination of both.
While such actions will sustain milk production, further steps must
be taken as part of a program developed with the Department of
164
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 19,42
Agriculture to check the diversion of butterfat from butter to its more
profitable uses, a diversion which has come about since the lifting of
the butterfat restriction orders, soon after VJ-day.
For the first time in the history of price control we plan to institute
a ceiling on the sale of commercially separated cream in bulk. This
should serve to protect the margins of the ice-cream manufacturer
and the cream retailer.
These steps, together with an allowance for butter storage to be
made effective during the summer and with certain local adjustments
to prevent diversion will, we are confident, alleviate the present acute
shortage of butter.
These steps remove the threat to milk production arising from
higher feed and labor costs, and assure a more normal distribution of
manufacturing milk among the various uses. Inability to obtain
feed may still, however, affect milk production in some localities.
With fluid milk taking an unusually large proportion of all milk, and
with the total production limited for some time by cow numbers and
available feed, I cannot claim that these steps or any others that could
be taken will provide within a period of many months supplies of
butter and most other manufactured dairy products which will equal
demand.
Senator H I C K E N L O O P E R . D O you establish ceilings on fluid milk
now to the consumer?
Mr. P O R T E R . T O the consumer, yes; we do.
Senator H I C K E N L O O P E R . Well, then, there is one great difficulty
we have in our State. The commercial users of fats and oils will go
out and pay 70 cents a pound for butterfat to use commercially. They
are paying that today. Our creameries and dairies that supply the
public with their butter or milk cannot afford to pay more than somewhere around 55 to 58 cents per pound for butterfat. The result is
that these fellows are paying 70 cents a pound for butterfat and are
taking all the butterfat and they are by the same token taking all the
raw milk—that is, a very substantial portion of the raw milk.
The food consumer, the public, is facing that absolute inability to
either get raw milk or cream or butter because of the commercial
competition that enables these fellows to pay 50 percent more than the
food producers in milk products can possibly pay for their product.
We have had some meetings, I know you have been in them, the
last few days. What steps do you contemplate?
Mr. P O R T E R . Senator, we think that this ceiling on cream, together
with the restriction orders on the use of this sort of products will
restore from the available supplies a more equitable balance, and at
the same time prevent these commercial users you are talking about
going out and bidding up the price to the extent they get the supply.
So I think the answer is twofold, as I say, for the first time a ceiling
on cream for manufacturing uses plus restriction orders that will
prevent that diversion. I think that is the only way we can go about
it, is through restoration of these orders.
Senator H I C K E N L O O P E R . One of two things is bound to happen.
The price of raw cream, the price of butterfats that goes into butter
or into consumers' milk supplies has got to go up drastically, because
you cannot pay 78 cents for butterfat and make a pound of butter—
you can make a little more than a pound of butter out of a pound of
butterfat, but you cannot pay 78 cents and be forced to sell it on the
market for 55 cents or whatever the ceiling on butter is.
165 EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 19,42
Mr. P O R T E R . There is no question about that.
Senator H I C K E N L O O P E R . That is why we have no butter, and here
we are facing an extreme shortage of butter even in the butter-producing areas of the country.
Mr. P O R T E R . If you undertake to raise the price upward to meet
the competition of these commercial users, I don't know where you
would stop, because they would go a little higher. So I think the
ceiling I have talked about plus restoration of these control orders
will at least have the opportunity to solve that problem.
Senator H I C K E N L O O P E R . All right, then you have got one of two
steps: You either have to cut down the price of butterfat which
means the farmer will get 20 percent less for his butterfat than he is
getting now in the producing area, or you have to subsidize that with
public money. I see no other alternative on that theory.
Mr. P O R T E R . I wonder if Mr. Baker will care to comment on that.
Mr. B A K E R . At the present time, Senator, the plan is, of course, to
increase the return to the producer, now, by 20 cents a hundredweight,
as Mr. Porter has said, and by another 20 cents on July 1, or a total
increase of 40 cents a hundredweight, which is roughly equivalent to
about a cent a pound.
Senator H I C K E N L O O P E R . Well, is that all subsidy?
Mr. B A K E R . That is, the first step of that is subsidy. Whether the
second step is a subsidy depends on Congress, and their decision on
the extension of subsidies.
Senator H I C K E N L O O P E R . Your decision is that 4 0 cents a pound
Mr. B A K E R . Forty cents a hundredweight.
Senator H I C K E N L O O P E R . Will be a subsidy?
Mr. B A K E R . NO, the first 2 0 . But we do recommend that the
second 20
Senator H I C K E N L O O P E R . If Congress authorizes it the second 20
will be a subsidy?
Mr. B A K E R . Yes. Now, with respect to the question of butterfat
the idea there is that wherever we have an increase in the fluid-milk
return we make a corresponding increase in the butterfat price so as
to keep them the same as they are now, but by virtue of the restriction
orders on heavy cream and on butterfat and ice cream and possibly
on a foreign type of cheeses, we divert the butterfat into butter so
that the farmer then will presumably either sell his milk as fluid milk,
which we have no restriction on in terms of quantities or will at least
give butter an equal chance with the butterfats, because no more
than a certain amount can be used now on ice cream or in cream itself.
That is, by limitation of the butterfat content of cream which will have
the effect of increasing the butter supply.
We have added to that a storage allowance on butter which will
make it profitable for a person to make butter and hold it in storage,
which would not be true under the flat price which he had during the
war when the Government bought the butter and stored it at their
own expense.
Senator H I C K E N L O O P E R . That is right.
Mr. B A K E R . It wiil not, of course, as Mr. Porter says, increase
this total supply of fluid milk or manufactured milk for butter, but at
least
Senator H I C K E N L O O P E R . Well, it won't increase the total supply of
fluid milk at the moment, but I would think it might vary conceiv-
166
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 19,42
ably at some time, very conceivably increase the supply of fluid milk
that could be turned into butter.
M r . B A K E R . Y e s , sir.
Senator H I C K E N L O O P E R . I
don't know whether your scheme will
do it, but some kind of an arrangement.
Mr. B A K E R . It is a joint program with the Department of Agriculture. At least it should serve to stop the reduction in cow numbers
which is now a serious question.
Senator H I C K E N L O O P E R . Very.
The C H A I R M A N . Well, Mr. Porter, it is now 1 o'clock and we will
resume at 2:30.
I wanted to announce the witnesses for tomorrow. At 10 a. m.
we will hear from William J. Kelly, president of the Machinery and
Allied Products Institute.
At 10:30, Roy A. Cheney, president, Underwear Institute.
At 11 o'clock, Arthur Besse, president, National Association of
Wool Manufacturers.
At 11:30, Douglas Whitlock, chairman, advisory board, The
Producers' Council.
We hope to finish with you this afternoon, Mr. Porter. 2:30 this
afternoon.
(Whereupon at 1 p. m. a recess was taken until 2:30 p. m. of the
same day.)
AFTERNOON
SESSION
The committee resumed at 2:30 p. m. on the expiration of the recess.
The C H A I R M A N . The committee will resume.
Mr. Porter, will you continue, please?
S T A T E M E N T OF P A U L P O R T E R , O P A A D M I N I S T R A T O R ,
TON,
D.
WASHING-
C — Resumed
Mr.*PORTER. Mr. Chairman, I am sorry that Senator Bankhead is
not here because I would merely like to state for the record something
apropos of some questions propounded to me this morning and something that occurred among members of the committee, that I do not
want my silence to be taken as indicative that any imputation that
Mr. Sells is not a highly competent individual is correct. We value
his services at the office very highly and are going to do our utmost
to have his leave extended. And I am sure that he does not have to
make any apology to the chairman of this committee for being from
New York.
The C H A I R M A N . Certainly not. This is my fourth term now* from
New York, and I think we all agree that the Empire State is a great
State.
Mr. P O R T E R . Mr. Sells has made a very substantial contribution
to price control, and his services have been recognized to the extent
that one office in the area with which his branch deals has seen fit to
try to persuade him to continue to occupy the very important position
in the manufacture and distribution of various types of consumer durable goods, and when he does find it necessary to go we will hate to
lose him. I want the record to show that we value his services
extremely highly.
167
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 19,42
Senator T A Y L O R . And I would like to commend Mr. Sells for the
splendid way he handled himself this morning.
Senator M I T C H E L L . Mr. Chairman, I wonder if Mr. Porter could
put in the record a division of the employees in OPA. I believe he
said there are approximately 5,500 and 1,500 are on price control,
which is approximately one-third.
Mr. PORTER. The principal departments are Price, Rent, Accounting, Legal Department, and Enforcement. Then there are the price
control boards, in which there is a small staff that is working directly
with boards in the field. I would be glad to give you not only an
organizational chart but a break-down of the professional and other
services.
Senator M I T C H E L L . I think it would be helpful to the record.
(The data afterward furnished by Mr. Porter are as follows:)
As of (date) Apr. 15, 1946.
Key operating report—Employment summary statement
Last year,
Apr. 15,
1945
Organization unit
Filled
&
OO
H
Current period
Preceding period, Mar. 31,1946
Authorized
Filled
Authorized
Vacant
Filled
Increase or decrease (—)
Vacant
Authorized
Filled
A
H
12!
O
Vacant
Total
Permanent
Temporary.
__
.
__
.
-
61, 359
1, 367
34,094
32, 015
177
2, 079
34, 654
32, 408
170
2, 246
560
393
-7
167
H
W
o1
National office
Total:
Permanent- _
Temporary.
Executive
__ .
Executive offices . .
A d v i s o r v staff __
Executive services.
Board management
Administrative management
Information
Accounting...
.
.
Enforcement
_
Rationing
Rent
...
__
__
...
.
.
___
3. 707
39
303
30
f 72
190
11
561
114
487
161
1, 435
516
130
3, 366
335
134
i 99
171
31
531
90
519
179
1, 573
139
3, 306
30
335
40
98
166
}• 31
516
92
507
172
1, 546
4
134
60
-6
1
15
-2
12
7
27
-4
5
3,459
TR
>
3, 308
34
336
41
71
193
31
507
91
512
173
1, 553
3
133
361
34
69
227
31
531
89
544
179
1, 616
139
151
93
25
-7
-2
34
26
24
-2
32
6
63
-3
6
-30
56
-1
25
43
2
4
1
1
-27
27
-9
-1
5
1
7
-1
-1
91
25
-1
-3
29
_
..
57, 652
1, 328
30, 341
387
28, 709
147
1, 632
387
30,677
518
29,100
136
1, 577
518
336
131
391
-11
O
>
W
9
20
36
1
1
Total, field
Permanent:
Allocated
Unallocated
Temporary
W
H-T
O
H
O
O
-55
131
CSJ
T—I
o
125
>
O
H
CQ
O
^
I—'
C
^O
to
Regional offices
Total:
Permanent
Temporary
Executive
Board management
Administrative management
Information
Accounting
Enforcement
Price
Rationing
Rent
4,299
177
151
82
1,869
107
172
668
601
424
225
4,158
174
74
1,481
88
203
916
958
264
3, 774
28
162
70
1,443
84
185
704
902
1
223
384
4,311
174
75
1,481
• 88
206
1,043
975
3,948
25
164
72
1,440
86
194
828
933
363
12
4
38
4
18
212
56
-1
41
10
3
41
2
12
215
42
3
127
17
269
231
38
5
153
1
174
-3
2
2
-3
2
9
124
31
-1
8
-21
-2
-1
3
-2
-6
3
-14
1
-3
District and area rent offices
Total:
Permanent
Temporary
Executive
Board management
Administrative management
Information
Accounting
Enforcement
Price
Rationing
Rent
18,119
453
213
1,689
1,316
338
586
4, 662
2,732
2, 648
3,935
16,662
177
1,047
965
309
569
4, 678
4, 369
4,548
15,827
62
169
1,018
941
301
543
4,466
4,206
1
4,182
835
16,836
174
178
1,058
967
310
569
4, 738
4,384
16,008
58
174
1,028
936
301
554
4,490
4,226
828
8
29
24
8
26
212
163
—1
366
4
30
31
9
15
248
158
1
11
2
1
60
15
4, 632
4,299
333
84
386
9
181
-r4
5
10
-5
—4
11
24
20
—1
117
-11
36
-5
1
-33
36
=4
-27
-7
Local boards
Permanent..
Temporary..
35,234
9,521
9,108
57
413
9, 530
9,144
53
>
O
H
U1
o
^
I—1
CO
to
CO
Date: Apr. 15, 1946.
Key operating report—Employment summary statement—Continued
Region I
Region II
"3
0
3
O
OS
>
£
rSJ
P
CE
§
>
£
Region III
Region IV
rS
P
o3
§
<D
£
>
£
1§
Region V
£
£
>
P
cS
Region V I
03
>s
£
P
CS
o
ce
>
O
Region V I I Region V I I I Region I X
P
8
03
>
£
©
£
Total:
Permanent:
Regional offices.
Districts.
Local boards....
327
1,230
656
21
855
50 3, 549
30 2,100
478
34
228 1, 855
112 1, 259
24
529
117 1,944
32 1, 343
495
80
114 2,180
40 1,207
45
557
81 2, 346
68 1,334
Total
2, 213
101 6,504
374 3, 592
172 3,816
234 3, 882
194 4, 237
2
6
17
21
2
2
3
16
8
12
13
2
6
6
44
2
21
33
8
24
26
19
21
1
19
31
1
2
19
12
17
25
50
40
1
50
3
31
Temporary:
Regional offices
Districts....
Local boards
4
.
Total
Executive:
Regional offices
Districts..
Total
Board management:
Regional offices
Districts
Total
Administrative management:
Regional offices
Districts
Total
Information:
Regional offices
Districts
Total
_
34
68
19
P
T5
>
£
CS
Q
03
1§
^03
>
m
Total
£
A
M
2ZS
©
1§
>
246
668
374
25
436
34 1,933
18
767
97
128
48
25
303
104
3 3, 948
8 16, 008
19 9,144
363
828
386
121 1, 288
77 3,136
273
432
30 29,100
1,577
1
16
3
2
25
58
53
20
2
136
2
2
2
9
164
174
10
4
42
4
11
338
14
W
H-L
O
H
O
0
H
§
T"1
>
«
CO
15
13
2
31
24
3
1
18
13
28
2
55
4
31
8
78
16
161
1
6
137
4
10
143
8
9
132
1
7
196
2
3
6
54
4
9
93
-1
5
1
34
3
72
1,028
3
30
86
177
1
143
4
153
8
141
4
203
5
60
4
102
4
35
3
1,100
33
1
208
147
7
1
80
53
2
143
109
8
-9
7
52
15
1,440
936
41
31
-1
59
15
2.376
27
O
>3
TO
1
-1
126
68
3
277
168
4
5
192
108
3
2
204
110
15
16
203
121
194
3
445
9
300
5
314
31
324
355
8
133
2
252
9
26
1
2
13
46
-1
4
6
36
1
1
11
30
1
13
43
11
44
1
-1
8
17
3
13
41
2
18
-1
86
301
2
9
35
3
59
3
42
2
41
1
56
55
25
3
54
20
-1
387
11
1
W
E
TSI
5
W
O
•
O
Accounting:
Regional offices..
Districts
Total.
Enforcement:
Regional offices.
Districts
Total.
Price:
Regional offices .
Districts
19
65
122
59
95
66
362
185
1,135
428
1, 320
343
200
871
113
516
12 1,071
629
Total.
101
591
99
82
94
46
129
439
596
114
694
33
203
77
694
19
112
505
28
109
550
27
617
36
35
594
71
174
135
656
14
531
12
15
748 |
27
4,490
215
248
5,318
463
933
4,226
42
158
5,159
26
26
791
105
194
554
>
Total
12
1,022
22 1,090
Total.
Local boards:
Administration.
Price
Rationing
Rent—
W
HH
Q
H
O
O
H3
W
O
T"1
Rationing:
Regional offices.
Districts
Rent:
Regional offices
District and D . R . A
H
X
H
H
656
1,973
"127
84
25
606
29
480
509
1, 259
36
68
34
513
36
679
547
27
10
128
22
593
138
615
1,315
1,312
364
""28
22
"io
77
231
4,299
38
333
4,530
371
©
QQ
H3
>
W
752
"lb
104
8,933
'"2II
CSJ
%
L
—
H
O
>
O
H
CQ
O
CD
to
OFFICE OF PRICE ADMINISTRATION
GENERAL ORGANIZATION
ADMINISTRATOR
DEPUTY
O F F I C E OF
ADMINISTRATIVE
HEARINGS
SPECIAL
A S S I S T A N T S TO
ADMINISTRATOR
ADVISORY OFFICES
O F F I C E OF
CONSUMER R E L A T I O N S
ADVISER
O F F I C E OF
CONGRESSIONAL
INFORMATION
O F F 1 C :E O F
ECONI O M I C
ADVI SER
ADMINISTRATOR
O F F I C E OF
AGRICULTURAL
RELATIONS ADVISER
O F F I C E OF
INDUSTRY ADVISORY
COMMITTEES
O F F I C E OF
CREDIT POLICY
ADVISER
O F F I C E OF
LABOR R E L A T I O N S
ADVISER
INDUSTRIAL
PROGRAMS
BUNCH
CONSUMERS GOODS
PROGRAMS
ECONOMIC A N A L Y S I S
AND FORECASTING
BRANCH
INTERNAL
COURT REV I EX
RESEARCH AN0
OPINION DIVISION
D I V I S t ON
0F
R E S E ARCH
FINANCIAL
ANALYSIS
BRANCH
O F F I C E OF
GENERAL
COUNSEL
O F F I C E OF
VETERAN'S RELATIONS]
ADVISER
BRANCH
COURT REVIEW
P R I C E BRANCH
COURT REVIEW
RENT BRANCH
FOOD PROGRAMS
BRANCH
COUNSEL TO
BOARDS OF REVIEW
INTELLIGENCE
BRANCH
RESEARCH AND
O P I N I O N BRANCH
MANAGEME SIT OFFICES
BUDGET
BRANCH
FISCAL
BRANCH
CLASSIFICATION
BRANCH
H I STORY
BRANCH
OFFICE OF
THE OPA
SECRETARY
TRAINING
BRANCH
PROCEDURES
REVIEW AND
ISSUE SECTION
PLACEMENT
BRANCH
Ft E L D R E L A T I O N S
P RANCH
P R I N T I N G AND
DUPLICATING
BRANCH
GRAPHICS AND FORMS
BRANCH
S E R V I C E CENTER
BRANCH
SERVICE OPERATIONS
BRANCH
RECORDS
MANAGEMENT
BRANCH
LIBRARY
BRANCH
PROGRAM PLANKING
AND AOMIN I S T R A T I V E
BR AH Of
EMPLOYEE R E L A T I O N S
BRANCH
OFFICE OF
PRICE BOARD
MANAGEMENT
O F F I C E OF
ADMINISTRATIVE
SERVICE
OFFICE OF
PERSONNEL
OFFICE OF
IBUDGET 8 P L A N N I N G
NATIONAL OFFICE
L I A I S O N BRANCH
FIELD LIAISON
BRANCH
P L AN K I N 6 AND
OPERATIONS
BRANCH
OPERATING DEPARTMENTS
ENFORCEMENT
DEPARTMENT
INFORMATION
DEPARTMENT
FIELD
OPERATIC
O F F IC t
EXECUTIVE
OFFICE
COMWNITY
SERVICE
DIVISION
PROGRAM
PLANNING
DIVISION
FIELD
DIVISIOH
EDITORIAL
DIVISION
EXECUTIVE
OFFICER
O F F ICE OF
FXPORT-IMPORT
WAR G O O D S
COORDINATOR
CONSIDER
RADIO
BRANCH
NEWS
BRANCH
VISUAL
SERVICES
BRANCH
TRADE
RELATIONS
BRANCH
HOUSEWARES AND
ACCESSOR! FS
PRICE BRANCH
L E A T H E R , FURS,
AND F I B E R S
PRICE BRANCH
FOOD
BRANCH
FUEL
BRANCH
HOME FURNISHINGS
P R I C E BRANCH
DISTRIBUTION
PRICE
BRANCH
INDUSTRIAL
MANUFACTURING
BRANCH
Bt'fLClKG AND
TEXTILE
rtlCf
APPAREL
PRICE
BRANCH
A P P L I A N C E AND
GROCERIES AND
DAIRY PRODUCTS
ENFORCEMENT
BRANCH
"" ®rANCH
EQUIPMENT
R E N T AND DURABLE
GOODS E N F O R C E M E N T
DIVISION
INDUSTRIAL
MANUFACTURING
PRICE DIVISION
POULTRY, EGGS,
AND DAIRY
PRODUCTS
P R I C E BRANCH
•RUBBER, CHEMICALS.
AND DRUGS
P R I C E BRANCH
AUTOMCTF VE
PRICE BRANCH
MEATS, FISH,
FATS, AMD O I L S
P R I C E BRANCH
CEREALS, FEEDS,
AND AGRICULTURAL
CHEMICALS
P R I C E BRANCH
PAPER AND
PAPER PRODUCTS
P R I C E BRANCH
MACHINERY
PRICE BRANCH
METALS
ACCOUNTING
BRANCH
LUMBER
ACCOUNTING
BRANCH
PAPER
ACCOUNTING
BRANCH
DURABLE GOODS
ENFORCEMENT
BRANCH
APPELLATE
BRANCH
TABULATION AND
ANALYSIS
TTF
CONSUMER PRODUCTS
ACCOUNTING
DIVISION
I S E R V I C E S ACCOUNTING
AND A U D I T S
DIVISION
BRIEFING
BRANCH
I RENTS, S E R V I C E S ,
AND E N F O R C E * H I T
ACCOUNTING
. BRANCH
GENERAL
LITIGATION
BRANCH
RE E L
ACCOUNTING
B RAM CLT
FOOD
ACCOUNTING
BRANCH
FIELD
ACCOUNTING
DIVISION
(
REVIEW A N »
ANALYSIS
T R A I N I N G ADVISORY I
AND PROCEDURES
I
I
BRANCH
PREFABRICATE
AND B U I L D I N G
EQUIPMENT
P R I C E BRANCH
T R A N S P O R T A T I O N AND
PUBLIC U T I L I T I E S
PRICE DIVISION
PETROLEUM
PRICE BRANCH
AREA P R I C I N G
AND D I S T R I B U T I O N
PRICE BRANCH
PUBLIC
UTILITIES
PRICE BRANCH
TRANSPORTATION
P R I C E BRANCH
Bui L DING
MATERIALS
PRICE BRANCH
S E R V I C E TRADES
PRICE BRANCH
FUEL PRICE
DIVISION
INDUSTRIAL
MATERIALS
PRICE DIVISION
METALS
P R I C E BRANCH
SOLID R I t L S
P R I C E BRANCH
PROGRAM
DIVISION
RENT LEGAL
DIVISION
REGULATIONS AND
INTERPRETATIONS
BRANCH
D E F E N S E RENTAL
ARFAS BRANCH
REGULATIONS
AND REVIEW
BRANCH
T N A N C I A L AMD
STATISTICAL
A N A L Y S I S BRANCH
ECONOMIC
ANALYSIS
BRANCH
INDUSTRY
ADVISORY
BRANCH
OPERATIONS
DIVISION
UMBER
P R I C E BRANCH
REVIEW
BRANCH
CONTROL
BRANCH
SUGAR
RATIONING
DIVISION
DURABLE GOODS
ACCOUNT)**
T E X T I L E S , LEATHER J
M O APPAREL
ACCOUNTING
BRANCH
D I V I S I O N OF
SPECIAL
INVESTIGATIONS
WHOLESALE-RETAIL
AND F R U I T S ARD
VEGETABLES
P R I C E BRANCH
B U I L D I N G AND
CONSTRUCTION
PR IC£ 0 1 V I S I O N
RECORDS AN ft
CONTROL
BRAN CM
EXAMINATION
BRANCH
BUILDING
MATERIALS
ACCOUNTING
LITIGATION
DIVISION
RENT
ENFORCEMENT
BRANCH
GROCERY
PRODUCTS
P R I C E BRANCH
FINANCIAL
REPORTING
DIVISION
MACHINERY
ACCOUNTING
BRANCH
CHEMICALS AMD
[RUBBER ACCOUNTING
BRANCH
I AUTOMOTIVE F U E L ]
AND S E R V I C E S
ENFORCEMENT
BRANCH
I
INDUSTRIAL
MATERIALS
ENFORCEMENT
BRANCH
fxilSTRIAl
MATERIALS
BRANCH
[TRANSPORTATION A N t f
PUBLIC U T I L I T I E S
3RANCH
P R I C E BRANCH
INDUSTRIAL
ACCOUNTING
DIVISION
APPAREL
GRWRCBLENT
BRANCH
MEAT
ENFORCEMENT
BRANCH
R E T A I L FOOD
ENFORCEMENT
BRANCH
MICTION
WPCT
BRANCH
BRANCH
A P P A R E L AND
{INDUSTRIAL M A T E R I A L S !
ENFORCEMENT OIVtSfONl
FOOD
ENFORCEMENT
DIVISION
PRICE LEGAL
DIVISION
GOODS P R I C E
DIVISION
CIRCULATION
PLANNING
AND CONTROL
ACCOUNTING
DEPARTMENT
FIELD OFFICES
REGIONAL
OFFICES
DISTRICT'
OFFICES
FIELD
OPERATIONS
BRANCH
DEFENSE RENTAL
AREA OFFICES
8b721 0 - 46 (Face p. 1 7 1 )
APRIL
I9W
1942
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF
19,42
Senator CAPEHART. Mr. Chairman, might I ask a question or two
right here?
The CHAIRMAN. Certainly, Senator Capehart.
Senator CAPEHART. Just before we recessed we were talking about
building materials and housing. I have before me the issue of
Saturday, April 13, 1946, of the Courier-Journal of Louisville, Ky.,
in which there is an article entitled "Aide Calls Wyatt's '46 Aim
Impossible." Then the article goes on to say:
Don Campbell, lumber consultant to Housing Expediter Wilson Wyatt, called
Wyatt's 1,200,000-home goal for 1946 "impossible" and said last night "someone
is making political capital of this emergency."
Then the article goes on with a lot of other things but one of the
headlines is critical of OPA and under that heading appears this:
The Office of Price Administration refuses to see that it is production and
production alone that is holding up reconversion.
Then he goes on to say:
Certainly there is a shortage—caused by the greatest war we have ever been
through, and we are in the midst of a housing hysteria. We are getting headlines
and ballyhoo, but I will tell you frankly we are not getting houses.
Then he lists some of his objections to the housing agency's program.
Then the article goes on to say:
He quoted OPA Administrator Chester Bowles as having said the Government
should subsidize manufacturers of "new and untried building materials because
we know the public won't buy them."
Then he goes on to say:
I have nothing but praise for legitimate prefabrication, but there is nothing
I can say before ladies about all these crackpot prefabricated crackerboxes of
which I am afraid we are going to see too many—bought by veterans—within
the next few years.
Then he goes on to say:
OPA has been "seeing the light" for the last several weeks, and has raised
ceilings on plywood, fir doors, western pine, hardwood flooring, red cypress, and
Lake States hemlock, with the result that these materials are being shipped.
I am just wondering if Mr. Porter feels that OPA has been interfering with production as Mr. Campbell, one of the lumber consultants, thinks, and I presume he is working for the Government.
Mr. P O R T E R . I know Mr. Campbell well.
Senator C A P E H A R T . I believe he comes from Kentucky, the same
State that you come from.
Mr. PORTER. That is correct, although I was born in Missouri.
Senator T A Y L O R . Oh, well. That accounts for some things.
Senator C A P E H A R T . I can understand now why you are OPA
Administrator.
Mr. PORTER. But I left Missouri at the age of 3 months.
Senator CAPEHART. That is all right, as long as you came from
Missouri.
Mr. PORTER. The last statement that you read is one which I
think would undoubtedly reflect Mr. Campbell's attitude, and that
is where you said he thinks OPA has seen the light.
Senator C A P E H A R T . I suppose he means by that to say you are
getting religion?
Mr. PORTER. That is right. Certainly there have been so far as
I know no substantial differences between Mr. Wyatt's organization
194 EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 19,42
and OPA in connection with price policy with respect to getting out
needed materials. We have had innumerable conferences along that
line, and will have more. As to the other statements made by Mr.
Campbell, obviously I am not in position to comment on those.
Senator CAPEHART. Mr. Chairman, I would ask permission to have
this article put in the record.
The CHAIRMAN. That may be done.
(The article appearing in the Courier-Journal, Louisville, Ky., of
April 13, 1946, entitled "Aide Calls Wyatt's '46 Aim Impossible" is
as follows:)
AIDE CALLS WYATT'S '46 AIM
IMPOSSIBLE
Don Campbell, lumber consultant to Housing Expediter Wilson Wyatt, called
Wyatt's 1,200,000-home goal for 1946 "impossible" and said last night "someone
is making political capital of this emergency."
He asserted the Office of Price Administration "refuses to be realistic" and
declared "just a little break, a little give in the line, is all we need to produce."
"If private industry fails to meet that (1,200,000-home) goal this year," Campbell told the Louisvill^ Building Congress, "the Government can go in and say,
'Private industry has failed and we'll build the rest with the taxpayers' money.' "
RECALLED BY W Y A T T
Campbell served in Washington 3 years during the war, administering lumber
distribution for "war needs. On his return to his home at Lebanon, Ky., he was
elected mayor of the town before being requested by Wyatt to return to Washington as lumber adviser to the housing agency.
He said he knows "of no man more sincere than Wilson W y a t t , " but declared
he disagreed sharply with the National Housing Agency's current buildingrestriction orders. Instead, Campbell said, he advocated a nonpriorities go-ahead
for all private homes costing up to $8,000.
He asserted that, "Since VJ-day there has been no policy set on reconversion."
is
CRITICAL
OF
OPA
The Office of Price Administration, he continued, "refuses to see that it's pro
duction and production alone that's holding up reconversion."
"Certainly there is a shortage—caused by the greatest war we've ever been
through," Campbell said, "and we're in the midst of a housing hysteria. * * *
We're getting headlines and ballyhoo, but I'll tell you frankly we are not getting
houses."
He listed some of his objections to the housing agency's program:
1. It's "unrealistic—I don't think 1,200,000 homes will be built this year."
2. The $6,000 limit on cost of veterans' homes—"Sure, we want cheap homes
for veterans but we can't build them for $6,000 in metropolitan areas."
SKEPTICAL
OF P R I O R I T Y
SYSTEM
3. The Wagner-Ellender-Taft bill in general—"Why bring another buyer into
the market when there is a shortage of materials already?"
4. Veterans' priorities—"I'm skeptical of the way priorities are going."
He quoted OPA Administrator Chester Bowles as having said the Government
should subsidize manufacturers of "new and untried building materials because
we know the public won't buy them."
" I have nothing but praise for legitimate prefabrication," Campbell continued,
"but there's nothing I can say before ladies about all these crackpot prefabricated crackerboxes of which I'm afraid we're going to see too many—bought by veterans—within the next few years."
SAYS HE'S
IN
DARK
He then listed three things "that don't make much sense to me":
1. Subsidies in the building-materials field.
2. Radical prefabrication.
3. Untried materials "which the Government will have to buy if the public
won't."
1942
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 19,42
He said lumber is going into "black market channels," and insisted "the O P A
must be made to see the light" and increase lumber prices "to get lumber back
into normal channels."
He said, however, that OPA has been "seeing the light" for the last several
weeks, and has raised ceilings on plywood, fir doors, western pine, hardwood
flooring, red cypress and Lake States hemlock, with the result these materials
are being shipped. Douglas fir, redwood, and southern pine are slated for price
increases, he said.
HOPES
FOR
SUCCESS
Despite his expressed disagreement with the restrictive orders, the price controls and the 1,200,000-home building goal, he said he hopes the housing program
succeeds.
" W h a t I have said has no political tinge," he concluded. " I ' m talking as one
American to another. * * * If you don't see that you are losing the American
way of life and losing it pretty fast, then I don't think you'd recognize the Goddess
of Liberty if you passed her on the street."
In a forum period, following his talk, Campbell was asked:
'What are we going to do about it?"
" I don't know," he replied.
HOUSING BILL RALLY TO B E HELD TONIGHT
Judge Roscoe Dalton, FHA Kentucky administrator, will explain the Patman
veterans' housing bill at a rally to urge immediate passage of the original bill
at 7:45 p. m. today at the Woman's Club auditorium.
Dr. John J. Cronin, dean of the University of Louisville Kent School of Social
Work, will discuss social dangers of a housing shortage, and Dr. Argus J. Tresidder, former executive officer of the U. of L. V - 1 2 cadet program, will act as
moderator.
WILL
START
CAMPAIGN
The meeting is sponsored by the Louisville Veterans Housing Committee in
co-operation with the American Veterans Committee, American Veterans of
World War II, League of Women Voters, American Legion, Council of Jewish
Women, Association of University Women, National Association for Advancement of Colored People, and labor groups.
The meeting will begin a campaign to obtain signatures to a petition asking
passage of the bill in its original form, as requested by Wilson W. Wyatt, Federal
Housing Administrator.
Senator M I T C H E L L . I would like to comment on OPA reaching a
conclusion in a price controversy in preferred areas. In regard to a
matter mentioned here this morning, I think the conclusion was
reached in a rather expeditious manner after all the figures were
available. I would ask, though, the reasons for the delay in the
issuance of the order after the conclusion has apparently been reached.
On the Douglas fir matter the order followed the conclusion by about
3 weeks. I just wondered what sort of mechanical difficulty there
was in getting out the completed order.
Mr. P O R T E R . We have a number of problems in that regard. One
problem, which is not inconsequential, of course, is the drafting of the
order. That requires some time, and then the record of the clearance
Senator M I T C H E L L . Why does that require time? I think the public
should know the difficulties and all of the factors that you have to
consider.
Mr. P O R T E R . I think if you will review that particular order you
will find there were a number of emergency matters pending. And it
is a question of just when the particular person whose responsibility
it is to draft the order can get to it in appropriate sequence. In addition to that
Senator M I T C H E L L . And it is a matter of personnel?
1942
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF
19,42
M r . PORTER. Y e s .
Senator MITCHELL.
If you had plenty of qualified personnel you
would have no delay?
Mr. PORTER. Yes. Once the decision is given in Washington it
goes out through the regions, and it takes time to get down to the
districts. We like to give an appropriate amount of notice so that
the director in a particular office where a particular action is a problem,
does have complete notice. It consumes time. I think it is probably
too long and we will continue to do what we can to shorten it. Then
there is also the question for the order to be validated. And it must
be printed in the Federal Register. But notification to the regions
is probably the principal lapse of time. But we can give on that
Douglas fir door order, or any of those others, a complete explanation
of what the time spaces were, and the delay. But I think it is generally as I have described it,
Senator CAPEHART. Mr. Chairman, one other question.
The CHAIRMAN. Certainly, Senator Capehart.
Senator CAPEHART. I have three wires, and I have had many more
from merchants in Indiana, complaining about the trouser problem.
One states:
My trouser manufacturer informs me he is unable to accept additional orders
for trousers unless schedule K is amended.
Do you have a trouser expert here, Mr. Porter?
Mr. PORTER. That is a C P A order instead of an O P A order.
Mr. SELLS. That is a CPA problem. I can tell you briefly what
the facts are if you would like to have them.
Senator CAPEHART. Will you be able to do what this fellow wants
you to do, revise the directive?
Mr. SELLS. CPA has had the matter under advisement and expects
to make a decision on it shortly.
Senator CAPEHART. Will you briefly tell us why these people cannot get trousers?
Mr. SELLS. Schedule K channels low-price lines into essential
garments. In this case it means trousers and suits. The price lines
on cloths that are channeled into garments are woolen and worsted
fabrics up to $3. Generally fabrics under $2 are woolens, and those
above $2,50 are worsteds. Some trouser manufacturers are using
their priorities to get worsted fabrics instead of woolen fabrics that
they usually use. In this period of great demand everyone is trying
to get all the cloth he can get. So we have had the problem from
your State, also from the West coast. We have been studying the
problem and hope to make some adjustment of it soon. I do not
know exactly what adjustment they will make.
Senator CAPEHART. But they have withdrawn materials from
trouser manufacturers?
Mr. SELLS. N O . The only thing that would happen would be the
relationship between the cost of the material and the price they agree
to produce the article under this order. I think the price for trousers
is $5.50 per pair. They would have a very low margin under it.
What they have requested is to have the higher price for the goods
eliminated. I think what CPA will probably do will be to try to get
more woolens for trousers and more worsteds for suits.
1942
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF
19,42
Senator C A P E H A R T . I hope you will remember my batting average
as we want to get it done.
Mr. SELLS. I do not think your batting average would be affected
in this case, as it is a CPA case.
Senator M I T C H E L L . I wonder whether the position of the dairy
industry, both producers and processors, under the recently announced
change in the subsidy plan, was discussed this morning.
Mr. P O R T E R . Yes, it was, to some extent. I think it is quite clear,
as Mr. Bowles testified yesterday, that producers would prefer a price
increase rather than a subsidy. And it was the decision of stabilization officials that becasue of this impact upon the consumer we
would proceed by subsidy, even though the low return to dairy farmers
is brought up to what we think to be an appropriate level by means of
a subsidy. I think the general attitude of the dairy industry is one
that is addressed to the whole question of subsidies rather than to the
action in this particular case.
Senator M I T C H E L L . Of course, when you refer to the action in this
particular case, one of the organizations in Washington State goes so
far as to say that this will mean a milk famine next winter. You, of
course, have discussed very thoroughly what you think will be the
effect of this order on milk production. But you recognize that milk
production has gone down, do you not?
Mr. P O R T E R . Yes; and that is the reason for this increased return.
Senator M I T C H E L L . And you think the increased return through a
subsidy will bring increased production of milk?
Mr. P O R T E R . We certainly hope it will stop the downward trend,
and are hopeful that it will start some increases. I think it is a feed
problem as much if not to a greater extent than the price problem.
I remember when the subsidy was first developed, back in 1943, I
heard these same predictions, yes both in 1943 and 1944, when I was
in Judge Vinson's office, that the subsidy would result in calamity in
milk production.
Senator M I T C H E L L . Actually production was going up then, and
at the present time it is going down. So now it is a different picture.
Mr. P O R T E R . I think the record should show that the Department
of Agriculture agrees the return to producers that we are shooting at
and have established, is adequate. There is, of course, a difference of
opinion as to whether it should be through subsidy or price. But as
far as return to the dairy farmer is concerned, and the relationship
between dairy prices and the prices of other farm products, the
experts of the Department of Agriculture are in agreement that this
is a level which should bring forth production.
Senator M I T C H E L L . And are they in agreement on the shift of
emphasis from cream to butter?
Mr. P O R T E R . Well, I think on that Mr. Baker can perhaps speak
with more authority. But I would say in general they do not like,
any more than some of the rest of us do, these various control orders.
They are difficult to administer, are vexatious, but in the circumstances we felt there was no alternative to stop diversion to ice cream
and other products and back into more basic foods.
Senator M I T C H E L L . One processor wires that the shift will mean
the farmer will skim his own milk and the processor will lose that from
the economy, and the dealer will lose about a dollar a hundredweight
of net income.
1942
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF
19,42
Mr. P O R T E P . I do not follow that. Maybe Mr. Baker can answer
that question for you.
Mr. B A K E R . In that farm-separated cream area he is doing that now
and selling his cream. The problem is to make sure that that cream
goes into butter as far as possible rather than into an excessive quantity of butterfat or ice cream. With respect to the farmer now selling
fluid milk, we see no reason why there would be any incentive for him
to separate the cream and feed the skimmed milk, unless he was in the
position where he felt he had to do it. I am at a loss to see how it
could encourage farm separation, except where he may have been
selling perhaps to a manufacturer and he cannot now separate the
butterfat out and sell it for butter.
Senator M I T C H E L L . Well, that is the point made in this area I
speak of. Washington is a fluid-milk area.
Mr. B A K E R . Y O U are now referring to the State of Washington?
Senator M I T C H E L L . Yes.
Mr. B A K E R . It has to be kept in mind that there are manufacturing facilities there, and also in Oregon, but in general he would have
a free choice whether to ship to the coast or to Spokane as fluid milk
class A, or whether to separate and sell his butterfat. He would choose
whichever he thought the most profitable at the time.
Senator M I T C H E L L . The disparity is not such that he would waste
skimmed milk?
Mr. B A K E R . N O . It would be sold to the powder manufacturer or
the man who is going to make it into food.
The C H A I R M A N . Y O U may proceed with your statement, Mr. Porter.
Mr. P O R T E R . At the recess we had reached the subject of meat.
This committee will, I know, be urged by the American Meat
Institute to legislate decontrol of meat prices and the abandonment of
meat subsidies. I wish I could acquiesce in this proposal. Of the
many difficult problems that have confronted OPA, none have been
more trying than those concerning the pricing and distribution of meat.
And these difficulties have developed the peculiar habit of reaching
a crisis stage, each year, just as our legislation comes up for renewal.
In previous years the institute's nostrum has been higher price
ceilings. This year it would cure our ills by removing controls
entirely.
Senator C A P E H A R T . I presume there has been no lobbying or
excessive pressure brought to bear by OPA; that the}7 have just waited
until the time the bill comes along annually?
Mr. P O R T E R . A S far as I am concerned, we make our case before
the established committees of the Congress; and I think everyone,
including the Meat Institute or anyone else, has the same right.
Senator C A P E H A R T . I agree that both have equal rights and should
have equal rights.
Mr. PORTER.. The argument appears to run that our efforts to
control meat prices have failed so signally that we should confess our
inability to cope with the situation, drop our controls, and let events
take their course. Admittedly there is a black market in meat.
Admittedly if there were no price control, there would, by definition,
be no black market. But the suggestion that we lick the black market
by dropping controls sounds to me like suggesting that we avoid
traffic violations by repealing our traffic regulations. I am surprised
1942
e x t e n d price c o n t r o l and stabilization acts of
19,42
that this proposal should be seriously advanced by the recognized
spokesmen of a responsible industry.
Let us, however, soberly analyze the problem and see where we
stand. In analyzing it, we must realize that we are concerned not
merely with getting available meat supplies fairly distributed to consumers throughout the country at reasonable prices. What we decide
to do about meat also vitally affects the supply and prices of grain and
grain products, the supply and prices of dairy products, and our ability
to make the food-for-famine program successful in helping to feed
our war-devastated allies. As a price stabilization decision it is
important, but in terms of human starvation it is even more so.
The heart of the trouble is the competition among buyers of live
animals, particularly cattle. Cattle just cannot be graded on the hoof.
This led OPA originally not to carry controls further back than the
slaughterer. But the more the slaughterers received, by price or by
subsidy, the more they bid themselves into a squeeze by increasing
what they paid for live animals. Finally OPA evolved the present
method of requiring slaughterers to average out their purchases so as
not to exceed the permitted maximum prices on a dressed weight
basis for a monthly accounting period. Under this system, no single
purchase constitutes a violation if it is under the overriding ceiling,
which means that enforcement on a spot basis at the live animal markets is impossible. The legitimate slaughterer can, and by and large
does, stay in compliance. But the fly-by-night buyer stepped into the
market and bid more than the legitimate slaughterer could pay and
remain in compliance. That is where the black market starts.
Recently some wholesalers, retailers, hotels, and restaurants began
to bid extremely high prices for cattle, often, through either ignorance
or willfulness. They would then have the animals custom-slaughtered;
that is, slaughtered for a fee by an established slaughterer. OPA
moved to break this practice up on April 1 by knocking out these
newcomers to the custom slaughter field. That did not do the whole
job, however, and the Department of Agriculture and OPA have'just
jointly announced the reinstitution of a slaughter-control program
similar to the one abandoned after VJ-day. This program will give
each slaughterer a fair chance for his share of the available livestock
supply.
Senator M I T C H E L L . Mr. Porter, can you tell us anything about the
number of slaughterers before and after VJ-day?
Mr. P O R T E R . I do not know how complete our records are on that.
It would be pretty much of a guess, but might be interesting. I believe Mr. Ericson could give you some over-all information on that.
Senator M I T C H E L L . All right.
Mr. E R I C S O N . We had about 1 6 , 5 0 0 slaughterers registered under
the control order in February of last year. Following VJ-day that
order was suspended and it was not necessary for a person to obtain
a license to slaughter cattle. So we have no recent figures on that.
Senator M I T C H E L L . Could you give any comparison between those
16,500 slaughterers and the number in the field prior to any control?
Mr. E R I C S O N . There are no records available on that. At one time
the Department of Agriculture did have 26,000 licenses outstanding,
which was in 1943, I believe.
Senator M I T C H E L L . That established a sort of control.
Senator C A P E H A R T . Then you have lost about 10,000 slaughterers?
1942 e x t e n d p r i c e c o n t r o l a n d s t a b i l i z a t i o n a c t s o f
Mr. P O R T E R . We do know that since VJ-day a number of retail
establishments—and I have had a number of those cases called to my
attention—where the law prohibited cattlemen slaughtering, and that
eliminated newcomers from the market. How many there are I do
not know. But it seems there are a lot of them because a great many
people who could not get their supply in the regular channel bought
live animals and had them slaughtered.
The C H A I R M A N . Y O U may resume your statement, Mr. Porter.
Mr. P O R T E R . This was a hard decision to make, but it was a necessary one. We know that the same action was severely criticized by
many Members of Congress last year, and we disliked the necessity
of going back to it. It should be said, however, that its effect is much
less drastic than last year because the available supply of meat is much
greater. This new program will benefit established slaughterers because the pressure of the Johnny-Come-Lately's has kept them from
getting their proper share of the supply at fair prices. I firmly believe
that this program will largely solve our difficulties.
Senator C A P E H A R T . But you still give the war veteran a slaughterer's
license?
Mr. P O R T E R . Yes, sir. Under this program we will have to make
certain arrangements for the veteran. And since VJ-day, judging by
the way brick and mortar has gone into slaughtering activities, we
will have to consider it.
If, on the other hand, we dropped all our controls, what would
happen?
The answer to this question calls for a hard look at the facts. Meat
production is high, as it has been all during the war. Early forecasts
for 1946 indicate a production 33 percent above 1939, in spite of feed
limitations. But demand is unprecedented and will continue so.
. The real problem is to get available supplies fairly distributed
among slaughterers. Forgetting prices for the moment, the removal
of controls would surely lead to distortions of distribution such as we
have never seen, because it would encourage still more buyers to enter
the live-cattle market, and because the packers who distribute their
product throughout the Nation would still have to outbid other
buyers—with no restraints upon the bidding except what the traffic
will bear. With consumer demands as they are today, the traffic
will bear a lot. I would be surprised if the 20-percent increase conceded by the American Meat Institute did not fall short of the mark.
But assuming it to be only 20 percent, it would mean an increase of
about $1,000,000,000 in the Nation's food bill during the coming
year. Meat accounts for more than 7 percent of the average family's
living costs. A 20-percent increase in meat prices would add $40 to
its grocery bill in the year ahead.
We confidently believe this 20-percent increase is just a minimum.
I believe it would be twice that amount, and I do not think anybody
can say where it would stop with this heavy demand.
That is, however, only the beginning. The removal of price ceilings would encourage feeding cattle to heavier weights. This would
drain more and more of our limited feed supply from the dairy and
poultry industries and the industries making products from grain.
This scramble for grain would increase the price pressures on dairy
products and such grain products as bread and breakfast foods,
which make up another 13 percent of the average family living costs.
19,19
180
e x t e n d price, c o n t r o l and stabilization a c t s of
194 2
I can assure you that price increases in these products would be
inevitable.
Senator C A P E H A R T . Mr. Porter, let us go back to cattle for a moment: I am just wondering when this problem can ever be solved
if your figures and your contentions are correct. We certainly cannot raise more cattle than we are raising at the moment. Oh, I presume we could, but I doubt if we would. We could probably raise
more hogs. When will we be able to eliminate OPA from the meat
market?
Mr. P O R T E R . Well, I would hazard—Senator C A P E H A R T . It is a discouraging situation. It is the assumption that it will stay with us, is it not?
Mr. P O R T E R . I think this much is true, that we needed during wartime, with family incomes—and I think the figure almost everybody
agrees to is around $2,500, that there are people consuming fluid
milk and meat that were never in the market, and that
Senator C A P E H A R T . And we hope they will continue to do it.
Mr. P O R T E R . Yes. What shifts and readjustments will have to be
made in our agricultural plan to supply those demands represent a
question of time and effort.
Senator C A P E H A R T . If your contention is correct, one or the other
of two things will happen: We must either get greater production of
meat or our people must consume less. That would mean a lower
standard of living. And that situation is rather discouraging.
Mr. P O R T E R . Well, I think when there is a
Senator C A P E H A R T . D O you think you might be overestimating it?
Mr. P O R T E R . N O ; I do not think so. There is this factor we are
going to have to face, and I assume this is what is in your mind: That
when these controls are lifted, when OPA goes out of existence, let us
say in June of 1947, that naturally there are going to be some adjustments and shifts, not only in our whole price structure but perhaps
in our agricultural relationships and production plans. And I take
it that the whole rationale of extending OPA is based upon the existence of inflationary pressures, which will be loosened to a great degree
at that time. Then I think further that we can hope the world-wide
food situation will have been alleviated during the coming year to the
extent that our foreign demands and the demand for extensions will
have lessened. With those two factors we will have to take the
chance of getting out of it at that time.
Senator C A P E H A R T . Possibly production will remain up, but consumption will be decreased to the point where it will automatically
take care of itself.
Mr. P O R T E R . N O . I am hoping, except as may be necessary to
meet our foreign demands, that we will maintain the highest standard
of living and the consumption we had during the war. But I believe
it will be safer to let price adjustments in the free economy move and
determine this thing, say, from then on rather than now.
Finally, the effects of such a scramble on our commitment to help
feed starving people in devastated areas are self-evident. The direct
and immediate result of the proposed action would exact a further
toll of human suffering abroad.
The renewal of specific controls over dairy products and meat is
dictated not only by the necessity for effective price control but as
prerequisites to meeting this country's commitments to the hunger
181 e x t e n d p r i c e , c o n t r o l a n d s t a b i l i z a t i o n a c t s o f
194 2
areas abroad. We cannot hope to discharge the obligations to humanity we have undertaken unless we move promptly to restore these
controls. They are moderate and, in my judgment, represent the
minimum necessary to bring about order in a situation created by the
unprecedented pressure of demand against the supply of these basic
foods.
These price and production controls will not, of course, work perfectly. But they represent a far better answer to our problems than
that of abdicating responsibility by legalizing the black market.
Senator T A Y L O R . Mr. Porter, a packer from my State called on me
the other day, and I will say that I know him to be absolutely honest,
and he said that he was going'to have to go out of the business because,
as you stated awhile ago, he would go to the sales yards to try to buy
cattle; that there he would bid as high as he could go and remain within
the ceilings, but that some stranger would come up and bid a few
cents more. What will these regulations do to help that man?
Mr. P O R T E R . I think they will give him more opportunity to get
his equitable share. He will have an equity.
Senator T A Y L O R . Yes; an equity, but what will the stranger have?
Mr. P O R T E R . This stranger that comes in will not have a license to
slaughter and he will be out of business unless he can qualify under
whatever exemptions we work out.
Senator C A P E H A R T . Y O U have conditions somewhat like in the
prohibition era. He will be out of sight but not out of business.
Senator T A Y L O R . That is what I am worried about. This Idaho
packer told me that on an occasion when they sold to the stranger
cattle somebody decided they were going to follow him and see what
happened to these cattle. They trailed him and found that he took
them out along the road, and evidently he saw that he was being
trailed and so he turned them into a pasture. Then some more cattle
were brought up and turned into that pasture, and then afterward
they disappeared. How will you discourage such a black-market
operator?
Mr. P O R T E R . We are intensifying our efforts in that field. I had
heard before I went back to OPA a good deal of discussion along this
line: Well, this is a simple matter if you concentrate your enforcement
facilities at the yard and follow through to the slaughterhouse and
find out who is proper and who is not. Well, it is not that simple.
They can use all manner of devices to get around it. I was amazed to
discover the job our enforcement people are doing. For instance,
the first 2 months 1,285 actions were filed at the preretail levels on
meat alone. This program will give us a better chance to see who is
in compliance and who is not, because it will eliminate, we hope, a
substantial number of those people who are now bidding the market
up and diverting supplies from your established slaughterers. If
that does not work we will try to find some other solution. But
certainly I do not believe that your slaughterer would be in much
better position if it were a free market in which he had to outbid those
now engaged in what are black-market operations.
* Senator M I T C H E L L . His contention is that if he bids in a free market the regular slaughterer can utilize all of the economic value of the
carcass and therefore can bid higher than the fly-by-night man who
does not use all of the carcass.
182
e x t e n d price, c o n t r o l and s t a b i l i z a t i o n a c t s o f
194 2
Mr. PORTER. This means that the big operator goes into the cattleproducing market. In addition to that we have certain large-time
slaughterers who are slaughtering much more than their regular proportion. The new control is to level off the volume those people can
slaughter. It will give the regular slaughterer an opportunity to obtain a regular supply of livestock. It is also much easier, of course,
to observe what a person is doing in complying than in following
through and seeing that he complies with the price side.
Senator T A Y L O R . All I can say is that I hope it works, because
there exists a very distressing situation.
Mr. PORTER. If we again, through this program, get a supply of
livestock back into established channels that will bd a major step.
It is my general observation that when these control orders were effective during the war that the various agencies of Government in charge
of enforcement were pretty much on top of it, although there were
still some black-market activities. But when all controls were lifted
after VJ-day you saw lumber and meat begin to dissipate all over the
markets. No price control can be successlul unless you have a measure that gives you some control of the supply in commodities of this
sort.
Senator M I T C H E L L . I would like to read into the record a paragraph
from a letter I received from Carstens Packing Co., in Tacoma, Wash.
The writer outlines the difficulty of getting cattle, and says:
In the Portland market, which has always been our chief source of supply and
where we should be buying anywhere from 400 to 600 cattle per week, upon checking our records we find that we have only been able to buy 124 head out of this
market since the 1st of last December, and these represented purchases we could
make to stay within compliance.
Mr. Porter, can you comment on that?
Mr. ERICSON. That is what our program is aimed at, to help these
regular slaughterers obtain their regular volume, or more nearly their
regular volume of livestock and remain in compliance with the regulations. I will say that Mr. Maxwell, who is the general manager of
that firm, was with us this week when we discussed it in Chicago.
. Senator M I T C H E L L . Was he satisfied that it would bring the results
you hope for?
Mr. ERICSON. I do not think he expressed himself one way or the
other on that. But he also complained about this custom of slaughterers who have come in and taken a lot of cattle he normally got.
This program is aimed at correcting that situation.
Senator M I T C H E L L . Would the situation he mentions be true for
the whole country? I mean where he says he has only been able to
buy 124 head of cattle out of the market since the 1st of last December,
whereas he should be buying anywhere from 400 to 600 cattle per
week?
Mr. PORTER. The total volume of livestock, cattle in particular,
being marketed now is nearly as large as it was last year. There has
been diversion in certain areas, and in some areas it has been severe,
and that is one of those areas. That is all.
Senator MITCHELL. Why was that diversion?
>
Mr. PORTER. We have a bigger influx of people into the market,
with more people buying, and consequently a greater strain on our
ceiling prices. The markets do not have to be out of line much to
throw a man out of compliance. In some cases a man is out of line
183
e x t e n d price, c o n t r o l and stabilization a c t s of
194 2
with a price of 25 cents to 50 cents per hundredweight more. It does
not take much additional pressure to push the market up to where the
regular seller finds difficulty in getting his supply.
Senator M I T C H E L L . Y O U mention that there are factors which would
push the Pacific Northwest market up out of line. What are they?
Mr. P O R T E R . I presume it is because there are more people in that
market relative to supply.
Senator M I T C H E L L . D O you mean more people buying, or the
demand of increased population?
Mr. P O R T E R . The demand is still strong there. In addition to that
you have the seasonal decline in cattle, which is rather severe in the
Northwest at this time of year. That is a regular thing and it is a
little difficult to get ample cattle in the Northwest.
Senator M I T C H E L L . SO you have the normal seasonal trend which
is augmenting an already bad situation?
Mr. P O R T E R . Yes. The same thing is true in other areas at this
time of year. For instance, we have a rather bad situation in Texas
this time of year, although Texas is normally on an exporting basis.
Mr. Chairman, shall I proceed with my statement?
T h e CHAIRMAN.
Yes.
Mr. P O R T E R . I now come to retail cost absorption. Since its
birth, OPA has never been without some commodity crises such as
those I have just reviewed. They evidence the compelling need for
price control under present conditions—-not its dispensability. One
after another, these problems have arisen and for a time have created
inconvenience, confusion, and controversy. One after another, they
have been solved, sometimes to recur in new forms. In addition,
however, there are a few hardy perennials, preeminent among which
is the demand of the retail trades to be exempt from the requirement
of cost absorption.
Cost absorption, as OPA has often and accurately claimed, is the
keystone of price control. The pricing standards to which manufacturers are subject are all essentially cost absorption standards, and I
have yet to encounter a persuasive argument why the retail trades
should be freed from taking their share of the burden.
Certainly the retail trades are profitable. Department store profits
are running 1,000 percent or more above peacetime levels and, now
that the excess-profits tax has gone, their net after taxes will be exceedingly high. Moreover, our surveys show that the small stores
compare very favorably with the large ones. Sales volume, which is
so great a factor in retail profitability, has not merely held up to wartime levels; it has continued to exceed them.
OPA's standards for retail cost absorption are such that there is
little or no likelihood that serious hardship will result to any seller.
Particularly is this true in the case of sellers specializing in "big
ticket" items such as the larger household appliances and automobiles.
As to such commodities, the most that OPA has required is that the
trade absorb manufacturers' price increases down to the average percentage gross margin which the trade actually realized in peacetime.
In view of the liberality of that rule to the retail automobile dealers,
I was dismayed to learn that the House Committee on Banking and
Currency had approved an amendment sponsored by. the automobile
dealers and deftly tailored to cover their special case, although extending also to other reconversion goods. It would compel OPA to pass
184
e x t e n d price, c o n t r o l and s t a b i l i z a t i o n a c t s of
194 2
through all the recent increases in auto manufacturers' prices to the
consumer, pyramided with the full trade discounts and handling
charges, which, on paper, the auto dealers had obtained in peacetime.
On a rough calculation, this amendment, if adopted, would be likely
over the coming year to transfer an extra $425,000,000 from the
pockets of car purchasers to the pockets of car dealers. On an average
it would boost the prices of the largest selling models of Chevrolet,
Ford, and Plymouth by $85 per car. This would not aid production.
All of the increase would go to the dealer who already is receiving an
average gross margin per car $68 higher than his peacetime realized
margin, when applied to the October 1941 prices of the corresponding
models. Moreover, during the war years our surveys show that
dealers' net profits have been running at double their prewar average,
despite the sharply diminished volume of sales.
The abolition of retail cost absorption in all fields would be still
more damaging. It would at once add a billion and a half dollars to
the cost of living. It would be a body blow at stabilization.
Senator C A P E H A R T . Mr. Porter, do you mean to say that automobile dealers have been running along pretty well, that their profits
have been above the prewar levels?
M r . PORTER. Y e s , sir.
Senator C A P E H A R T . And they have been selling just used cars?
Mr. P O R T E R . NO. I am talking from the standpoint of their
repairs and service, and the sale of what accessories that have been
available. The survey which the agency has made shows—and I
think there is not too much difference in the showing of the trade
association. While they have criticized our survey, yet they have
not produced any figures of their own to show where we are wrong
As I started out to say, we have made a survev of 300 dealers, and
taking 1936-39 as 100, their earnings in 1941 show $281, and in 1944
they show $202, and in 1945 they show $235.
Senator T A Y L O R . D O they represent their gross earnings before
taxes?
Mr. P O R T E R . That is the net profit.
Senator T A Y L O R . Then even without any cars to sell they have made
these higher profits by being able to make more profit on their repair
work and on second-hand cars; is that it?
Mr. P O R T E R . That is right. As far as dealers' prospects for the
coming year are concerned, it is our judgment that it will be the most
prosperous year that the automobile dealers have ever experienced.
And one of the reasons for that is that they will get higher margins
per car than ever before. And we know that you do not have to
make any sales effort on automobiles now. They have long priority
lists with this tremendous backlog of demand, and there is a minimum
of sales expense involved. And they will be unlikely to make the
customary prices on trade-ins and their service departments will
actually continue operation at full blast.
Senator C A P E H A R T . Mr. Porter, I do not want to dispute those
figures, but I do wonder how generally they apply. You say you took
300 automobile dealers. It is difficult to understand how an automobile dealer with no cars to sell could make greater profits than in a
prewar year.
And right there, Mr. Chairman, may I suggest that we request a
representative of the automobile dealers' association to appear here
as a witness?
185
e x t e n d price, c o n t r o l a n d stabilization a c t s of
194 2
The C H A I R M A N . We will have a witness to tell us their side of the
problem when they appear.
Senator C A P E H A R T . Mr. Porter, frankly I do not understand your
figures.
Mr. P O R T E R . We would like to see their figures. They made a
survey of their own but
Senator C A P E H A R T . I do not know that it makes any difference on
the particular problem but it is an almost unacceptable situation, is
it not?
Mr. P O R T E R . It is surprising when you look at these figures.
This survey was made rather recently and under conditions which
we think show the situation. We have had proof of one thing and
that is that the service departments of automobile dealers have always been the chief money makers for the dealers, and as the wartime
experience now proves. And they now will not only have that but
the higher gross margin on automobiles than ever before.
Senator C A P E H A R T . D O you mean higher because 2 0 percent of
$1,000 is more than 20 percent of $800?
Mr. P O R T E R . Yes; for one thing.
The C H A I R M A N . Mr. Mallon, the president of the National Automobile Dealers Association, is going to be here the 23d.
Mr. P O R T E R . Well, I hope that again you, if I may suggest it,
Senator, ask him in what respect he figures that our survey—which
we admit may have involved somewhat of the larger dealers—but in
what respect the larger survey that his organization made conflicts
with the general conclusions that we have reached from our survey.
General pricing standards: This committee has considered at
length OPA's basic pricing standards, and I doubt that much would
be added to your knowledge by a further review. However, I should
like to call the committee's attention to a new product standard
which has been developed by OPA to meet the needs of the transition
period.
This transition product standard covers the pricing of all products
except those in a limited number of categories which I have outlined
in a memorandum I should like to file with the committee. Under
this standard, the OPA will increase ceiling prices for any products
when the ceilings fail to cover the industry's average total cost to
make and sell the product. It, therefore, sets a higher level of price
than our minimum product standard which ordinarily covered only
the industry's manufacturing cost.
And I would like to make it clear that this standard is used on a
particular product even when the over-all earnings of the industry
from all of its product are at least equal to its peacetime earnings.
So I do not want to leave the impression that we allow the industry
only total cost on each and every product and hence no profit over-all.
If the over-all earnings are below their peacetime standards, we bring
up the industry average to that, but this transition product standard
is in addition to that, where total costs are allowed on that basis.
There are, of course, a number of situations where the need for
expanding the supply of a particular product essential to the transition
will require a still higher price adjustment than would be called for
by the transition product standard. That standard will in no way
obstruct the taking of such action.
85721—46—vol. 1
13
186
e x t e n d price, c o n t r o l and s t a b i l i z a t i o n a c t s of
194 2
(This material furnished for the record by Mr. Porter).
S T A T E M E N T B Y O P A A D M I N I S T R A T O R P A U L P O R T E R TO THE H O U S E B A N K I N G AND
C U R R E N C Y C O M M I T T E E ON E X T E N S I O N OF THE E M E R G E N C Y P R I C E C O N T R O L
ACT, MARCH 29, 1946
( T h e c o m m e n t on pricing standards referred to in the Administrator's statement
of April 17 is contained in Pricing Standards Section herein)
T h e American people, through their representatives in Congress, n o w face one
of the most critical issues of our time. Can prices a n d rents be maintained
during the coming year, close to their present levels while production is expanding
t o a point which will make price and rent controls no longer necessary? Or must
we face general inflation with its certain aftermath of deflation and depression?
There is serious danger of a severe cumulative inflation in the next 12 months
or so. I do not mean just a gradual adjustment of prices to a moderately higher
level. I mean a 30, 40, or 50 percent increase in prices on the average, with all
the spiraling of prices, wages, and costs which that would entail.
If we can get safely through the next 12 months, I believe it probable that the
danger of a cumulative spiral of inflation will be past. The next 6 months will
be the most critical of all.
T h e record of testimony before this committee has made it clear that we are in
danger. I will not burden the committee with accumulated evidence of the fact
that the danger of severe inflation is greater now than at any time since the
outbreak of the war. T h e testimony before your committee by various groups
urging price relief of one sort or another is but one indication of the pressures that
exist.
Perhaps even more important than the inflationary economic factors in our
situation are the developing rivalries between business, labor, farmers, landlords,
and other groups who are concerned about their relative positions in the economy.
If these groups fear a substantial rise in prices, nothing can prevent a struggle f o r
at least equal increases in m o n e y incomes for all groups. The equities in the
relations among different groups are not perfect. A n y group can rightfully point
t o some injustices and to many mistakes. W e must, and will, do everything in
our power to correct mistakes, and to remove inequities insofar as this can be done
without precipitating inflation. But any attempt at wholesale correction of
inequities in the present situation will only produce the far worse inequities of
inflation and collapse. W e cannot afford a continuation of conflict among ourselves over a question which so critically involves our whole national well-being.
T h e economic and social results to our own country of inflation and resulting
collapse are obvious. The economic stability of much of the rest of the world,
n o w very precarious, is also at stake. A severe inflation and collapse here would
be reflected abroad. This might well wreck for years all constructive attempts
at the sort of international economic relations which we must have as a firm
support for international peace.
I want to be completely frank about this. As a matter of fact I have b e c o m e
increasingly concerned during the several weeks I have been at O P A about the
number and extent of price adjustments which we have been required to make.
There is justification for these actions in cotton textiles, automobiles, lumber, and
certain f o o d products. But the vigor of the claims presented b y the producing
groups involved clearly indicates that but for O P A price controls there would be
a swift and, in m y view, a disastrous upward sweep of prices in these and other
fields.
I a m convinced that we can avoid serious i»flation, if we have the guts and
teamwork to do it. T h e Congress, the different groups in the country, the
O P A , and other Government agencies have the know-how to prevent it. It can
be prevented, but only if we have the tools to do it with. It can be prevented,
but only b y the kind of combined effort and determination on the part of the
Congress, the Government agencies, business, agriculture, labor, and the general
public which brought us successfully through the war.
This year we have made and will be making a considerable number of price
adjustments to meet the needs of the transition period. But I a m convinced that
we can continue to hold living costs almost as stable as we have since the hold-theline order was issued in April 1943. At the same time, we can avoid genuine
impediments to production. But we can do this only if the price-control law is
extended promptly without weakening amendments, only if present subsidies are
continued, only if the Second War Powers Act is extended, and only if all groups
in the country give support to the price-control program.
187
e x t e n d price, c o n t r o l and stabilization a c t s of
194 2
Plainly, inflation can be prevented only if we all pull together and if we honestly
face the clear need for doing a number of very specific things.
L.
PRODUCTION
First of all, we must have production. The O P A cannot assume m a j o r responsibility for getting out the goods. Reaching this goal must depend principally
upon American workers, farmers, and businessmen. The Government can help—
in m a n y ways. T h e Civilian Production Administration, the Department of
Agriculture, and the Labor Department all have substantial responsibilities to
help business, labor, and agriculture to keep production rolling. The O P A can
and will help b y making every effort promptly to adjust ceiling prices whenever
they are an impediment to production. The O P A can also help b y maintaining
stable materials prices which will provide industry with a basis for confidence
a b o u t future costs. These responsibilities the O P A assumes to the full extent of
its resources.
But the primary responsibility for getting out the goods rests with management, labor, and agriculture. Unless we have production we cannot finish the
j o b we've set ourselves. Everyone agrees on this. A n d while we are all agreeing
that production is the first order of business, let's not forget the remarkable
record that management, labor, and agriculture have already turned in since
VJ-day.
Unquestionably, there are many specific instances in which production has
been held up b y shortages of materials, equipment, manpower, industrial disputes,
or b y price impediments. T h e over-all figures of production and employment,
however, show conclusively that we are beginning t o roll at nearly t o p speed.
E m p l o y m e n t is at the highest levels in our peacetime history. Almost 52,000,000
m e n are at work.
Despite the rapid rate of demobilization, unemployment is only slightly more
than half the 1941 figure. According to the Federal Reserve Board, production
is now above the level of any previous peacetime period and far a b o v e the 1936-39
average—in spite of our recent troubles in steel, automobiles, and electrical
equipment.
G l o o m y forebodings about the future of production which are often expressed
when price control is under discussion are not borne out in the financial sections
of our newspapers. Let me read y o u a few headlines which have appeared in the
last 2 or 3 weeks.
" T h i r t y - t w o billion record forecast in f o o d " — " S h a r p improvement in hard
goods supplies anticipated by retailers"—"Industry spends more than two billion
on plant during first q u a r t e r " — " R e c o r d resources to be used to finance National
Dairy Products Corp. e x p a n s i o n " — " D u p o n t reveals expansion p l a n s " — " A m e r ican Airlines plans financing of 80 m i l l i o n " — " R e c o r d 1946 outlay planned in
s t e e l " — " U n i t e d Fruit appropriates millions for e x p a n s i o n " — " B r i c k production
shows sharp r i s e " — " S h o e production shows 5 percent i n c r e a s e " — " R u b b e r consumption in January near p e a k " — " K e r o s e n e yield strikes new p e a k " — " B r a k e
Shoe plans to add new plants." These are typical of the plans and attitudes of
American business.
Price control is not holding down over-all production. Little, if any, increase
in total output could be expected as a result of a general rise in prices. On the
contrary, the real danger facing us is that the fear of a general and cumulative
increase in prices will give rise to business uncertainty, hoarding, and speculation
which would hinder production and check the flow of goods to the markets.
So it is vitally important that the general stability of prices be held.
But the important thing is that if we are to win the fight against inflation, we
must have all-out production.
2. P R I C E
ADJUSTMENTS
T o be sure of getting production O P A must see to it, as far as humanly possible,
that individual prices are not an impediment to the production of particular firms
or industries. I have already expressed m y concern over the effect on the price
level of the large number of price adjustments constantly being made.
But
within the present pricing standards, O P A must assume responsibility for flexible
price adjustments wherever necessary to eliminate hardship and stimulate output
of essential products.
Although a general price rise would be more likely to retard than to stimulate
the flow of goods to the markets, selective price adjustments are being used and
must be used to remove obstacles and, on the recommendation of the supply
188
e x t e n d price, c o n t r o l a n d s t a b i l i z a t i o n a c t s o f
194 2
agencies, to help attract necessary manpower, materials, and equipment to the
points where expanded production is most needed. These adjustments must be
made promptly if they are to be effective in breaking production bottlenecks and
in creating an atmosphere conducive to the settlement of industrial disputes.
O P A ' s record for speed is not all that one could wish it to have been. But in
the clamor of complaints, it is important to remember the achievements O P A
has made since VJ-day in streamlining its procedures to meet the burden placed
upon its staff b y this period of rapid readjustment.
Y o u are familiar with the reconversion pricing formulas; the special pricing
provisions for new, small manufacturers in many parts of the consumer durable
field; the incentive pricing for low-price clothing and furniture, and the so-called
general rescue adjustment provision to relieve hardship for individual manufacturers in a loss position.
Let me emphasize some other pertinent facts f r o m the testimony at the beginning of these hearings. In the 8 months between V E - d a y and the end of January
1946, O P A made 192 industry-wide discretionary increases in ceiling prices to aid
production of essential commodities or to correct maladjustments or inequities
that would interfere with transition. A m o n g these were numerous increases t o
break bottlenecks, especially in the building materials field, and increases to stimulate larger production of low-priced consumer goods. These 192 industry-wide
increases were in addition to 170 industry-wide increases to meet the minimum
requirements of law and 85 industry-wide increases to correct certain particular
inequities.
In the same period many thousands of individual c o m p a n y adjustments were
made to aid essential production, to aid transition, or to remove hardship.
Recently, following the adoption of the new wage-price policy in the middle of
February, O P A adapted its procedures to handle quickly the large number of
price cases which were anticipated.
Priority was given to industry-wide cases as the most efficient and expeditious
w a y of handling large numbers of individual cases at once. Special handling was
given to actions necessary to meet supply emergencies—both industry-wide and
f o r individual firms. A n d arrangements were made for p r o m p t action where necessary to stimulate larger output of low-priced goods. Methods were developed
f o r quick adjustment of data already on hand t o reflect current operating conditions. And simplified forms f o r telegraphic response were designed f o r use \yhere
additional data were needed.
As a means of concentrating the efforts of its limited manpower on the more
important cases, O P A is also extending automatic, self-pricing b y businesses in
c o m m o d i t y fields where looser pricing methods will not substantially threaten
general economic stability.
T h e results of this streamlining of operations m a y b e illustrated b y the rapid
handling of adjustments in prices of basic steel and the steel processing and fabricating industries. Price increases covering the whole field of basic steel products
were issued promptly after adoption of the new wage-price policy and settlement
of the steel wage issue. T o be specific, within 10 days, meetings were held with
23 industry advisory committees representing various branches of steel fabrication
and processing and machinery industries for which steel was a heavy factor in costs.
B y the third week in March, price increases had been issued for about 10 m a j o r
branches of steel processing and fabrication and f o r miscellaneous machinery
products f o r which steel was a large element of cost. Industry meetings and
collection and analysis of data are proceeding rapidly for other steel-using industries which have asked O P A t o postpone action in their cases until they have
reached wage settlements which, upon approval, can be taken into consideration
along with the increases in the cost of steel.
A study has also been made recently of individual company adjustment p r o cedures and arrangements are being made for a streamlined method of handling
cases to reduce the number of reviews and other delaying factors. T h e result
of this work is already beginning to show in some fields in speeding the handling
of individual adjustments.
I have said that O P A must make price adjustments where needed to remove
impediments to production. This is our intention and this is what we are doing.
It is obvious, however, that this does not mean that O P A can give a price increase
in every case in which it is alleged that the existing ceiling is hampering production. N o r does it mean that O P A can always give the amount of price increase
requested. But if we are to prevent inflation b y getting all-out production, the
O P A must and will act promptly t o remove price impediments.
189 e x t e n d p r i c e , c o n t r o l a n d s t a b i l i z a t i o n a c t s o f 194 2
3. P R I C I N G
STANDARDS
OPA must operate on standards and by even-handed application of these
standards to all. Price administration cannot be conducted on a horse-trading
basis without rank discrimination and unfairness which wpuld discredit the whole
operation. Moreover, OPA cannot prevent inflation unless it restricts price
increases to cases where they are needed and limits the amount by standards
appropriate for the particular purpose. This means that unless we want to take
unwarranted risks there can be no weakening of the statutory pricing standards
of the law.
In duscussing pricing standards and later in discussing decontrol I shall have
to register disagreement with a few—but only a few—of the conclusions of the
recent reports of the Colmer committee and of the research staff of the Committee
for Economic Development. To avoid any possible misunderstanding I want
to emphasize that I consider both of these reports to be thorough, careful, and
thoughtful studies of the problems .of price control in the transition period.
We have benefited much from them.
I do not believe I need to repeat in any detail our basic pricing standards
which Mr. Bowles presented to this committee not only earlier in this hearing
but also in 1944 and 1945. However, there is one point applicable to all those
standards which I wish to emphasize. Each standard is a cost absorption standard. That means that it sets a limit to which OPA may require cost absorption
of any industry or on any product. In other words, it sets a floor under the
earnings of the industry—either overall or on the product.
In addition to the liberal pricing standards specially written into the act for
the protection of agricultural and fishery commodities, cotton textiles and meat,
there are at least 10 ways in which OPA pricing standards set floors under the
earnings of American business which will protect it from being squeezed between
maximum prices and rising costs during the coming year:
Floors for industries and trades
1. Every industry not operating at low volume must have ceiling prices enabling
it to average at least its base period rate of earnings on its present net worth.
2. Every such industry which in the base period had earnings at a depressed
level must have ceiling prices enabling it to average a higher rate of earnings
than it averaged in the base period.
3. Every industry operating at low volume must have ceiling prices which,
when output reaches a good volume, will enable it to average at least its base
period earnings.
4. Every industry making more than one product must have ceiling prices
on each product which will enable it to cover its average total cost of making
and selling that product. (To this new standard—-which we call our "transition
product standards"—there are a few exceptions which are covered by a memorandum we are filing with the committee, as Mr. Wolcott requested).
5. Any industry making an essential product in short supply because of present
ceilings must be granted increases in those ceilings to the extent needed to bring
out the essential supply.
6. Every distributive trade must have ceiling prices providing protection
similar to that afforded producers.
Floors for individual sellers
7. Many individual manufacturers of essential or low-end commodities in
short supply can obtain adjustments in ceilings whenever needed to enable them
to realize profits on those commodities.
8. Every manufacturer, except in a limited number of fields, can obtain price
adjustments sufficient at normal volume to eliminate losses caused by his present
ceilings.
9. Individual producers of commodities not produced in volume during the
war can obtain adjustments in ceilings which will be sufficient to enable them to
realize profits on those commodities when their output reaches good volume.
10. Individual distributors of many commodities are protected against having
to absorb increases in their suppliers' prices in any case where this would reduce
their margin on the commodity below their cost of doing business.
In these 10 ways, OPA has gone far toward eliminating the risk of hardship
from price control. True, they do not guarantee protection to every businessman
on every product. Neither does competition. Moreover, there are limitations
on the administrative job OPA can do, consistently with effective control. And
190
e x t e n d price, c o n t r o l and s t a b i l i z a t i o n a c t s of
194 2
an attempt to cover every conceivable situation would merely mean impeding
relief to those whose need was most substantial.
Of course, the continuing prosperity of American business has done m u c h t o
keep the number of hardship cases down to manageable proportions. I see no
reason to expect a reversal of this trend. On the contrary, as business emerges
f r o m the recent period of dislocation and readjustment, a steady improvement in
its costs and earnings position seems to me to be certain—provided we in O P A
can do our part in holding a reasonably stable level of prices. Given this prospect
of improvement, further liberalization of pricing standards would not seem to
serve the needs of the economy. On the contrary, it might well be enough t o
start the destructive inflationary cycle in motion.
The spokesman for looser standards fall into two groups. Those most often
heard are the advocates of cost-plus pricing. They are opposed to all cost
absorption. Sometimes they voice opposition to cost absorption only when it is
applied to distributors. But I cannot see how the Government could maintain
one rule for manufacturers and another for distributors. Simple justice means
cost absorption for everyone or for no one. That, in substance, means a choice
between price control and no price control.
Those who urge cost-plus pricing usually propose that every manufacturing
industry be given ceilings assuring it a prescribed margin of profit over its current
costs on every product. This is sometimes accompanied, as in the case of Representative Hartley's proposed amendment, with a guaranty to each manufacturing
industry and distributive trade of its customary margins and trade discounts and
a further assurance to each individual seller that every future increase in his own
production and distributing costs may be passed directly through to the consumer,
pyramided at each successive stage b y the seller's customary percentage of profit.
During the war, unit percentage profit margins fell below prewar levels for a
g o o d many commodities even though unit dollar margins were often higher anddue to larger volume, aggregate dollar profits rose sharply. Under cost-plus
amendments the manufacturers of all these commodities could come in at once t o
O P A for price increases despite the fact that they are now earning satisfactory
profits. These increases would set off another round of increases. Price control
of this sort means inflation. I would rather see an end to price control than a
sham renewal.
I have said that it would be utterly unfair to require cost absorption of the
manufacturer while allowing the retailer to preserve his customary percentage
mark-ups. Such a difference in treatment could be justified only if retailers,
unlike manufacturers, could not operate without these customary mark-ups.
This is not the case.
T h e choice is seldom between prewar mark-ups and, sales at a loss.
Drastic
changes have come about since 1939 when " c u s t o m a r y " mark-ups were in effect.
Department store sales volume has doubled since then and all O P A studies indicate
that the smaller stores are doing even better. Sales volume has continued t o
increase despite persistent predictions of empty shelves. High volume means
that the expense of selling each unit of goods has dropped. Before the war the
retailer did need a 40 cent mark-up on each dollar of sales when he had t o pay out
36 of these 40 cents to run the store ( N R D G A figures). But today he has to pay
out only 27 or 28 cents of every sales dollar, and thus his profit moves f r o m 4 t o
something like 12 cents for each dollar of sales. There is, I believe, no justification
for raising retail prices to preserve this mark-up and so sharply increase profits per
units of business on many more units, when stabilization is in danger.
Even on particular products, moreover, O P A ' s retail cost absorption standards
minimize the risk that retailers will have to sell at a loss. Under our strictest
rule, absorption on any particular c o m m o d i t y can be required only down to the
trade's average cost of doing business, and, as I noted above, for a great many
commodities, retailers are allowed to use their own individual expense rates as a
floor where the trade's average rate is lower. In other words, for such commodities
no retailer need ever sell at a loss for he is always free t o increase his own ceiling
t o the level of his own expense rate.
T h e abolition of the cost absorption policy at retail alone would increase the
consumer's total cost of living b y something like 1.4 billion dollars on an annual
basis. T h a t m o n e y would not be shared b y retailers with the manufacturers and
producers of materials. T h a t sum is simply what retailers would get f r o m the
substitution of historical percentage Inark-ups for O P A ' s present standards.
A n d this vast sum would go to the retail trades at a time when retail earnings—
n o w undiminished b y excess profits taxes—are at levels far b e y o n d prewar dreams.
191 e x t e n d p r i c e , c o n t r o l a n d s t a b i l i z a t i o n a c t s o f
194 2
Cost absorption is the core of price control. O P A ' s standards for its administration are reasonable. They are fair to manufacturers. T h e y are fair t o retailers. Subtract cost absorption, and price control becomes officially sponsored
inflation.
T h e second of the two groups of critics of O P A ' s standards is much more
thoughtful. T h e y have recognized the vital necessity for cost absorption at all
levels, but at a few points they feel that these standards pinch t o o tightly.
The
views of these critics are best represented by the helpful report of the Colmer
committee and that of the research staff of C E D which parallels much of M r .
Ralph Flanders' testimony before this committee.
T h e y have both advocated the relaxation of the minimum product standards
so as t o cover average total costs. This has already been done b y the adoption
of the transition product standard which applies to nearly all products.
T h e Colmer committee has a d v o c a t e d special consideration for low-end p r o d ucts. I believe that what O P A is now actually doing for low-end manufacturers
is substantially what the Colmer committee recommends.
Finally, they have both urged the modification of the industry earnings standard b y the substitution of a more liberal base period for 1936-39.
(Incidentally,
O P A itself does not use 1936-39 in cases where the earnings in those years were
unrepresentative or depressed.)
T h e C E D recommendation, as presented b y Mr. Flanders, would simply add
33}£ percent to the 1936-39 figures which O P A now uses. T h e Colmer C o m mittee would substitute for 1936-39 the best 3 years in 1936-40.
W e cannot agree with these recommendations. Frankly, we believe that they
are directed to an unreal problem. But we are also convinced that they,would
give rise to a very real danger.
N o major part of American industry either has been or will be compelled b y
price control to work for any substantial period of time at the 1936-39 profit
level. This country has been passing through the roughest part of the postwar
transition—assuming that inflation can be avoided. Although much of industry
has remained at profit levels as high or higher than those prescribed b y the Colmer
and C E D reports, nevertheless, a number of industries, including some key industries, have been reduced b y temporary transition cost increases t o earnings
rates below their 1936-39 average.
O P A is giving these industries price relief on a basis which will yield them
base-period earnings on the average for the coming year. That means, of course,
that they can be expected to earn more than their base-period profit rate in the
latter part of the year. In other words, these industries, including many of the
reconversion industries, should be catching up during the year with the industries
whose earnings have been well above the 1936-39 floor. Consequently, there is
no need now for a new pricing standard to keep the general level of industry
earnings well above the 1936-39 rate after the present dislocations are behind
us. As I stated, I believe the problem is an unreal one.
But, if either recommendation were adopted, O P A would be obliged at once
to raise ceilings for all the industries which, at the present stage of the transition,
happen still to have earnings which fall short of whichever profit level was selected.
These price increases would not be dictated b y economic necessity. Their only
purpose would be to correct assumed inequities which the steady improvement
in business will itself cure. But to make them at this time might well upset the
balance which our economy now is rapidly regaining after having sustained an
unprecedented succession of shocks in the form of drastic cut-backs, extensive
reconversion, acute manpower and materials shortages, and prolonged labormanagement difficulties.
This danger is not hypothetical. Let me make it concrete. The steel-producing industry has recently been granted an increase which should yield its 1936-39
earnings on the average over the coming year and considerably above that rate
in the latter half of the year. If the Colmer committee amendment were to b e
adopted, O P A might have to raise steel prices all over again. That would p r o b ably mean another wave of price increases for a number of consumer-goods industries, which would themselves, have higher claims as a result of the higher
standards.
Instead of reaching a period of relative stability in costs and prices in the
metal-using industries this summer, business would, therefore, have to be going
through the same difficult process of readjustment which is now nearing a c o m pletion. Similar increases would be required in many other fields. In other
words, Congress would have legislated a new bulge in prices.
192
e x t e n d price, c o n t r o l and s t a b i l i z a t i o n a c t s of
194 2
I believe the effect of all this weuld be to touch off another round of wage
demands and compel upward adjustments in the level of rents and farm prices
to prevent inequities. N o t only would it be dangerous to take the chance, but
in worrying over the hypothetical inequity which the 1936-39 profit floor might
for a while cause to some American industries, I think we should consider the
very real inequity to those whose incomes lag behind a rising cost of living.
O P A has had many tough problems in the fight against inflation. N o doubt
it has many still ahead of it. But the modifications in pricing standards which
thoughtful critics propose would not help us solve those problems or win that
fight.
The radical measures which the cost-plus prices call for would constitute
unconditional surrender.
4.
SUBSIDIES
A vital part of the antiinfiation program is the requested authorization for
continuing subsidies for the coming fiscal year. O P A had hoped and expected
t o be substantially out of the subsidy business b y the end of June. It looked
last fall as though there would be a sufficient softening of prices so that subsidies
could be gradually withdrawn without an over-all increase in living costs.
But
the predictions went wrong. Employment remained high. Although income
fell somewhat, consumer spending stayed up, and inflationary pressures were
stronger than ever. The world f o o d crisis has greatly intensified the need for
continued subsidies.
It is clear that the price adjustments of this transition period will have some
impact on the cost of living. It is O P A ' s j o b to continue to keep this impact
to a minimum. None of us like subsidies but the simple truth is that our econo m y Could not stand the shock that their abrupt elimination would bring.
The
resulting increase of living costs would inevitably undermine the stability of the
wage settlements which have just been reached and might well precipitate the
explosion we all fear. This is not time to play with that kind of dynamite.
It has been suggested that Congress should write into the law a schedule for
tapering off the subsidies. I do not believe this is wise. As Secretary Anderson
told the committee, the Government pledges itself to withdraw subsidies as rapidly
as conditions permit. With the present uncertainties in the picture, I would not
dare to predict with any assurance what the economic conditions will be in the
months ahead.
A predetermined schedule of removals established now, either b y law or administratively, might well necessitate the removal of a particular subsidy at a time
when it would be disastrous. If, for example, the tentative removal timetable
of last fall had been binding, the consequences to stabilization would have been
irreparable. Accordingly, I ask the committee to authorize the continuance for
a year of subsidies in the amounts recommended b y the Office of Economic
Stabilization. Unless this authority is continued, I am convinced we cannot
complete the task the Nation has set itself.
5.
RENT
Amendments proposing, in one form or another, substantial increases in rent
levels have been presented to the committee. The N e w Y o r k metropolitan fairrent committee and other real-estate groups have urged that a blanket 15-percent
increase in rents be written into the statute and be made effective across the
board throughout all defense-rental areas.
T h e O P A has repeatedly taken the position that the key to the general fairness
and equity of the rent regulation is the net operating position of landlords today
in comparison with what it was immediately prior to the war.
During the past 4 years the Office has conducted income and expense surveys
in 90 different cities and has covered over 200,000 rental units.
While individual area results have varied, the most recent data show that the
average net operating income for the year ending June 30, 1945, was 38 percent
higher f o r apartment houses and 37 percent higher for small structures than it
was in 1939. There is no evidence of substantial change in the position of landlords generally since that time.
The O P A has taken very seriously its obligation to follow the net operating
position of individual areas, and it will continue to do so through regular accounting surveys. If any area falls below the 1939-40 standard of net operating
income which we have set up, appropriate adjustments will be made in accordance
with the existing statute. A n y such change, however, should be done on an
individual area basis—just as maximum rent dates were fixed on an individual
area basis—and not by imposing a blanket increase on the entire nation.
193 e x t e n d p r i c e , c o n t r o l a n d s t a b i l i z a t i o n a c t s o f
194 2
If the proposed 15 percent blanket increase in rents were permitted, average net
operating income would j u m p to 87 percent above 1939 for apartments and to
82 percent above 1939 for small structures. This increase would immediately
push the cost of living up about 4 percent. The repercussion of this on wages
and prices would, I believe, soon take f r o m the small landlord more than he could
hope to gain f r o m the rent increase.
I am surprised that there are still those who advocate the "fair return on fair
v a l u e " type of amendment. In the days when I was O P A D e p u t y Administrator
f o r Rent, this theoretically perfect formula was repeatedly brought forward. It
was as repeatedly rejected because it was perfectly obvious that, when applied to
15,000,000 dwelling units, it just could not possibly work. I can promise this
committee that the enactment of any such formula now would bury rent control
in an administrative morass.
T h e demand of the hotel industry that a blanket 10 percent increase in room
rates be permitted can be dismissed with two facts from the studies of the outstanding hotel industry accounting firm: (1) Most recently published data for
some 300 hotels show that net operating income is 182 percent above the 1939
level.
(2) A 10 percent blanket increase in room rates would push the percentage
increase to 236 percent above the 1939 base.
That rent control has not been inflexible is clearly evidenced by the fact that,
since the regulations were made effective, 750,000 individual increases were granted
landlords under the provision set forth in the regulation. These individual
adjustments have safeguarded the individual fairness of the controls at the same
time that they have maintained the general level of rents on an even keel.
On the basis of the record I believe the rent control program should be left
intact as long as the present acute housing shortage continues.
6.
ENFORCEMENT
N o p a f t of the Nation's effort to retain control over the general level of prices
is more important than effective enforcement of price and rent regulations.
You
have heard a considerable amount of testimony critical of O P A enforcement, and I
k n o w you have all received a number of individual complaints. Various amendments have been proposed for the stated purpose of correcting alleged abuses.
I am not going into the details of either the complaints or the suggested amendments, but I would like to present m y general views on the subject.
First, given the magnitude and difficulty of the job, I believe the level of performance of the O P A enforcement staff has been remarkably high. I hope that
complaints about individual cases, which, in all fairness, are often pretty one-sided,
will not cause y o u to lose sight of the solid achievements.
Second, I recognize that there is justice in some of the criticisms. In this
connection, I should like the privilege of inserting in the record the letter referred
to b y Representative Dirksen in his testimony here in which I discussed criticisms
made b y Senator Lucas on the floor of the Senate, since it states m y views about
enforcement in a w a y which I hope will be helpful to the committee.
Third, the way to solve our enforcement problems is not b y amendments weakening our enforcement powers. The task of enforcing our regulations, tremendous as it was at the height of the war, is even more difficult now. T h e fight
against the black market will rapidly become a very unequal struggle if our enforcement powers are cut down in order to prevent the possibility of their misuse against
law-abiding businessmen.
Finally, let me make it completely clear that so long as I am Administrator I
intend to see to it that our regulations are firmly and fairly enforced—and
enforced with all the vigor and skill we can muster. I am not impressed b y sheer
statistics. It is the quality, not the quantity, of enforcement cases that counts.
As a matter of both g o o d administration and fair dealing, we must and we shall
use our limited enforcement manpower where we believe it will do the most good in
keeping the cost of living as closely as possible to legal levels.
7.
DECONTROL
If the fight against inflation is to be won, O P A must have the confidence of
American business, labor and agriculture. There must be confidence in the
integrity of the Government's word that it means to drop emergency controls just
as rapidly as it is safe t o do so. I should like to repeat that ceiling-price controls
must and will be removed as soon as they are no longer needed to safeguard the
country against the disaster of inflation. I think y o u are generally familiar with
O P A ' s decontrol policy so I will merely outline it and summarize the results.
194
e x t e n d price, c o n t r o l a n d s t a b i l i z a t i o n a c t s o f
194 2
Decontrol actions are guided b y two basic standards. In the case of c o m m o d i ties that are significant in the cost of living or in business costs, ceilings are
suspended when it appears that supply and demand are in such relation that the
price will not rise above the ceiling. If after a reasonable period it appears that
the price will not rise above the ceiling the commodity is exempted f r o m price
control.
In the case of any commodity not significant in the cost of living or in business
costs O P A suspends or exempts, even though the price m a y rise, when it finds
(1) that decontrol presents no substantial threat of diversion of materials, m a n power, or facilities from production that is more essential to effective transition
and does not impair effective price control of other commodities, and (2) that the
work involved in control of the c o m m o d i t y is disproportionate to the effectiveness
of control or to the contribution to stabilization. In the case of trivial items
decontrol takes the form of outright exemption. For others the initial action
is suspension.
Since last summer when decontrol actions under this policy were begun, the
O P A has suspended ceilings on or exempted several hundred product categories
including many thousands of items estimated to have annual sales of at least
$6,000,000,000.
Only a few of these decontrol actions have affected commodities significant in
the cost of living or of doing business. Most of the important commodities have
remained under control because it was O P A ' s judgment that their prices would
have risen substantially if they had been decontrolled. Where O P A has suspended
ceilings on the judgment that prices would not rise, this has generally proved to be
correct. This was true in the case of white potatotes, domestic wines, ingot and
pig aluminum and ingot magnesium and aircraft. In a very few cases, such as
citrus fruits, O P A ' s judgment was incorrect. A few such mistakes are inevitable,
but O P A must go ahead on its best appraisal, to achieve its objective of decontrolling just as soon as the probabilities indicate that the price will not rise.
T h e list of decontrol actions for commodities not significant in living costs or
business costs is already long and O P A is adding to it every week. T o date the
main c o m m o d i t y fields affected include a wide variety of professional, scientific,
and industrial instruments; all musical instruments including pianos; most jewelry ;
most sporting goods; most t o y s ; fire arms and ammunition; certain narrow fabrics;
incandescent light bulbs, and a great number of trivial or luxury f o o d and consumer goods items. In the case of these commodities O P A has made no systematic attempt to discover price movements after decontrol. Most of those for
which there is information have shown some increases.
Recently, it has become possible t o embark on a more extensive program of
decontrol with respect to commodities mot significant in living costs or business
costs. Very soon, ceilings will be suspended on several large blocks of industrial
equipment and a "great number of relatively unimportant consumer durable
items. Similar decontrol actions will follow in the coming months.
In the present highly inflationary situation this program unquestionably
involves some risk, for in many cases prices of these commodities will rise.
OPA
consumer advisory and labor advisory groups have strongly opposed parts of this
program. It is m y belief, however, that it is the wisest policy. There are t w o
reasons for this. First, the problem of diversion of manpower, materials, or
facilities from commodities essential to transition is beginning to disappear with
the easing of the manpower situation and the imminent improvement in the materials situation. Second, the increasing work load involved in transition price
adjustments and cases arising under the new wage-price policy makes it imperative
for O P A to concentrate its resources where they will count most. This cannot be
done if a substantial part of O P A ' s efforts are dissipated in administering controls
over thousands of relatively unimportant items.
If it should appear, however, that in the effort to concentrate its resources on
price control of the more important commodities O P A releases f r o m control items
which rise precipitately and cause consumer hardship, we will reinstate controls.
W e must not permit our decontrol program, as rational as I believe it is, to create
the kind of inflationary psychology that we seek to avoid. I believe that this
policy can be made to work effectively if producers know we mean business and
consumers understand that we are concentrating our efforts on products that
really count.
Y o u have received several proposals for amendment on the subject of decontrol.
M o s t of these seem to have one thing in common. T h e y are intended to require
removal of price ceilings before shortages disappear, in other words when prices
would still rise sharply.
195
e x t e n d price, c o n t r o l a n d stabilization a c t s of
194 2
The Colmer committee, for example, proposes that ceilings must be removed as
soon as the acute demands for a c o m m o d i t y have been satisfied. Thus the amendment would require removal of the ceiling on a commodity before the shortage
was eliminated—before the supply had become large enough to fill all the demands
at the ceiling prices. Plainly, every time a ceiling was lifted the price would go
up. Hence decontrol of the important commodities would always result in
increases in the cost of living or in business costs.
The Colmer committee proposal would seem to require the removal of most
f o o d ceilings immediately for, aside f r o m a few commodities, the acute demands
are surely more than satisfied b y present f o o d supplies. If this were done, f o o d
prices would of course go up considerably. What would then happen to the wage
situation and to general stability?
I cannot believe that the Congress wishes to lose the fight against inflation by
requiring O P A to default in the last round. In the critical period in which a
severe spiral will develop if adequate controls are not maintained, it seems only
prudent to keep ceilings on the important commodities until the market situation
is such that their prices will not rise.
The notion that there should be some mechanical test to bring about decontrol
with the minimum of reliance upon administrative judgment is very appealing.
I myself wish fervently that decontrol could be worked b y pushing buttons.
T h e difficulty, however, is that decontrol just isn't that kind of a problem. It is
a judgment problem, and the important thing is to get judgment directed to the
right issues.
T h e Colmer committee recommendation signally fails to do this. It charges
the Director of War Mobilization and Reconversion with the impossible task of
sitting down with each of our 600 industry advisory committees and drafting
formulas in terms of yards, sheets, shirts, or tons, which would automatically
tell under what future circumstances the demand for its products would no longer
be acute. The standard of acuteness is significant only in terms of price behavior.
But the formula rules out any consideration of probable price reactions.
This in effect would be a commission to plant a great many uncontrollable
time bombs under our system of price control. After the Director had done his
conscientious best to guess how many pajamas and alarm clocks and bed springs
in the warehouses and the store shelves would blunt the edge of the Aiiierican
housewife's shopping drive, the Director and I could sit back uneasily to await
whatever might happen to prices when, one after another, the b o m b s began to go
off.
T h e act does not need amendment in order to have a decontrol policy with the
proper objective of removing price ceilings as quickly as is consistent with maintenance of general economic stability. I pledge that O P A will do just that.
With
the present outlook on the manpower and materials situation, I believe we can
safely complete our program of decontrol action for most all commodities not
important in living costs or business costs b y the end of this year. W e would act
immediately instead of spieading decontrol of these commodities over a period of
months but for the fact that, if we were to remove ceilings f r o m all of them at
once, the cumulative effect on the price level and the country's psychology might
b e serious.
I think it likely that b y the latter part of 1946 and increasingly after the turn
of the year ceilings can be lifted f r o m more and more of the important commodities
without price increases, as shortages disappear, as operating conditions and costs
settle down, and as the country recovers f r o m its present case of inflation jitters.
When those conditions come into being, it will also be safe t o remove ceilings in
those cases, if any, where prices will rise moderately even though supply is large
enough to meet the full demand. T o lift ceilings in such cases in the present
critical situation would be dangerous.
Let me explain this. There will have to be a considerable number of price increases this spring and summer. In some cases they will be needed to keep
ceilings "generally fair and equitable." In others they will help solve supply
shortages or carry through the transition adjustments f r o m the wartime price
structure to the peacetime structure. Other price increases will result f r o m d e control actions in commodities not important in living costs or business costs.
Although all these price increases will not in the aggregate be enough in themselves
t o upset general economic stability, the public and the business community m a y
not all realize this. M a n y m a y j u m p to the conclusion that these increases mark
the beginning of a general upward movement of all prices.
If, on t o p of all these increases, some new decontrol standard compels us t o
allow price increases on a lot of basic commodities which are important in business
196
e x t e n d price, c o n t r o l and s t a b i l i z a t i o n a c t s of
194 2
costs or living costs, businessmen and consumers could scarcely escape the conviction that inflation was really under way.
If they ever come t o believe this, nothing can stop them from spending a large
part of their enormous liquid assets for protection or for speculation. If that
happens, the game is up.
But if O P A is to merit the confidence of business, labor, and agriculture it must
continue to get out of price control as fast as it safely can. A n d that confidence
is essential t o our success as a nation in completing our task.
CONCLUSION
As I indicated at the beginning of this statement, I am convinced that we now
face a critically important decision. In fact it m a y well prove to be a turning
point in the history, not only of our domestic affairs but in our relations with the
rest of the world.
T h e danger of inflation is present, immediate, and serious. Speculation is fully
apparent in the stock market, the real estate market, the cotton exchanges, and
in the prices of farm lands. Inflation in these markets is unchecked b y effective
price controls. T h e y serve as a thermometer of the rising temperature of price
pressures.
M o r e and more frequently businessmen and landlords are writing "escalator
clauses into their contracts and leases. This is their hedge against the chance
that price and rent controls will collapse. It is a far more important indication
of business attitudes about what would happen to prices, if controls were removed,
than the recent crop of advertisements predicting an end to our troubles if price
controls were eliminated.
N o t only are businessmen writing escalator clauses into their contracts but they
are.increasingly tempted to withhold their products in anticipation of higher prices.
T h e growth of this practice—which would flourish if price-raising amendments
were a d o p t e d — w o u l d be fatal to our all-out production effort.
Farmers are casting an uneasy eye at the gains in wage rates recently m a d e —
even though these gains do not fully offset the drop in take-home pay which
occurred at the end of the war. Workers and consumers generally are worried
a b o u t their cost of living. People in all walks of life are awaiting the decision of
Congress—a decision which will affect the economic well-being of every one of us.
In the last few weeks, I have devoted myself entirely to the study of O P A
policies and procedures. I am aware that price and rent regulations at times make
life difficult for farmers and businessmen. I am aware that such regulations are
complex, often clumsy, and sometimes fall harder on one firm, industry, or group
than on another.
But against this we must weigh the larger problem. The Government has a
responsibility to all the people, to see that a precipitous rise in prices does not rob
them of savings and destroy the bright prospects for profitable production, good
wages, and good farm income we see before us today.
I believe O P A policies as now operating are generally fair. I am fully confident
that, under these very policies, we shall see an outpouring of goods for civilians
which five short years ago was beyond our most optimistic dreams. I believe
that production will come fast. W e won't see it at once, for inventories are low,
pipe lines are only beginning to fill, and incomes are very close to the peak of the
wartime years. But, as each month goes b y , more and more industries will show
figures to dwarf prewar production.
Until that happens, we must hold back the tide of inflation b y these temporary
controls—undesirable and difficult as they may be.
It is a hard job. It cannot be done with complete equity for all. It cannot be
done without criticism and indeed without some bitterness. But I believe that,
in the interests of all Americans, it must be done.
If we are careless or if we lack the courage of our convictions and understanding,
we can very easily cast aside our economic future into a wasteland of business
failure, farm foreclosure, unemployment, poverty, bitter dissension among groups,
intense social unrest and international insecurity.
But if, on the contrary, all of us squarely face the need for all-out production,
for p r o m p t price adjustments wherever necessary, for firm administration of
present price and rent standards, for the continuation of the subsidy program,
for fair and vigorous enforcement of price and rent regulations, for business c o n fidence in the integrity of O P A ' s decontrol program and for prompt extension of
the laws upon which stabilization depends—this country can, during the coming
year, lay a stable foundation upon which free private enterprise can build the
greatest period of domestic prosperity and international prestige we, as a people,
have ever enjoyed.
197
e x t e n d p r i c e , c o n t r o l a n d s t a b i l i z a t i o n a c t s o f 194 2
Mr. P O R T E R . By an extension of its individual adjustment provisions, OPA has broadened still further the area of protection to industry against possible hardship. In appearing before the House committee, I outlined 10 ways in which OPA's pricing standards now
provide floors to protect American business from being squeezed
between rising costs and fixed ceilings. That portion of my statement
also discusses some of the criticisms which have been directed against
the continued use of the 1936-39 base period in our industry earnings
standard. However, rather than extend that discussion here, I should
like instead to file with the committee my earlier remarks and aim now
at a proposal which threatens the stability of our ceiling price structure. I refer to the proposal that OPA should be required to increase
ceilings on every product when they do not cover all its current costs
plus a margin of profit, usually derived from some base period experience. Such price increases would be mandatory—however profitable
overall the producing industry might currently be.
This proposal is one of the principal reasons why the continued
success of price stabilization is in grave danger today. And let me
give you seven reasons why. And I understand that this particular
proposal which I am discussing was adopted in the House today.
1. It would unsettle a great number of price ceilings, as to which,
in the absence of cost surveys, no one could say with assurance
whether or not they were currently returning the profit margin prescribed in the formula.
2. The influx of demands for ceiling price review would soon overwhelm OPA's limited price and accounting staffs. The job would be
far bigger than the recent price revisions pursuant to the new wageprice policy since it would call not merely for profit and loss data but
for cost analyses to break out the cost-and-profit position of each particular product covered by over-all profit and loss statements. And
I do not know of very many businesses that keep their cost data on
a product-by-product basis.
3. Comprehensive surveys recently completed by our Accounting
Department show only a relatively few industries equipped to give
OPA reasonably reliable product cost data. To get such data, OPA
would have to set up and carry through extensive cost-accounting
studies. OPA can attempt to do this under its transition product
standard only because the volume of cases is much lower, no profit
allocation is involved, and current rather than historic cost data can
be used.
And I might say parenthetically that our Accounting Department
advises that 85 percent of the firms that would be affected by this
proposal do not keep cost data and accounting standards that would
give us the opportunity to break these individual items out.
4. Applied to most reconversion products, including automobiles,
where the temporary bulge costs of the transition period still hold
down product profits, the standard would require drastic increases in
prices to the consumer, setting ceilings far above the levels needed to
bring back production in high volume.
5. Applied to other product fields, it is impossible to calculate the
number and amount of the price increases which would be required.
They would be serious, and they would serve no useful purpose. Instead, as recent experience has made abundantly clear, the expectation
of price increases inevitably disrupts the flow of goods as sellers hold
back deliveries in anticipation of higher ceilings.
198
e x t e n d price, c o n t r o l and s t a b i l i z a t i o n a c t s of
194 2
6. Each unnecessary price increase made under this standard would
mean either a direct increase in the cost of living or an increase in
business costs likely to threaten the ceilings of other products. One
price increase would feed another.
7. The "profit-on-every-product" standard would not give the
stimulus to production which OPA can provide by the price increases
it authorizes for supply purposes. To be effective, supply price increases must be selective. If prices must be raised under price control, it is important to see that the resulting increases do the maximum
of good. Buck-shot methods, such as the proposed standard, are
considerably worse than useless.
Senator M I T C H E L L . Going back to point 5 , is there any information available now which indicates that goods are being held off the
market because of the present discussion of the continuation of OPA?
Mr. PORTER. That question, Senator, was raised briefly this morning, and we are going to supply what data we have on current inventories. But I can say this: that I recall during the time that we were
making adjustments in the textile fields to bring this low-cost production out and give them incentive pricing, that there was a complete
stagnation in the textile market at that time for a period of about. 3
weeks until we could get these new prices out. And I recall particularly because it was the tobacco-planting season down in my
State, in Kentucky, and they were getting no tobacco cloth for the
seed beds. I personally got in touch with one manufacturer who had
a considerably supply of tobacco cloth, but he said he was not going
to move it because the rumor was that there was going to be an advance of from a cent and a half to 2 cents a yard on this cloth. So we
had to slap a production directive on, or we would have had no tobacco crop down in central Kentucky. And that is an illustration of
what happens in your distributive channels where there is an anticipation of a higher price.
Now, I think that that situation, as Mr. Bowles pointed out yesterday, could get progressively worse as we get towards the time* of expiration of this statute, if there is no action by the Congress.
(The following was later received for the record by Mr. Porter);
ADMINISTRATOR'S
STATEMENT
WITH
RESPECT
TO C U R R E N T
INVENTORIES
When I appeared before the Senate Banking and Currency Committee on April
17, I agreed to supply for the record what current inventory information we could
obtain. Since then we have checked all available statistical records and have
been unable to determine the extent of goods being withheld f r o m the market in
anticipation of price increases. It is true that there are many trade rumors that
the withholding is considerable. Statistical proof is, however, not available.
With respect to some particular commodities there is evidence of withholding in
anticipation of price rises. For example, in the 5 weeks before the issuance on
March 11, 1946, of M a x i m u m Price Regulation 607, relating t o prices of men's
suits, stocks rose f r o m about 184,000 to about 220,000. Immediately after the
issuance of the regulation, shipments more than doubled and stocks declined f r o m
the 220,000 high on the week ended M a r c h 9 t o less than 100,000 on the week
ended March 30.
Senator CAPEHART. Will not the same thing be true a year from
now, when the law again comes up for expiration?
Mr. PORTER. Well, Senator, I think that that is a .problem which is
one of the difficult things that OPA will have. I am hoping that by
that time we can have worked out from under a lot of these areas and
that our job for the last 6 months will really be a transition type of
199 e x t e n d p r i c e , c o n t r o l a n d s t a b i l i z a t i o n a c t s o f
194 2
thing where selective decontrol actions will have been taken, where
there won't be this abrupt withholding and inventory hoarding in
anticipation of a free market or price increases.
Senator C A P E H A R T . Would you possibly like to make the statement
that if OPA is extended until June 30, 1947, that before June 30, 1947,
rolls around you might of your own accord completely have liquidated
OPA?
Mr. P O R T E R . Well, I would not want to make the statement just
in these terms. I discuss in the concluding part of my statement here
some of our decontrol problems. But I will say this: that I think
that it will be the duty of the agency to come before this committee
long before the extension or the expiration of the act—assuming that
it is extended for a year—so that those problems can be resolved.
I am hoping that we can get out of a substantial number of areas.
What will happen on rent control, what will happen in certain tight
areas, has to me been a problem of congressional determination in
6 or 8 months from now. But I think it is important that we have a
year's extension so that it can be considered deliberately and not just
in the haste of having 2 or 3 months in which to appraise the situation.
So in answer to the Senator's question I will say that we are going
to do everything we can, where we feel that it is safe to do; but on
some of these basic things it is a question of congressional policy that
must be decided, oh, I would say, out sometime in early 1947.
Senator C A P E H A R T . It was estimated that there would be 3 , 5 0 0 , 0 0 0
radio sets manufactured by December 30 last year, when the figures
were about 3 0 0 , 0 0 0 . Do you know why the industry fell 3 , 2 0 0 , 0 0 0
sets short?
Mr. P O R T E R . Well, I think, Senator, that that estimate was probably an extremely optimistic estimate, that it was based largely upon
productive capacity, upon the production in the year before the war,
plus a lot of hopes on the part of manufacturers, without any real
appraisal of what the supply of components and others were.
Senator C A P E H A R T . Do you know why they are not turning radio
sets out today, "why there is just a dribble, when the industry has a
capacity of about forty million sets a year?
Mr. P O R T E R . I think we are hitting at a rate now—the last trade
figure that I saw was a current rate of around 800,000 a month.
Senator C A P E H A R T . Which month? I mean August or September—
we are certainly not getting them today.
Mr. P O R T E R . Oh, yes. We had 5 5 0 , 0 0 0 in January. That was the
production of the Civilian Production Administration, and our people
estimate we will get a million in March. Of course, they are not these
fine custom built jobs that you and I are used to.
Senator C A P E H A R T . Well, they are not even the little ones.
Are we going to have the industry here to testify, Mr. Chairman?
T h e CHAIRMAN. Y e s .
Senator C A P E H A R T . The radio industry?
Mr. P O R T E R . I have had a number of discussions, Senator, with
K M A.
Senator C A P E H A R T . Yes. They got out a little booklet. They are
one of these bad boys.
Mr. P O R T E R . Oh, no.
got a moving picture.
They not only got out a booklet, but they
200
e x t e n d price, c o n t r o l and s t a b i l i z a t i o n a c t s of
194 2
Senator C A P E H A R T . I know. I say they are one of those very unpatriotic people that Mr. Bowles was talking about yesterday who are
fighting OPA.
Mr. P O R T E R . Well, I think that their difficulty is in a lot of the
small components where their suppliers cannot get the raw materials,
and that part of it may be a price question; but in as much as I have
gone into it, I think that by far the most of it is a supply problem.
Senator C A P E H A R T . Let me ask you one other question: Do you
particularly think that the price of radio sets has anything to do with
the cost of living? I might say other items, too, in addition to
musical instruments.
Mr. P O R T E R . Senator, I have long said, as having been a part of
the radio industry at one time and more recently on the Federal Communications Commission, that a radio set has long since ceased to be
a hobby but has become a household utility; and that, having some
60,000,000 radio sets in this country, and a great backlog of demand
for new and for replacements, I think that very definitely it is a part
of the cost of living.
Senator C A P E H A R T . I don't know anyone that doesn't have one.
I mean I don't know any particular reason why anyone should buy
one tomorrow, unless it would be a new couple who were just married.
Everyone has one. I do not see that it has much effect upon the cost
of living.
Mr. P O R T E R . I do not think the type of sets that you are more
familiar with is an item in the ,cost of living. These are the finest
ones that are made. I would classify a Capehart as a luxury.
Most products are now individually profitable to the average
manufacturer. A few were always sold at a loss or at less profit than
others for competitive reasons. In the absence of a special need for
such products during the transition, there is no reason why their
normal cost-price relationship relative to other products should be
disturbed.
I think it is significant that neither the Colmer committee which
made an intensive study of our pricing standards nor the House
Banking and Currency Committee endorsed the "profit-on-everyproduct" rule. Nor was it approved either in the staff report of the
Committee for Economic Development or in the testimony of Mr.
Ralph Flanders, chairman of the CED research committee. A
"profit on every product" is a plausible slogan, but its appeal lasts
only for those who fail to examine it closely. I urge that this committee reject the proposal.
Commercial rents: I feel called upon to renew the request made by
previous administrators that rents on commercial establishments be
subject to control in those areas where a shortage of business properties
and office space is resulting in sharp and unwarranted rent increases.
This problem has become far more acute during the reconversion
period than it was at the height of the war.
The recent limitations imposed by the Housing Expeditor, Mr,
Wilson Wyatt, on all construction except housing for veterans will
of necessity, result in a further increase in commercial rents.
My office has been receiving a steadily rising volume of letters describing fantastic commercial rent increases. These letters come from
small businessmen and veterans who are trying to establish themselves
in their communities. I am not referring to 10 or 15 percent increases
201
e x t e n d price, c o n t r o l a n d stabilization a c t s of
194 2
in commercial rents. The reports run to the doubling and trebling of
rents for the same space.
Doctors returning from years of service in the field cannot afford to
resume their practice under such circumstances. Veterans cannot
reopen the stores in which they once served their communities. The
loan provisions of the GI Bill of Rights, designed to enable veterans to
start small independent service establishments, become meaningless.
And all businessmen are faced with increased rental costs which may
require them to seek relief in requests for increased retail prices.
In the present scramble for commercial space in many communities,
the small businessman is obviously the one who is most heavily penalized because he cannot meet the rental which larger firms can afford
to risk.
Decontrol: As a matter of public policy and good administration,
as a matter of relationships with business groups, farm groups, labor
groups and consumer groups, and I might add also the Congress, the
development of the OPA decontrol policy is of vital importance.
There must be confidence in the Government's word that it means to
drop emergency controls just as rapidly as possible. There must
also be confidence that, in the interests of doing so, controls will not
be dropped so rapidly that stabilization will be dropped along with
them. I should like to repeat that ceiling price controls must and
will be removed as soon as they are no longer needed to safeguard the
country against the disaster of inflation. Let me tell you briefly
about our decontrol policy.
Decontrol actions are guided by two basic standards. In the case
of commodities that are significant in the cost of living or in business
costs, ceilings are suspended when it appears that supply and demand
are in such relation that the price will not rise above the ceilings the
commodity is exempted from price control.
In the case of any commodity not significant in the cost of living
or in business costs, OPA suspends cr exempts, even though the price
may rise, when it finds (1) that decontrol presents no substantial
threat of diversion of materials, manpower, or facilities from production that is more essential to effective transition and does not impair
effective price control of other commodities, and (2) that the work
involved in control of the commodity is disproportionate to the effectiveness of control or to the contribution of stabilization. In the case
of trivial items decontrol takes the form of outright exemption. For
others the initial action is suspension.
Since last summer when decontrol actions under this policy were
begun, the OPA has suspended ceilings on or exempted several hundred product categories including many thousands of items estimated
to have aggregate annual sales of at least $10,000,000,000.
Only a few of these decontrol actions have affected commodities
significant in the cost ot living or of doing business. Most important
commodities have remained under control because OPA judged that
their prices, if decontrolled, would have risen substantially. Where
OPA has suspended ceilings on the judgment that prices would not
rise, this has generally proved correct. This was true as to white
potatoes, domestic wines, ingot and pig aluminum, and ingot magnesium and aircraft. In a very few cases, such as citrus fruits, OPA's
judgment was incorrect. A few such mistakes are inevitable, but
85721—46—vol. 1
14
202
e x t e n d price, c o n t r o l and stabilization a c t s of
194 2
OPA must go ahead, on its best appraisal, if it is to achieve its decontrol objectives.
Senator M I T C H E L L . What is the relation between supply and demand there when you reach a point where you think you can take off
control? Is there any set percentage?
Mr. P O R T E R . Senator, we haven't taken any mathematical formula
on that. There was some discussion in the very thoughtful report of
the Colmer committee and likewise of the CED. The CED didn't
discuss any mathematical formula. I am incorrect on that. But
rather it is difficult to appraise just what the demand of specific items
is. Certainly where we can make the calculation that prices will not
rise substantially, the element of the supply-and-demand factor enters,
but we would be opposed to raising any control, for instance, on automobiles if you would get, say, to the peak prewar production. We
know we have a backlog of what? Five to six to seven million automobiles?
Mr. Z E N A S P O T T E R . Twelve.
Mr. P O R T E R . And probably it is nearer twelve. And the production
will not run higher than five million in any one yeai;. Well, now, to say
that you would get to some prewar period of production, or even a
percentage above that, would not give you any relief in that situation.
So it is our view that this is largely a matter of administrative discretion under broad congressional direction to the agency, that we should
get out as soon as it is safe to, rather than any arbitrary formula.
Senator C A P E H A R T . Well, Mr. Porter, if in the next 12 months the
automobile manufacturers produced, say, 5 to 6 million cars and it
looked as though they were going to produce that many or more in
the next 12 months, would you a year from now take automobiles
off of the price control?
Mr. P O R T E R . Well, the case of automobiles is a difficult one to use
an illustration on, because of the tremendous backlog of demand, and
cars are still going off the road. I would doubt whether from the
standpoint of supply-and-demand relationship that production will
catch up to the backlog and to the obsolescence before 1948.
Senator C A P E H A R T . Then, your answer is that a year from now,
even if we extend OPA and the automobile industry gets 6,000,000
automobiles, that you would not, even at that time, recommend
eliminating it from price control?
Mr. P O R T E R . Well, there, again, I would go back to my earlier
answer: That sometime before June 1947 Congress itself is going to
have to determine rent control; and whether automobile control is
ended or not I think would depend on the competitive factors and a
number of other considerations. But just purely from a supply-anddemand relationship I would say that you can't bring them into
balance much before 1948.
Senator C A P E H A R T . Yet, if radio
Mr. P O R T E R . Maybe the decision would be to turn it loose at that
time. I don't know.
Senator C A P E H A R T . If there were 10,000,000 radio sets manufactured in the next 12 months, would you recommend at that time
that price controls be taken off of radio sets?
Mr. P O R T E R . Yes; I think it would be safe to say that there is a
Senator C A P E H A R T . But you would not say the same thing about
automobiles?
203 e x t e n d p r i c e , c o n t r o l a n d s t a b i l i z a t i o n a c t s o f
194 2
Mr. P O R T E R . It is our feeling in the agency that automobiles is one
of the major exceptions. I mean we cannot see even in a year any
safe way of decontrolling automobiles.
Senator C A P E H A R T . Would you say if the steel industry produces—
I believe their capacity is 90—what is it?—90,000,000 tons of steel
a year?
Mr. P O R T E R . I think they hit 58 or 60.
Senator C A P E H A R T . N O ; I think they hit 90,000,000,000, didn't
they, or 90,000,000, during the war?
Mr. P O R T E R . They did in the war, but their normal capacity is
Senator C A P E H A R T . Well, if the steel industry would produce a
normal capacity of, say, 60,000,000 tons in the next 12 months, would
you recommend taking steel off of the priority list or the price list?
Mr. P O R T E R . Well, I say all these commodities or products, Senator, would require, as we are doing now, a rather separate analysis.
Now, if the steel—and it is my impression that your ordinary requirements are much below 50 or 60 million tons—that should—it would
probably be safe to decontrol.
Senator C A P E H A R T . Well, in other words, Mr. Porter, there is just
no formula for it. You may and you may not; and therefore you may
be back here a year from now asking that price control be extended
another year.
Mr. P O R T E R . Well, I certainly hope not. I should think that in
another year it will again be a congressional determination as to what
areas we should continue; and if I may just extemporize, the thinking
I have done about this, I can foresee a situation in which the OPA, as
an agency—certain of its functions would be dropped, in the field of
rent control, for example, into the established housing agency; perhaps
the Department of Commerce in the field of industrial manufacture, if
it was important.
Senator C A P E H A R T . In other words, you feel that under housing it
may go on for a grest many years.
Mr. P O R T E R . I think that we have
Senator C A P E H A R T . Of course, that was our contention with the
Wyatt bill, that we were setting up a desire in the building industry
that would continue for many, many years.
Mr. P O R T E R . In certain of these areas it may be wise national
policy to maintain certain types of controls; but, as I say, I am hoping
that in a year from now your established departments of government
can assume whatever responsibilities are involved.
Senator C A P E H A R T . I can't understand why your answer wouldn't
be very positive, when any one industry produced for a straight year
its maximum production and was in a position for the next 12 months
to produce that amount or more—I can't understand why your
answer wouldn't be absolutely positive yes, because if your answer
isn't yes, then I don't know when we are ever going to get rid of, or
when you are ever going to recommend, elimination of price control.
Mr. P O R T E R . Well, Senator, I think that is true for a majority of
your industries, but we must bear in mind that we have got the accumulation of 4 years of demand for many of these products.
Senator C A P E H A R T . Well, I ask you this: I think this morning it was
brought out that the capacity is 28,000,000 suits a year. I guess it
was 21,000,000 men's suits, and that possibly the requirements this
year would be 28,000,000.
1942
e x t e n d p r i c e c o n t r o l a n d s t a b i l i z a t i o n acts of 19,204
If 21,000,000 suits were produced in the next 12 months, or
28,000,000, would you then recommend that price control be
eliminated?
Mr. P O R T E R . Oh, yes; I think very definitely so, because your
demand would begin to slack off; and again I would put it this way,
and perhaps I haven't placed enough emphasis on this fact in my
statement: that these inflationary pressures—I don't know how you
divide them as to what are psychologic and what are economic.
I suspect that a great many of them are psychological, and once we
get beyond that, then I think it is safe to get back to the free economy
of supply and demand and bargaining, except in perhaps a few critical
areas.
Now, that is, frankly, the picture as I see it, but as to the timing of
it I wouldn't want to hazard a guess.
Senator C A P E H A R T . Well, if you can't hazard a guess on number of
units produced, I don't know what formula or basis you would ever
use in talking about specific numbers. It seems to me as though
it will have to be your only formula; otherwise it will be purely a guess,
the psychological effect that you are talking about.
Mr. P O R T E R . Well, I think it is principally a question of timing.
Now, there are certain areas where we have turned loose already, irrespective of the supply and demand conditions, but I would put it
again this way: that by and large it is a matter for congressional determination, with all the facts the executive branches place before you.
As far as the decontrol policy of OPA is concerned, as I described here,
we are taking some risks, and we are taking what I believe to be a
sound policy.
The list of decontrol actions—and I think this is responsive to
your point, Senator—for the relatively unimportant commodities is
already long and OPA is adding to it every week. To date the main
commodity fields affected include a long list of heavy machinery and
equipment, a wide variety of professional, scientific, and industrial
instruments; all musical instruments including pianos; most jewelry;
most sporting goods; most toys; firearms and ammunition; certain
narrow fabrics; incandescent light bulbs; and a great number of
trivial or luxury food and consumer durable goods items.
Recently it has become possible to embark on a more extensive
program of decontrolling commodities not significant in living costs
or business costs. Last week two major actions were taken, the first
in the capital goods field, and the second involving a large number of
relatively unimportant consumer durable goods items.
These two actions have been vigorously criticized by labor and other
consumer groups. This criticism is indicative of the deep concern
felt by many people over the Government's ability to hold the general
level of prices stable. As I have repeatedly emphasized, if this concern turns into lack of confidence, it can quickly become a violently
inflationary force, precipitating a rush by consumers and businessmen
to convert liquid funds into goods, materials, and equipment.
In the present critical situation, this decontrol program unquestionably involves a risk, for, in many cases, prices of these commodities
will rise. There is also a hazard of diversion of manpower, materials,
or facilities from commodities needed to aid production in other fields.
Nevertheless, it is my belief that this is the wisest policy. In the
interests of the over-all program some risks have to oe taken, if OPA
205
e x t e n d price, c o n t r o l and stabilization a c t s of
194 2
is to handle the increased work load as most industries and individual
companies seek price adjustments under OPA's liberalized standards.
Except for the recent decontrol action involving many hundreds of
miscellaneous durable goods, OPA would have had to undertake
extensive cost studies in order to assure equitable pricing of these
goods under changing conditions. Although this action covers only
about 2 percent of the total dollar value of all consumer durables,
including automobiles, the removal of controls, because of the great
number of items involved, will relieve the OPA and the industries
concerned of a work load utterly disproportionate to any gain to
stabilization.
This decontrol action will mean that a more effective job can be
done for the products remaining under control. The same reasoning
applies to the suspension of capital goods ceilings—with the added
considerations that the cost of capital goods is amortized over an
extended period of time and that the products decontrolled are not
generally used by small businesses and farmers.
Furthermore, OPA can always reinstitute controls, if, in the cases of
commodities of importance, prices rise after controls are dropped.
This we intend to do. We must not permit our decontrol program, as
rational as I believe it is, to create the inflationary psychology that
has to be avoided, particularly in the coming 6 to 8 months. I
believe that the decontrol policy can be made to work effectively, if
producers know we are serious about reinstating controls wherever
inflationary price rises threaten the cost of living or the cost of doing
business, and if consumers understand that we are concentrating our
efforts on the products which really count.
By the latter part of 1946 and increasingly after the turn of the
year, I think it likely that ceilings can be lifted from more and more of
the major commodities without price increases. This will be possible
as shortages disappear, as operating conditions and costs settle down,
and as the country recovers from its present case of inflation jitters.
It will then be safe also to remove ceilings where prices will rise moderately, even though supply is large enough to be in substantial
balance with demand. To lift ceilings in such cases in the present
critical situation would be dangerous, to say the very least.
I do not think the policy I have described above requires statutory
implementation, but any amendments which looked to a similar
decontrol program naturally would not impair our operations. On
the other hand, I must earnestly warn against the proposed legislative
formulas for removal of controls which, by tying decontrol to some
historical supply-demand relationship, completely ignore the sweeping
changes which have intervened. Equally unsatisfactory are those
proposals which would list by statute the products or product categories for decontrol. Both approaches would interpose a mechanical
rule in a task which calls for the exercise of balanced"judgment based
on the rule in a task which calls for the exercise of balanced judgment
based on the most timely production, inventory, and demand information which can be obtained.
The basic issue we face today can be put very simply. The question is whether we are to finish the job that for more than 4 years has
been effectively done or whether we are to let inflation loose just as
we did after the last war. All the arguments boil down to this one
issue..
206
e x t e n d price, c o n t r o l and stabilization a c t s of
194 2
Senator C A P E H A R T . Mr. Chairman, I have listened to "inflation
turned loose after the last war." I lived through that. I was discharged from the Army in April 1919; and while I was only 21 years
old, maybe I was too young to understand, but I don't remember any
particular hardship that was worked upon the people. Was it
really severe? I have seen some figures on it, butMr. P O R T E R . Senator, I was a little younger than that at the time,
but I think that anyone that reviews the history of that period, of
the tremendous deflation that followed
Senator C A P E H A R T . I understand about the deflation. I M S in
the deflation. But we are not talking about deflation now. We are
talking about inflation.
Mr. P O R T E R . I don't think you can separate it.
Senator C A P E H A R T . I see Mr. Potter sitting over there. He doesn't
have much hair; he must have been living in those days. I do not
remember anything so serious.
What happened that was so serious as far as inflation is concerned?
If you can't tell us briefly, why, just forget it. But I have been
listening to this now here for days and days and days. Just what
happened? Tell us briefly what happened.
Mr. Z E N A S P O T T E R . It is a statistical record, and also a fact which
I remember very well, that the cost of almost all commodities, in the
period immediately
Senator C A P E H A R T . They went up.
Mr. P O T T E R (continuing). Immediately after the war, went up
very sharply: Clothes, shoes, feed—all these things.
Senator C A P E H A R T . Yes; and then they went right down.
Mr. P O T T E R . They went up for about 1 3 months, I think, about a
year, and then they collapsed in about 9 months.
Senator C A P E H A R T . Then you could buy two pairs for what you
paid for one before.
Mr. P O T T L E . That is right. But there were 106,000 businesses
failed in the next 5 years, which was way above—40 percent above the
prewar average. People got caught on inventory squeezes, and there
were 450,000 farm foreclosures in the next 5 years, because farm prices
dropped harder and farther than anything else.
Senator C A P E H A R T . Yes.
Mr. P O T T E R . If I remember rightly, potatoes went down from—
they lost 85 percent of their value in a very short time, and cotton
went from 39 cents to 9 cents in a year.
Senator C A P E H A R T . Sugar went down.
Mr. P O T T E R . Sugar went down from—it was very high here. There
were great inventory losses in business.
Senator C A P E H A R T . A S far as I know, the people who really took
the licking were not consumers, but they were speculators, the so-called
rich.
Mr. P O R T E R . Well, I think all the regular business—retailers and
wholesalers and manufacturers who built inventory on the rising prices.
Senator C A P E H A R T . I say, it was the speculators and people in business and the so-called economic royalists.
Mr. P O R T E R . Well, no, Senator.
Senator C A P E H A R T . Outside of 13 months the public got the benefit
of it, primarily.
207
e x t e n d price, c o n t r o l a n d stabilization a c t s of
194 2
Mr. P O R T E R . Oh, Senator, I say there were a lot of little people
that suffered very greatly from the squeeze, particularly those on
fixed incomes, and the deflation that followed. Wages never keep up
with prices, and I am intimately familiar with the story of rents in
that period because I was required to make a study of it; and where
you had your housing accommodations the literature of that period
and the press of that period are full of stories of riots, of wholesale
evictions that occurred because of this rising price level; and I think
that the suffering and the misery that took place at that time is not
a statistical thing but an actuality.
Senator C A P E H A R T . Misery?
Mr. P O R T E R . Undoubtedly.
Senator C A P E H A R T . Well, I was a farmer in those days, and I just
wasn't conscious of it. Maybe I should go back to the farm again
and get away from this.
Mr. P O R T E R . Well, I think that the farmer, as far as his personal
living costs were concerned, was
Senator C A P E H A R T . I was not conscious of it.
Senator T A Y L O R . May I say, Mr. Chairman, that I was not particularly conscious of the inflation. I was o'n the farm at that time,
too. But then we had so little to consume; if we had to go without
sugar, we probably never even noticed the difference. We ate what
we raised on the farm.
But about that time I left home, and I got into business, and I
was in the deflation, in J 922, wasn't it, along in there, and went broke.
So I know the deflation was no fun. [Laughter.] And as long as
you—if you have the inflation, then you have got to have the deflation; so even if the inflation is pleasant, why, we had better remember
the deflation.
Mr. P O R T E R . A hangover.
Senator C A P E H A R T . If we have inflation at the moment, does the
Senator mean that we would inevitably have deflation?
Senator T A Y L O R . Well, our inflation at the moment is not so
inflated as it was at that time. We might keep this price level, but
after the last war it was absolutely clear out of reason.
Mr. P O R T E R . Mr. Chairman, I am about to conclude here.
Senator C A P E H A R T . Yes, you are just about through?
Mr. P O R T E R . Four years ago, the Congress registered its determination that the mistakes of the last war in letting inflation overwhelm
our economy should this time be avoided. In mv opinion, no part
of our war planning showed higher statesmanship than that decision
by the Congress. It was a decision that has paid off to the American
people vastly better than anyone at that time dared to hope.
The facts of economic life—the brutal facts of what inflation does
to a country, its economy, and its people—which Congress has before
it now—are the facts which call for a reaffirmation of the decision of
Congress to maintain a stable level of prices until the danger of inflation is over. Under the 1942 laws, price increases have been held to
a small fraction of what they would have been without controls.
Price control contributed to the efficient operation of an economy that
rang up an almost unbelievable record of all-out production. Price
control will permit production to rise to heights unprecedented in
peacetime. And price control will provide a general level of prices
208
e x t e n d price, c o n t r o l a n d s t a b i l i z a t i o n a c t s o f
194 2
which can be sustained without collapse after pent-up demands are
satisfied.
I might say, in connection, Senator, with the questions of shirts,
I think it is each objective on shirts and suits that when we get into
production and we hit this level of 21,000,000 suits, now that would
not be enough to satisfy this pent-up demand, but the point is that a
given amount of production will give the consumer assurance that
he is not going to run to the store and hoard, that he is going to get it,
and that in turn will relieve the pressure. We don't have to wait until
all the demands are automatically satisfied, is my point.
The question now is simply whether we shall reaffirm as a nation our
original determination, to maintain a stable level of prices as a firm
foundation for the high levels of production and consumption which
are the essentials of a prosperous America.
That concludes my statement, Mr. Chairman.
The C H A I R M A N . All right. I am sure we are all very happy that
we had you here. You have presented a fine statement, and I hope
it may be distributed so the people can understand just what the
problem is.
Mr. P O R T E R . Well, Senator, I want to thank you and the committee
for the extreme courtesy which I personally have received. It was,
I may say, a pleasant surprise. [Laughter.]
Senator C A P E H A R T . Y O U are not disappointed, are you, Mr. Porter?
M r . PORTER. N O , sir.
The C H A I R M A N . Tomorrow
morning, I already announced, we are
going to start with William J. Kelty, the president, Machinery &
Allied Products Institute; at 10:30 a. m.; Roy A. Cheney, the president of the Underwear Institute; at 11, Arthur Besse.
Senator C A P E H A R T . Well, are these proponents or opponents?
The C H A I R M A N . I think they are opponents. Does that satisfy
you?
Senator C A P E H A R T . Oh, yes. I don't object. I just wondered if
we were through with the proponents.
The C H A I R M A N . N O ; there are some more coming later on.
Senator C A P E H A R T . Are there?
The C H A I R M A N . The president of the National Association of Wool
Manufacturers. And Mr. Douglas Whitlock, the chairman of the
advisory board of the production council. Those will be the witnesses tomorrow.
Thank you again, Mr. Porter.
Mr. P O R T E R . Thank you, Mr. Chairman.
The C H A I R M A N . Y O U have been very, very nice. Very glad to have
you.
Mr. P O R T E R . Thank you, sir.
(Whereupon, at 4:30 p. m., an adjournment was taken to tomorrow,
Thursday, April 18, 1946, at 10 a. m.)
1946 EXTENSION OF THE EMERGENCY PRICE CONTROL
AND STABILIZATION ACTS OF 1942, AS AMENDED
T H U R S D A Y , APRIL 18,
1946
U N I T E D STATES S E N A T E ,
COMMITTEE ON B A N K I N G AND C U R R E N C Y ,
Washington, D. C.
The committee met at 10 a. m., pursuant to recess on yesterday, in
room 301 Senate Office Building, Senator Robert F. Wagner, chairman, presiding.
Present: Senators Wagner (chairman), Bankhead, Downey, Carville, Buck, and Millikin.
The C H A I R M A N . The committee will come to order.
Mr. Kelly, you are president of the Machinery and Allied Products
Institute?
M r . K E L L Y . Y e s , sir.
The C H A I R M A N . We
would like to hear from you on the matter
you know we are concerned with.
STATEMENT OF WILLIAM J. KELLY, PRESIDENT, MACHINERY
AND ALLIED PRODUCTS INSTITUTE, CHICAGO, ILL.
Mr. K E L L Y . Thank you, Senator.
Mr. Chairman, I realize that you want me to observe a time schedule here, and in view of the fact that the time alloted to me would
not permit me to make the complete statement that I should like to
present to your committee, I wonder if I could have the privilege of
presenting that for the record and then using my time to summarize it.
The C H A I R M A N . Very well.
Mr. K E L L Y . Thank you, sir. For the record may I identify myself
as William J. Kelly, of Chicago, president of the Kelly Steel Works
and here today in my capacity as president of the Machinery and
Allied Products Institute.
May I express on behalf of the Machinery and Allied Products
Institute our appreciation for the opportunity to comment on S. 2080
which proposes extension of the Emergency Price Control and Stabilization Acts of 1942, as amended, to June 30, 1947.
As a federation of trade associations in the industrial-equipment
field, the institute has a special interest in the effect of the price-control
program on the capital-goods industries. These industries create the
Nation's facilities for production, transportation, communication, and
commerce. Because our primary interest is in the industrial-equipment field, we have made no attempt to seek answers to questions
posed by controls over prices of consumer goods, rents, or cost-ofliving items. Thus, the views and recommendations we shall present
are limited to matters of special significance from the standpoint of
manufacturers who produce the tools of industry.
209
210
e x t e n d price, c o n t r o l and stabilization acts of
194 2
We should prefer, if it were feasible, to develop fully the multitude
of specific problems and serious economic results that price control
has produced in the capital-goods industries. However, such a
presentation is impracticable in the time allotted. Therefore, our
statement is of a summary nature and is limited to consideration of
(1) the role of machinery in the battle against inflation, (2) some economic consequences of price control in the industrial equipment field,
(3) factors which make price decontrol of industrial equipment noninflationary, and, (4) recommendations for legislative action.
First as to the role of machinery in the battle against inflation:
Although our interest naturally concerns the problems of capital-goods
manufacturers under price regulations now in force, it includes also
the effect of price control on the production of industrial machinery
needed for the volume manufacturer of consumer goods at the lowest
possible cost. Thus we comment briefly on the role of modern,
efficient machinery in the battle against inflation since all of the
experts appear in agreement that this battle can be won only through
volume, low-cost production.
One of the principal barriers to adequate production of consumer
goods is a deficiency of machinery needed for high-volume output.
This deficiency is a result of two factors: First, the peacetime industrial plant was badly undersupplied with modern efficient equipment
at the beginning of the war as an aftermath of the depressed conditions of the thirties.
Secondly, except in a few segments of the economy which ex«
panded to meet ballooned war demands for peacetime products,
consumer-goods producers in general have just completed 4 years of
capital equipment starvation as the war program permitted no serious
diversion of materials and manpower for machinery used primarily
in civilian production.
With equipment replacements generally unavailable in civiliangoods manufacture after 1941, much outmoded and inefficient machinery was continued in use. It was possible to continue with
limited capacity and outmoded machinery while many important
items—such as washing machines, refrigerators, and vacuum cleaners—were virtually out of production and other civilian products
were turned out at greatly reduced rates.
However, new machinery is now required to increase capacity, to
meet deferred replacement needs, and to remove bottlenecks in
present operations. Moreover, the demands of plants normally engaged in civilian-goods production are augmented by the conversion
of war plants to the production of consumer goods.
Thus, manufacturers of all types of civilian goods are currently in
the market for the latest and most efficient production machinery.
These requirements must be met if the industrial plant is to be
physically capable of delivering the volume production needed to
checkmate inflationary forces.
Cost-saving essential: The attainment of volume production is not
enough. Modern equipment is needed for another reason. Costs
must be held in check if we are to avoid an upward spiral^ of prices,
and industry looks to more efficient machinery as the most important
means for offsetting the major rise in manufacturing costs which has
taken place. Although all costs have gone up, the rise of 44 percent
between 1940 and the end of 1945 in straight-time hourly earnings for
211
e x t e n d price, c o n t r o l a n d s t a b i l i z a t i o n a c t s of
194 2
nil manufacturing—reported by the Bureau of Labor Statistics—is
dominant.
Further increase in wage and material costs have occurred since
the beginning of 1946 as a result of changes in the Government's
wage-price policy. Moreover, the impact of increases still to come
remains to be felt.
The net result of these developments is to place a premium on cost
saving. Obviously, improved technical efficiency that will effect
rising unit labor costs by reducing unit manpower requirements
affords the major possibility whereby producers can hold down, or
further reduce, prices of consumer goods and services to the buying
public. Equally obvious, failure to neutralize the increased costs
through more efficient equipment and technology would mean that a
major rise in price levels of consumer goods was inevitable.
Technologic program and its effect on the wage level: Aside from
its short-term aspects, the attainment of greater technical efficiency
has important long-range implications, particularly significant for
wage earners. By increasing productivity per worker, technologic
progress operates to reduce unit costs and to make possible a low-price
economy despite the long-term upward trend in wages. In fact, an
increase in productivity furnishes the only sound basis on which a
higher wage structure can be maintained so as to mean anything to
workers. This is because the benefit of any wage rise is not measured
by a given amount of money, but by the purchasing power of the total
wage under existing price levels.
If increased wages are simply translated into higher prices, the
value of the higher wage is destroyed as far as the worker is concerned and he suffers further damage in the impaired purchasing
power of his reserve savings. It is a delusion to seek higher wage
levels unless costs and prices are held in check by a compensating
increase in productivity, achieved with the aid of aggressive technologic progress. Such progress must be stimulated as a necessary
foundation for a high-wage, low-cost, mass-production economy.
Producers of industrial equipment can make a major contribution to
such progress* whenever they are permitted to do so.
Now I should like to discuss some economic consequences of price
control over industrial equipment in peacetime.
The current situation of the industrial equipment industries under
price control, like Topsy, "just grow up," without the benefit of adequate forethought. As the impact of economic forces set in motion
by the war began to register fully on peacetime business, price control evolved from the nuisance category to become a growing hazard
to proper functioning of industrial equipment manufacturers in the
economy. By the end of 1945 the price situation for equipment producers was difficult and getting worse. Developments since January
have further intensified the seriousness of the problem and the need
for solving it.
Progressive paralysis of incentives for production: From experiences reported by its member companies, the institute knows that a
progressive paralysis of incentives for production of industrial equipment has been taking place. While prices of machinery and equipment have been held rigidly at 1941-42 levels, all elements of cost
have surged upward to distort grotesquely the normal price-cost
relationship and to reduce radically, or squeeze out, profit.
212
e x t e n d price, c o n t r o l and stabilization acts of
194 2
For example, hourly earnings of wage earners in general machinery
manufacture, according to Government figures, have advanced 43
percent from 1941 through 1945. Over the same period there have
been increases in costs of materials and of components and semifabricated items which range from 10 to 20 percent and from 20 to
30 percent, respectively, for individual manufacturers. Since 1945
there have been further cost rises that substantially increase these
percentages.
These are magnitudes of the greatest importance. Taken in conjunction with the change to normal individual order business since
VJ-day, which is substantially less profitably than the block-order
repetitive production of the war period, they have progressively
nibbled down profits in the equipment industries under the hold-theline program. Indeed, for many companies, production during recent
months has led either to break-even operations or to major operating
losses. To protect themselves, producers will be obliged to curtail
output, abandon loss lines and items, shift to other than normal
products, and eliminate developmental work on new types of costsaving machinery.
Why price control increasingly discourages production of industrial
equipment becomes clear when the special characteristics of the
machinery business are fully understood. Machinery and equipment
are not counter goods, but are normally sold on orders taken before
fabrication and the production cycle usually extends from 3 to 18
months, or longer. Hence, orders taken on the basis of past prices
and costs are a sure road to insolvency, when, as in the months ahead,
a sharp upward rise in costs is inevitable during the period of fabrication.
Because production under present conditions is exceptionally precarious, we know of numerous instances where companies have reduced
their activities and where new business cannot be accepted because
prospective leases loom too large. The continuation of price control
will increase the number of such adjustments that machinery producers find necessary.
Besides holding in leash the full power of the equipment industries
for maximum production, price control will increasingly force other
adjustments highly disadvantageous to the economy. We have
knowledge, for example, of instances where price regulations have
operated to distort the composition of production by encouraging companies to drop production of certain lines and undertake the output
of different machinery, or simply to swap products with another
manufacturer—all without regard to economic needs.
Such adjustments are a result of regulations which allow no price
relief to include profit on loss or break-even lines or items. They have
the net effect of contracting the efficient low-cost segments of production and expanding the high-cost areas. Thus by substituting other
criteria than low cost, efficient operation as a basis for production,
price control progressively warps the normal competitive structure of
machinery production and sets in motion long-term unstabilizing influences within the machinery industries.
There is also growing evidence that price control retards technologic
progress and stifles the development and production of entirely new
types of machinery that would further reduce manufacturing costs
or produce better products. Since such developmental ventures are
213
e x t e n d price, c o n t r o l and stabilization a c t s of
194 2
largely experimental and beset with many exceptional hazards, they
can be undertaken only when there is a possibility of realizing the
higher returns that are necessarily associated with the greater risks
involved. Work of this type is so much of a gamble under price regulations that manufacturers cannot afford to undertake it. With the
opportunity for technologic improvements unusually promising due to
scientific developments during the war, we should not permit price
control or any other influence to defeat the social progress that is
within our grasp.
We dismiss as illusory the thought that price relief through OPA
action has been, or will be, administered to stimulate production
effectively or to mitigate the baneful economic results of price control in the machinery industries. Time does not permit us to
develop this subject fully, but we emphasize that OPA dispenses price
relief for those industries under blanket regulations that reflect the
complete orientation of the agency's policy thinking to pricing problems in consumer goods manufacture. Such regulations are unrealistic
and discriminatory when applied to manufacturers of capital goods.
Moreover, OPA officials have stated in price regulations and to the
Congress that there are insuperable administrative obstacles in the
way of effective price relief for industrial equipment producers.
We submit that continuation of industrial equipment under a
pricing program designed primarily for control of consumer goods and
rents is an economic perversion. It discourages the manufacture of
vital machinery urgently needed in the battle against inflation, it
distorts production and the pattern of normal competition, it arrests
technologic progress, and it threatens economic disaster for a strategic
segment of the economy.
These are cogent reasons why price control over industrial equipment should be terminated. However, members of this committee
will properly question what effect such action would have on the
economy as a whole. Therefore, we now consider whether the removal of industrial equipment from price control involves any
inflationary threat.
Because cyclical fluctuations of business have an accentuated impact on the capital-goods industries, we would be the last to recommend any course of action that would add impetus to inflationary
forces. There is nothing, however, which supports the view that
removal of captial goods from privce control would be inflationary.
On the contrary, the evidence is positive that such decontrol would
aid in holding living costs in check and that there would be no unwarranted increase in the price level of machinery and equipment.
The cost of living is not affected by the price level of capital goods.
With the prevention of a major rise in living cost the keystone of the
stabilization program, it is important to understand fully why the
cost of living is not materially affected by the price level of capital
goods. We buy consumer goods for direct individual consumption,
to keep body and soul together. The purchase is virtually unavoidable and no element of choice is involved except among kinds of goods
that serve the same purpose. Thus a rise of 1 cent in the price of
bread, meat, or children's stockings is felt immediately in the households of millions of Americans. Such increases directly affect living
costs and are inflationary.
214
e x t e n d price, c o n t r o l and stabilization a c t s of
194 2
On the other hand, the motivation for the purchase of capital goods
and the influence of the price level for such goods on consumers are
entirely different. Capital goods are not purchased for direct consumption by individuals. They are bought entirely for industrial
use to make volume and low-cost production possible. They are
never purchased when, in the judgment of the potential buyer, they
would increase over-all production expense. The sale objective in
their acquisition is lower-cost or better consumer goods.
The prices paid for capital goods have little significance in costing
and pricing the consumer goods and services they produce. This is
because expenditures for capital equipment enter production expense
in the form of depreciation charges, and these charges constitute a
very minor fraction of manufacturing costs—less than 2 percent of
aggregate costs in all branches of manufacture, according to Treasury
reports.
Depreciation is also a relatively inflexible fraction of costs since it
is dominantly determined by capital assets already acquired. Clearly,
the price level of producers7 equipment has no material short-term
influence on costs and prices of consumer goods. It is the operating
savings accomplished by capital equipment in mass production, not
the price of the equipment, which is really important in achieving low
prices for consumer items.
And we believe the fear of unwarranted price increases in capital
goods is a delusion. Will the removal of industrial equipment from
price control result in excessive price to buyers and unconscionable
profits for manufacturers? This question expresses a fear which, as
I say, is a delusion.
There is no possibility of excessive prices for capital goods because
the pressures which normally operate to keep prices at reasonable
levels have been reinforced by important influences generated by the
war. The war-created factors which are highly significant as brakes
on prices in the industrial equipment market are the large wartime
increase in the capacity of equipment producers and the existence of
large stocks of Government-owned surplus equipment. They combine
with strong normal pressures favoring low prices and with powerful
limitations on opportunistic pricing to prevent an unwarranted rise in
the price level of machinery.
With production expanded during the war many times prewar needs,
it is clear that manufacturers can meet all possible demands in the period ahead. It is also obvious that the expanded capacity assures
intensive competition which will hold prices and profits within reasonable limits.
How great the expansion has been is revealed by comparing production rates during the war with those in a prewar year, such as 1939.
Aggregate figures are not available for this purpose, but detailed records of the War Production Board indicate that production during the
war was many times the 1939 rate. For example, percentage increases
in rates of output in 1943-44 over 1939 for specific items of equipment
were as follows:
Machine tools, 556; internal-combustion engines (including Diesels),
1,402; cutting tools and metal-working accessories, 601; pumping
equipment and compressors, 599; industrial cars and trucks, 414;
power-transmission equipment, 377; and locomotives, 1,533. Such
increases in output could be obtained only with substantial expansion
of production facilities.
215
e x t e n d price, c o n t r o l a n d stabilization a c t s of
194 2
Competition augmented by Government-owned surplus equipment:
The effective competition otherwise assured throughout the industrialequipment field will be reinforced in certain important segments of
machinery manufacture by additional competition from Governmentowned surplus equipment. The real importance of the Government
surpluses as a market factor is not simply that they cover an extensive
aggregate array of machinery, but that they include exceptionally
large quantities of specific types of equipment normally used in peacetime production.
It is clear that the competitive influences of surpluses on the
machinery market, while selective, will be important and acute in
many areas.
Although an over-all inventory of Government-owned equipments
not available, it is known that at the end of the war the Government
owned about 600,000 machine tools. Partial tabulations of other
equipment items, believed to represent about two-thirds of Government holdings, show 158,342 general-purpose machines, 16,830 specialindustry machines, and 189,650 other items of machinery and equipment.
Such figures, although impressive in the aggregate, must be analyzed
in connection with other facts to determine their full meaning. In the
case of machine tools, for example, the probable surplus available for
disposal after Government requirements are satisfied will be from
400,000 to 500,000 units, or something like 10 years' normal output.
Where the quantities of surplus machinery are important, the
procedures employed in disposal have a significant impact on prices
that can be charged on new production. Under the Clayton formula,
which governs disposal prices for machine tools and certain other
machinery and equipment, the disposal price of a 3-year-old machine—
which would normally have more than three-fourths of its useful life
remaining—represents a 54.8 percent reduction from the original cost
price. A machine 1 year old is sold at a reduction of 35.6 percent
from cost. The fact that a surplus machine is available at bargain
discount limits the extent to which prices can be increased on new
machinery and still attract purchasers.
Even if there were no expanded production capacity and Government surpluses, strong normal pressures operate constantly to keep
machinery and equipment prices reasonable. These derive from the
strategic position of the buyer of machinery and equipment whose
decision to purchase is optional and is determined largely on the
basis of short-term cost savings.
None of the desperation psychology which characterizes customers
for war-scarce consumer goods is applicable to buyers of capital
equipment. Such purchasers are well informed, deliberate, and in
a strong bargaining position. Calculations based on engineering and
economic data determine their decisions. In general, industry justifies replacement of capital equipment on the basis of a short pay-off
formula.
Briefly, this means that a new machine must recover its price in
the form of cost savings over a relatively brief period. If the buyer
concludes that prices of machinery are excessive, purchases are simply
deferred and the market dries up.
The suggestion that opportunistic pricing of industrial equipment
for temporary gain might become significant is amazing to anyone
familiar with the pattern of producer-buyer relationships in the capital
216
e x t e n d price, c o n t r o l and stabilization acts of
194 2
goods industries. Unlike the untold millions who are outlets for
consumer goods, the number of potential buyers for capital equipment
is comparatively small and their confidence is carefully cultivated.
Close relationships exist, and infrequently dating back a half century
or more, between equipment manufacturers and their customers and
there is a high degree of cooperation and mutual trust on the part of
both buyer and seller. The influence of this condition as a market
factor cannot be demonstrated statistically, but it is a powerful
deterrent to unwarranted and opportunistic price increases.
Now, Mr. Chairman, to sum up the summary and give you our
conclusions, I should like to say this:
We submit that price control over machinery and equipment in
peacetime defeats the major objectives of the stabilization program.
The observations leading to this conclusion are briefly summarized
as follows:
1. Despite a deficiency of production equipment required for volume low-cost output of consumer goods, the production of machinery
urgently needed in the battle against inflation is discouraged and
thwarted.
2. Technologic progress in the development and production of new
cost-saving machinery, important in offsetting rising labor rates, is
stifled.
3. The composition of machinery production is distorted by the
effect of price regulations on manufacturers' operations and does not
properly reflect the real economic needs of industry.
4. The normal competitive structure of industrial equipment production is warped and long-term unstabilizing influences set in motion
within these industries.
Fortunately, price control over machinery and equipment can be
terminated entirely, since such action would not be inflationary and
would not result in unwarranted price increases for the following
reasons:
First: Due to phenomenal expansion in productive capacity, industrial-equipment producers are capable of meeting any possible
peacetime demand under conditions that encourage production.
Second: Intensive competition is assured among equipment manufacturers, who are normally highly competitive, as the wartime
expanded capacity presses for outlets.
I may say on that point, Mr. Chairman, I observed in this norning's
press a statement from the White House containing a report made by
the Special Investigator of the Disposal of Goods, Mr. Bruce. Mr.
Bruce says that he believes the War Assets Administration is now in a
position to step up their sales very rapidly and the White House says
that Mr. Bruce's report on that point will be accepted and the recommendations he makes carried out, the expediting of the sale of surplus
goods would be supported by the White House. That means that
400,000 or 500,000 machine tools alone will be getting on the market
very rapidly.
We in the machine-tool industry hope that will be true. We want
rapid liquidation. It will cause the keenest kind of competition in our
industry, but we invite it because we believe, as I have said here, it is
in the interest of the economy to have the finest tools in America at
work lowering the price of consumer goods and improving the quality
of those goods.
217
e x t e n d price, c o n t r o l and stabilization acts of
194 2
Third: Important types of machinery must face additional acute
competition from large stocks of Government surplus equipment which
are available at generous discounts.
Fourth: The strategic position of industrial equipment buyers and
the economic justification required for purchase exert strong pressures
against unwarranted price increases.
Fifth: The prevailing pattern of producer-customer relationships
makes opportunistic pricing unattractive.
On the basis of the circumstances we have presented, the Institute
recommends that the proposed legislation for extension of price control beyond June 30, 1946, specifically name industrial machinery and
equipment as exempt from its provisions. The fact that the OPA
Administrator and the Stabilization Director have assured Congress
that machinery and equipment will be decontrolled rapidly by administrative action does not a'lter the validity of this recommendation.
We believe that provisions of law which have outlived their usefulness
should be discarded through affirmative legislative action.
The C H A I R M A N . Thank you very much. Are there any questions?
Senator C A R V I L L E . I would like to ask Mr. Kelly, of course, you
are familiar with the procedere of OPA in its decontrolling program
and you select this machinery and equipment as being—to have it
relieved from the control of the OPA. Have you taken into consideration that OPA controls from the raw material stage right up to
the manufacturing of your machinery and equipment? Do you think
if the OPA would release its controls over the equipment and not the
others, it would help your industry?
Mr. K E L L Y . Well, Senator, I can only speak on the economics of
our own industry because it is only with them I am familiar. OPA
and we are now in agreement on this suggestion to decontrol. We
were not in agreement up to the time we made an appearance before
the House Banking and Currency Committee on March 12, but I
should like to say this, if I may: That the cooperation we in the
Machinery and Allied Products Institute have received from Mr.
Porter, from Mr. Baker, from Mr. Bulkley, Mr. Stranahan, Mr.
Wallace, and from others of the top policy-making group at OPA has
been excellent.
Senator B A N K H E A D . Then why are you .here, if you have got an
agreement with them? Why present the matter to this committee
on behalf of your industry if you have a satisfactory agreement with
the top people?
Mr. K E L L Y . We are in agreement that the machinery and equipment industry should be decontrolled, but we are not in agreement on
the timing. For example, on the 10th of December certain parts of
the heavy-goods industries were decontrolled, but they represented a
very small part of the total of the capital-goods-industries production.
We believe that all of the machinery and equipment industry should
be decontrolled immediately. We feel that it is necessary for Congress
to say that to OPA, if they agree with us.
Mr. B a k e r Senator B A N K H E A D . Wait a minute. Why if they are willing to do
it, why don't you take it and walk off and say, "Thank you"?
Mr. K E L L Y . A S I say, Senator, they are not decontrolling as rapidly
as we should like to have decontrols. Mr. Baker, the Deputy Price
Administrator, said publicly in New York the other day, he expected
85721—46—vol. 1
15
218
e x t e n d price, c o n t r o l and stabilization acts of
194 2
that OPA would substantially decontrol our industry within 60 days.
We hope that occurs. There is one reason, though, Senator, for our
appearance on this subject—one other reason why we ask that our
industries be specified in legislation for decontrol, and that is that
Mr. Porter and these other gentlemen who are now associated with
him may or may not be associated in those offices if Congress continues
legislation covering OPA.
We feel that whoever holds those offices should have a mandate
from Congress to decontrol these industries that are so important to
getting consumers7 goods prices reduced and consumers' goods quality
improved.
Senator C A R V I L L E . Then as I understand it, you are satisfied with
the decontrolling program, but is a matter of time—that it fits into
the whole picture of OPA all down the line. Of course, that is going to
be Congress' problem, too, as to the matter of time. That is what we
are considering. Do you think the decontrols should be cut off as of
today? Would not that upset your industry?
Mr. K E L L Y . Not in the slightest, Senator. I think our industries
could be decontrolled today with nothing but benefit to the industry
and benefit to the country.
Senator C A R V I L L E . That takes into consideration the materials
and everything that go to make up your product clear down the line
from the raw material?
Mr. K E L L Y . Yes, sir. From the top right down to the bottom.
The C H A I R M A N . All right. Thank you very much. Are there any
further questions?
(There was no response).
Mr. K E L L Y . I will just leave this complete statement for the record.
The CHAIRMAN. Very well. That may be placed in the record.
(The statement referred to is as follows:)
P R I C E D E C O N T R O L OF T H E C A P I T A L - G O O D S
INDUSTRIES
(Statement of William J. Kelly, president, Machinery and Allied Products
Institute, before the Committee on Banking and Currency, Senate of the
United States, April 18, 1946)
Mr. Chairman and gentlemen of the committee, the Machinery and Allied
Products Institute appreciates the opportunity to comment on S. 2080 which
proposes extension of the Emergency Price Control and Stabilization Acts of 1942,
as amended, to June 30, 1947.
As a federation of trade associations in the industrial-equipment field, the
institute has a special interest in the effect of the price-control program on manufacturers of capital goods. The producers' machinery and equipment these
manufacturers make range f r o m drills and cutting tools, through such larger
items as machine tools and Diesel engines, to giant hydraulic presses, rolling
mills, cranesv, and locomotives. Naturally, our interest concerns the problems
of these manufacturers in conducting their operations under the various price
regulations now in force. More importantly, however, it also concerns the
effect of price control on the production of industrial machinery and equipment
needed for the volume manufacture of consumer goods at the lowest possible cost.
Since the institute is interested primarily in fthe effects of price control upon
the production of industrial equipment, it has made no attempt t o seek answers
t o questions posed b y controls over prices of consumer goods or cost-of-living
items. Accordingly, the views and recommendations we shall present are limited
t o matters of special significance f r o m the standpoint of manufacturers who p r o duce the tools of industry.
219 e x t e n d p r i c e , c o n t r o l a n d s t a b i l i z a t i o n a c t s o f
I.
T H E R O L E OF M A C H I N E R Y
IN THE BATTLE AGAINST
194 2
INFLATION
Before taking up the particular problems of the industrial equipment industries
under price control, we comment briefly on the role of modern, efficient machinery
in the battle against inflation because this has direct bearing on the significance of
our subsequent observations.
T h e committee has heard previous witnesses testify on the processes of inflation
and on the dire potentialities that reside in the large volume of liquid savings and
in the pressure of high national income upon inadequate supplies of consumer
goods and services. There is no need to touch further on this subject, but we
note that all the experts, although differing widely as to methods of accomplishment, prescribe the same remedy—volume, low-cost production.
Barriers to volume production
It is broadly assumed b y these experts that the Nation's industrial plant is at
once physically capable of smothering the e c o n o m y with the low-cost goods n o w
needed to supply the accumulated demands of consumers. Such an assumption
is contrary to the facts.
One of the principal barriers to production of consumer goods is a deficiency of
machinery needed for high-volume output. This deficiency is a result of t w o
factors. First, the peacetime industrial plant was badly undersupplied with
modern efficient equipment at the beginning of the war as an aftermath of the
depressed conditions of the thirties. Secondly, except in a few segments of the
e c o n o m y which expanded to meet ballooned war demands for peacetime products,
consumer goods producers in general have just completed 4 years of capital
equipment starvation as the war program permitted no serious diversion of
materials and manpower for machinery used primarily in civilian production.
With equipment replacements generally unavailable in civilian goods m a n u f a c ture after 1941, much outmoded and inefficient machinery was continued in use.
It was possible t o continue with limited capacity and outmoded machinery while
many important items—such as washing machines, refrigerators, and v a c u u m
cleaners—were virtually out of production and other civilian products were
turned out at greatly reduced rates. However, new machinery is n o w required—•
to increase capacity, to meet deferred replacement needs, and to remove bottlenecks in present operations.
T h e demands of plants normally engaged in civilian goods production are
augmented b y the conversion of war plants to the production of consumer goods.
T h a t the conversion process is time-consuming and requires much new machinery
and equipment is being vividly demonstrated at present at Willow R u n where
finished automobiles will leave the assembly line only after needed machinery is
forthcoming and the production layout completed. Similarly, other plants
fitted for war activities require either much new machinery or important supplemental equipment before they can contribute to peacetime production.
Thus, manufacturers of all types of civilian goods are currently in the market
f o r the latest and most efficient production machinery. These requirements
must be met if the industrial plant is t o be physically capable oi delivering the
volume production iieec.ed to checkmate inllatioi^ary ioictis.
Cost saving essential
T h e attainment of volume production is not enough. M o d e r n equipment is
needed f o r another reason. Costs must be held in check if we are to avoid an
upward spiral of prices, and industry looks to more efficient machinery as the
most important means f o r offsetting the major rise in manufacturing costs which
has taken place. Although all costs have gone up, the rise of 44 percent between
1940 and the end of 1945 in straight-time hourly earnings f o r all manufacturing—
reported b y the Bureau of Labor Statistics—is dominant. 1 Further increases in
wage and material costs have occurred since the beginning of 1946 as a result of
latest changes in the Government's wage-price policy. Moreover, the impact of
increases still to come remains t o be felt.
T h e net result of these, developments is to place a premium on cost saving.
Obviously, improved technical efficiency that will offset rising unit-labor costs b y
reducing unit-manpower requirements affords the major possibility whereby
producers can hold down, or further reduce, prices of consumer goods and services
1
Monthly Labor Review, January 1946, p. 117.
220
e x t e n d price, c o n t r o l and stabilization a c t s of
194 2
t o the buying public. Equally obvious, failure to neutralize the increased costs
through more efficient equipment and technology would mean that a m a j o r rise
in price levels of consumer goods was inevitable.
Technologic progress and the wage level.
Aside from its short-term aspects, the attainment of greater technical efficiency
lias important long-range implications, particularly significant for wage earners.
B y increasing productivity per worker, technologic progress operates t o reduce
mnit costs and t o make possible a low-price economy despite the long-term upward trend in wages. In fact, an increase in productivity furnishes the only
sound basis on which a higher wage structure can be maintained so as t o mean
anything to workers. This is because the benefit of any wage rise is not measured
b y a given amount of money, but b y the purchasing power of the total wage
under existing price levels. If increased wages are simply translated into higher
prices, the value of the higher wage is destroyed as far as the worker is concerned
and he suffers further damage in the impaired purchasing power of his reserve
savings. It is a delusion to seek higher wage levels unless costs and prices are
held in check b y a compensating increase in productivity, achieved with the aid
of aggressive technologic progress. Such progress must be stimulated as a necessary foundation for a high-wage, low-cost, mass-production e c o n o m y .
Producers of industrial equipment can make a major contribution t o such progress
whenever they are permitted to do so.
II.
THE INDUSTRIAL-EQUIPMENT INDUSTRIES UNDER PRICE CONTROL IN PEACETIME
T h e current situation of the industrial-equipment industries under price con
trol, like T o p s y , " j u s t grew u p " without the benefit of adequate forethought'
During the war, price control over machinery was integrated with other i m p o r tant controls—such as those over materials, components, wages, and man"
p o w e r — a n d conditions of wartime production were exceptional as t o volume and
nature of output. Under this combination of factors, production at 1941-42
ceiling prices was possible and price control had very little practical effect on
manufacturers' operations.
With the collapse shortly after VJ-dav of the broad structure which made
operation possible under price regulations in wartime, the picture changed.
As
t h e impact of economic forces set in. motion b y the war began to register fully
o n peacetime business, price control evolved slowly but surely f r o m the nuisance
category to become a growing hazard to production and to proper functioning of
industrial equipment manufacturers in the economy. B y the end of 1945 the
price situation for equipment producers was difficult and getting worse.
Develo p m e n t s since January have further intensified the seriousness of the problem
and the need for solving it.
Unless an adequate solution of the price control problem is forthcoming,
equipment manufacturers will be forced t o adjust their activities in various ways.
Such adjustments have already been made b y individual companies to a limited
extent, b u t they will be wide-sweeping under conditions n o w in prospect.
Before
considering h o w such consequences can be avoided, we review briefly the nature
of the artificial pressures price control has been building up within the industrial
equipment industries.
Progressive paralysis of incentives for production
F r o m experiences reported b y its member companies, the institute knows that
a progressive paralysis of incentives for production has been taking place.
Under
the hold-the-line program, the prices of various types of machinery and equipm e n t have been frozen at 1941-42 levels. T h a t this freeze has been effective is
p r o v e d by the reporjts of the United States Bureau of Labor Statistics which show
n o aggregate rise in machinery prices since 1941. 2 "While prices have been rigid,
all elements of cost have surged upward to distort grotesquely the normal pricecost relationship and to reduce radically, or squeeze out, profit.
H o w intense has been the pressure of rising costs on profits f r o m 1941 through
1945? HouTly earnings of wage earners in general machinery manufacture,
according t o Government figures, have advanced 43 percent in this short period.
For important segments of the field the rise was greater, as is shown b y the 472 See following mimeographed releases of U. S. Bureau of Labor Statistics: Machine Tool Prices, JulyDecember and year 1945; Prices of General and Auxiliary Machinery July 1944-September 1944; and Prices
of Construction Machinery, October-December and year 1945.
221
e x t e n d price, c o n t r o l and stabilization acts of
194 2
percent increase in hourly earnings in the machine-tool industry. 3
Although
over-all figures are not available on material and component costs of machinery
producers as a group, experience records of individual companies indicate that t h e
increase in material costs since 1941 ranges typically f r o m 10 to 20 percent a n d
that the rise in costs of components and semifabricated items is in the nature of
20 to 30 percent. Since 1945, as mentioned previously, there have been further
cost rises that will substantially increase these percentages.
These are magnitudes of the greatest importance. Taken in conjunction with
the change to normal individual order business since VJ-day, which is substantially less profitable than the block-order repetitive production of the war period,
they have progressively nibbled down profits in the equipment industries under
the hold-the-line program. Indeed, for many companies production during t h e
past few months has led either to break-even operations or to major operating
losses.
With manufacturers already in a difficult position, the additional increases in
costs of materials, components, and labor—resulting from the current wave of
general wage increases sweeping the country—will make large areas of production
unprofitable under existing equipment price ceilings. T o protect themselves,
producers will be forced to curtail output, abandon loss lines and items, shift to
other than normal products, and eliminate developmental work on new types of
cost-saving machinery.
The damping of output
Although there is great national need for modern cost-saving machinery, it i s
already clear that price control will increasingly discourage the production of
industrial equipment.
We know of numerous instances where companies have
already reduced their activities and where new business cannot be accepted
because prospective losses loom too large. This reaction will become widespread
when equipment manufacturers generally feel the effects of sizable cost increases
n o w on the way. Small wonder that the O P A Administrator for Price, in his
appearance before the House Appropriations Committee on February 6, testified
that lack of important machinery was the only remaining difficulty in attaining
adequate production of certain important consumer items.
Production is also discouraged by certain characteristics of machinery m a n u facture which make operation under price control exceptionally precarious.
Machinery and equipment are not counter goods, but are normally sold on order
before fabrication is undertaken and the production cycle usually extends f r o m
3 to 18 months, or longer. Hence, orders taken on the basis of past prices a n d
costs are a sure road to insolvency when, as in the months ahead, a sharp upward
rise in costs is inevitable during the period of fabrication.
W e ask the members of this committee to place themselves in the position o f
the heavy-goods manufacturer who today is confronted with the decision of
whether he should continue production of a machine at the 1941 frozen price, say,
$10,000. Let us assume that this machine has over a thousand parts and c o m ponents, of which one-half are furnished by subcontractors and suppliers who are
n o w increasing wages and filing applications for price relief with O P A under the
new wage-price policy. D o you believe that there is anyone in the universe with
such consummate wisdom that he can foresee the results of O P A price action o n
these hundreds of requests? Moreover, who can forecast t o d a y what wage i n creases and higher material costs the producer will have to pay in the next 12
months on the work he does on the machine? Is not the only prudent answer t o
the manufacturer's problem that the cards are stacked against him and that he
should not undertake production until he knows where he is going to come o u t ?
Distortion of production and competition
Besides holding in leash the full power of the equipment industries for maximum' production, price control will increasingly force other adjustments highly
disadvantageous to the economy.
W e have knowledge, for example, of instances
where price regulations have encouraged companies to drop production of certain
lines and undertake the output of different machinery, or simply to exchange
products with another manufacturer—all without regard to economic needs.
Such adjustments distort both the composition of production and the normal
competitive structure of the industrial-equipment industries.
It is not surprising that what individual companies can produce without loss
under price regulations should grow in importance as a determinant of production.
3 The data on earnings in this paragraph are from mimeographed industry reports of the TJ. S. Bureau of
Labor Statistics, which are obtainable on request.
222
e x t e n d price, c o n t r o l and s t a b i l i z a t i o n a c t s of
194 2
A very substantial portion of machinery output comes from companies that are
moderate or small in size. T h e y do not have large financial reserves and their
ability to withstand operating losses is narrowly limited. Hence, with rising costs
increasing the number of machinery items whose production involves losses and
with decreasing opportunity to balance such losses against profits on other items,
the manufacturer's only option is to cease making the loss items. Thus many
substantial, long-established, and efficient producers will find it necessary to stop
entirely, or to reduce to a low rate, the fabrication of certain machinery lines.
T h e same factors that bedevil production also operate to distort the normal
competitive pattern of the equipment industries. W e are acquainted with instances where companies that have dropped loss or break-even lines have found it
advantageous to inaugurate the manufacture of established lines of equipment
different from what they have .heretofore produced. T h e prices permitted b y
O P A on the lines thus adopted include a profit mark-up which, though low, is
more satisfactory than the absence of profit on the previous production.
W e also
k n o w of other instances where manufacturers have simply exchanged products to
their mutual advantage. Such adjustments are a result of regulations which
allow no price relief to include profit on loss or break-even lines or items.
They
have the net effect of contracting the efficient low-cost segments of production
and expanding the high-cost areas. Thus by substituting other criteria than
low-cost, efficient operation as a basis for production, price control progressively
warps the normal competitive structure of machinery production and set in
motion long-term unstabilizing influences within the machinery industries.
Technologic progress under wraps
There is also growing evidence that price control retards technologic progress
and stifles the development and production of entirely new types of machinery
that would further reduce manufacturing costs or produce better products. Since
such developmental ventures are largely experimental and beset with many
exceptional hazards, they can be undertaken only when there is a possibility of
realizing the higher returns that are necessarily associated with the greater risks
involved. Work of this type is so much of a gamble under price regulations that
manufacturers cannot afford to undertake it.
Obtaining official approval of a price for an entirely new t y p e of machine is
n o t only a ponderous, time-consuming, and difficult process, but the regulations
are written so as to prohibit an adequate return on such production. According
t o O P A rules, a new-type machine must be priced under what is k n o w n as the
formula procedure. In simple terms, this means that a manufacturer must arrive
at a price by using the labor rates, material costs, overhead charges, and mark-up
in effect on the appropriate 1941-42 freeze dates. Holding the profit on such
work to the rate of mark-up on regular products obviously results in a reward
insufficient to compensate for the higher risk in making the new-type equipment.
Moreover, it is not enough to encourage speculative investment in facilities needed
t o put the new machine into production. This situation, of course, differs entirely
f r o m that mentioned previously where a manufacturer drops a loss line and shifts
to a different established product and where the conventional profit mark-up
represents a more attractive return than the abandoned production.
I t is particularly unfortunate that technologic progress should be thwarted
a t this time when there are wide areas of industry where the opportunity for
technical advance is both promising as well as urgent f r o m a social standpoint.
I n the field of low-cost housing, for example, there can be no d o u b t that only
through the application of new technical ingenuity and new machinery can the
$6,000 house for veterans become a reality. W ith no downward trend in costs
of building materials and supplies in sight, any opportunity for substantial cost
reduction lies in greatly increasing the productivity of construction labor which
represents 30 to 50 percent of the cost of residential projects. As evidence of the
willingness of labor and management to meet its public responsibilities in this
connection, we call attention to the recent collective-bargaining agreement between the International Brotherhood of Electrical Workers and contracting
companies in New York City which provides for the use of entirely new costsaving machinery. However, this equipment must be designed, developed, and
produced. On last report the union was earnestly seeking to interest various
machinery producers in the project, whereas under normal conditions manufacturers would be seeking the opportunity. It is a tragedy of this time that
price control or any other influence should be permitted to discourage technologic
i m p r o v e m e n t s and to defeat the social progress that is within our grasp.
223
e x t e n d price, c o n t r o l and stabilization acts of
194 2
Constructive price relief illusory
W e dismiss as illusory the thought that price relief through O P A action has
been, or will be, administered to stimulate production effectively or to mitigate
the baneful economic results of price control in the machinery industries.
OPA
dispenses price relief for these industries under blanket regulations that reflect
the complete orientation of the agency's policy thinking to pricing problems in
consumer-goods manufacture. For example, underlying Supplementary Order
142—which is the regulation governing relief action f o r most machinery and
equipment items—are the basic assumptions that (1) losses during the transition
period are inevitable and should be absorbed b y business because the period is
abnormal, and (2) a large proportion of costs incurred in this period are 4 'bulge
costs" and must be eliminated in any price consideration. Applicable as these
assumptions may be to the typical producer of consumer goods who is in process
of change-over to his regular lines and has not yet attained high volume, they are
unrealistic and discriminator} 7 when applied to manufacturers of machinery and
industrial equipment. These manufacturers have no conversion problems
which justify the theory of "bulge costs" disallowance. A n y price relief granted
equipment producers on the basis of such principles is bound to be inadequate.
There are also insuperable administrative obstacles in the way of effective
price relief for industrial equipment producers. With a flood of applications
f o r relief pouring into OPA as a result of the new wage-price policy, it is now
generally admitted that the only practical hope for constructive price relief lies in
the approval of flat or percentage price increases on an industry basis.
Mr.
James F. Brownlee, Deputy Director of the Office of Economic Stabilization,
has told the Congress that price relief is practical under the new wage-price policy
only where it can be dispensed on an industry basis.
But what, indeed, is an industry in the producers' equipment field with its
multiple-product companies each turning out a widely different assortment of
machinery and parts? That OPA, which prefers to administer relief on an industry
basis, has been unable to do so for industrial equipment is admitted by the former
O P A Administrator. " I n the machinery field," said Mr. Bowles, " i t has frequently been found impossible to clearly define an industry, and it is partially
for this reason that price adjustments * * * have generally followed along
the individual adjustment lines rather than the industry-wide basis." 4
W h a t this means is that machinery and equipment producers differ so widely
in their individual operations that, in general, O P A has found it impossible to
deal with them on an industry basis which is the only practical pattern for price
relief in the future. T o be sure, we are told that "individual applications for
relief will continue to be considered." However, such applications not only
require a myriad of minuscule administrative operations and rituals which
thoroughly obfuscate and defeat the applicant; they will be far d o w n in the list
of responsibilities taken seriously b y the pricing agency. There is no hope that
the procedure of individual relief will solve the pricing problems of machinery
producers.
W e submit that continuation of industrial equipment under a pricing program
designed primarily f o r control of consumer goods and rents is an economic perversion. It discourages the manufacture of vital machinery urgently needed in the
battle against inflation, it distorts production and the pattern of normal competition, it arrests technologic progress, and it threatens economic disaster for a
strategic segment of the e c o n o m y . In addition, price control imposes an insuperable burden of administration on both Government and machinery manufacturers.
These are cogent reasons why price control over industrial equipment should
be terminated. However, members of this committee will properly question what
effect such action would have on the e c o n o m y as a whole. Therefore, we now
consider whether the removal of industrial equipment f r o m price control involves
any inflationary threat.
III.
PRICE
DECONTROL
OF I N D U S T R I A L
EQUIPMENT
NOT
INFLATIONARY
Because cyclical fluctuations of business have an accentuated impact on the
capital goods industries, the Institute has long been especially interested in the
problem of economic stabilization. W e know f r o m experience that continuous
high-level business activity is the proper short- and long-term goal and that both
inflation and deflation—while harmful f o r all industry—are disastrous f o r m a n u facturers of producers' equipment. I t is f o r this reason that the Institute, in its
« OPA Supplementary Order 142, issued December 11,1945, p. 11.
224
e x t e n d p r i c e , c o n t r o l a n d s t a b i l i z a t i o n a c t s o f 194 2
recommendations t o the House committee considering the full-employment
legislation, strongly urged the creation of an agency capable of giving constructive
direction in the solution of the economic stabilization problem. 5
W e would be the last to recommend any course of action that would initiate or
add impetus to inflationary forces. There is nothing, however, wThich supports
the view that removal of capital goods from price control would be inflationary.
On the contrary, the evidence is positive that such decontrol would aid in holding
living costs in check and that there would be no unwarranted increase in the price
level of machinery and equipment.
Cost of living not affected by the price level of capital goods
With the prevention of a major rise in living cost the keystone of the stabilization program, it is important to understand fully why the cost of living is not
materially affected b y the price level of capital goods. W e buy consumer goods
for direct individual consumption, to keep b o d y and soul together. T h e purchase
is virtually unavoidable and no element of choice is involved except among kinds
of goods that serve the same purpose. Thus a rise of 1 cent in the price of bread,
milk, or a baby's nursing bottle is felt immediately in the households of millions
of Americans. Such increases directly affect living costs and are inflationary.
The motivation for the purchase of capital goods and the influence of the price
level for such goods on consumers are entirely different. In the first place capital
goods are not purchased for direct consumption by individuals. They are bought
entirely for industrial use to make volume and low-cost production possible.
They
are never purchased when, in the judgment of the potential buyer, they would
increase over-all production expense. The sole objective in their acquisition is
lower cost or better consumer goods.
T h e prices paid for capital goods have little significance in costing and pricing
the consumer goods and services they produce. This is because expenditures f o r
capital equipment enter production expense in the form of depreciation charges,
and these charges constitute a very minor fraction of manufacturing costs—-less
than 2 percent of aggregate costs in all branches of manufacture, according to
Treasury reports. Depreciation is also a relatively inflexible fraction of costs
since it is dominantly determined by capital assets already acquired. N e w additions to capital account, either at high or low prices, would cause no material
change. Clearly, the price level of producers' equipment has no material shortterm influence on costs and prices of consumer goods. These costs and prices are
determined by other factors in the production equation.
Although the price level of capital goods is a negligible factor in the cost of
consumer goods, this should not be interpreted to imply that the use of capital
equipment is unimportant f r o m the standpoint of living costs. T h e reverse is the
truth. Capital goods perform a most vital function in keeping living costs down'
b y making possible the manufacture of consumer goods at the lowest possible cost.
It is the operating savings accomplished by capital equipment in mass production,
not the price of the equipment, w^hich is really important in achieving low prices
for consumer items. This explains why the availability of adequate machinery
is so imperative in the battle against inflation.
Fear of unwarranted price increases in capital goods a delusion
Will the removal of industrial equipment from price control result in excessive
prices to buyers and unconscionable profits for manufacturers? This question
expresses a fear which is a delusion. It is true that the price level of industrial
equipment must rise inevitably to reflect a proper proportion of the increases in
costs previously noted, but there is nothing t o justify the belief that an unbridled
upward surge in prices will take place.
There is no possibility of excessive prices for capital goods because the pressures
which normally operate t o keep prices at reasonable levels have been reinforced
b y important influences generated b y the war. T w o war-created factors which
are highly significant as brakes on prices in the industrial-equipment market are
the large wartime increase in the capacity of equipment producers and the
existence of large stocks of Government-owned surplus equipment. T h e y c o m bine with strong normal pressures favoring low prices and with powerful limitations on opportunistic pricing t o prevent an unwarranted rise in the price level of
machinery.
Expanded production capacity adequate to meet all needs and assures intensive
competition.—The slogan " T o o l America f o r W a r " which rang throughout the
land at the beginning of the war was primarily a challenge t o producers of indus8
Statement to House Committee on Expenditures in the Executive Departments, October 23, 1945,
225
e x t e n d price, c o n t r o l and stabilization acts of
194 2
trial equipment. T i m e was of the essence in the challenge, and it was met
successfully because manufacturers notably expanded their capacity f o r p r o duction.
H o w great this expansion has been is revealed b y comparing production rates
during the war with those in a prewar year such as 1939. Aggregate figures are
not available for this purpose, but detailed records of the War Production Board
indicate that production during the war was many times the 1939 rate.
For
example, percentage increases in rates of output in 1943-44 over 1939 f o r specific
items of equipment were as follows: Machine tools, 556; internal-combustion
engines (including Diesels), 1402; cutting tools and metal-working accessories, 601;
pumping equipment and compressors, 599; industrial cars and trucks, 414; power
transmission equipment, 377; and locomotives, 1533. 6 Such increases in o u t p u t
could be obtained only with substantial expansion of production facilities.
With production expanded during the war 4 to 15 times prewar needs, it is
clear that manufacturers can meet all possible demands in the period ahead.
It is also obvious that the expanded capacity assures intensive competition which
will hold prices and profits within reasonable limits. These are the criteria for
price decontrol action named b y the Stabilization Director. B y these critera,
industrial equipment should be removed from price control without delay.
Competition augmented by Government-owned surplus equipment.—The effective
competition otherwise assured throughout the industrial equipment field will be
reinforced in certain important segments of machinery manufacture b y additional
competition from Government-owned surplus equipment. T h e real importance
of the Government surpluses as a market factor is not simply that they cover an
extensive aggregate array of machinery, but that they include exceptionally large
quantities of specific types of equipment normally used in peacetime production.
Commenting on the composition of the Government holdings in his recent report
to the Congress, the Surplus Property Administrator advised that machine tools
and metal-working machinery comprise the largest single block of the Government-owned equipment and that other important categories include generalpurpose plant equipment and electrical machinery. 7 Thus it is clear that the
competitive influence of surpluses on the machinery market, while selective, will
be important and acute in many areas.
T h e stock of Government-owned equipment is so widely distributed that an
over-all inventory, begun over 2 years ago, 8 is not yet available. However, it
is known that at the end of the war the Government owned about 600,000 machine
tools. 9 Partial tabulations of other equipment items, believed to represent about
two-thirds of Government holdings, show 158,342 general-purpose machines,
16,830 special industry machines, and 189,650 other items of machinery and
equipment. 1 0 Detailed break-downs for these categories are not available but
the g r o u p designated "general purpose equipment" includes important quantities
of such items as industrial engines, compressors, pumps, conveyors, cranes of all
types, fans and blowers, dust-collection equipment, power-transmission equipment,
industrial presses, and miscellaneous additional general-purpose machinery.
Such figures, although impressive in the aggregate, must be analyzed in connection with other facts to determine their full meaning. In the case of machine
tools, f o r example, the probable surplus available for disposal after Government
requirements are satisfied will be f r o m 400,000 to 500,000 units, or something like
10 years' normal output. For other kinds of machinery and equipment the ratio
of Government surplus to normal production varies in accord with the size of
Government stocks.
Where the quantities of surplus machinery are important, the procedures
employed in disposal have a significant impact on prices that can be charged on
new production. Under the Clayton formula, which governs disposal prices f o r
machine tools and certain other machinery and equipment, the disposal price of
a 3-year-old machine—which would normally have more than three-fourths of its
useful life remaining—represents a 54.8 percent reduction f r o m the original cost
price. 11 T h e discounts are graduated in accord with age, and a machine 1 year
old is sold at a reduction of 35.6 percent f r o m cost. Equipment not priced b y
• Facts for Industry Series 50-3-5, published by War Production Board and U. S. Department of Commerce, November 15,1945, p. 16.
' Fourth Quarter 1945 Report to the Congress by the Surplus Property Administration, p. 24.
»Disposal of Government-Owned Production Facilities, Machinery Institute Research Memorandum
No. 4, January 1944, p. 5.
«American Machinist, October 11,1945, p. 123.
10 American Machinist, October 11,1945, p. 125.
11 The percentages of discount stated apply on sales to a buyer not in possession. The discounts are
5 percent less when sale is made to a contractor in possession.
226
e x t e n d price, c o n t r o l and s t a b i l i z a t i o n acts of
194 2
formula is sold b y negotiation in which the formula discounts are a dominant
consideration. Disposal prices combined with Government financing of surplusequipment sales set standards which weigh heavily in the pricing of new production. It is true that a new machine will be more efficient and attractive than
used Government equipment, but the fact that a surplus machine is available at
bargain discount limits the extent to which prices can be increased on new m a chinery and still attract purchasers.
Normal pressures for fair capital-goods prices strong.—Even if there were no
expanded production capacity and Government surpluses, strong normal pressures operate constantly to keep machinery and equipment prices reasonable.
These derive from the strategic position of the buyer of machinery and equipment
whose decision to purchase is optional and is determined largely on the basis of
short-term cost savings.
N o n e of the desperation psychology which characterizes customers for warscarce consumer goods is applicable to buyers of capital equipment.
Such purchasers are well-informed and deliberate. Calculations based on
engineering and economic data determine their decisions. If they conclude prices
of machinery are excessive, purchases are simply deferred and the market dries up.
Fair prices reduce sales resistance for another reason. In general, industry
justifies replacement of capital equipment on the basis of a short pay-off formula. 12
Briefly, this means that a new machine must recover its price in the f o r m of cost
savings over a relatively brief period. Obviously, the lower the price of the
machine, the more ready the demonstration of required cost savings in the short
period. Equally obvious, high prices make more difficult the economic justification of purchases and reduce the volume of equipment that can be sold.
Limitations on opportunistic pricing important.—The suggestion that o p p o r tunistic pricing of industrial equipment for temporary gain might become significant is amazing to anyone familiar with the pattern of producer-buyer relationships in the capital-goods industries. Unlike the untold millions w h o are outlets
f o r consumer goods, the number of potential buyers for capital equipment is c o m paratively small and their confidence is carefully cultivated. Close relationships
exist, not infrequently dating back a half century or more, between equipment
manufacturers and their customers. T h e purchase of large, expensive, complex,
and frequently individually designed machinery requires a high degree of c o o p eration and mutual trust on the part of both buyer and seller. T h e influence of
this condition as a market factor cannot be demonstrated statistically, b u t w e
submit it is a powerful deterrent to unwarranted and opportunistic price increases.
IV.
CONCLUSION
A wise national stabilization program should be discerning and adjustable on
the basis of economic necessity and advisability. A t best price control is simply
a tool designed to do a j o b and it should be modified or discarded wherever it fail
t o meet the test of proper performance. W e submit that in the field of machinery
and industrial equipment production it fails to meet the test of useful performance.
T h e observations leading to this conclusion are briefly summarized as follows:
1. Despite a major deficiency of production equipment required for volume
low-cost output of consumer goods, the production of machinery urgently needed
in the battle against inflation is discouraged and thwarted.
2. Technologic progress in the development and production of new cost-saving
machinery, important in offsetting rising labor rates, is stifled.
3. T h e composition of machinery production is distorted by the effect of price
regulations on manufacturers' operations and does not properly reflect the real
economic needs of industry.
4. T h e normal competitive structure of industrial equipment production is
warped and long-term unstabilizing influences set in motion within these industries.
Fortunately, there is no need to continue price control over machinery and
industrial equipment. It can be terminated entirely since such action would not
be inflationary and would not result in unwarranted price increases for the following reasons:
1. D u e to phenomenal expansion in productive capacity, industrial equipment
producers are capable of meeting any possible peacetime demand under conditions
that encourage production.
12 The Short Payoff on Machinery Replacements, Machinery Institute Research Memorandum No. 1,
June 1943.
227
e x t e n d p r i c e , c o n t r o l a n d s t a b i l i z a t i o n a c t s o f 194 2
2. Intensive competition is assured among equipment manufacturers, who are
normally highly competitive, as the wartime expanded capacity presses for
outlets.
3. Important types of machinery must face additional acute competition
from large stocks of Government surplus equipment wiiich are available at
generous discounts.
4. The strategic position of industrial-equipment buyers and the economic
justification required for purchase exert strong pressures against unwarranted
price increases.
5. The prevailing pattern of producer-customer relationships makes opportunistic pricing unattractive.
The conditions of production and competition in the industrial equipment
industries conform in every way with the criteria for price-decontrol action advanced by responsible officials. Moreover, price control over machinery and
industrial equipment is not only unneeded in peacetime, but defeats the major
objectives of the stabilization program. No useful purpose will be served by
legislation which extends beyond June 30, 1946, the authority of the pricing
agency to exercise price^ control over this segment of the economy.
On the basis of the compelling circumstances we have presented, the institute
recommends that the proposed legislation for extension of price control beyond
June 30, 1946, specifically name industrial machinery and equipment as exempt
from its provisions.
MACHINERY
AND A L L I E D
PRODUCTS
INSTITUTE
OFFICERS
William J. Kelly, president; president Kelly Steel Works, Inc., Chicago, 111.
Charles J. Stilwell, vice president; president, the Warner & Swasey Co., Cleveland,
Ohio.
George Terborgh, research director.
Oscar E. Kiessling, secretary.
Donald H. Reynolds, assistant secretary.
J. A. Keogh, treasurer; vice president and comptroller, Allis-Chalmers Manufacturing Co., Milwaukee, Wris.
Alexander Konkle, assistant treasurer.
William F. Yelverton, assistant secretary.
EXECUTIVE
COMMITTEE
Charles E. Brinley, chairman, the Baldwin Locomotive Works, Philadelphia, Pa.
Maurice F. Dunne, president, Pyott Foundry & Machine Co., Chicago, 111.
Duncan W. Fraser, chairman, American Locomotive Co., New York, N. Y.
Robert E. Friend, president, Nordberg Manufacturing Co., Milwaukee, Wis.
Robert W. Gillispie, president, the Jeffrey Manufacturing Co., Columbus, Ohio.
George H. Houston, George H. Houston & Co., New York, N. Y.
R. E. LeBlond, president, the R. K. LeBlond Machine Tool Co., Cincinnati, Ohio.
Gordon Lefebvre, president, The Cooper-Bessemer Corp., Mount Vernon, Ohio.
L. W. Mesta, executive vice president, Mesta Machine Co., Pittsburgh, Pa.
Philip M. Morgan, president, Morgan Construction Co., Worcester, Mass.
James Y . Scott, president, Van Norman Co., Springfield, Mass.
Clarence E. Searle, president, Worthington Pump & Machinery Corp., Harrison,
N. Y .
Duncan J. Stewart, vice president, Barber-Colman Co., Rockford, 111.
Guy A. Wainwright, president, Diamond Chain Co., Inc., Indianapolis, Ind.
ADVISORY
COMMITTEE
H. C. Beaver, vice chairman, Worthington Pump & Machinery Corp., Harrison,
N. J.
Ralph E. Flanders, president, Jones & Jamson Machine Co., Springfield, Vt.
Robert M. Gaylord, president, the Ingersoll Milling Machine Co., Rockford, 111.
Herbert L. Watson, president, DeLaval Steam Turbine Co., Trenton, N. J.
The CHAIRMAN. Here is a statement submitted by Mr. Foreman,
managing director of the Associated General Contractors of America,
Inc., which will be made a part of the record.
228
e x t e n d p r i c e , c o n t r o l a n d s t a b i l i z a t i o n a c t s o f 194 2
STATEMENT OF H. E. FOREMAN, MANAGING DIRECTOR, THE
ASSOCIATED GENERAL CONTRACTORS OF AMERICA, INC.,
WASHINGTON, D. C.
Mr. FOREMAN. The Associated General Contractors of America is
the national association of construction contractors. Its members^
over 3,575 in number, operating in all parts of the country, perform
every type of construction.
At its twenty-seventh annual convention, held in Chicago in
February of this year, the following resolution, a copy of which has
been transmitted to every Member of Congress, was unanimously
passed:
GOVERNMENT
REGULATION
T h e Associated General Contractors of America, at its Twenty-seventh annual
c o n v e n t i o n on February 21, 1946, expresses the conviction that the construction
industry could execute the work which is vitally needed for the development of
the Nation more quickly, more efficiently, and more economically if wartime
controls over the industry and the other industries supplying it were abolished,
a n d goes on record as being opposed to Government control over the construction
industry by the continuance of wartime regulations b e y o n d the periods currently
established by law.
We desire to present here some of the facts and the thinking which
Inspired the passage of this resolution.
Construction is well known as one of the most complex and intricate
of all industries. The fact that each project differs from all others in
many particulars and that in the industry a great number of different
grades of many different materials and items of equipment are used
make the preparation of cost estimates a highly technical operation.
Furthermore, the contractor has to take into consideration many
other items, such as weather, unknown soil conditions, the future
availability of the various kinds of labor which may be needed as the
work progresses, and so forth, all of which are exceedingly uncertain
to say the least but which have a very profound effect upon the cost
of the project.
In spite of these facts, however, in 1943 the OPA determined to
establish ceiling prices on construction operations. This effort resulted in Maximum Price Regulation 251. Our association made
formal protest against this regulation, chiefly on the grounds that it
was impractical from every point of view. It was subsequently
modified somewhat, but it still exists to harass contractors who find
it exceedingly difficult, if not impossible, to understand and apply to
their operations.
In construction there exist many technical and business procedures
which over many years have demonstrated their sound practicability.
The importance of a thorough understanding of them, to the successful management of a construction business, is well known to contractors, but is frequently not understood by the layman and we are
certain that for the most part they have never been comprehended by
OPA. When ill-advised attempts to regulate these procedures are
made by those who do not have a well-grounded experience in this
industry, the entire mechanism is thrown out of adjustment, and confusion, uncertainty and apprehension are the inevitable results.
Thus, the great construction industry with its enormous potentiality
to make national prosperity a reality is rendered to a great extent
impotent.
*
229
e x t e n d price, c o n t r o l and stabilization a c t s of
194 2
Construction has long been regarded as a basic industry which
might be counted upon to operate as an effective wheel in our national
economy. It normally furnishes lucrative employment to hundreds
of thousands of laborers and skilled craftsmen. Of course, the industry simply cannot function without materials.
We now have a huge potential market for construction. We are
reliably informed by the material manufacturers that they have ample
capacity to supply the needed materials. That they have been
strangled by the unrealistic and ineffective pricing policy of OPA is
well known to us all. Inventories have been depleted by demand and
have not been replenished for the reasons cited. It is, therefore,
clear that the construction industry is ready and anxious to go ahead,
but it finds itself without the necessary materials.
Costly delays and apprehension which has been brought about
through Government interference have a far more harmful inflationary
effect than would result from the early removal of price control from
these materials. The normal competition which would inevitably
develop with expanding production would in our opinion, soon result
in a reasonable price structure in this field and the construction
industry could then move ahead to the performance of its normal
functions in our national economy.
The C H A I R M A N . Next we will hear from Mr. Devereaux, vice;
president of the Underwear Institute.
STATEMENT OF F. R. DEVEREUX, VICE PRESIDENT, UNDERWEAR
INSTITUTE; PRESIDENT, ONEITA KNITTING MILLS, UTICA,
N. Y.
Mr. D E V E R E U X . Senator Wagner and gentlemen, I understand
that I have been asked to appear before this committee by the Underwear Institute because my mill—the Oneita Knitting Mills of Utica,
N. Y.—has been seriously affected by OPA's pricing policy and
because our case illustrates the fact that unless we are given immediate
and substantial relief we cannot continue long in business.
Due to a technicality our prices were frozen as of September and
December 1941 instead of March 1942.
We normally manufacture 80 percent men's anc! boys' lightweightunderwear and 20 percent men's and boys' heavyweight underwear,
and our underwear is medium-priced serviceable underwear that goesto all parts of the country.
You will recall that when the Bankhead amendment was passed in;
September 1944, OPA arbitrarily ruled that lightweight underwear
was not a major item and, therefore, did not come under this amendment. So 80 percent of our product received no relief from the
amendment.
In 1941 we used 17-cent cotton for our costs. Today we are using
29%-cent cotton.
Senator B A N K H E A D . Oh, no; no; no. That is a way above the
market. The market is about 27 cents.
Mr. D E V E R E U X . Senator Bankhead, I am adding the basis to the
type of cotton we use.
Senator B A N K H E A D . That is the highest quality in the market?8
M r . DEVEREUX. Y e s .
Senator B A N K H E A D . Very
high quality?
230
e x t e n d price, c o n t r o l and stabilization a c t s of
194 2
Mr. D E V E R E U X . We use strict Middling inch-and-one-sixteenth and
inch cotton. The last quotation I had was 125 points for the inch
and 350 points on for the inch-and-one-sixteenth, so that I think the
price is 29% cents on the market today, or very close to it. When I
wrote this it was that.
Senator B A N K H E A D . Well, the market is as high now as it was last
week, it you keep up with matters of that sort.
Mr. D E V E R E U X . I think we use as high quality cotton as any
knitting mill in the country. I cannot substantiate that, but that is
my opinion.
Senator B A N K H E A D . G O ahead.
Mr. D E V E R E U X . There is a difference of 12% cents a pound or
approximately $375,000, the major part of which we have had to
absorb.
,
There have been a number of yarn advances since March 1942
amounting to 15 cents per pound on Combed Peeler and 10% cents
per pound on Karded. Most of this advance we have had to absorb.
Our labor since 1942 has been advanced 32% percent and again we
have had to absorb a substantial amount of this advance because
OPA in their so-called relief orders never allow us to include indirect
labor, foremen and office salaries and executive salaries. This 32%
percent in dollars amounts to over $1,000,000.
So today we find ourselves with the cost of practically every item
we make well above ceiling prices. We have been losing money since
July 1945 and the situation has been rapidly growing worse. How
much longer we can continue in operation on the present basis is a
question I shall have to decide very soon. We employ 1,200 people
now and there are already 12,000 people in Utica unemployed.
There are two matters that I should like to particularly emphasize.
The first is that the so-called relief orders issued to date by OPA, with
one exception have in no case given us adequate relief. OPA has
announced time and again through the papers that they are granting
the textile industry a 15-percent advance or a 10-percent advance.
The C H A I R M A N . Can I ask you a question there, Mr. Devereux?
M r . DEVEREUX. Y e s .
The C H A I R M A N . Y O U said 12,000 people are unemployed in Utica?
Mr. D E V E R E U X . That is the figure I just got from USES.
The C H A I R M A N . What is that due to? Why are they unemployed?
Mr. D E V E R E U X . I think it is partially due to the fact they are
getting $21 unemployment insurance and they apparently are not
interested in going back to work. The period we thought they would
take to rest up after the war was over is now long past, and they just
have not returned to work.
Senator B A N K H E A D . We had evidence here yesterday or day before
that there'wasn't any unemployment in this country.
Mr. D E V E R E U X . There is in our city.
Senator B A N K H E A D . And that output was the greatest in history—
total output.
Mr. D E V E R E U X . All the textile mills are running well below their
labor capacity. We should be employing about 1,700 people.
Senator B A N K H E A D . They were talking about all industry, of course,
the national output.
Mr. D E V E R E U X . This may be just our own city, but those are
USES figures. I was on the War Manpower Commission with the
people that issued those figures, and I have confidence they are correct.
231
e x t e n d price, c o n t r o l and stabilization acts of
194 2
Senator
B A N K H E A D . N O W , are those former textile workers?
M r . DEVEREUX. NO.
Senator B A N K H E A D . H O W much is textile labor?
Mr. D E V E R E U X . Well, take our case, we should be employing
1,700 and we are employing 1,200.
Senator B A N K H E A D . Why don't you employ the other 500?
Mr. D E V E R E U X . Because we cannot make the styles we want to,
because of the great loss we have to take. We cannot get yarns.
Senator B A N K H E A D . IS that due to the M A P program?
Mr. D E V E R E U X . N O ; it is due to the fact O P A has not given us
relief.
Senator B A N K H E A D . What sort of relief?
Mr. D E V E R E U X . Cost, plus a reasonable profit. We have not
been able to get that.
Senator B A N K H E A D . SO you are limiting the garments, you are
just not operating to that extent?
Mr. D E V E R E U X . That is right.
Senator B U C K . Are you actually losing money, or not making as
much money as you would like to make?
Mr. D E V E R E U X . We are actually losing money since July last
year.
Senator B U C K . H O W much do you suppose you have lost in that 8
months?
Mr. D E V E R E U X . Several hundred thousand dollars. I would
say about $200,000.
Senator B U C K . H O W can you afford to keep on at that rate?
Mr. D E V E R E U X . We cannot. At the same time we don't like to
close the company up.
Senator B U C K . Well, when you take those figures to O P A don't you
get any consideration or any relief?
Mr. D E V E R E U X . I am going to bring that out in just a minute,
if I may. I am going to illustrate by a relief order. May I proceed?
The C H A I R M A N . All right.
Mr. D E V E R E U X . A S I said, the so-called relief orders issued to
date by OPA, with one exception have in no case given us adequate
relief. OPA has announced through the papers many times that
they are granting the textile industry a 15-percent advance or a
10-percent- advance. These announcements are in my opinion willfully misleading. OPA does not tell the public or you gentlemen
that there are certain qualifications under these special orders that
in every case so far but one restricts or nullifies any price advantage
given under the order.
For example, take the most recent order SO 154, the first item
"balbriggan athletic shirts," on which they have given a cut-off price
of $4. OPA does not say that irrespective of this new $4 price, we
can only add to our original ceiling price increases since January 1942
on yarn and direct labor increases, so instead of giving us a price of
$4 our price is $3.12 per dozen, aiid our current cost is $3.24. This
is not adequate relief.
The one exception I mentioned was SO 137, which applied to heavyweight underwear only. This order gave us cost plus 4 percent, but
was so distasteful to OPA that it has recently been rescinded, leaving
us with a large inventory that we cannot ship out except at a substantial loss.
232
e x t e n d price, c o n t r o l and stabilization a c t s of
194 2
I will now read a letter from OPA dated April 12, 1946, with regard
to this order:
Y o u r telegram of April 5, to Mr. Porter, regarding extension of SO 137 has been
referred to me for reply.
SO 137 was a very special type of supply order, issued b y us October 17, 1945,
on the urgent representations of the War Production Board and the then Director
of the Office of Economic Stabilization to relieve a critical supply situation in
heavy-weight underwear. The order was once extended f r o m January 31 to
March 31 to make certain that the supply was not interferred with during any of
the cold months.
Now, gentlemen, you don't make underwear the way you get water
out of a faucet. "We have to start making heavy-weight underwear in
January for delivery in June or July or August for the following fall.
We have to have time.
Now, I will tell you what that order has done to us. We decided
to make part wool heavy underwear. We ordered our wool top. We
got part of it in. We started our production, got a good production,
and the order was rescinded. TV e have $175,000 worth of wool top on
order and every dozen we get out must go at a loss. Continuing the
letter:
However, this order cannot be further extended under our office standards.
It
is a type of order not generally available to industry and the special circumstances
under which it was issued no longer exist. It would simply give rise to an inflationary spiral in underwear pricing, and this everyone seeks to avoid.
W e are, however, moving to include most of the items formerly covered by
SO 137 in SO 154 at an early date. M A P adjustments to make the adjusted
prices effective will also be made. These actions should be completed before the
first of M a y and on over-all underwear regulation of the M P R 607 type will be
completed as rapidly thereafter as circumstances permit.
Yours very truly,
J.
S.
LIBERMAN,
Jr.,
Price Executive, Apparel Price Branch, Consumer Goods Price Division.
Six hundred and seven was promised on December 11, 1945. We
are still waiting for it.
I bring this matter before you because it is my honest conviction
that unless you require OPA by law to give us adequate relief the
shortage of underwear will become even more acute and at least some
of the old established mills will have to shut down. Without a direct
relief amendment from you gentlemen, I am convinced OPA will not
really change its present policy.
The second matter is the question of relief to a mill that can show an
over-all loss on all major items.
OPA tells you that there is a provision for relief in such a case.
Let me tell you how this has worked in our own case. Last February 2,1946, at the suggestion of OPA, we started to apply for an overall relief under Supplementary Order 133. The OPA gentleman that
suggested we use this form said that he had not read it, but that he
felt sure it was the form we wanted. To say that this form was complicated is putting it mildly. It took us 2 weeks to prepare the information required under SO 133 and we worked at top speed. When
completed this form went to the Syracuse Office of OPA. Syracuse
cleared it promptly, but instead of going directly to Washington we
found that it had to be also cleared by the New York office of OPA.
In spite of the fact that we urged the Washington office of OPA by
telephone to help us clear this form through New York, it took over
3 weeks to get this application cleared through New York, and the
233
e x t e n d price, c o n t r o l and stabilization a c t s of
194 2
work of actually getting it out of New York was done by Dr. Teper,
economist of the International Ladies' Garment Workers' Union,
who gave us his full-time assistance.
When this order reached Washington, OPA called us and informed
us that they were issuing a new Supplementary Relief Order, SO 149,
and this new order would give us cost plus 3 percent with qualifications instead of only cost.
There was nothing for us to do but wash up SO 133, and start on
SO 149. Unfortunately, we found SO 149 much more complicated
than SO 133. For one thing it required a detailed statement of costs,
ceiling prices, and losses on every item we make.
Now, here it is, gentlemen. I just got it ready. There are 76 items
in this list, 7 of which show us 1 or 2 cents of profit. There are items
of lightweight underwear and heavy-weight underwear. Just to
mention a few, part wool unionsuits—25 percent wool—shows a loss
of $2.22 a dozen. On part wool shirts it shows a loss of $1.72 a
dozen. I will leave this with you.
The CHAIRMAN. Very well.
(Statement of current costs and ceiling prices filed in connection
with SO 149, is as follows:)
Current costs and ceiling prices filed in connection with SO 149, Oneida Knitting
Mills, 851 Broad St., Utica 2, N. Y.
APRIL
style
10,
1946.
18A. B o y s ' lightweight balbriggan athletic shirt, sizes 24 t o
34, made from 2 0 K P , at $0.5050 per p o u n d :
Per dozen
Current cost
$2. 26
Ceiling price established under SO 139
2. 19
Loss
. 07
20A. M e n ' s lightweight balbriggan athletic shirt, sizes 34 t o 46,
made f r o m 2 0 K P , at $0.5050 per p o u n d :
Current cost
Ceiling price established under SO 139
Loss
. 23
S27A. Men's c o m b e d Swiss rib built-up shoulder, athletic shirt,
sizes 34 t o 46, made f r o m 3 0 C P at $0.6300 per p o u n d :
Current cost
Ceiling price established under SO 139
Loss _
2019/2. Men's lightweight balbriggan short-sleeve shirts, 3 button front, sizes 34 to 46, made f r o m 2 0 K P , at
$0.5050 per p o u n d :
Current cost
Ceiling price established under SO 139
Loss
Loss
3. 24
2. 65
. 59
5. 06
4. 15
. 91
20N, M e n ' s lightweight balbriggan short-sleeve shirts, pullover type, sizes 34 to 46, made f r o m v 2 0 K P , at $0.5050
per p o u n d :
Current cost
Ceiling price established under SO 1 3 9 _ . _
85721—46—vol. 1
2. 88
2. 65.
3. 80
3. 74
06
16
234
e x t e n d price c o n t r o l and stabilization acts of
1942
Current costs and ceiling prices filed in connection with SO 149, Oneida Knitting
Mills, 851 Broad St., Ltica
N.
Y.—Continued
Style
2 0 1 9 - D r . M e n ' s lightweight balbriggan ankle-length drawer, string
back, double gusset, sizes 32 to 44, made from 2 0 K P ,
at $0.5050 per p o u n d :
Current cost
Ceiling price established under SO 139
Loss
1824/2. Men's lightweight balbriggan short-sleeve shirts,
button front, sizes 34 to 46, made f r o m 18KP,
$0.4950 per p o u n d :
Current cost
Ceiling price established under G M P R
3at
C G M - 4 . Men's lightweight balbriggan short sleeve shirts, pullover type, sizes 34 to 46, made from 12KP, at $0.4625
per p o u n d :
Current cost
Ceiling price established under SO 139
Loss
1824AG. Men's lightweight balbriggan ankle-length drawer,
A r m y gusset, 4 button, back strap, sizes 32 to 44,
made f r o m 18KP, at $0.4950 per p o u n d :
Current cost
Ceiling price established under G M P R
Loss
1823/2. M e n ' s c o m b e d balbriggan short sleeve shirts, 3-button
front, sizes 34 to 46, made from 18CP, at $0.5575 per
pound:
Current cost
Ceiling price established under G M P R
Loss
1823. Men's combed balbriggan ankle-length drawer, 4-button
back strap, double seat, sizes 32 to 44, made f r o m
18CP, at $0.5575 per p o u n d :
Current cost
Ceiling price established under G M P R
Loss
C G M B - 4 . B o y s ' short sleeve, pull-over type, balbriggan shirt,
sizes 24 to 34, made f r o m 12KP, at $0.4625 per p o u n d :
Current cost
Ceiling price established under SO 139
Loss
18N. Boys' short sleeve, pull-over type, balbriggan shirt, sizes
24 to 34, made f r o m 2 0 K P , at $0.5050 per p o u n d :
Current cost
Ceiling price established under SO 139
$5. 27
4. 15
1. 12
Loss
Profit
P e r doze n
5. 34
4. 55
. 79
4. 38
4. 15
. 23
6. 22
4. 55
1. 67
5. 76
5. 25
. 51
6. 43
5. 25
1. 18
3. 37
3. 16
. 21
3. 02
3. 16
. 14
235
e x t e n d price, c o n t r o l a n d stabilization a c t s of
194 2
Current costs and ceiling price's filed in connection with SO 149, Oneida Knitting
Mills, 851 Broad St., Utica 2, N.
Y.~Continued
Style
D C / 2 . M e n ' s c o m b e d Cooper spring needle lightweight, shortsleeve, ankle-length union suit, sizes 36 t o 46, m a d e
f r o m 3 0 C P , at $0.6300 per pound:
Per dozen
Current cost
$10. 73
Ceiling price established under G M P R
9. 125
Loss
2 8 W A . Men's c o m b e d lightweight balbriggan athletic shirt,
sizes 34 t o 46, made f r o m 2 8 C P , at $0.6150 per pound:
Current cost
Ceiling price established under G M P R
Profit
2 3 R . M e n ' s long-sleeve, grey random, heavyweight shirts,
weighing approximately 8 pounds on size 42, m a d e
f r o m 13}£KP, at $0.4700 per pound, sizes 34 t o 46:
Current cost
Ceiling price established under amendment 6 t o
M P R 221
Loss
2 3 R / 2 . Men's short-sleeve, grey random, heavyweight shirt,
weighing approximately 8 pounds on size 42, long
sleeves, made f r o m 13J^KP, at $0.4700 p$r p o u n d ,
sizes 34 to 46:
Current cost
Ceiling price established under amendment 6 t o
M P R 221
Loss
2 3 R . M e n ' s ankle-length, grey random, heavyweight drawer,
3 - b u t t o n y o k e front, sizes 32 t o 44, made f r o m 1 3 K K P ,
at $0.4700 per p o u n d :
Current cost
Ceiling price established under amendment 6 t o
M P R 221
Loss
9 7 G N . M e n ' s long-sleeve, ankle-length unionsuit, 25-percent
wool, 75-percent cotton, weighing approximately 15
pounds on size 42, sizes 36 t o 46, made f r o m 10's
25-percent w o o l at $0.8457 per pound.
Current cost
Ceiling price established b y Office of Price A d m i n istration letter dated Jan. 29, 1946 ( D o c k e t N o .
6062-221-303-32)
Loss
10WS. M e n ' s long-sleeve 50 percent cotton 50 percent wool
undershirt, 3 - b u t t o n front, sizes 34 t o 44, weighing
approximately 10 pounds on size 42, made f r o m 10's
50 percent wool at $1.20 per pound:
Current cost
Ceiling price established b y Office of Price Administration letter dated Sept. 28, 1945 ( D o c k e t N o .
6062-221-303-22)
Loss
1. 605
3. 05
3. 125
085
8. 04
6.71
1. 33
7. 15
6.43
. 72
7. 80
6.71
1. 09
22. 22
18. 00
2. 22
18. 22
16. 50
1. 72
e x t e n d price c o n t r o l and stabilization acts of
1 9 4 2 236
Current costs and ceiling 'prices filed in connection with SO 149, Oneida, Knitting
Mills, 851 Broad St., Utica 2, N.
Y.—Continued
Style
1 0 W D . M e n ' s ankle length, 3-button front drawer band, 50
percent cotton 50 percent wool drawer, sizes 32 t o 44,
made f r o m 10's 50 percent wool at $1.20 per pound:
Per dozen
Current cost
$17. 97
Ceiling price established b y Office of Price Administration letter dated Sept. 28, 1945 ( D o c k e t N o .
6062-221-303-22)
16. 50
Loss
1. 47
B 6 5 N / 8 . Children's 1-piece tinted union suits, made f r o m 2 2 C P
at $0.5775 per pound, D u t c h neck, short sleeves,
button front, French leg, drop seat, sizes 2 to 12:
Current cost
Ceiling price established b y Office of Price Administration letter dated Mar. 28, 1945 ( D o c k e t N o .
606-221-303-11)
Loss
B 5 1 T A . B o y ' s 1 b y 1 rib, spring needle athletic shirt, sizes 24 to
34 made f r o m 20CP at $0.5675 per p o u n d :
Current cost
Ceiling price established under amendment 6 to
M P R 221
Loss
7. 48
6. 88
. 60
3, 93
3.50
. 43
B 5 1 T N . B o y ' s 1 b y 1 rib, spring needle wing sleeve shirt, sizes 24
to 34 made from 2 0 C P at $0.5675 per p o u n d :
Current cost
Ceiling price established under amendment 6 to
M P R 221
Loss
4. 92
4.19
. 73
B 1 5 1 T K . B o y ' s 1 b y 1 rib. spring needle, elastic top, fly front knee
drawer made from 20CP, at $0.5675 per pound, sizes
20 to 34:
Current cost
Ceiling price established under amendment 6 to
M P R 221
Loss
4. 47
3.96
. 51
5 I T A. M e n ' s 1 b y 1 rib, spring needle athletic shirt, sizes 34 to
46 made f r o m 2 0 C P , at $0.5675 per p o u n d :
Current cost
Ceiling price established under amendment 6 to
M P R 221
6.47
. 49
B 6 5 N / 6 . Children's 1-piece tinted union suit, made f r o m 2 2 C P
at $0.5775 per pound, Dutch neck, b u t t o n front, cuff
knee length:
Current cost
Ceiling price established b y Office of Price Administration letter dated Mar. 28, 1945 ( D o c k e t N o .
606-221-303-11)
Loss
Loss
6. 96
.
5. 20
4.88
66
e x t e n d price c o n t r o l and stabilization acts of
1942
237
(Current costs and ceiling prices filed in connection with SO 149, Oneida Knitting
Mills, 851 Broad St., Utica 2, N.
Y.—Continued
Style
5 1 T N . Men's 1 b y 1 rib, spring needle wing-sleeve shirt, sizes 34
to 46 made f r o m 20CP, at $0.5675 per dozen:
Ceiling price established under amendment 6 t o
M P R 221
1 5 1 T K . Men's 1 b y 1 rib, spring needle knee-length drawer, sizes
32 t o 44, made f r o m 20CP, at $0.5675 per pound.
Elastic top, fly f r o n t :
Current cost
Ceiling price established under amendment 6 t o
M P R 221
Loss
1 5 1 T D . Mens' 1 b y 1 rib, spring-needle, ankle-length drawer,
elastic top, fly front, sizes 32 to 44, made f r o m 2 0 C P ,
at $0.5675 per p o u n d :
Current cost
Ceiling price established under amendment 6 t o
M P R 221
Loss
M 5 1 T . Children's French leg, elastic drop seat, short-sleeve,
button-front union suit made f r o m 1 by 1 rib springneedle fabric, sizes 2 t o 12, 20CP, at $0.5675 per
pound:
Current cost
Ceiling price established under amendment 6 to
M P R 221
Loss
M 5 1 T / 3 . Children's knee length, elastic drop seat, short-sleeve,
button-front union suit made from 1 b v 1 springneedle fabric, sizes 2 tg 12, 20CP, at $0.5675 per
pound:
Current cost
Ceiling price established under amendment 6 to
M P R 221
Loss
851TU/3. B o y s ' 1 b y 1 rib spring-needle, combed, short-sleeve, kneelength union suit, made f r o m 20CP, at $0.5675 per
pound, sizes 26 to 36:
Current cost
Ceiling price established under amendment 6 to
M P R 221
Loss
C R T . Children's 1 b y 1 rib combed, spring-needle pantie, y o k e
front, sizes, 2 to 6, made f r o m 20CP, at $0.5675 per
pound:
Current cost
Ceiling price established under amendment 6 to
M P R 221
-
Loss
P e r dozen
$6.21
5. 49
5.34
. 15
8. 21
7.25
. 96
7. 78
6.58
1. 20
7. 32
6.31
1. 01
8. 38
7.43
. 95
3. 30
2. 64
. 66
238
e x t e n d price c o n t r o l and stabilization acts of
1942
Current costs and ceiling prices filed in connection with SO tJ+9, Oneida Knitting
Mills, 851 Broad St., Utica 2, N. Y— Continued
Style
C R T . Children's 1 b y 1 rib, combed, spring-needle pantie, y o k e
front, sizes 8 to 16, made f r o m 20CP, at $0.5675 per
pound:
Current cost
Ceiling price established under amendment 6 to
M P R 221
Loss
D N V . Children's D u t c h neck, 1 b y 1 spring-needle, combed,
short,-sleeve vest, sizes 2 t o 6, made f r o m 2 0 C P , at
$0.5675 per p o u n d :
Current cost
Ceiling price established under M P R 221, a m e n d ment 6
Loss
D N V . Children's D u t c h neck, 1 b y 1 spring-needle, c o m b e d ,
short-sleeve vest, sizes 8 t o 16, made f r o m 20CP, at
$0.5675 per p o u n d :
Current cost
Ceiling price established under M P R 221, amendment 6
.
Profit
S V T . Children's 1 b y 1 rib, combed, spring-needle, sleeveless
vest, sizes 8 ' t o 16, made from 20CP, at $0.5675 per
pound:
Current cost
Ceiling price established under M P R 221, amendment 6
Loss
I C T . Children's button-on training pant, 1 b y 1 spring-needle,
sizes 2 to 6, made f r o m 20CP, at $0.5675 per p o u n d :
Current cost
Ceiling price established under amendment 6 t o
M P R 221
Loss
I C V . Children's vest, 1 b y 1 spring-needle, t o be used with
I C T listed above, sizes 2 t o 6, made from 20CP, at
$0.5675 per p o u n d :
Current cost
Ceiling price established under amendment 6 t o
M P R 221
Loss
B G . B a b y ' s balbriggan gown, drawstring b o t t o m , sizes 0 t o
2 / m a d e f r o m 2 6 K P , at $0.5475 per p o u n d :
Current cost
Ceiling price established under M P R 221
Loss
Per dozen
$3. 98
3.56
. 42
3. 48
3. 43
.05
4. 43
4. 52
. 09
4. 29
3. 50
. 79
3. 53
2.64
. 89
3. 53
3. 52
. 01
5. 79
5. 00
. 79
e x t e n d price c o n t r o l and stabilization" a c t s of
1942
239
Current costs and ceiling prices filed in connection with SO 149, Oneida Knitting
Mills, 851 Broad St., Utica 2, N.
Y.—Continued
Style
I K . Infant's 1 b y 1 rib, spring-needle, combed, training pant,
sizes 1 t o 4, made f r o m 20CP, at $0.5675 per p o u n d :
Current cost
Ceiling price established under M P R 221
Loss
I R / 5 1 T . Infant's 1 b y 1 rib, spring-needle, combed, training pant,
sizes 1 to 4, made f r o m 20CP, at $0.5675 per p o u n d :
Current cost
Ceiling price established under M P R 221, amendment 6
Loss
C X D . Ladies' balbriggan bloomer, elastic t o p and legs, Sizes 38
t o 44, made f r o m 2 6 K P , at $0.5475 per p o u n d :
Current cost
Ceiling price established under M P R 221
Loss
C X D . Ladies' balbriggan bloomer, elastic t o p and legs, sizes 46
to 60:
Current cost
Ceiling price established under M P R 221
Loss
I V 5 0 W . Children's vests, 1 b y 1 spring-needle, combed, shortsleeve, to be used with I B 5 0 W pant below; sizes 2, 3,
4, and 6, 26CP, at $0.6150 per p o u n d :
Current cost
Ceiling price established under G M P R
Loss
I T 5 0 W . Children's pant, 1 by 1 spring-needle, combed, button-on,
to be used with I V 5 0 W a b o v e ; sizes 2, 3, 4, and 6,
28CP, at $0.6150 per p o u n d :
Current cost
Ceiling price established under G M P R
Profit
I R - 5 0 W . Infant's training pant, 1 b y 1 spring-needle, combed,
made with double gusset, sizes 1, 2, 3, 4, made f r o m
28CP, at $0.6150 per p o u n d :
Current cost
Ceiling price established under G M P R
Profit
B 3 3 6 W N . B o y s ' solid white, ribbed, T shirt, no pocket, sizes 24 t o 34,
m a d e f r o m 1 8 K P , at $0.4950 per p o u n d :
Current cost
Ceiling price established under G M P R
Loss
Per dozen
$5. 14
4. 00
1. 14
3. 25
2. 64
. 61
4. 99
4. 50
. 49
5. 86
5. 20
. 66
3. 23
3. 15
.08
3. 03
3. 15
12
3. 03
3. 15
. 12
3. 33
3. 25
.08
240
e x t e n d price c o n t r o l and stabilization acts of
1942
Current costs and ceiling prices filed in connection with SO 149, Oneida Knitting
Mills, 851 Broad St., Utica 2, N. Y— Continued
Style
B336CN. Boys' solid color, ribbed, T shirt, no pocket, sizes 24 to 34,
made from 18KP, at $0.4950 per pound:
Current cost
Ceiling price established under G M P R
Profit
336WN. Men's solid white, ribbed, T shirt, no pocket, sizes 34 to 46,
made from 18KP, at $0.4950 per pound:
Current cost
Ceiling price established under G M P R
Loss
336CN. Men's solid color, ribbed, T shirt, no pocket, sizes 34 to 46,
•made from 18KP, at $0.4950 per pound:
Current cost
Ceiling price established under G M P R
^—
Loss
KA4. Misses' crew neck, short-sleeve pull-over, sizes 14 to 20,
made from 38CP, at $0.7000 per pound:
Current cost
Ceiling price established under G M P R
Loss
K A 4 T N . Misses' turtle neck, long-sleeve pull-over, sizes 14 to 20,
made from 38CP, at $0.7000 per pound:
Current cost
Ceiling price established under G M P R
Loss
B22N. Boys' interlock pull-over, sizes 8 to 18, no pocket, short
sleeves, made from 22CP, at $0.5775 per pound:
Current cost
Ceiling price established under G M P R
Profit
B30N. Boy's interlock pullover, sizes 8 to 18, no pocket, short
sleeves, made from 30CP, at $0.6300 per pound:
Current cost
Ceiling price established under G M P R
Profit
30P/2. Men's short-sleeve, crew neck, pullover shirt, made with 1
breast insert pocket, natural shade, sizes 34 to 46, made
from 30PC, at $0.6300:
Current cost
Ceiling price established under G M P R
Loss
30P/2. Men's short-sleeve, crew neck, pullover shirt, with 1
breast insert pocket, light shades, sizes 34 to 46, made
from 30PC, at $0.6300 per pound:
Current cost
Ceiling price established under G M P R
Loss
Per dozen
$3.33
3. 375
. 035
4. 11
3. 75
. 36
4. 11
3. 875
. 235
5. 71
5. 25
. 46
7. 52
7. 00
52
5. 42
5. 75
.33
4. 91
5. 25
, 34
6. 86
6. 50
. 36
6. 96
6. 625
. 335
e x t e n d price c o n t r o l and stabilization acts of
1942
241
Current costs and ceiling prices filed in connection with SO 149, Oneida Knitting
Mills, 851 Broad St., Utica 2, N. Y.—Continued
Style
1422/2. Men's short-sleeve, crew neck, pullover shirt, with 1
breast insert pocket, natural shade, sizes 34 to 46, made
from 22CP, at $0.5775 per pound:
Current cost
Ceiling price established under G M P R
Loss
Per dozen
$7. 66
7. 25
. 41
P200-IC. Men's terry cloth, button-front coat, 2 patch pockets,
sizes 34 to 44, made from 57 percent 18KP and 43 percent 7}£KP, at $0.4728 per pound:
Current cost
Ceiling price established under G M P R
Loss
11. 08
9. 50
1. 58
P200-I. Men's terry cloth pullover, long sleeves, no pockets, sizes *
34 to 44, made from 57 percent 18KP and 43 percent
7 # K P , at $0.4728 per pound:
Current cost
8. 00
Ceiling price established under G M P R
6. 75
Loss
1. 25
SO. Men's oxford gray sweat shirt, V insert in neck, set-in
sleeve, rib-tail bottom, weighing 10 to 10*4 pounds on
size 42, made from 26KP-30KP-15 Gr backing, at
$0.4743 per pound, sizes 34 to 46:
Current cost
Ceiling price established under amendment 6 to
M P R 221
Loss
Loss
10. 07
8.14
1. 93
SOBX. Boys' oxford gray, full-freedom sleeve sweat shirt, V insert in neck, rib-tail bottom, made from 26KP-30KP15 Gr backing, at $0.4743 per pound, sizes 24 to 34:
Current cost
Ceiling price established under amendment 6 to
M P R 221
Loss
7. 82
6.77
1. 05
S O B X T . Boys' full-freedom sleeve sweat shirt, V in neck, rib-tail
bottom, colored sleeves, made from 26KP-30KP-15
Gr backing, at $0.4649 per pound, sizes 24 to 34:
Current cost
Ceiling price established under amendment 6 to
M P R 221
8.25
1. 46
SOX. Men's oxford gray full-freedom sleeve sweat shirt, V insert in neck, rib-tail bottom, weighing approximately
10 to 10J4 pounds on size 42, made from 26KP-30KP-15
Gr backing, at $0.4743 per pound, sizes 34 to 46:
Current cost
Ceiling price established under amendment 6 to
M P R 221
Loss
9. 71
.
8. 04
7.15
66
242
e x t e n d price c o n t r o l and stabilization acts of
1942
Current costs and ceiling prices filed in connection with SO 149, Oneida Knitting
Mills, 851 Broad St., JJtica 2, N. Y— Continued
Style
SSP. Men's training pant, string top, string bottom, made in
small, medium, and large, 30KP-26KP-15 Gr backing, at $0.4667 per pound:
Per dozen
Current cost
$10. 87
Ceiling price established under amendment 6 to
M P R 221
9.95
Loss
SC. Men's colored sweat shirts, V in neck, rib-tail, made from
26KP-30KP-26KP-15 Gr backing, at $0.4649 per
pound, sizes 34 to 46:
Current cost
Ceiling price established under amendment 6' to
M P R 221
Loss
3SS. Boys' silver gray sweat shirts, no V insert in neck, rib-tail
bottom, set-in sleeve, made from 26KP-30KP-15 Gr
backing, at $0.4667 per pound, sizes 24 to 34:
Current cost
Ceiling price established under amendment 6 to
M P R 221
Loss
2SC. Juvenile colored sweat shirts, V insert in neck, rib-tail
bottom, made from 26KP-30KP-15 Gr backing, at
$0.4649 per pound, sizes 2, 4, 6, 6 X :
Current cost
Ceiling price established under amendment 6 to
M P R 221
Loss
SCBI. Boys' colored sweat shirt, crew neck, freedom sleeve,
with V insert in neck; same yarn as SC above:
Current cost
Ceiling price established under amendment 6 to
M P R 221
Loss
10X1. Men's rib utility sweat shirt, freedom sleeve, military
shoulder, made from 11KP, at $0.4951 per pound,
sizes 34 to 46:
Current cost
Ceiling price established under amendment 6 to
M P R 221
Loss
FX404. Men's combed, lightweight sweat shirt, made from 16CP,
at $0.5500 per pound; the garment has a rib-tail bottom, crew neck, with ribbed cuffs; sizes 34 to 46:
Current cost
Ceiling price established under amendment 6 to
M P R 221
Loss
. 92
10. 69
9. 62
1. 07
6. 52
5. 75
. 77
5. 99
5.75
. 24
7. 80
7. 75
. 05
9. 18
7.76
1.42
10. 41
9.93
.48
243 e x t e n d p r i c e c o n t r o l a n d s t a b i l i z a t i o n a c t s o f
19 42
Current costs and ceiling prices filed in connection with SO 149, Oneida Knitting
Mills, 851 Broad St., Utica 2, N. Y.—Continued
Style
5ITU. Men's 1 by 1 rib, spring-needle, long-sleeve, ankle-length
union suit, combed, sizes 34 to 46, made from 20CP,
at $0.5675 per pound:
Per dozen
Current cost
$15. 62
Ceiling price established under amendment 6 to
M P R 221
13. 75
Loss
1. 87
51TU/2. Men's 1 by 1 rib, spring-needle, short-sleeve, ankle-length
union suit, combed, sizes 34 to 46, made from 20CP,
at $0.5675 per pound:
Current cost
Ceiling price established under amendment 6 to
M P R 221
Loss
14. 38
13.37
1. 01
KP1. Men's balbriggan, long-sleeve, high-neck, pajama-top,
and long-leg, ski-bottom, fly-front pa jama bottom,
made from 18KP, at $0.4950 per pound:
Current cost
Ceiling price established under SO 139
Loss
14. 11
13. 50
. 61
KP2. Men's brushed, flat, long-sleeve, high-neck, pajama-top,
and long-leg, ski-bottom, fly-front pajama bottom,
made from 11 }£KP, at $0.4600 per pound:
Current cost
Ceiling price established under SO 139
Loss
15. 72
13. 50
2. 22
NOTE.—All foregoing prices are based on our terms of 2/30 or net 60—f. o. b. Utica, N . Y .
Mr. DEVEREUX. It is now April 18 and only as of today have we
finished preparing this order.
Now, it will probably have to go to Syracuse for approval, then to
New York, and then to Washington, and if it is approved we may be
notified sometime in May or June. Perhaps OPA considers this relief,
but it has taken us from February 2 to April 15 to prepare these forms
and now it may be two or more months before we know whether or
not we get relief. This will mean that we have been operating at a
serious loss for approximately 5 to 6 months while trying to get critically needed relief, in addition to the 6 months of operating at a loss
which made us eligible to apply for relief under these forms. That is
a year. And we have to meet a pay roll every Friday.
Incidentally, there is still another catch in SO 149. The order states
that if in the base period—1936 through 1939—your profit was less than
3 percent on net worth, OPA will bring you up to 3 percent and if
more than 6 percent OPA will bring you down to 6 percent. Our net
worth is $2,000,000, and we shall be allowed 3 percent on this, or
$60,000, out of which we have to pay taxes, depreciation, and dividends, if any.
Senator BUCK. How much would that be?
have left?
How much would you
244
e x t e n d price c o n t r o l and stabilization acts of
19 4 2
M r . DEVEREUX. Nothing.
Senator BUCK. When you pay those items how much would you
have left?
Mr. DEVEREUX. We wouldn't have anything left. We couldn't
pay our preferred dividends.
This gives us a profit of approximately 1.2 percent on our sales.
I wonder, gentlemen, if you think any firm can exist on this type of
relief.
I want to emphasize by the two points that I have made that OPA
is not giving us the relief that they want you to think they are giving
us, and that unless you gentlemen force OPA by law to give us a total
cost plus a reasonable profit, the knit-goods industry, in my opinion,
is going to be badly crippled, if not partially destroyed, and the
supply of underwear now woefully short will continue to diminish
and the black market will continue to flourish.
And finally—OPA speaks of the threat of an inflationary spiral in
underwear prices. Ordinarily a man will buy six undershirts a year
or a limit of six twice a year. Even today with cotton and labor at a
new high level, I believe the average underwear mill would be well
satisfied with an advance of 7 or 8 cents per garment . If the man I
speak of had to pay 42 cents more per year for six shirts, I wonder if
you would consider this serious inflation.
I also want to state that the elimination of MAP without price relief
will not help us now because all of our major underwear numbers are
priced below cost.
The experience of my company—one engaged in selling to the wholesale trade—is, I believe, typical of that of many mills making underwear. However, so that the committee may have a full picture of
conditions within the industry, it is desirable that you also have the
viewpoint of a company selling directly to retailers. For this phase of
the situation, I know that the committee will be interested in additional facts to be presented by Mr. Gordon D . Pray, vice president
and production manager of the Globe Knitting Works, of Grand
Rapids, Mich.
Senator B U C K . Y O U started your statement by saying 20 percent
of your output was heavyweight underwear?
M r . DEVEREUX.
Yes.
Senator Buck. Was that 20 percent of the national output?
M r . DEVEREUX. Oh, no; of our output.
Senator BUCK. What do you make besides underwear?
Mr. DEVEREUX. We make some outerwear.
Senator BUCK. On the outerwear you are making a profit?
Mr. DEVEREUX. The outerwear prices are all shown in this list
I have submitted.
Senator BUCK. There are only five or six you make any profit on
at all?
Mr. DEVEREUX:. That is correct.
Senator BUCK. That list is going to be placed in the record?
M r . DEVEREUX. As I understand it.
Senator B U C K . What do you suggest be done with O P A ?
Mr. DEVEREUX. That they give us real cost plus a reasonable
profit.
Senator B U C K . Y O U recommend it be done through legislation?
Have you any suggested amendments?
245
e x t e n d price c o n t r o l and stabilization acts of
M r . DEVEREUX.
19 4 2
N O , sir.
Senator BANKHEAD. Have you given any consideration to the basis
of figuring your profit?
Mr. DEVEREUX. WeL, OPA has sent accountants into our firm
time and again. We have just had them there. They have gone over
our records. They did a beautiful job. The accountant told me he
didn't see how we could possibly continue to exist under the present
system.
Senator BUCK. Won't one of those House amendments that were
passed yesterday take care of your case?
Mr. D E V E R E U X . I think it would, sir; yes, sir.
Senator C A R V I L L E . Y O U mentioned the black market. So far as
your business is concerned, how does it enter into underwear?
Mr. DEVEREUX. In our own city I know if you bought a shirt you
would pay about three times as much as we could furnish it to you
if we are allowed to make a reasonable profit. I don't know how
that happens. I suspect a good deal of that merchandise comes from
mills that have reorganized under a new name, or have started
business since 1942. They have been granted a reasonable price.
These mills have just started up. The old-line mills are held back
to the 1941-42 profits.
Senator B U C K . I am not quite sure I would have, in your case,
gone along for 9 months at the loss you have sustained.
Mr. DEVEREUX. That is what is worrying me, gentlemen. That
is why I am here.
Senator B U C K . H O W much longer are you going to do it?
Mr. DEVEREUX. We are going to do it just as long as we can.
Senator BUCK. Your capital is $2,000,000 and you have already
lost $400,000?
Mr. D E V E R E U X . N O , about $200,000.
Senator BUCK. $200,000 in 9 months?
M r . DEVEREUX. In 6 months.
Senator MILLIKIN. What is the answer of OPA to your predicament? What excuse do they give?
Mr. DEVEREUX. In this case they have changed the order, so that
we had to prepare a new order. That order was submitted to their
office—149 was submitted only the day before yesterday. How long
it is going to take them to act on that, I don't know, but from my
experience, I think it will be some time. And then when they do act
on it that will only give us relief for 4 months. Then they have a
right to review our case, and if they find we are making more money
than they think proper, they can withdraw or cancel that order. That
is the thing that hurts us so. They have given us—like this 137—
they have given us relief, and then they pull it out from under us.
Senator BANKHEAD. Well, have they done that? Have they pulled
any relief out from under you?
Mr. D E V E R E U X . I beg your pardon?
Senator BANKHEAD. Have they withdrawn any relief?
Mr. DEVEREUX. Yes. They withdrew 137 which gave us a profit
plus 4 percent. They left us with 175,000 pounds of wool top which
is very hard to get.
Senator MILLIKIN. Did they contend your profit was unreasonable
before they pulled that rug out from under you?
246
e x t e n d price c o n t r o l and stabilization acts of
19 4 2
Mr. DEVEREUX. That letter just says it is not the type of order
they care to issue; that it met an emergency. It may have met an
emergency, but the emergency is going to be there next fall and people
want heavyweight underwear.
Senator B A N K H E A D . H O W long have you been applying to them for
relief?
Mr. DEVEREUX. "Well, 3 years.
Senator MILLIKIN. Have you made any money during any of
those 3 years?
Mr. DEVEREUX. Yes, we made money on our war contracts. We
made money up to July 1945. Then'all our war contracts were
terminated.
Senator MILLIKIN. But since that time you have lost money?
Mr. DEVEREUX. That is correct.
Senator BUCK. Perhaps they figure you made so much on your
war contracts you had better lose a little.
Mr. DEVEREUX. That is their attitude.
Senator BUCK. Is that it?
Mr. DEVEREUX. That is their attitude. They want to limit us
to the 1936-39 period when our earnings were less than 4 percent.
But they forget our production has increased.
The CHAIRMAN. Did you make a very large profit during the war?
Mr. D E V E R E U X . N O , we didn't.
The CHAIRMAN. Larger than in peacetime?
Mr. DEVEREUX. In the year 1943. Not in the other years.
After taxes we added not more than $20,000 to our surplus.
Senator MILLIKIN. Have they said to you in effect that because
you did make money during the war they are not going to permit
you to make any money now, or is that your inference?
Mr. DEVEREUX. That is more or less my inference, although
when they talked to the committee—our committee—in December
about this new order which they are going to issue, 607, they said
that you are not going to be allowed to make over 2 percent profit
under any circumstances. We are going to limit you to that irrespective of what this order says.
Senator MILLIKIN. Is that 2 percent on an item, or 2 percent of
your total turn-over, or 2 percent on what?
Mr. DEVEREUX. Entire production.
Senator MILLIKIN. For what period of time?
Mr. DEVEREUX. Until they choose to withdraw the order.
Senator MILLIKIN. Well, I am still a little confused about that.
Two percent profit on something that you turn over 24 times a year
is 48 percent profit. Are we talking about 2 percent profit a year or
something else?
Mr. D E V E R E U X . T W O percent profit a year.
Senator M I L L I K I N . T W O percent profit a year.
Mr. DEVEREUX. On total production.
Senator MILLIKIN. On your total production.
Senator B A N K H E A D . IS that based on sales—2 percent of your sales?
They have got two bases, you know, one is sales, and the other is
capital investment.
Mr. DEVEREUX. This order has not been issued. That is why I
am a little uncertain myself.
Senator MILLIKIN. They have said to you you would not get more
than 2 percent a year?
247
e x t e n d price c o n t r o l and stabilization acts of
19 42
Mr. DEVEREUX. That is right.
Senator MILLIKIN. Net?
Mr. DEVEREUX. Net. And they don't allow us to add indirect
labor costs.
Senator B U C K . IS that after taxes?
Mr. DEVEREUX. Before taxes.
Senator MILLIKIN. Before taxes?
Mr. DEVEREUX. OPA has never considered anything after taxes.
It is always before taxes.
Senator MILLIKIN. Well, of course, that is confiscation.
The CHAIRMAN. We had better get the actual testimony about that.
Senator MILLIKIN. Mr. Chairman, I suggest we get someone up
here from OPA and let's get into that. If correct, that is an example
of perfect asininity in the administration of the OPA.
The CHAIRMAN. I have sent for someone from the OPA.
Senator MILLIKIN. I wish we had more Members of the Senate to
hear that.
Senator BUCK. We will probably hear a lot more of it before we get
through.
Mr. CHENEY. Mr. Chairman, my name is Roy A. Cheney, president of the Underwear Institute. We have occupied only half an hour
of the allotted time, and inasmuch as our industry is divided into two
great groups, those who sell to the wholesale trade and those who
perform the functions of wholesalers and sell to the retail trade, we
would like to have the committee hear Mr. Gordon D. Pray, vice
president of the Globe Knitting Works, of Grand Rapids, Mich.
Senator M I L L K I N . IS Mr. Devereux going to be available when we
get the OPA representative here?
Mr. CHENEY. If he is not, I will be here, sir.
STATEMENT OF GORDON D. PRAY, VICE PRESIDENT, GLOBE KNITTING WORKS, GRAND RAPIDS, MICH.
Mr. PRAY. Mr. Chairman and members of the committee, I am
Gordon D. Pray.
The C H A I R M A N . IS Mr. Devereux here?
M r . DEVEREUX.
Y e s , sir.
The CHAIRMAN. Stay here a little while, Mr. Devereux. A representative of the OPA will be here soon.
Mr. P R A Y . A S a matter of information and introduction for the
record, I am vice president and production manager of the Globe Knitting Works, located in Grand Rapids, Mich.
I wish to give my hearty endorsement to the statement of Mr.
Devereux. He has made an accurate and convincing analysis of the
critical condition to which the OPA has brought the manufacture of
underwear in this country. His statement, while it is applicable to
the underwear industry as a whole, is especially applicable to the
position of the mills of which his firm is an example, those mills doing
a substantial wholesale business. I would like to supplement his
analysis with a statement on behalf of the retail outlets, mills that also
perform the functions of wholesalers, of which the Globe Knitting
Works is characteristic.
Our business and our plant are versatile. It is possible for us to
manufacture many different lines besides underwear, although we are
248
e x t e n d price c o n t r o l and stabilization acts of
19 4 2
essentially an underwear mill and despite the fact that we would
prefer to remain an underwear mill. Because of our potential versatility we will find a way to operate profitably; we will find a way to
pay dividends to our stockholders, but it will not be through the
manufacture of underwear unless relief is granted from the lossenforcing orders of OPA.
Senator BUCK. What are you going to make if you do not make
underwear?
Mr. PRAY. We can make sport garments, T-shirts, women's
dresses, women's knitted gloves.
Snator BANKHEAD. Are they not likely to cut you off from materials
for those nonessential things?
Mr. PRAY. Not to our knowledge, sir.
Senator B A N K H E A D . Y O U know they are doing it, do you not?
They allocate material now.
Mr. PRAY. They could do it.
Senator BANKHEAD. According to the evidence, they have frozen
material for making cbenille bed-spreads because they want all the
material for undergarments.
Mr. PRAY. Then we will have to find a way to make undergarments
profitably, if that is the case. We have several directions in which
we can go in changing our production. We have, for example, in
our plan 46 lines of men's, boys', women's, and children's lightweight
underwear, 250 different styles. A hundred and twenty, it so happens,
show a loss. We have already, and will continue to channel our
production through lines that are profitable to us, regardless of the
need of that type of underwear. That, of course, would be our first
step in changing our production. I might add to that, that that is a
thing we have been forced to do for the past 2 years.
Senator B U C K . I do not understand that. On the more expensive
grade of goods they permit you to make a profit?
Mr. PRAY. The more expensive grades of goods, according to the
orders that have been issued by the Office of Price Administration in
the past few years, seem to be completely taboo; and that is something
that I would like to speak about in my presentation.
Senator B U C K . Y O U can derive a profit from manufacturing a better
grade of goods?
Mr. PRAY. Not necessarily. We not only cannot derive a profit,
but we are excluded from relief as to better quality goods.
A ceiling price is placed on goods which are eligible for relief under
orders. For example, OPA has said that a man's cotton union suit
will receive relief providing the ceiling price goes no higher than $10 a
dozen. We have been making quality underwear in our factory for
49 years, and $10 a dozen is a low-priced item for us.
I will say more about that a little later, sir.
The point I wish to emphasize is this, that by its current regulations
OPA is penalizing not the Globe Knitting Works, but the public. It
is not depriving my company of a profit, but it is depriving the public
of underwear. The public is the loser, for it is obvious that we cannot
continue to manufacture and sell underwear at less than it costs us to
make it.
The C H A I R M A N . Y O U say you are making a profit?
Mr. PRAY. Our over-all operation is at a profit; yes, sir.
Senator MILLIKIN. Did you customarily carry loss lines before the
war?
249 e x t e n d p r i c e c o n t r o l a n d s t a b i l i z a t i o n a c t s o f
19 42
M r . P R A Y . Y e s , sir.
Senator MILLKIN. Are you carrying more of them now than you
did before?
Mr. PRAY. Yes, sir. At the moment, I would say by 10 to 1. I
would not give you that figure as an accurate figure, however.
Senator BANKHEAD. What is your complaint? What are you here
for? What is your objective?
Mr. PRAY. We want to make underwear, sir, and we want to be
given prices that will enable us to make it.
Senator BANKHEAD. They are forcing you to make other things
rather than underwear?
Mr. P R A Y . N O , sir; they are not forcing us to make other things.
Senator BANKHEAD. If you are » making a profit, what is your
complaint?
Mr. PRAY. We have had trouble with that point of view for some
time, sir. Our business is to make a profit and we must continue to
make a profit. We would like to make a profit making underwear;
we would like to make a profit making all kinds of underewar which
we have normally made during peacetime years, so that we can
continue to supply our retailers with the type of merchandise they
want from us and have expected from us. We cannot make a profit
on all of the garments that our retailers want and the consumers need.
Senator MILLIKIN. Would not that be in the so-called low-price
field?
Mr. PRAY. That is possible; At the present time it is a grouping
above the low-price field, however, and is covering practically all of
the essential numbers in the men's and boys' lines particularly.
Senator MILLIKIN. Would it be fair to say that if yoii had a better
price on your lower-price garments you would make them, whereas
if you did not get a better price you would have to stop making them?
Is that the point?
M r . PRAY. Yes, sir; and for two reasons.
Senator MILLIKIN. And the orders of the OPA are driving you into
the higher-price field?
Mr. PRAY. The orders of OPA, up until this point, have driven us
to the profitable field. It may be the higher-price field in one classification. Take men's athletic shirts. We do happen to ha\e a
profit on a $6.75 shirt. That is one reason that you find so many
dollar and dollar-and-a-half undershirts on the market.
Senator B A N K H E A D . Y O U mean, men's shirts?
M r . PRAY.
Y e s , sir.
Senator BANKHEAD. What did those sell for before the war?
Mr. PRAY. A t a dollar.
Senator BANKHEAD. And they have gone up to $6.50? Price
control is very effective.
Mr. P R A Y . I mean, $ 6 . 7 5 a dozen. I think I will bring out the
points as we go into this.
The Globe Knitting Works and other mills will be forced increasingly to turn from the manufacture of underwear and concentrate on
more profitable lines.
To illustrate OPA's insistence upon loss-producing underwear, an
insistence which is forcing us now into other lines, let me read to you
a recent exchange of telegrams between the Globe Knitting Works
85721—46—vol. 1
17
250
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 19 4 2
and O P A .
I think, b y reading these telegrams, it will explain our
position completely.
W e sent this telegram on March 22, 1946, to M r . Paul A . Porter,
Administrator; George Baker, D e p u t y Administrator, and Chester
Bowles, Director, O E S [reading]:
There is no need of our telling you that there is a critical shortage of knitted
underwear. Knitted underwear is our business. We are selling our lightweight
underwear on our price list of October 20, 1941, and our winter-weight underwear
on our price list of August 1, 1941. Since then our labor rates and costs of
materials have increased by more than 40 percent.
T h e recent labor rates having been made with the approval of the
Labor Board.
[Continuing reading:]
A large volume of war production and the discontinuance of many high loss
civilian underwear styles helped sustain our profit structure during the past few
years. Now that we are back into civilian production, we should be dong everything possible toward relieving the existing underwear shortage. This we are
unable to do under your regulations.
Every basic item in our men's and boys' underwear lines shows us a loss. A
large portion of our women's and children's underwear are heavy loss numbers.
Our latest increases in labor rates together with increased yarn costs will make it
necessary to drop many of our basic lines unless relief is given immediately.
This explains some of our problems.
[Continuing reading:]
Our price on men's lighweight cotton shorts is $4.50 per dozen. We need a price
of $6.18 to just break even. Our price on men's lightweight cotton undershirts is
$3.40 per dozen. We need $4.17 to break even.
Our price on men's lightweight cotton shorts—incidentally, that is
the only one we now have left in the line. W e have discontinued about
eight in order to manufacture that classification at a profit, and we
are dowTL to the last one now.
If we discontinue this number we are
out of the men's shorts business.
T h e C H A I R M A N . IS there any answer to this telegram?
M r . PRAY. Y e s , sir; I have it and will read it, sir. I have not yet
completed the reading of the telegram which we sent.
[Reading
further:]
Our price on men's lightweight unionsuits is $13.50 per dozen.
I might add there that the ceiling for relief in this particular classification is $10 a dozen.
This is the only suit we have made for years.
Senator MILLIKIN. This is all cotton?
M r . PRAY. Yes, sir.
[Reading further:]
We need a price of $16.71 to break even. Our price on our men's winterweight cotton union suits is $13.90. W e need a price of $19 to break even. Our
price on winter-weight cotton shirts and drawers is $6.54. We need a price of
$8.44 to break even. These comparisons show break-even prices with no profit
considered.
These are but a few of the items on which we are in serious trouble. These are
numbers that we should be producing in volume. These figures show clearly
what a difficult position we are in.
Senator BUCK. H a v e you endeavored to get relief on those items?
M r . PRAY. Y e s , sir. This is the wire which we have sent to M r .
Bowles, M r . Porter, and M r . Baker.
Senator MILLIKIN. W h a t is the date of that wire?
M r . PRAY. M a r c h 2 2 , 1946.
[Reading further:]
One of your Washington auditors is in Grand Rapids working on our books at
the present time and you can immediately verify these figures through him.
251
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 19 42
Our entire line was audited and the figures I have given you are in
the Office of Price Administration. I might add that since 1942 we
constantly had auditors in our building representing the Office of Price
Administration and checking our books, and they have apparently
been aware of the situation.
Senator MILLIKIN. Have they challenged your own presentations,
so far as costs are concerned?
Mr. PRAY. NO, sir. [Continuing reading:]
We called on your office in January seeking relief. We were told you wef£
working on a relief order for the industry that would be out in a week or two.
W e are still waiting for that order.
This telegram was dated March 22, 1946, and we are still waiting
for that order. I might add, also, that in midsummer of 1945 we
were also told that the order was forthcoming, and in September and
October and November and December we were advised that an order
on lightweight underwear was forthcoming.
Senator MILLIKIN. During that period of time did you continue to
make those items?
Mr. PRAY. We set up a very ambitious production schedule in the
last half of 1945, despite the fact that a large portion of that production was at a loss. We did so on the basis and on the assurance that a
relief order would be forthcoming. Fortunately, in 1945 we were able
to sustain a loss; we were able to produce merchandise that we cannot
produce now because of further increases in costs of raw materials,
further increases in costs of labor, in addition to the fact that we are
not now manufacturing Government underwear.
Senator MILLIKIN. YOU said you set up an ambitious production
schedule. I asked you if you made the goods.
M r . PRAY. Yes, sir.
Senator MILLIKIN. YOU carried out the schedule?
M r . PRAY. Yes, sir.
[Continuingreading:]
You have given the cotton-varn spinners increases of more than 40 percent on
yarn prices and we are paying these increased prices but have received no relief to
offset these higher costs. Our prices were set when our minimum wage was 33 j4
cents per hour. Our present minimum wage is 55 cents per hour and our average
wages have increased accordingly. The Government has openly condemned
wages of less than 55 cents an hour as substandard. OPA has granted increases
to other industries for going to the 55-cent minimum but we are paying these
higher wages with no price relief in return.
We have been in the underwear business 49 years. We are one of the largest
and best equipped mills in the country. We were given the Army-Navy E award
with three stars for outstanding war production. It is regrettable that a mill
with our record is prevented from producing to capacity because of OPA's delay
in working out relief for the underwear industry.
Senator MILLIKIN. At what percentage of capacity are you now
working?
Mr. PRAY. I would say, about 65 percent.
Senator MILLIKIN. Could you get available labor to come up to
the maximum?
Mr. PRAY. We have space and equipment for approximately 1,350
to 1,400 employees in our mill. That is what we employed before the
war. We slipped down from year to year until we had 850 employees
in August of 1945. That was due to the tremendous amount of
heavy goods manufactured in the Michigan area during that time.
252
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 19 42
Senator MILLIKIN. Did that represent a loss in production per
person?
Mr. PRAY. W e have gained in dozens produced per employee,
steadily, up until the present time.
Senator MILLIKIN. Let us get back to the other point.
Mr. PRAY. W e went to 850 employees in August, Senator.
We
have stood still for about 3 months, and then our employment picked
up and it has been going up until we now employ about 1,050.
Senator MILLIKIN. Can you get all the labor you need to run at
capacity?
Mr. P R A Y . I would not know that. We have gradually been
increasing our production. What we will be able to do in a month or
two I cannot say.
Senator MILLIKIN. Have you been increasing your pay roll?
Senator B A N K H E A D .
retarding it?
IS
there anything holding production back or
Mr. PRAY. At the present time the greatest difficulty we can see is
the difficulty of being able to produce underwear at a profit.
Senator BUCK. Can you get raw material?
Mr. P R A Y . A S to our getting material for our present production,
frankly, we are working hand to mouth. We have never operated
with such low inventories of yarn, on our standard basic counts of
yarn. That subject is a price problem also. I think that the yarn
situation pricing problem also ties up with ours. [Continuing
reading:]
OPA and OPA alone is responsible for our inability to produce greater quantities of civilian underwear. The urgency for immediate relief is self-evident.
We need help now, not 2 or 3 months from now.
We have already reduced our production schedules on critically needed underwear by 33)£ percent because of inadequate prices. We must further curtail
production of all critically needed underwear items which under present regulations are now being produced at substantial losses. We will be forced to make
these additional reductions in production unless y/e hear from you that adequate
relief is immediately forthcoming.
That telegram was signed by R. W. Clements, president, Globe
Knitting Works.
In answer to that wire to Porter, Baker, and Bowles we received a
detailed reply from Mr. J. S. Lieberman, Jr., Price Executive, Apparel
Branch, Office of Price Administration, reading as follows [reading]:
Your telegram of March 23, 1946, to Mr. Porter, with reference to price adjustments on underwear, has been referred to me for reply.
As you doubtless know, we have just issued Supplementary Order 154, providing a method of adjusting prices on certain specified underwear items. We
• expect to add to this order, in the near future, a number of garments formerly
covered by Supplementary Order 137.
I will explain those orders later, gentlemen.
[Continuing reading:]
So far as underwear is concerned, this order is interim in nature, pending the
completion of an over-all 607-type of underwear regulation. Our accountants are
completing collection of data basic to such a regulation, and we expect to have
the summary of their findings upon which to start work within a week or 10 days.
We do not know just how soon this over-all underwear regulation can be completed. For your information, I am enclosing copies of Supplementary Orders
154, 149, and 133, which may be temporarily useful to you. As I have said, there
will be early additions to Supplementary Order 154.
We shall make all possible haste with the 607-type of regulation.
Very truly yours,
J.
S. LIEBERMAN,
Jr.
253 EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 19 42
Senator MILLIKIN. It boils down to the fact that he told you absolutely nothing?
M r . PRAY. T h a t is right.
The CHAIRMAN. DO you know what the orders are?
Mr. PRAY. Yes; I know the numbers of them. I will explain them
to you.
Our problem in the past 2 years seems to have been a waiting policy
that has been used—promise and wait, promise and wait; and by the
time those prom ise-and-wait periods were over, the crisis was over.
But, somehow or other, nothing has happened.
On April 11, 1946, we replied to Mr. Lieberman with the following
telegram, a copy of which was sent to Mr. Porter [reading]:
Your letter of April 4 in answer to our telegram of March 23 has been received.
You have suggested that we might be able to obtain relief from orders 154, 133,
and 149. We have studied these orders carefully and find that they will be of
slight help.
The new interim order 154 provides only partial relief.
Incidentally, that is the new interim order that has been talked
about for the last 6 months. It was the very special order that was
created to provide light-weight underwear. [Continuing reading:]
Out of 120 loss numbers, we have been able to apply for new prices on only
5 items. Of these five, three will still show sufficient losses to discourage production.
In other words, two items out of our entire line will receive relief
under order 154.
Senator MILLIKIN. Would you mind reading that last sentence
again, about loss items?
Mr. PRAY (reading):
The new interim order 154 provides only partial relief. Out of 120 loss numbers,
we have been able to apply for new prices on only 5 items. Of these five, three
will still show sufficient losses to discourage production.
Senator MILLIKIN. I do not quite get the point of that. Would
you mind elaborating that?
Mr. PRAY. Order 154 provides that a manufacturer of certain
limited types of underwear., men's underwear only incidentally, can
receive 13 cents a pound, for example, for relief for the number of
pounds of the yarn that is used in the underwear manufacture. It
provides also that he can receive his increase in labor, direct labor, not
overhead, not supervisory labor or anything of that sort. Therefore
the increase is limited to a formula and is not based on your profit
position before or after. We might have an item that we are making
10 percent profit on, and we can still get this increase and make 25
percent profit if such a thing were in our line today. But it has no
relationship whatsoever to the profit on the item. It is a formula
increase that you can take.
Does that explain it, sir?
Senator MILLIKIN. No; I am not sure that it does. You referred
to 120 loss items?
M r . PRAY. Y e s .
Senator MILLIKIN. IS the point that this order would #give you a
chance only so far as five items are concerned?
Mr. PRAY. Yes. It is limited to such an extent that instead of
helping us on our production, it helps us only on really two items.
254
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 19 42
Senator MILLIKIN. YOU start with five, and the limitations are
such that it would apply only to two. So it comes down to 2 out of
120; is that right?
M r . PRAY. Y e s .
Senator BANKHEAD. If there were no OPA how many items would
you produce?
Mr. PRAY. We would produce all numbers. We have felt all along,
and we have tried hard to follow this policy, that during the war
years we should continue to manufacture all of the merchandise that
our regular trade usually expects of us. We want to be in business
another 49 years, and another one after that, if we can.
The CHAIRMAN. Did you do well during the war? Did you make
large profits?
Mr. PRAY. Our profits in the entire mill ranged around 9 percent
before taxes. Our Government profits during the war years—I mean,
our profits on Government underwear, Army and Navy—averaged
slightly over and slightly under 4 percent. I might add that our
books have been checked for 3 years by the Army price board, and
those figures have been accepted.
Senator BANKHEAD. What were your profits after taxes?
Mr. PRAY. I cannot tell you exactly. I do not have those figures
with me. But our 1945 operation, if I remember it correctly, was a
total of 8.9 for our entire mill, and I believe that our profits were
about 3.5 or perhaps 4. I do not have those figures with me, and I
do not remember.
Senator MILLIKIN. After taxes?
Mr. PRAY. Yes. After taxes they broke down to about 3.5 to 4
percent.
In further explaining order 154 the telegram says:
15.4 allows recovery of only a part of the increased cost of yarn. P r w to OPA
the Government pleaded with industry to hold down prices. We were willing
and able to cooperate because of substantial inventories of low-priced materials.
Consequently, when OPA froze our prices these prices were based on costs of
materials far below the existing market. To illustrate this inequity,! 154 allows
a recovery of 13 cents on 1/30 combed peeler yarn. Actually, the increase in
our cost of this yarn is 21 cents.
Senator MILLIKIN. Are you still talking about cotton?
Mr. PRAY. Cotton yarn; yes, sir. [Continuing reading:]
154 allows no recovery on increased costs of thread, elastic, buttons, facings,
and other findings, nor does it allow for increased operating expenses other than
direct labor. For example, on our men's shorts 9/32 we will receive under 154
a new maximum price, if they allow it, of $5.58, whereas we need a price of $6.18
to break even.
Senator MILLIKIN. Have you had any field conferences on this
matter? Has anyone been to your mill and talked to you about it?
Mr. PRAY. The auditor is the last man that was in our mill. He
left about 2 weeks ago.
Senator MILLKIN. Have you been down to talk to them?
Mr. PRAY. I was down there in January.
Senator MILLIKIN. What did they say in answer to fact of the kind
that you are developing?
Mr. PRAY. AS far as the men that I have been able to contact, or,
I should say, our mill has been able to contact, they have been men
who are able only to mete out relief to us as such relief is written up in
orders. I imagine that is true from Mr. Porter down.
255 EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 19 42
Senator MILLIKIN. YOU do not know what the philosophy is for
denying your plea?
Mr. PRAY. We cannot know, of course. [Continuing reading:]
The cost of elastic alone on this garment has increased 45 cents per dozen, and
we receive no price relief whatsoever for this increased cost.
154 provides no relief whatsoever for boys', children's, or women's underwear.
I think you have all heard that boys, children, and women are also
in need of light-weight underwear.
The CHAIRMAN. Did they recognize that it would be a loss to you?
You discussed it with them, did you not?
Mr. PRAY. We prepared a set of figures, Senator, which would
show our profit in each individual item in each classification and for
the entire mill based on the way we wanted to produce underwear for
the 1946 season. That production starts, incidentally, in November
1945. We showed individual profits and losses dn each one of those
numbers. We computed that on the basis of the volume which we
felt we should produce of those items, the comparative volume. It
so happens that that shows a 3 percent loss for our entire 1946 operation. Those figures were shown to OPA, but OPA has power to act
only according to the regulations at that time in force.
Senator MILLIKIN. Mr. Chairman, I am interested in how sharply
this problem was brought before OPA. Was it all by correspondence,
or were you down here and did you bring it to the attention of someone
who was in charge and had authority; or wheie does it rest with
relation to someone in OPA who had the power to make a decision?
Mr. PRAY. Generally Mr. Cheney has been presenting the problems
with regard to the industry for a great many months. Specifically,
as far as we are concerned, I personally visited Mr. Boner, the head
of the Knit Goods Division, and showed him these figures early in
January and went over the entire situation with him. At that time
they said:
We have no mechanics with which to deal out relief to your firm, no mechanical
means to do so. However, you may rest assured that there will be an order out
in a week or two which will give you relief on your light-weight underwear line.
And of course that is the thing I am talking about.
Senator MILLIKIN. But that has not materialized?
Mr. PRAY. That came out and that gave us relief on two numbers
in our entire line.
The CHAIRMAN. We must not overlook the fact that we must protect the consumer, too.
Mr. PRAY. We must protect the consumer; we agree. We are not
asking for complete release of OPA controls. We have always believed in OPA, in their controls. Frankly, we have lost faith in their
ability to function. As far as we are concerned they have not acted
promptly; they have not seemed to take a realistic attitude; they have
given us the impression that they have not understood underwear
production from the production standpoint.
Those are our opinions only, of course.
The CHAIRMAN. YOU would not want to see the OPA Act repealed,
from the standpoint of the public interest, would you?
Mr. PRAY. We feel that from our own standpoint and from the
standpoint of the public interest, if OPA were to allow us our actual
costs plus a reasonable profit, two things would be accomplished.
256
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 19 42
We would, first, be able and willing and happy to produce our entire
lines of underwear as they are needed by the consumer. We would
be able to do that at a profit and, at the same time, the consumer
would be able to obtain underwear which he is not able to do at the
present time.
Senator B A N K H E A D . H O W much difference in cost would it be to
the consumer if all the mills could be operated as you desire?
Mr. PRAY. I could not answer that question as far as the entire
industry is concerned.
Senator BANKHEAD. What about yours? What would be the average increase to the consumer?
Mr. PRAT. In our particular operation we show on this production
plan a loss of 3 percent of our selling price.
Senator BANKHEAD. On the entire output?
Mr. PRAY. On the entire output, on a weighted average, based on
desirable production from the consumer's standpoint. We show a
loss of 3 percent now. We would have to make up that loss and be
accorded a reasonable profit.
Senator BANKHEAD. Three percent between your gross receipts and
your gross costs?
Mr. PRAY. Yes, sir. I might say that during the very difficult
years in the textile industry—they were not inflationary by any
means, referring to 1936 to 1939—our particular mill was making
7% percent net profit before taxes.
Senator BANKHEAD. That is not a desirable basis to take, 1936 to
1939.
Mr. P R A Y . N O ; it was not good. In fact, as far as the textile
industry is concerned—I am giving a personal opinion again—I think
you will find in checking this history that actually the textile industry
in our field, at least, is too big for the needs of the Nation. Actually
it has been a highly competitive industry. All the way through it
has been highly competitive, and it was highly competitive in the
1936 to 1939 period. I think we showed a very favorable profit as
compared with the industry.
Senator MILLIKIN. What is the customary mark-up? Let us take
a cotton athletic undershirt. What is the retail price?
Mr. PRAY. We have in the past 15 yeais attempted to obtain a
10-percent profit on our underwear operation.
Senator M I L L I K I N . Y O U sell them for how much a dozen?
Mr. PRAY. Our line bases on our original selling price of undershirts. For example, we have a shirt at $ 3 . 5 0 a dozen. Another one
at $ 6 . 7 5 a dozen.
Senator MILLIKIN. What does the retailer sell it for?
Mr. PRAY. Fifty cents.
Senator M I L L I K I N . D O you work through distributors?
Mr. P R A Y . N O ; we sell direct to the retail trade.
Senator MILLIKIN. That is the customary additional mark-up in
the business?
M r . PRAY. Yes.
Senator B A N K H E A D . D O you allow about 100 percent to the retailer?
Mr. P R A Y . N O . The retailer, in our type of merchandise—this is
prior to regulation 580—sold our goods for approximately 40 percent
of the retail price.
257
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 19 4 2
Senator B A N K H E A D . Y O U said you sold them at 25 cents to the retailer, and the retailer sold them at 50 cents. That is a hundred
percent.
Mr. P R A Y . I am sorry. I misunderstood the question. He sold
them for 50 cents; that is right.
Senator BANKHEAD. What did he pay for them?
Mr. P R A Y . He paid $ 3 . 5 0 a dozen.
Senator BANKHEAD. And he sold them at $6?
M r . P R A Y . Y e s , sir.
Senator BANKHEAD. That is nearly a hundred percent.
Mr. PRAY. Ordinarily the mark-up of our merchandise has been
approximately 40 to 42 percent of the selling price of the merchandise.
That has been pretty standard. There have been some exceptions
to it, of course.
Senator BANKHEAD. What is the spread between the mill, the
wholesaler and the retailer?
Mr. P R A Y . I cannot speak for the wholesaler, Senator. Maybe
Mr. Cheney can.
Senator B A N K H E A D . Y O U do not know anything about the customs
in the trade?
Mr. P R A Y . A S far as wholesale mills are concerned, I am not acquainted with their profit or marginal structure. I think Mr. Cheney
could perhaps answer that better than I can.
Senator BANKHEAD. The thing that I am trying to get information
on is this. Mr. Bowles and others continue to talk about the high
price of cotton. According to my information, the retailers and wholesalers get practically 80 percent of the consumer's dollar; 15 percent
goes for other purposes, and the farmer gets about 10 percent. Is not
that about right? You are familiar enough with your trade and business to know what the distribution is.
Mr. PRAY. In our merchandise I would say, as an average, that our
cost of materials is approximately 40 percent of the total cost of our
goods.
Senator BANKHEAD. Forty percent of what?
Mr. PRAY. Of the price at which we sell our merchandise to the retailer. We manufacture, Senator, the actual stock—in these days we
are not carrying much—which the retailer orders. We have no middlemen's set-up in our particular organization. We do not manufacture
to sell to a jobber who releases to the trade. We sell our merchandise
directly to Marshall Field r Alt man's, and to the rest of the trade that
buys our merchandise.
Senator B A N K H E A D . Y O U did not get my question. I am trying to
find out what percentage of the consumer's dollar y.ou get, for instance.
Mr. PRAY. That we receive?
Senator BANKHEAD. Yes.
Mr. PRAY. We receive approximately 58 percent of the consumer's
dollar—58 to 60 percent normally.
Senator BANKHEAD. What does the retailer get? He gets a hundred percent of what you charge?
Mr. PRAY. Based on 100 percent selling price of the retailer, we in
turn receive back from the retailer from 58 to 60 percent of the selling
price.
Senator BANKHEAD. And the retailer gets what percent?
Mr. PRAY. He would get from 40 to 42 percent of that.
258
EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 19 4 2
Senator BANKHEAD. That makes about 80 percent, as was stated a
while ago. There is less than 20 percent all along the line from the
farmer to the retail merchant. And still some people insist that the
high price of cotton affects the scarcity of cotton goods, when the
price going to the farmer, out of the entire sum, is almost negligible.
Mr. PRAY. It is a small amount; yes.
Senator BANKHEAD. When you get down to the increase in the
price of cotton, it is practically nothing, and still Mr. Bowles got
jittery about it and went into the field of trying to regulate the
exchanges on account of the increase of 3 or 4 cents a pound in cotton.
Mr. PRAY. If the spinners and manufacturers were allowed a
reasonable profit on spinning and processing yarn, and then we were
in turn allowed a reasonable profit in manufacturing that yarn and
converting it into materials and into underwear, the cost would still
be away up.
Senator BANKHEAD. What is your principal garment?
Mr. P R A Y . Y O U mean, the type of cotton we use?
Senator B A N K H E A D . N O ; I mean the quality.
Mr. PRAY. In our leading type of garment, in our shirts, for
example, we use a total of 2l/2 pounds of combed cotton. That is
our biggest item in our men's line.
Senator BANKHEAD. If cotton increased 3 cents a pound, what
would you sell the shirts for?
Mr. PRAY.' That does not include the additional processing costs.
Senator B A N K H E A D . N O ; I know. I want to see what effect the
increase in the price of cotton would have.
Mr. PRAY. It would represent approximately 4% to 5 cents per
dozen in our selling price. Everything I am talking about is in
dozens. You have to divide it by 12.
Senator BANKHEAD. That would make it about a half cent more
per garment?
M r . P R A Y . Y e s , sir.
Senator BANKHEAD. Still we hear all this clamor, which is creating
friction, about the increase in cost of the raw material on which all
the textile business is based.
Senator MILLIKIN. I would like to ask the witness a question. As
I figure it, you are selling a cotton undershirt for 29 cents and the
retailer gets 50 cents?
M r . PRAY.
Yes.
Senator MILLIKIN. If you got what you say you should have, to
get cost plus a fair profit, how much would you sell that shirt for?
Mr. PRAY. If we sold it for $4.16 a dozen, a 10-percent profit
would be approximately $ 4 . 5 0 a dozen.
Senator MILLIKIN. If you got what you want for this shirt you
would get $4.16 a dozen?
Mr. PRAY. Plus a profit. We will assume that 40 cents would be
a 10-percent profit. That is $ 4 . 5 0 a dozen.
Senator MILLIKIN. If you had a dollar increase it would be about
8 cents per item?
Mr. PRAY. That is right.
Senator MILLIKIN. That would make the cost per item 37 cents,
and the retailer would sell it for what, under the customary mark-up?
Mr. PRAY. Under the customary mark-up he would sell that
garment for about 65 cents.
259 EXTEND PRICE CONTROL AND STABILIZATION ACTS OF 19 42
Senator MILLIKIN. SO that would represent a total increase to the
consumer of 15 cents per garment?
M r . PRAY. Y e s , sir.
Senator BANKHEAD. What sort of shirt are you talking about—
undershirts?
Mr. PRAY. Yes, sir. If I may resume the reading of the letter:
We have manufactured better quality underwear at medium prices for 49
years and have built up one of the largest and best-equipped mills in the country.
The patronage of our customers in normal times should be proof of the demand
for this better merchandise.
The CHAIRMAN. From what you have said so far, you are doing
pretty well in your line of business. I do not see why you should
complain.
Mr. PRAY. Are you talking about our prices and profits?
T h e CHAIRMAN. Yes.
Mr. PRAY. O P A has talked about our vast profits in the last year or
two, the profits of the entire underwear industry.
The CHAIRMAN. I am thinking of the consumer in connection
with it.
Mr. PRAY. Our profits have been made at the expense of the consumer, Mr. Chairman. We are going to continue to make them,
because we feel that we are good businessmen and we want to make
those profits in making the kind of underwear that the trade and the
consumer want. We have made those profits, frankly, at the expense
of the consumer, and we will have to continue that same policy.
The CHAIRMAN. YOU can understand why the consumers throughout the country are for the continuance of OPA. They think it gives
them some protection.
M r . PRAY. Y e s .
[Continuing reading:]
154, like so many other regulations, places a ceiling or a cut-off price, above
which relief is not available.
On men's shorts $6 is the top; on shirts $4 is the top.
reading:]
[Continuing
Such a cut-off leaves most of our items out of consideration. Why are we as
manufacturers of quality underwear not entitled to the same relief as are those
manufacturers of lower quality goods?
We are staying in our field. We want to stay there. We should
not have to go out of it.
Further answering Mr. Lieberman's letter, we stated as follows:
You have suggested that 149 might be useful to us. This regulation is discriminatory and can be used only by a few mills whose production is 85 percent
winter underwear. The fact that wTe make substantial quantities of lightweight
underwear in addition to heavy weight underwear denies us any relief under this
regulation.
I think Mr. Lieberman probably knew that when he sent it to us.
The CHAIRMAN. Mr. Lieberman, will you come up here? Some of
the Senators will undoubtedly want to ask you some questions.
(Mr. Jerome S. Lieberman, Jr., Price Executive, Apparel Branch,
OPA, took a seat at the committee table.)
Mr. PRAY. I had just stated that 85 percent of winter underwear
production was fixed under regulations which Mr. Lieberman recom-
260
e x t e n d price c o n t r o l and stabilization acts of
mended, and we think it would be of no value to us.
reading:]
You have recommended regulation 133.
19 4 2
[Continuing
This is a regulation for failing busi-
nesses.
We do not want to be put into that position. I am almost afraid
to say this, considering the ladies at the press table, but we have a
nylon hosiery division. [Continuing reading:]
We have been able to maintain a profit in our hosiery division and' on some
numbers in our underwear lines, but OPA prices have forced us to withhold production on a substantial volume of needed underwear. Therefore, in order to
protect our profit structure, our production of vitally needed underwear will
continue to be curtailed until OPA provides relief on such items.
You have indicated that a new "over all" regulation for underwear is in process.
However, you did not know how long it would take for this regulation to be
completed. This information is not encouraging as it holds no promise for early
relief.
Based on past history, this promise did not substantiate in our
mind any feeling that we would get something quickly on it. [Continuing reading:]
As previously stated, our need for relief is immediate, and our current production
plans must be developed accordingly. Consequently, we are again reducing our
schedules on our loss numbers.
This was just a short time ago.
[Continuing reading:]
We need an order immediately, one similar to 137, providing a simple pricing
formula for all loss numbers in all of our lightweight and heavyweight lines.
I would like to repeat: A simple pricing formula. The average
formula we have had in the past has always been very confusing.
[Continuing reading:]
Such an order to allow us our actual present day costs with a reasonable profit.
Immediate price relief is the only method by which OPA can assure,,consumers
sufficient underwear for their 1946 needs.
That is the end of my presentation.
Thank you.
Senator MILLIKIN. I would like to ask the gentleman who just
came in: Are you familiar with this case?
Mr. LIEBERMAN. With Mr. Fray's case specifically? I do not know
the precise details.
Senator MILLIKIN. W h y do you not give them cost plus a reasonable
profit, assuming that you do not?
Mr. LIEBERMAN. I think that in the letter written to Mr. Pray we
indicated the immediate means of relief which were available to him.
We said, for example, that SO 133 was an order for failing businesses.
However, it also could be used as a stopgap measure to see that he
did not suffer loss pending the completion of the orders which we
would draw for the industry as a whole. We were also, as indicated
in the letter, working on an order to include other items in SO 154
which will cover heavyweight items and some additional lightweight
items. But that does take some time. I have, however, a draft
of the order with me. It has to be retyped and cleared, and we expect
to issue it within the next week.
Senator MILLIKIN. Are you in position to say what that w^ill do?
Mr. LIEBERMAN. There may be some slight changes in the items
themselves.
Senator MILLIKIN. Will you listen to this carefully, Mr. Pray, to
see whether or not it means anything?
261
e x t e n d price c o n t r o l and stabilization acts of
M r . PRAY. I will, sir.
19 42
Mr. LIEBERMAN. The principal addition to the order will be boys'
athletic shirts with a cut-off of three and a quarter; and there may be
some changes in the cut-offs by some slight amount. Men's briefs,
up to four and a quarter. Boys' briefs three and a quarter. Men's
shirts with sleeves, under 6 pounds, $4.75 per dozen. That cut-off
may well be changed. Then men's union suits, 9 pounds and over,
with no cut-off. We did not deem it necessary to supply cut-offs in
the heavyweight items. Boys' union suits, finished weight of 7
pounds and over. Men's drawers and shirts with sleeves, 6 pounds
and over. Boys' drawers and shirts with sleeves, 5 pounds and over.
In addition to that there are, with cut-offs, children's waist suits, 3
pounds and over; children's union suits, 6 pounds and over, both with
cut-offs, at $7.50. Children's sleepers, 5 pounds and over, a cut-off
of $9.
Senator M I L L I K I N . Does that do you any good, Mr. Pray?
Mr. PRAY. I would like to answer that several different ways.
In regard to the lightweight underwear, on 154 as such we receive
relief on two items. I do not say we have received that relief; we
have not received it yet. We will receive it on the 25th of April if it
is accepted. We should have been manufacturing lightweight underwear in November of 1945. We have lost our November, December,
January, February, and March production. We have lost that time
in which we could go out looking for yarns.
Senator M I L L I K I N . What do you say, Mr. Lieberman, as to the
reason for that delay?
Mr. LIEBERMAN. The sharpest part of the increase, of course, has
occured with the recent cotton increase, the recent yarn increases.
It was difficult for us to pick out the items which were in a loss position for the industry as a whole at that time, that is, the lightweight
items, because our study had shown that the lightweight items for the
industry as a whole, that is, all lightweight items taken together, were
in a profitable position, that the industry could make lightweight
items on a profitable basis.
Then we culled through the items and picked out those individual
items, certain types of garments, such as athletic shirts, which were
not in a profitable position, and we intended to issue an order to cover
those.
One delay occurred because one of the proposals—and I will accept
responsibility for this—-which was made was not in accordance with
our standards. In other words, by making that type of relief available to this industry we would have had to make it available to every
industry, and it would have raised prices generally too much. We
had to go back, and in the meantime these other yarn increases came
about, with increased labor costs, as well. So we redevised a method
to return to the industry on these loss items a more liberal form of
relief for those particular items due to the increase that had occurred
meanwhile, and with the changed picture of raw materials and labor
I would say that added a great deal to our difficulty in arriving at a
means of relief.
Senator M I L L I K I N . That indicates to me that you never can catch
up with the requirements of the industry. These things are always in
a state of flux, are they not?
262
e x t e n d price c o n t r o l and stabilization acts of
19 4 2
Mr. LIEBERMAN. We feel that with this new type order it will be
easy for us to keep abreast of the current situation, because we allow
the manufacturer to figure his own labor increase; that is, he makes
the calculations himself on the basis of the changes that have occurred
since March 1942, and the present time.
Senator M I L L I K I N . Y O U manufacture your stuff for the future
season when?
Mr. PRAY. We start off in November of the preceding year to manufacture our lightweight underwear.
Senator M I L L I K I N . D O you run on a seasonal basis or a continuous
basis?
Mr. PRAY. I would like to explain it this way.
We have about 250 different knitting machines in our mill, of
various sizes and cuts. We must operate all of the various types of
those knitting machines 12 months a year in order to produce the
volume what our mill is set up for. We cannot stop making winter
underwear in December and wait until May or June. We have to
manufacture all the year round. The same thing in lightweight
goods. That is in order to produce as much as we can out of that
mill. Otherwise we lose the facilities of the mill.
Senator M I L L I K I N . A S I get the gist of what you said, this delay
occurred because you did not know exactly what kind of an order to
make?
M r . L I E B E R M A N . Y e s , sir.
Senator MILLIKIN. And all those months of production have been
lost, to the extent that the production has been lost, because of lack
of order. Is that correct?
M r . LIEBERMAN. The way you put it, I believe it is to the ex-
tent
Senator MILLIKIN. I do not want to assume my case. To the
extent that manufacturers have not made these items, because they
could not make them at a profit or could not avoid a loss to that
extent. That great loss in production has been going on all of these
months because you folks could not agree on the type of order to
put out. Is that correct?
Mr. L I E B E R M A N . I should think that the question of which yarns
go into which items and which items are profitable is still up to the
mill to decide; and I doubt that any mill would claim that all items
are in a loss position.
Senator M I L L I K I N . N O ; there is no claim of that kind here.
Mr. PRAY. There is a claim, however, that OPA believes th<5y know
which items are in the loss position. Our feeling is that this thing
is so big and is such a big problem that I believe it is too hard to
handle for any one group of men.
Senator MILLIKIN. Does it not come to this, that they no sooner
catch up with one crisis, after a long while, than they are in the
middle of another crisis?
Mr. PRAY. That is our experience. It takes at least 3 months
from the time we start the yarn going into our knitting department
until we get it cut and into the dye house, to get the finished product. We allow it to condition, and then we have got to put it through
from 15 to 25 different manufacturing processes, and it takes us, at
a minimum, 3 months to do that.
263
e x t e n d price c o n t r o l and stabilization acts of
19 4 2
The CHAIRMAN. What is your answer with reference to that delay?
That sounds unreasonable.
Mr. LIEBERMAN. I would say that there was no delay in production, from the figures which we have been able to see. Athletic shirts,
which are one of the items complained of most, increased sharply in
production beginning in October. If I am not mistaken, the increase
ran in the neighborhood of 150 to 250 percent in production. That
is what the month-by-month figures show, even though the industry
was awaiting this order.
The CHAIRMAN. Your answer is that it did not delay them?
Mr. LIEBERMAN. The only delay that would have occurred because
of the price impediment would be the delay in shipment. But, according to the figures, production did increase substantially.
Senator MILLIKIN. Was not that due to the fact that these people
had war orders, and hence all of their peacetime lines showed, for a
period at least, an increase in production?
Mr. LIEBERMAN. Yes; I think that had a great deal to do with it.
Senator M I L L I K I N . SO we have got to find a basis of comparison
other than the lack of basis that is implicit in your answer.
Mr. LIEBERMAN. The only thing is that no yarn lay idle during this
period. At least we have heard of no such condition, because I do
not think anyone contends that it did. In other words, all the yarn
that was available was knit.
Senator C A R V I L L E . A S I understood Mr. Pray, they could make
money on those athletic shirts.
Mr. L I E B E R M A N . I started with athletic shirts because that was the
:tem as to which they complained they could not make money.
Senator CARVILLE. Maybe I misunderstood it.
Mr. PRAY. Our combed cotton athletic shirt is made at a loss.
Our mercerized shirt is made at a profit.
I would like to ask this question. We will assume that athletic
shirt production nationally is up. I do not know whether it is or
not; but even though it is, why should the Globe Knitting Works,
which has been supplying a regular number of customers over a period
of all the way from 5 to 40 years, because of that, be prohibited from
manufacturing athletic shirts at a profit?
I would also like to ask this question. How can it be determined
that there is not a loss position in boys' or men's atheltic shirts anywhere in the country because of that production, when actually we
have two numbers in our line right now that are at a loss; and why
should we be discriminated against? Why should we not be allowed
a profit if a mill that makes a poor grade of undershirt on a greater
volume of business is allowed a profit? Also, why, again, on these
garments that are being added to 154, despite the fact that they are
being added to that line, I notice that the cut-off price is below the
price of our one and only boys' shirts.
The C H A I R M A N . I do not know the answer to that. You will have
to ask Mr. Lieberman.
Mr. LIEBERMAN. The idea of 154, in this period of marked yarn
shortage, when there is just not enough material to go around, is to
make sure, first, that the yarn available goes into the low- and mediumprice field; and that is why we have used cut-off prices on these items
and provided relief there.
264
e x t e n d price c o n t r o l and stabilization a c t s of
19 4 2
Senator MILLIKIN. What do you mean by cut-off prices?
Mr. LIEBERMAN. By cut-off prices I mean up to which the adjustment permitted under this order applies.
Senator M I L L I K I N . A self-imposed ceiling?
M r . LIEBERMAN.
Y e s , sir.
Mr. FRAY. The boys whose mothers buy their briefs at Marshall
Field's, Mandel Bros., Lord & Taylor's, Saks Fifth Avenue, and
Altman's, are going to be just as bare if they do not get underwear
as the boys whose mothers buy cheaper underwear.
Mr. LIEBERMAN. It is also true that according to the figures we
have, they cover from about 75 to 90 percent of the normal production of these items. In other words, the bulk of the brief lines are
covered. AS a rule, I would say that the price differences; that is,
in terms of cents per garment, are not too great.
Senator MILLIKIN. But it is unrealistic, is it not, because you have
not got a normal demand situation?
Mr. LIEBERMAN. I guess I was misunderstood. I meant that our
cut-off points are at prices which cover the price lines at which these
garments were produced normally.
Senator MILLIKIN. But you are not contending that there is sufficient production at the present time?
Mr. L I E B E R M A N . N O , sir. My statement was not directed toward
that. It was directed at the point that the relief provided has provided for from 75 to 90 percent of the price lines which normally were
used for those items.
Senator M I L L I K I N . IS that a fair basis of considering the rise in the
costs of all kinds?
Mr. LIEBERMAN. That is a starting point. To that may be added
the increases in labor and material costs.
Senator CARVILLE. There has been testimony here that these
prices are so made that they do not include the taxes. I suppose that
is real estate, personal, and income taxes. Do you consider the tax
situation in setting prices?
Mr. L I E B E R M A N . N O , sir. I do not know what is meant by the
tax.
Senator CARVILLE. What did you mean by the tax?
Mr. PRAY. That was Mr. Devereux's statement.
Senator MILLIKIN. The gist of that, as I got it, is that before taxes
the over-all profit of the company is 8 percent a year. After taxes it
is 3 percent.
Senator B U C K . Mr. Lieberman, do you have the final say on fixing
prices for companies such as this one that is represented here today?
M r . L I E B E R M A N . N O , sir.
Senator B U C K . Are you the one he has appealed
Mr. L I E B E R M A N . I think Mr. Pray has spoken to
to in the past?
Mr. Boner, rather
than to me.
Mr. P R A Y . I have spoken to Mr. Boner.
Senator B U C K . Is he present?
Mr. L I E B E R M A N . N O , sir. I am Mr. Boner's superior, but my
actions must be cleared by the Division and by Mr. Baker, the
Deputy Administrator for Price.
Senator B U C K . Y O U just about have the final say; if you O . K . it,
it goes through, does it not?
Mr. L I E B E R M A N . Not necessarily. It has happened that it has not.
265 e x t e n d p r i c e c o n t r o l a n d s t a b i l i z a t i o n a c t s o f
19 4 2
Senator BUCK. Sometimes?
M r . LIEBERMAN. Y e s .
Senator B U C K . H O W big a company is
Mr. P R A Y . T W O million dollars today.
your company, Mr. Pray?
It was $ 5 , 0 0 0 , 0 0 0 last year
and 5K million dollars the year before.
Senator BUCK. So that you can write the death sentence of this
company, allow it to make a little money, or put it into the hole, can
you not?
M r . LIEBERMAN.
N O , sir.
Senator BUCK. Who has the final say as to whether they make a
profit or not?
Mr. LIEBERMAN. Mr. Porter has the final say. All of our actions
are done on the basis of the policy that is set forth.
Senator B U C K . D O you believe in the profit system?
Mr. LIEBERMAN. Of course.
Senator BUCK. You do?
M r . LIEBERMAN.
Y e s , sir.
Senator BUCK. What is your experience in this line?
Mr. L I E B E R M A N . I have no experience in the underwear line.
fore coming to OPA I was in Wall Street.
Senator BUCK. In the brokerage business?
M r . LIEBERMAN.
Be-
Yes.
Senator BUCK. Yet you are fixing prices down here on underwear?
Mr. L I E B E R M A N . I alone am not fixing prices on underwear. The
men in our section, consultants, and men from the industry whom we
call in at meetings and discuss these matters—we, plus the policymaking officials, fix the prices.
Mr. CHENEY. May I make an observation?
The CHAIRMAN. All right.
Air. C H E N E Y . I cannot recall a single recommendation made by
the underwear industry committee to the Office of Price Administration which has been followed. I do know that we have given them
four or five consultants to advise them on how to price underwear.
Three of them resigned in disgust, and one died. The man who is
there now, it is my impression, is having a continual lot of trouble in
having them listen to his recommendations. I think they are mostly
disregarded.
When you come to the production of lightweight shirts, or the production of any other underwear, as you who have been in business or
connected with it know, you have a plant employing from a hundred,
in some instances, to three or four thousand people. You have got
to keep that plant operating. You are responsible to the board of
directors. You have some feeling for your employees.
The OPA promised last October, after the people of the country
had been advised why they could not get underwear, that we would
have immediate relief. Our people, because of the burden of running
their plants and because of those promises, continued their operations.
The order came out, No. 139, and it was not the type of order which
our advisory committee recommended.
This order 154, of which we have heard, purported to take care of
only four types of underwear, lightweight union suits, athletic shirts or
drawers and midlengths, they call them in the trade
Senator MILLIKIN. What is that?
85721—46—vol. 1
18
266
e x t e n d price c o n t r o l and stabilization acts of
19 4 2
Mr. CHENEY. A short knitted garment that comes down to just
above the knee. Even though a large number of mills producing, I
would say, 80 percent of the men's briefs, of the type made by Coopers,
Inc., for example, and known as jockey shorts, have been to the
Office of Price Administration asking for relief, and no relief was
given. This is a man's knitted brief which comes down just about
covering the thigh.
I do not think the type of people who are supposed to make the
policies have the time to go into these industries, the multiple number
of industries under control by OPA. It seeps down until it gets to
men like Mr. Lieberman, who has been in Wall Street; Mr. Boner,
who was an economist—I think, an instructor in economics at some
small college west of the Mississippi—I have forgotten where it is; a
man who is also qualified as an economist; and two or three young:
lawyers—
The C H A I R M A N . That sounds like quite a long story.
Senator M I L L I K I N . I would like to hear this storv.
Mr. CHENEY. There are five levels of OPA that come into the
Knit Goods sections. That .means a price executive there, plus an
economist, plus a lawyer, must agree that an order is correct. If
they approve, it goes froni that level to Mr. Lieberman's level. He,
the price executive, his economist, and his lawyer must approve and
agree. Then I understand it moves to a higher level, and the economist and the price executive and the lawyer there must agree, and it
goes up five levels to the Director. If any one of those 15 men on
those five levels disagree, it has to come down to the bottom. They
have all got to agree. So there are interminable delays.
Senator M I L L I K I N . IS that a correct statement of the thing?
Mr. L I E B E R M A N . NO, sir. I think it is exaggerated.
Senator M I L L I K I N . G O ahead.
Mr. CHENEY. That is my belief and my information. I am wandering why, when this light-weight order 154 was issued, these items were
not included. They are now being included several weeks later.
I am wonering also if these new additions to order 154 will permit a
mill to include indirect labor as well as direct labor costs. Under the
Wage and Hour Administration even the elevator operator in a building which rents space to tenants who are engaged in interstate commerce is considered in interstate commerce and therefore subject to
the benefits of that law.
Why is not indirect labor in our mills given the benefit of that same
principle? But, no; it is only direct labor that can be computed in
our costs.
You have heard Mr. Devereaux's statement. He is in an over-all
loss position. Before I came here another mill, the largest one in the
United States, showed me their sheets, like Mr. Devereaux's; and
that mill is in an over-all loss position.
Thank you, Mr. Chairman.
Senator M I L L I K I N . What do you say to that, Mr. Lieberman?
What have you to say with reference to the five escalators, up and
down?
Mr. L I E B E R M A N . It is not a fact, as Mr. Cheney states, that 1 5
people have to agree at different levels. The facts are worked up in
the section by, as a rule, the section head and the men working with
him. Then one lawyer and myself pass on it, and from then on, if our
267
e x t e n d price c o n t r o l and stabilization acts of
19 4 2
facts are right, it is usually checked only for policy at the higher
levels to see that it agrees with the general policy.
Senator MILLIKIN. How many levels?
Mr. LIEBERMAN. The Division level, the Deputy Administrator's
office; and the Deputy Administrator's office ordinarily has merely a
formal approval.
Senator BUCK. I do not see how your experience as a broker qualifies you to fix prices. That is one of your duties, is it not?
Mr. LIEBERMAN. My duty was to look into other people's business
down there as it was here. If you mean, do I know the underwear
industry from having worked in it, I do not. I think no one man in
this job has ever had enough experience in all the industries that are
covered, to be able to do that.
Senator BUCK. I do not mean that, but I think somebody that had
had some association or connection with the industry during his business experience could have better fixed prices.
Mr. LIEBERMAN. The way it works is that the facts are collected in
the section from consultations with the industry, that is advice from
the industry, so that it is the industry's responsibility in a sense to
supply us with the facts which will make our regulations apply to their
industry. The general regulations in essence state that the prices are
determined as they have been determined in the past by the industry.
Senator B U C K . IS there anybody in this branch of O P A who has
had experience in the textile business?
Mr. LIEBERMAN. In the entire branch, or the underwear section?
In the branch; yes. In the underwear section we do not have any
men who have had experience in the knit underwear business. Our
paid employees have not had experience in the business, but we have
a consultant who is in the underwear business; and of course we call
upon members of the industry themselves to provide us with information.
It has been impossible to get men in each of the industries to
become paid employees of the agency. In that one branch alone I
would say conservatively there are 50 to 75 different industries represented. I do not have that many employees including stenographers.
Senator B U C K . I am quite sure that if called upon they would be
glad to furnish some capable men to sit in with the OPA and try to
work these things out.
Mr. LIEBERMAN. That has not been our experience, sir.
vSenator BUCK. You mean, it has not been the policy of the agency?
Mr. LIEBERMAN. We have been most anxious to get people from
industry and have asked them repeatedly to come down.
Senator MILLIKIN. The testimony is that when they come and
advise you, you pay no attention to the advice.
Mr. LIEBERMAN. I had hoped that we would not get on to that
subject. I think that is generally quite true in this instance, and it is
true because the recommendations made^by this group to us have been
so completely ridiculous in terms of price control that it was obviously
impossible for us to follow them. It was further known by the people
who made the regulation, because they had had a great deal of experience in dealing with them that that was the case.
Senator MILLIKIN. Did they ask for anything other than cost plus
a reasonable profit?
268
e x t e n d price c o n t r o l and stabilization acts of
19 4 2
Mr. LIEBERMAN. I remember one meeting when the position taken
was that what we want is a 15-percent increase. No facts, no figures.
When the policy was explained—which was well known, anyway—
when we had discussed the matter further, it ended with the flat
statement, " W e want a 15-percent increase."
Senator MILLIKIN. Taking all of the cases before you, if it came to
a 15-percent increase in order to get production, what would be
your viewpoint toward that?
Mr. L I E B E R M A N . I would consider that we would be well on the
way to inflation. I may have misunderstood your question.
Senator MILLIKIN. As I got your point, they came in and, without
any supporting data, asked for a 15-percent increase. Is that correct?
M r . L I E B E R M A N . Y e s , sir.
Senator M I L L I K I N . I assume
they asked for it because, out of their
own experience, they figured that a 15-percent increase was necessary
to get production. I assume that.
The C H A I R M A N . That would be a pretty large increase.
Senator M I L L I K I N . I am not competent to judge. I am taking it
just as he stated it. If that kind of an increase is necessary, considering the individual cases in the industry; if the individual cases in
the industry bring you to that conclusion, how are you going to get
production unless you give them the increase?
Mr. LIEBERMAN. If I understand you correctly, if a 15-percent
increase is required to run the industry as a whole
Senator M I L L I K I N . Make it " X " increase.
Mr. LIEBERMAN. If " X " increase is required to run the industry
as a whole, we would give them that increase under the law. There
is no argument or discussion about it.
Mr. P R A Y . I would like to observe that the price we need on men's
shorts—and we all know that many men need shorts badly—is $6.18
a dozen to break even only. The reason for that is that our costs
of labor have gone up, as authorized by the Labor Board; our costs of
materials that go into the garments have gone up, as authorized by
the Office of Price Administration. We will need a 36-percent
increase to break even.
Senator MILLIKIN. What is your answer to that?
Mr. LIEBERMAN. If Globe is a high-cost mill, and I belive that is
the case, then as a marginal producer it still has available to it the
relief provided by SO 133, which at least allows them to break even.
Senator B U C K . That is a big incentive for anybody to put goods
out to the public!
Mr. P R A Y . We are not that type of businessmen.
Mr. L I E B E R M A N . I say, if it is a high-cost mill, which I think is the
case.
Senator M I L L I K I N . D O you not have to get high-cost mills, mediumcost mills, and low-cost mills to operate if you want to get this production? Do you not have to adopt policies that may be tailored to
those different categories and which must be tailored to them in a way
that will get production? Can you exclude one of those categories
and get that production?
Mr. L I E B E R M A N . We do not attempt to exclude them.
Senator MILLIKIN. The testimony is to that effect—or I have misconceived the whole force of it. The gentleman has just testified
that he has got to have a 36-percent increase to produce a certain line
of goods which we need badly. How could you meet his problem?
269
e x t e n d price c o n t r o l and stabilization acts of
19 4 2
Mr. L I E B E R M A N . I say, first, if his position is that bad, because his
costs are away out of line, he has available to him immediately the
SO 133 type of relief which allows him to break even.
Senator M I L L I K I N . But, as Senator Buck has pointed out, there is
no incentive to produce involved in that.
What relief will this proposed order give you folks?
Mr. P R A Y . Up until today, order 154 has given us a loss of 56 cents
on these men's drawers, an actual loss. The OPA auditor has already
checked that. It still is no incentive. On the new numbers that are
added we will not be able, in men's or boys' lightweight underwear,
to apply for relief for one number, additionally to the two we have that
show a reasonable profit. We have been excluded and discriminated
against on every one of these cut-off prices.
Senator M I L L I K I N . So, this order will do you no good, roughly
speaking?
Mr. P R A Y . On lightweight underwear; no. They have chosen to
erect no cut-off ceiling on some winter-weight goods. I . do not
know why the story is different there from what it is on lightweight
goods. So we will receive some benefit on that, depending on how
much we are able to regain; and we know in advance that we will not
be able to regain, in our increased costs of yarn or buttons or facings.
We will not be able to increase our price on the basis of our increases
in indirect labor or supervision or shipping-room costs or anything-of
that sort. We will get a partial relief.
Senator M I L L I K I N . What do you propose to do about this long-time
delay? How do you intend to overcome that?
Mr. L I E B E R M A N . We have been trying to devise means at the office
to cut down the period of time it takes, by being less precise and
taking rough-cut action, even though it means that in some instances
the actions will not be as noninflationary as they were before.
Senator M I L L I K I N . Are you getting anywhere with it?
Mr. L I E B E R M A N . I think we have progressed a good deal. As a
matter of fact, 154 is one step in that direction, in that the manufacturer figures his own labor increase and merely reports it to us.
Senator MILLIKIN. What new device will you adopt that has not
been used in the past? I am still thinking of the 5-month delay we
were discussing when you first came in. How are you going to overcome delays of that kind, specifically?
Mr. LIEBERMAN. Specifically in this field the only means have been,
first, to devise a mechanism which can be used of the 154 type.
Once that has been put into effect, it becomes a very easy matter to
add items to it. It can be done by a simple amendment stating the
item.
Senator M I L L I K I N . It has been suggested here this morning that
in fixing your prices you take into consideration whether a company
made money during the war. D o you do that?
Mr. L I E B E R M A N . We fix the prices on the basis of the industry as
a whole.
Senator M I L L I K I N . Y O U do not include adjustments to meet the
situation of particular companies?
Mr. L I E B E R M A N . Y O U are talking about individual adjustments?
Senator M I L L I K I N . Y O U said you set your prices on an industrywide basis; is that correct?
M r . LIEBERMAN.
Yes.
270
e x t e n d price c o n t r o l and stabilization acts of
19 4 2
Senator M I L L I K I N . D O you make adjustments for individual cases?
Mr. LIEBERMAN. One adjustment is that of SO 133.
Senator M I L L I K I N . D O you make adjustments to meet inequities
of individual businesses?
M r . LIEBERMAN. Y e s .
Senator M I L L I K I N . Y O U
cannot run a business on a national
average. That is what I am getting at.
Mr. LIEBERMAN. It depends upon the type of the order, Senator.
If the company starts with its own prices and is allowed to add increases which have occurred, then it still has as a basis its own experience. Some of the orders are on a cost-plus basis, which means that
the company's experience in the base period is used as a basis for the
prices.
Senator MILLIKIN. In the meantime it has had to put out a lot more
money for labor. How do you adjust that?
Mr. L I E B E R M A N . Y O U mean, an individual company, or the industry
as a whole?
Senator MILLIKIN. An individual. In other words, the base period
is unfair because the costs have increased since that time. How do
you adjust that?
Mr. LIEBERMAN. They can apply for relief under SO 133.
Senator M I L L I K I N . That brings them up to cost?
M r . LIEBERMAN. Y e s .
Senator M I L L I K I N . What other relief?
Mr. L I E B E R M A N . We have S O 1 5 4 now,
but it is on an industrywide basis, because those cases generally occur that way. It allows
them to add labor and materials.
Senator MILLIKIN. That has not produced production in many
cases, where a more equitable treatment might have produced production.
Was not that the order that you said gives you some relief in 2 out
of 120 loss items?
Mr. PRAY. Yes, sir. It gave us relief on five; on two it gave us a
profit; on three other items it did not give us a profit and therefore
discouraged production.
Senator MILLIKIN. Let us say it gives you relief in 5 out of 120
loss items; is that right?
M r . P R A Y . Y e s , sir.
Senator M I L L I K I N .
And you cut out the five rather than two,
because the profit on two is spread out on the other three?
Mr. PRAY. There is not sufficient profit in the two to even balance
the other three.
Senator M I L L I K I N . H O W do you meet a situation of that kind?
Mr. LIEBERMAN. By adding other items to this list at the present
time.
Senator M I L L I K I N . The gentleman states that that does not do
any good.
Mr. L I E B E R M A N . On his heavyweight business I think he said it
would do him good.
Senator M I L L I K I N . What was your testimony on that?
Mr. P R A Y . That on lightweight goods we will receive no relief
whatsoever.
Senator M I L L I K I N . IS it not the lightweight goods that you are
trying to promote?
271 e x t e n d p r i c e c o n t r o l a n d s t a b i l i z a t i o n a c t s o f
19 4 2
Mr. LIEBERMAN. Up to the cut-off point.
Senator MILLIKIN. And not after that?
Mr. LIEBERMAN. That is right, sir.
Senator MILLIKIN. In other words, you would stop production if it
hits your cut-off point?
Mr. LIEBERMAN. What we want to do is to encourage production
up to the cut-off point.
Senator M I L L I K I N . Y O U mean, you want as much production as
possible up to the cut-off point?
M r . LIEBERMAN. Y e s .
Senator M I L L I K I N . SO,
if you need more, you cannot have it
because it has reached the cut-off point; is that right?
Mr. L I E B E R M A N . N O . The point is that all the yarn that is available we want to be used, obviously, and we want it to be used in
items that reach the market in the low and medium-price lines; and
that is why we instituted the cut-off point.
Senator MILLIKIN, And at the present time you are putting into
that low price category all of the yarn that reaches the mills?
Mr. L I E B E R M A N . I say, as far as I know, all the yarn will be used.
Senator MILLIKIN. But a part of it will be used for high-priced
items.
Mr. LIEBERMAN. In many instances the high-priced items may still
be profitable.
Senator MILLIKIN. But that does not produce the low-priced items
that you are talking about?
Mr. LIEBERMAN. That is correct.
Senator MILLIKIN. And we are after low-priced items.
The CHAIRMAN. Mr. Lieberman was asked whether he was ever
engaged in this business. I was once a member of an appellate
division which had before it a utility case which we had to decide, as
to whether certain action taken was confiscatory or not. There was
not one of us who knew very much about the utility corporation, but
I think we made a good decision in the matter. We might have been
criticised if we had had utility experience. I think that although Mr.
Lieberman has not had a background of experience in this business,
his intelligence should not be against him.
Mr. PRAY. Mr. Chairman, you have been very generous in your
time, and I greatly appreciate it. I would like to leave this one
thought, however, sir, that as businessmen we in the Globe Knitting
Works are not defeatists. We are not going to our stockholders and
report to them that we will have to go to a loss position which order
133 requires in order to get relief. We are going to find a way to
conduct our business successfully and report favorably to our stockholders.
The CHAIRMAN. We want to help you in that regard. I think
you are entitled to it.
Mr. PRAY. We hope we can do it by manufacturing underwear.
Senator B U C K . I think this Congress is going to try to find a way
to see that you can do so.
The CHAIRMAN. Mr. Devereaux, you said, if I recall your testimony
correctly,that the OPA, in the examination of the work with which
you are concerned, said that you could not get more than a 2-percent
profit. Is that what you said?
272
e x t e n d price c o n t r o l and stabilization acts of
19 4 2
¥ Mr. DEVEREUX. Not quite. I was referring to 607 which has
not come out.
The C H A I R M A N . Y O U said something about 2 percent.
Mr. DEVEREUX. My understanding was—and of course I did not
get it directly; I got it from Mr. Cheney—that after this order was
drawn we would be limited to a 2-percent profit.
The C H A I R M A N . D O you know anything about that, Mr. Lieberman?
I think the Senators here thought it was rather unfair to limit the
concern to a 2-percent profit.
Mr. LIEBERMAN. The type of order which is under discussion imposes no limit on profit. The way the amount that is the margin is
figured out is to apply to a sample of the industry the base-period
profit of that industry the dollar amount of the base period profit
adjusted for returns on the net worth in the interim, and then the firm
figures out its own margin on that basis. If the volume of sales
increases there obviously is no restriction on the amount of profit.
There is usually a relief provision in there to see that a firm does not
operate at a loss. As a matter of fact, the order has not yet been
worked to the point where it can be said what, the margin will be.
Mr. DEVEREUX. All that I can say, Senator, is that that is the
report which the task committee brought back.to us.
The CHAIRMAN. That was the rumor?
Mr. D E V E R E U X . N O , sir; it was under discussion, and in discussing
this new order, that was the interpretation they got.
The CHAIRMAN. I should be very much surprised if the OPA
decided that 2 percent was the highest profit.
Mr. L I E B E R M A N . I should say that, contrary to the usual experience
in this case the story diminished as it became a rumor.
Senator BUCK. That should not surprise you any more than the
fact that there is a company which, for 9 months, has not made
any money and is still operating and losing money. Are you faimiliar
with this case?
Mr. L I E B E R M A N . I do not know Mr. Devereux's company. What
is it?
Mr. DEVEREUX. The Oneida Knitting Mills,
Mr. L I E B E R M A N . N O , sir; I am not familiar with it.
Senator BUCK. Maybe you can give us some reason for the situation that exists. I understand that his company is capitalized at
$1,800,000 and it has lost money constantly since September.
Mr. DEVEREUX. Since July 1945.
Senator BUCK. And that loss is cumulative and amounts to something like $200,000 or $300,000, and it is still losing money on every
item it produces. Why cannot some correction, through your agency,
be found for that situation?
Mr. L I E B E R M A N . D O you know anything about the case, Mr. Ailes?
Mr. A I L E S . I am not familiar with this specific case, either. I was
interested to know whether Mr. Devereux's company had ever applied for price relief.
Senator B U C K . I imagine he has, a number of times, from what he
said.
How many times have you applied?
Mr. DEVEREUX. We have to establish a 6-month loss period before we can apply, under 133. I do not think Mr. Lieberman made
that clear. So we had to operate at a loss for 6 months, and at the
273 e x t e n d p r i c e c o n t r o l a n d s t a b i l i z a t i o n a c t s o f
19 4 2
end of that time we immediately applied. That was February 2, and
our application just went in this week.
Mr. A I L E S . I am sure that the order provides that to quality for
relief under 133 a company must demonstrate that for 3 months its
operation has been at a loss or that there are changes in circumstances which make the profit experience for the preceding 3 years
irrelevant on the question of what the earnings are going to be. I
think there must be some mistake about it.
Senator MILLIKIN. Let us cut through the administrative procedure. Assuming that a company of the type which is represented
by Mr. Devereux does have a loss position such as he says it has;
assuming that his representations are correct, you have the means
within your organization to give relief, have you not?
Mr. AILES. Yes, sir. We have SO 133 on the books which gives
relief to almost any kind of producing business.
Senator M I L L I K I N . I S that where you come up to the cost level?
Mr. AILES. Yes. Over and above that, depending on the product
that it makes, if you have an essential supply situation where you
have got to do something extra to get out adequate production, we
have more liberal provisions, such as this 154 provision that Mr.
Lieberman has discussed, which gives any company in this area the
right to add to its ceiling price its own base period of price increases
in labor and materials which have occurred since that date, which
ordinarily would yield a substantial profit, assuming that the volume
of production is not such that the overhead has tremendously expanded. That is quite a bit more than SO 133.
Senator MILLIKIN. Would all of the factors which you have mentioned enable Mr. Devereux to operate his business at a reasonable
profit?
Mr. A I L E S . I do not know what commodity the company manufactures.
Senator M I L L I K I N . IS the application pending over there at the
present time?
M r . DEVEREUX. Yes, sir; it went in on the 15th.
Senator MILLIKIN. Why don't you gentlemen take a look at that
application and come back here and tell us what the situation is?
Mr. LIEBERMAN. Where was it filed?
Mr. DEVEREUX. In the Washington office.
The CHAIRMAN. How long ago?
M r . DEVEREUX.
T h e 15th.
Mr. AILES. Of February?
Mr. DEVEREUX. No; this month.
Senator MILLIKIN. Let us take a fresh look at it; let us have the
case before us and see how your minds operate in that case, what the
regulations are that are applicable to it, and let us see if we cannot,
instead of dealing with a lot of generalities, take that case and draw
something out of it.
Senator B U C K . I think these gentlemen would like to get a copy of
the testimony so that they can read it.
The CHAIRMAN. The committee will take a recess until next Monday
morning at 10 o'clock, in this room.
(Whereupon, at 1:15 p. m., a recess was taken until Mondav^
April 22, 1946, at 10 a. m.)
1946 EXTENSION OF THE EMERGENCY PBICE CONTKOL
AND STABILIZATION ACTS OF 1942, AS AMENDED
M O N D A Y , APRIL 22,
1946
U N I T E D STATES
SENATE,
Committee on Banking and Currency,
Washington, D. C.
The committee met at 10 a. m., pursuant to recess on Thursday,
April 18, 1946, in room 301, Senate Office Building, Senator Robert
F. Wagner (chairman) presiding.
Present: Senators Wagner (chairman), Barkley, Bankhead,
Downey, Murdock, McFarland, Fulbright, Mitchell, Carville, Tobey,
Taft, Millikin, Hickenlooper, and Capehart.
The CHAIRMAN. The committee will come to order. Thursday
we had a matter up here and Senator Millikin asked a question
which the witness was unable to answer. Senator, will you present
your question again now?
Senator MILLIKIN. Mr. Chairman, on last Thursday Mr. Devereux
testified to practices of OPA, so far as his mill is concerned, which he
regarded as unconscionable. In order to bring the thing to focus we
had Mr. Lieberman, head of the Textile Division of OPA, come over
here, and we got some of his reactions on it. We suggested that over
the week end he look into the case more completely and be prepared
to tell us just how the OPA as a case example would handle that kind
of a transaction. So I believe it would be a good idea if we had Mr.
Devereux and Mr. Lieberman finish this piece of testimony.
Mr. BAKER. I will get Mr. Lieberman over here within a few
minutes. If you want to proceed with something else, I will have
him over here within a half hour.
The CHAIRMAN. Very well. Mr. Besse.
STATEMENT OF ARTHUR BESSE, PRESIDENT, NATIONAL ASSOCIATION OF WOOL MANUFACTURERS
Mr. B E S S E . I will identify myself for the record as Arthur Besse,
representing the National Association of Wool Manufacturers.
Mr. Chairman and gentlemen, the horsemen ride again.
Senator TOBEY. What horsemen?
Mr. B E S S E . I will name them.
Senator BARKLEY. There are a couple of plugs there that he has
named.
Mr. BESSE. Their number has increased to five. They include:
Chester Bowles, Director of Economic Stabilization; Paul Porter,
Price Administrator; W. Willard Wirtz, Chairman of the National
Wage Stabilization Board; John D. Small, Chairman of the Civilian
Production Board; Clinton P. Anderson, Secretary of Agriculture.
275
276
e x t e n d price c o n t r o l and stabilization acts of
19 4 2
This group, giving to the White House what it calls "an accounting
of trusteeship under the liold-the-line order of April 8, 1943/' calls
for the renewal of the Emergency Price Control Act "without the
crippling amendments which are now being proposed.''
That is hokum of the highest order.
Senator T O B E Y . What is hokum?
Mr. B E S S E . The statement that they must continue the Emergency Price Control Act without crippling amendments.
Senator T O B E Y . YOU make a statement to that effect, but that
does not make it so. There is a difference of opinion as to whether
it is hokum. If you have any evidence to give us, we will be glad to
hear it, but just calling it hokum doesn't help us much.
Senator B A R K L E Y . IS it your judgment that anybody who wants
to continue OPA is indulging in hokum?
Mr. B E S S E . Anyone, Senator, in my opinion, who says it must be
continued without crippling amendments.
Senator B A R K L E Y . IS guilty of hokum?
Mr. B E S S E . I think so.
Senator B A R K L E Y . Well, then, I am guilty of hokum and I haven't
any respect for anybody who charges me with any such motive. You
will have to improve your testimony considerably from now on if I
am going to give it much weight.
Senator M I L L I K I N . I suggest the witness has a right to his opinion.
Senator B A R K L E Y . Certainly he has a right to his opinion, but this
is just name calling.
Senator T O B E Y . He has a right to come here and give evidence,
but not to call names.
Senator M I L L I K I N . He has certainly got that right.
Senator T O B E Y . Leave name calling out of it.
Senator MILLIKIN. He has a right to name call, if Bowles and
these other fellows have got a right to go on the air and to call Congress names, the witness has a right to come in here and call Bowles
names.
Senator T O B E Y . And we have a right to discount it if that is what
his testimony is going to consist of.
Senator M I L L I K I N . Y O U have a right to discount it if you want to,
but he has a right to make these statements.
Senator T O B E Y . I am serving notice now that I am going to discount henceforth and forevermore a man that begins a statement
that way.
Senator C A P E H A R T . Mr. Chairman, let me say I am not going to
discount it. He hasn't used half as strong epithets as I have listened
to Mr. Bowles and Mr. Porter and others use. They have called the
businessmen of this Nation every name under the sun and I am going to insist that this witness be allowed to make his statement.
Senator B A R K L E Y . I would like to have you describe any
instance
Senator C A P E H A R T . I will be very happy to put in the record a
speech that Mr. Bowles made in Wichita, Kans., in which he accused
everybody that was opposed to this bill for the extension of OPA as
being unpatriotic and against the interests of the Nation.
Senator T A F T . "The greedy interests of businessmen," I think he
said.
277 e x t e n d p r i c e c o n t r o l a n d s t a b i l i z a t i o n a c t s o f
19 4 2
Senator CAPEHART. That is right. If it is good for the goose it is
good for the gander.
Senator BARKLEY. Let's get on with the goose.
Senator TOBEY. It is all right as long as it is "propagander."
Senator CAPEHART. I want the record to show that he is doing
nothing more than those who are in favor of the bill have done,
including Mr. Porter and Mr. Bowles.
The CHAIRMAN. I don't recall Mr. Porter saying any such thing
as you allege.
Senator CAPEHART. Mr. Chairman, I will be very happy to put in
the record a speech Mr. Bowles made, and I will be very happy to
put in the record
The CHAIRMAN. I don't remember Mr. Porter saying anything
like that.
Senator CAPEHART. I will be happy to put in the record Mr. Porter's
statement the other day in which he used language equally as strong
as we are now hearing, and you will remember that I commented on
it at. the time and said that it was unfortunate. Let me say this:
Such language as is being used at the moment by this gentleman
and others they have been taught how to use by Mr. Porter, Mr.
Bowles, and other advocates of OPA.
Senator BARKLEY. I would like to have you put in the record any
statement, any speech or newspaper interview, or anything else that
attempts to hold up to ridicule and contumely everybody that dissents
from the policies of OPA.
Senator CAPEHART. Let me say this: I am opposed to it. I think
it is wrong. I think it was wrong for Mr. Porter to do it in that
instance, and I said so. I certainly don't condone it, but my point is
if one side has a right to do it, I think the other likewise has a right
to do it.
Senator BARKLEY. I haven't seen any statement of Mr. Bowles or
Mr. Porter or any of these five horsemen named that has gone anything like this far.
Senator C A P E H A R T . Y O U evidently didn't read Mr. Bowles' speech
in Wichita.
Senator BARKLEY. I did not read Mr. Bowles' speech in Wichita,
I didn't see it. I don't read all the speeches that are made, even those
that the Senator from Indiana makes. I don't have time.
Senator CAPEHART. I think it is unfortunate that both sides have
been using such language. I said that the other day and I say it
again, but I don't like to see one crowd condemned and the other
praised, when both have been using the same kind of language.
Mr. BESSE. I am a little overwhelmed, Mr. Chairman, with this
discussion.
The CHAIRMAN. I am, too. I have never heard a witness speak
that way.
Mr. BESSE. But it is my own opinion and I hope you will accept it
as such.
The CHAIRMAN. I will.
Mr. BESSE. What the group asks is that the OPA, badly " crippled"
by its own inefficiency, stubbornness, and lack of realism, be continued
"as is" and allowed for another year to cripple industry and delay the
attainment of higher production levels. The adjective "crippling"
278
e x t e n d price c o n t r o l and stabilization acts of
1942
is well chosen, but it should be applied to the OPA rather than to the
amendments which it is now proposed to add to the Emergency Price
Control Act.
Do these five administrators seriously contend that neither Congress
nor business groups can suggest any possible changes in OPA policy
which would improve the administration of price control? That is
what their plea amounts to. They say in effect that under no circumstances will the OPA itself make any of these suggested changes
unless forced to do so by Congress, since they believe that to make
the changes will cripple the agency.
That puts the responsibility squarely up to Congress. The OPA
has served notice that it intends to stand pat, to make no changes,
to take no steps to prepare for a return to a normal free economy.
It recognizes no validity in the idea that we are in a transition period
from a war to a peace economy. Transition means (and I am quoting
Webster) "passage from one place, state, stage of development, and
so forth, to another; change." This is a transition period. Changes
must be made in OPA policy. The OPA itself will not make them.
We have no alternative other than to come to Congress with a plea
that you make the necessary revisions.
On behalf of the wool textile industry, I am suggesting three specific
amendments. These suggestions are based on experience in our own
industry. They may not go as far as certain amendments suggested
by other groups, but I am confident that there is no industrial group
which would not approve of our proposals.
1. The MAP. The first amendment is one to prevent, after June
30, 1946, the continuance of Maximum Average Price programs,
referred to in this alphabetical age as MAP.
These MAP programs have nothing whatever to do with price
control as such. Each individual item subject to price control has a
specific price ceiling of its own, a ceiling which is either a stated dollar
and counts amount or is arrived at by an applicable formula. The
MAP regulation does not affect these specific ceiling prices in any
way but superimposes a further obligation on the producer to so
arrange his sales and production that the average price of all the products sold or delivered in each calendar quarter is equal to, or in many
cases less than, the average price of the products delivered in a specified base period. The manufacturer is not only required to sell every
item at or below its ceiling price; he is also directed to sell his variously
priced items in certain predetermined proportion. This obligation
obtains whether his customers want to buy his products in those
predetermined proportions or not.
Thus, if the maximum average price of a particular wool textile
mill is $3 a yard, it becomes necessary, every time the mill sells a yard
of $3.25 fabric, to offset it with the sale of a yard of cheaper fabric
at $2.75. To the consumer who wants a $3.25 fabric, Mr. Bowles
says, in effect, "no, father knows best; you can't have a $3.25 fabric;
Adolph Menjou already has that; you will have to be content with
something at $2.75 so that the BLS cost of living index won't go up
again."
Of what use is the extra money so many people have if they can't
buy something better than they had before? What is the sense of
making cheaper fabrics than the public wants if the public has the
money and wants to spend it for better products?
279 e x t e n d p r i c e c o n t r o l a n d s t a b i l i z a t i o n a c t s o f
19 42
Mr. Bowles appears to want to keep people from spending their
money so that they will continue to have "surplus purchasing power"
which will hang over the market and continue to constitute an inflation threat. This would seem to be the best possible way to
preserve the threat of inflation indefinitely and provide for permanent
price control.
Senator MILLIKIN. It is argued if they didn't put pressures to
bear on the market for lower priced goods that poor people wouldn't
be able to buy anything. What is your comment on that?
Mr. BESSE. Our industry, and I suppose it is true of practically
every other industry, works to a certain market. We have mills
who make high-priced material, mills who make medium-priced
fabrics, and mills who make cheap fabrics. By and large they don't
get out of their particular niches. A mill equipped and designed to
make lower priced fabrics cannot make higher priced fabrics if they
want to, but there is a certain limit to which they can trade up. The
limit is very definite and very real.
Senator MURDOCK. May I ask a question, Mr. Chairman? I move
this morning that we let the witness finish his statement before we
interrogate him.
The CHAIRMAN. That is up to the committee.
Senator MILLIKIN. I had finished, Senator.
Senator MURDOCK. I don't want to vary any. rule, Mr. Chairman.
The CHAIRMAN. It is suggested that we permit the witness to
finish his statement before we begin the questioning.
Senator MILLIKIN. That is entirely agreeable to me.
Mr. BESSE. Some of the questions would perhaps be answered in
the testimony.
The CHAIRMAN. I see. All right. Go ahead.
Mr. BESSE. The maximum average price program in the wooltextile industry is particularly "crippling" because it requires mills to
hit an average price in each quarter which is 4 percent below the corresponding average in 1944. A mill which delivered fabrics at an average price of $2.50 in 1944 is supposed currently to achieve an average
of $2.40. By reason of cheapening its fabrics to the extent of 10 cents
a yard, this mill is presumably doing its bit—I quote from the act:
" T o protect persons with relatively fixed and limited incomes * * *
from undue impairment of their standard of living" and is also
assisting "in securing adequate production of commodities and facilities" and helping to prevent "a postemergency collapse of values."
Is not this a little absurd?
What has happened is that in effecting this cheapening of fabrics,
wool-textile mills have tended to make lighter weight fabrics, which,
because they are lighter, sell for a lower price. Topcoating fabrics
have been made, instead of heavy overcoatings; tropical men's suitings
have been made, instead of standard suiting weights; women's-wear
fabrics have replaced the heavier goods used for men's apparel.
Mr. Bowles at various times has attributed the shortage of suits
for veterans to the fact that the wages paid in textile mills were too
low to attract sufficient help. Employment in the wool-textile mills
has increased from 134,000 at VJ-day to over 160,000 today. Factory
wages in the industry currently average over $1 an hour. Insofar as
there has been any shortage of men's-wear wool fabrics, it has been
due to the fact that OPA regulations (particularly the wool MAP)
280
e x t e n d price c o n t r o l and stabilization acts of
19 4 2
have operated to foster the production of fabrics of types other than
those customarily used in men's suits. If it had not been for the wool
M A P there could have been in the fourth quarter of 1945 and the first
quarter of 1946 an added production of over 20,000,000 yards of raon/swear fabrics, enough for 6,000,000 men's suits.
We told Mr. Bowles last August that this is what would happen.
He accused us of being uncooperative, expressed himself as confident
that the MAP would not operate to distort the proportions of various
types of wool fabrics produced—and clung to his MAP. Mr. Bowles
was wrong—but he still clings to his MAP.
During the 6 months ending March 31, 1946, the wool-textile industry produced approximately 100,000,000 yards of men's-wear
fabrics and 97,000,000 yards of women's-wear fabrics. Historically,
men's-wear fabrics comprise around 62 percent of the total produced.
Had this ratio obtained during these 6 months, there would have been
22,000,000 yards more of men's-wear fabrics than there were. The
wool MAP was the primary cause of this dislocation of production.
If the OPA is extended, there should be a provision specifically prohibiting the continuance of these crippling, complicated, whimsical
programs.
The House bill, H. R. 6042, prohibits such programs in section 7,
which provides for the addition of a subsection (p) to section 2 of the
Emergency Price Co"ntrol Act. The language of this subsection is
as follows:
After July 1 no maximum price order shall be issued or continued in effect
requiring any seller to limit his sales by any weighted average price^limitation
based on his previous sales.
I recommend that the same amendment be incorporated in the
Senate bill.
The second amendment I wish to suggest has to do with individual
as contrasted with general price ceilings.
One very unfortunate aspect of price control arises from the OPA
attitude toward its own complicated and involved orders. Once an
order is issued it becomes sacred and its faults are defended as tenaciously as its virtues. The OPA goes further, and prevents itself from
giving relief in certain cases by incorporating in its orders relief provisions of extremely limited applicability.
Specifically, the OPA has refused to consider applications for adjustment of price ceilings on individual items unless a concern was operating at an over-all loss. The result has been that producers have
given up the manufacture of such unprofitable items. We make no
claim that the wool-textile industry has been unable, or is now unable
to operate at a profit. The industry, by and large, is making profits
but making profits by changing the type of products manufactured.
The production of some items has become unprofitable and since the
OPA refuses to consider making adjustments on such items, the mills
merely drop these numbers and substitute something else. Mr.
Bowles thinks we should continue to produce unprofitable items because he believes somebody wants to buy them.,
We don't agree with him. The OPA has had two choices. One was
to adopt a realistic attitude and admit that what makes the wheels of
industry turn is the expectation of profit. The agency would then
have adjusted ceilings so that it was possible to make a profit on
281
e x t e n d price c o n t r o l and stabilization acts of
19 4 2
certain products, the production of which has been drastically curtailed.
The other alternative was to decide (as the OPA did) that the retention of a certain theoretical price level was more important than the
production of standard products. The result is that we have the price
level, but we don't have the goods.
The OPA theory is that because at certain times certain firms have
been willing to produce certain items at a loss, anybody should be
willing at the present time to produce items which they are allowed
to sell only at prices less than the cost of production. And this is
what Mr. Bowles terms a "practical program," one which is working
satisfactorily and which should not be changed in any particular.
The leopard is not going to change its spots, nor the Ethiopian his
skin; unless Congress revises the rules the OPA will continue to insist
that unprofitable items should be produced along with profitable ones;
industry will continue respectfully, to decline to produce them. In
my opinion there just won't be production of these unprofitable items
until their production again becomes profitable.
The only practical way of accomplishing that is for the Congress to
insist that in every price order there be a provision for according price
relief as respects individual items now having ceiling prices too low
to permit production at a profit.
I suggest possible wording for such an amendment as follows:
Every price regulation issued pursuant to this Act shall contain a hardship
provision which will permit the granting of relief as respects the ceiling price of an
item which cannot be produced at a reasonable profit without requiring a producer to show that his over-all activities are conducted at a loss.
May I say that is not a mandatory provision. It is merely a
provision to permit OPA to make adjustments if, in its opinion,
it believes after presentation is made that the adjustment should be
accorded.
The third amendment has to do with the OPA's present tendency to
control profits rather than prices.
Obviously with a limited extension of price control in prospect, it is
not feasible to write into the act new concepts or formulas which will
necessitate complete revision of existing price regulations. However,
certain principles should be established which the OPA should be
obligated to observe in writing any new orders or in making amendments to existing ones.
You will note that there again that is optional on the part of OPA.
I am trying to suggest that OPA should give itself a little more leeway to take action when that action is j ustified.
The basis for price control provided in the present so-called wageprice program is completely unrealistic. It appears to spring largely
from Mr. Bowles' thesis that profits are not important to producers
and that cost absorption is something which jobbers and distributors
should welcome with open arms. This wage-price program, to which
the President has given support, sets the base period return on net
worth as the measure of an adequate profit. It would be difficult to
imagine anything better calculated .to discourage production. Congress repealed the excess-profits tax as of January 1. This so-called
wage-price formula would establish a profit base for industry lower
than the level of profits after the payment of the former excess-profits
taxes.
85721—46—vol 1 —
19
282
e x t e n d p r i c e c o n t r o l a n d s t a b i l i z a t i o n a c t s o f 19 42
The OPA price policy—I say this advisedly—because they only
get to that formula in case of revisions in existing regulations—but if
fully effectuated, would be roughly equivalent to an act of Congress
continuing the excess-profits tax and raising the tax to 100 percent in
all instances. And this policy is adopted without consultation with
Congress, by an executive agency of the Government which has for
years protested that it was not controlling profits.
In the wool-textile industry the profit record in the base period
years was as follows: In 1936 the aggregate profits were $19,195,000;
in 1937 the aggregate loss was $1,753,000; in 1938 the aggregate loss
was $14,319,000; in 1939 the aggregate profits were $20,839,000.
That gives an average aggregate profit for 4 years of $5,990,500.
Senator BARKLEY. That is per annum?
Mr. BESSE. That is per annum, correct, Senator.
So the formula under which the OPA is now operating would thus
permit prices calculated to return to the 500 mills in the wool textile
industry an aggregate profit of less than $6,000,000 on yearly sales of
approximately $1,000,000,000. The OPA figures this would amount
to approximately 1.6 percent on the aggregate net worth of the
industry.
A new order which they have issued suggests that will be raised to
3 percent, if it fell below 3 percent.
This alluring profit prospect is held out to industry which appears
singularly unappreciative and understandingly reluctant to wear out
the tools of production in return for a profit which is only a fraction of
what one may obtain by acquiring a Government bond.
There is no reason to expect that the OPA or other related administrative agencies will adopt a more realistic policy or will awake to a
realization of the fact that if production increases are desired they will
be achieved only if the rewards, not only to labor, but to management
as well, are substantial enough to provide the needed incentive. The
amendment which I suggest is as follows:
Whenever a new price regulation is promulgated or an old regulation is
amended—
You will note we don't suggest the OPA is obligated to do that;
merely if they do that—
the Price Administrator shall establish ceilings which will, as nearly as can be
determined, provide prices which will exceed prices prevailing in 1941 to the same
extent that the cost of producing the same or a comparable commodity exceeds
the cost of producing such items in 1941.
If I could explain that in slightly different words it means the
producer would get the same dollars and cents margin that he got in
1941, not the same percentage of profit. In other words, he would not
get a profit on his increased price. It would provide a means of
returning to the manufacture of the items now largely discontinued
because they cannot be sold at a profit.
Such a provision would definitely prevent any run-away inflation
or undue price increase, but would permit a producer to obtain his
former dollars and cents mark-up although it would not provide for
any additional profit on the increase in price.
Such a provision is not an invitation to inflation. It is a commonsense approach to the problem of production and a realistic treatment
of price ceilings during a transition period. If the OPA is sincere in
saying its object is to approach decontrol as rapidly as possible, it
283 e x t e n d p r i c e c o n t r o l a n d s t a b i l i z a t i o n a c t s o f
19 4 2
cannot object to the inclusion of such an amendment to the act. If
the agency does object to such an amendment, it is ample proof that
the amendment is necessary and that realistic price ceilings can be
expected only if Congress will lay down specific rules for the OPA
to follow.
The C H A I R M A N . Are there any questions to be asked of the witness?
Senator B A R K L E Y . I would like to ask Mr. Besse if his organization are members of the National Association of Manufacturers.
M r . B E S S E . N O ; w e are n o t .
Senator B A R K L E Y . Not connected with
M r . BESSE. NO.
Senator B A R K L E Y . Y O U don't approve
them in any way?
of their program to abolish
OPA entirely?
.
Mr. B E S S E . I am giving you my three suggestions which certainty
are much more moderate or go to a lesser extent, I would say, than
the N A M suggestions.
Senator B A R K L E Y . I appreciate that, but are you offering these
suggestions merely because you don't think Congress might repeal
the law entirely, or let it terminate, or do you advocate its continuance with these amendments?
Mr. B E S S E . Yes. I would like to put it this way, Senator: That
I am suggesting the three amendments based on experience in our
industry, and don't want to be in a position of commenting on
amendments which are based on experience in other fields of which
I am ignorant.
Senator BARKLEY. That is all.
Senator TAFT. Mr. Besse, there is one thing that seems to me
somewhat illogical in your statement. If your description of the
character of OPA is correct, I don't see what you would gain by making
a lot of optional amendments.
Mr. B E S S E . Well, frankly, Senator Taft, our experience has been
this: That in the case of specific problems we have been to what we
might call the operating level of the OPA and they have been very
sympathetic, but always point to the general policies under which they
work which preclude them from giving relief in the case under review.
Senator TAFT. It seems to me if Congress were going to correct
them it is perfectly foolish to pass optional amendments. I don't
know what the amendments ought to be, but I agree with you fully
that the OPA doesn't intend to chaiTge it, and I don't think any
optional amendments will bring about any change. If you want it
changed you are going to have to have compulsory amendments, in
my opinion.
You start off calling them every name under the sun, with which I
have some sympathy; then you propose to leave it all to them. I
don't understand the logic of your position.
Mr. BESSE. The logic can be explained only if you are familiar with
the different levels in OPA. There is a distinct difference between
what you might call the operating level and the policy level. The
people on the operating level do take time and do understand the
specific problems, and I think even are sympathetic to the problems,
but the higher level has laid down policies from wiiich they cannot
depart. One is the profit-year base. That is 1936-39.
Senator TAFT. This last amendment I am interested in because it
seems to me that something of that sort has to be done and it is a
284
e x t e n d p r i c e c o n t r o l a n d s t a b i l i z a t i o n a c t s o f 19 42
better general approach than the so-called Wolcott amendment in the
House bill. Why do you select the year 1941?
Mr. BESSE. I haven't too much basis, Senator, for the year 1941.
I don't particularly hold to it. I am simply suggesting that as a year
in our industry which could be considered fairly satisfactory, but
not an extraordinary year. I am not sufficiently versed in the general
economic theory to know whether that is a better period than 1939,
1941, or 1942.
Senator TAFT. I proposed an amendment of this kind last year. I
think we made it 1940, and I think the OPA objected that that was
an unreasonable year, a year of wide margins in most industries, and
I think finally we settled on 1939. Have you any particular objection
to 1939 or an average of 1939 and 1940, or something of that kind?
Mr. BESSE. NO, Either one of those I think would be perfectly
satisfactory.
Senator TAFT. YOU make a statement here on this M A P I wanted
to get perfectly clear. You say:
The M A P regulation does not affect these specific ceiling prices in any way, but
superimposes a further obligation on the producer to so arrange his sales and production that the average price of all the products sold or delivered in each calendar
quarter is equal to, or in many cases less than, the average price of the products
delivered in a specific base period.
Does that MAP regulation increase the average over the average
price in any base period?
Mr. BESSE. None I have ever heard of. It does not in any case in
our industry.
Senator TAFT. Does it ordinarily go to 1944 or does it go to prewar?
Mr. BESSE. The MAP order for our industry is entitled SO 113.
It has been amended a number of times. There are two bases. One
is the 1944 base with a 4-percent roll-back. The other is 1941—
April 1, 1941, to March 30, 1942, the goods actually delivered in that
period reconverted to the price which they would have sold at if they
had sold at the ceiling subsequently imposed, which is, without the
4-percent roll-back.
Senator TAFT. DO you know whether, generally, MAP goes back
to prewar prices in most industries?
Mr. BESSE. N O ; it does not.
Senator TAFT. Usually some period during the war?
Mr. BESSE. Some period during the war; that is correct.
Senator TAFT. During which period, however, prices were fixed?
Mr. BESSE. All prices were fixed. They tried to fix a general
average as distinguished from the specific prices which were all fixed.
The CHAIRMAN. Your association, as a wiiole, discussed the OPA,
did they not, at a meeting of some kind?
Mr. BESSE. We often discuss it, Senator. We had one of our
friends from the OPA—don't let that surprise anybody; we have a
number of friends in the OPA—we had Mr. Sells up to talk to us 2
weeks ago. We had quite a large meeting at which he endeavored to
answer some of our questions on the operation of OPA.
Mr. Sells
is here now,
The CHAIRMAN. I am wondering whether your organization was in
any way concerned with the statement you made here, whether they
knew about it.
Mr. BESSE. They have not received this statement yet. A number of them have read it, but not the industry as a whole.
285 e x t e n d p r i c e c o n t r o l a n d s t a b i l i z a t i o n a c t s o f
19 4 2
The C H A I R M A N . I remember a professor once said to me in college,
"When you cannot debate a question, then abuse it." So I read this
first page and I thought it was rather abusive.
Senator TAFT. Mr. Besse, one thing I would like to ask, I don't
quite understand in these last two amendments—you say in a comparable—some comparable commodity. Do you mean by that items
as well as commodities?
Mr. BESSE. That is right.
Senator T A F T . Y O U mean major items only, or minor items, or
Mr. BESSE. Any item which would have a specific price ceiling.
You treat it according to whether or not it has its own price ceiling.
Senator TAFT. There are some items which are completely byproducts which it is almost impossible to determine the cost of manufacturing a particular item. What would you do with that kind of a
case?
Mr. BESSE. There has been some kind of determination setting the
ceiling price which now prevails.
Senator TAFT. Yes; probably a historical determination. Supposing that a commodity under some such consideration has always been
sold at a loss because it was purely a byproduct. Would you have—
you then would say—your second amendment would not apply to
that because there would be no margin on it?
Mr. BESSE. That would be correct—the way it is written.
Senator TAFT. That is your idea of how it should be worked out?
Senator BARKLEY. You stated in your statement that because of
the price policies many of the mills in your industry—I understand
you speak only for your industry
Mr. BESSE. That is right.
Senator BARKLEY. Had eliminated production of unprofitable
items because they could make more profit, or make a profit, on
others. Isn't it true that long before the OPA was established, and
before the war, not only woolen manufacturers, but other manufacturers generally produced articles upon which they made no profit,
because they did make an over-all profit on their entire outfit? They
might have had a dozen or 50 different items and they don't make a
profit on everyone of them. They use some of them as fillers or
feeders, items they could sell at a loss because they made a profit on
the whole?
Mr. BESSE. We don't do that intentionally. As I pointed out, we
had two base years in which we made an over-all loss. You sometimes find yourself in that position.
Senator BARKLEY. That may not be true of woolen manufacturers,
but it is true of other industries. There were years in which there
was an over-all loss, I imagine, if you went back further you would
find more than 2 years, during peacetimes, in which there was an
over-all loss, but isn't it true that in normal business years concerns
do make articles which are along the line of their product, but which
they wish to sell to their customers as sort of an inducement to get
them to buy something else on which they don't make a profit?
Mr. BESSE. That is quite true, Senator, but if you are realistic you
will appreciate these items are not being made today.
Senator B A R K L E Y . Y O U say they are not being made
Mr. B E S S E . Y O U cannot buy them.
Senator BARKLEY. Because the manufacturer has deliberately
decided to cut them out. You say he is only willing to make the
286
e x t e n d p r i c e c o n t r o l a n d s t a b i l i z a t i o n ACTS o f
19 4 2
particular items on which he can make a profit—on each individual
item—regardless of his over-all profit position.
Now, why should he change his policy and method simply because
we have the OPA, when he has been doing that all the time heretofore?
Mr. B E S S E . I might answer that by asking you another question
Senator B A R K L E Y . I am asking you the questions.
Mr. B E S S E . A S to why the cotton manufacturer stops making
white shirts. The reason is he cannot make money on them and he
can make money on something else.
Senator BARKLEY. I am asking you about your industry, not
about cotton manufacturers. If I could give you an answer as to why
shirt manufacturers do not make white shirts, I would be glad to do
so, but I don't know the answer because I am not in the white-shirt
business. I know that I am almost out of white shirts and I cannot
buy any.
M r . B E S S E . SO a m
I.
Senator BARKLEY. But you know, and I know, and all of us know,
that in all industries in normal peacetimes there are items that are
made at a loss. They don't eliminate those items because of that
loss, they go ahead and make them because they make up the difference in their total output.
Senator TOBEY. What they call "loss leaders."
Mr. BESSE. Yes; but the loss leader has disappeared today.
Senator BARKLEY. That is what I am trying to get at. Why
should it disappear under the OPA system merely because they are
making it at a loss, when they have been making it at a loss all the
time?
Mr. BESSE. It disappears because there is ample demand on the
market for your other products.
Senator BARKLEY. In other words, you have abandoned the practice
and the policy and the custom and the rule which has been in effect for
generations, simply because there is a shortage in everything. You
can get some profit out of the things you make?
Mr. BESSE. If you want to apply that to our industry, I will say
that we never had that policy.
Senator B A R K L E Y . I thought you said you did.
Mr. B E S S E . N O , sir; I didn't.
Senator B A R K L E Y . Y O U mean the woolen manufacturers never made
anything prior to the year 1941 or 1940 at a loss, although they were
making profits on other things?
Mr. BESSE. We don't intentionally price a fabric at a loss and go out
and sell it. The woolen industry as a general matter does not make
goods and stock pile them. We make samples which are given to the
garment manufacturers who in turn get orders from retailers and those
orders flow back to the mill and we make the fabric on order. We
don't intentionally go out and sell at a loss in order to sweeten up the
market. We do make losses, but they are losses not of intent, but of
accident.
Senator BARKLEY. Your castigation here seems to include CPA as
well as OPA. I happen to have had my attention brought to the fact
that in a certain fabric out of which men's suits are made, there were
only 5,000,000 yards in the United States. There were 27,000,000
yards asked for by the clothing manufacturers throughout the country.
The CPA was compelled to allocate that 5,000,000 yards among all
287
e x t e n d price c o n t r o l and stabilization acts of
19 4 2
the clothing manufacturers who had asked for or who needed 27,000,000 yards. What would have happened if there had not been a CPA
to allocate that goods among all the concerns in some fair degree, in
proportion?
Wouldn't the one who was most able to pay the highest price have
gotten the goods and the smaller concern wouldn't have gotten any?
Mr. BESSE. The price has nothing to do with it, because the price
of the article, no matter who buys it, is based on a ceiling price.
Senator BARKLEY. I am talking about your theory that the CPA
and the OPA have restricted the manufacturer unfairly. They go
together, they work together. As long as there is a shortage there has
to be some sort of allocation, because of the fear that was entertained
by small manufacturers that the big concerns would get all the material and they would have to close their plants. If it were not for
the CPA that fear would have been realized.
Mr. B E S S E . A S a matter of act, among clothing manufacturers—
the big fellow is worse off today than the little one, but I haven't said
anything in my statement about the CPA.
Senator BARKLEY. Well, you included Mr. Small as one of the five
horsemen.
Mr. B E S S E . I am including him because he is one of the five that
made the report to the White House.
Senator CAPEHART. Mr. Chairman, may I ask a question?
T h e CHAIRMAN.
Yes.
Senator CAPEHART. Mr. Besse, have you ever known of an instance
in which a manufacturer deliberately made a product and sold it at a
loss?
Mr. BESSE. Yes. You mean a woolen manufacturer?
Senator CAPEHART. Woolen manufacturer.
Mr. B E S S E . I don't recall of any. There may have been some, but
1 don't recall any such instances. I have known of it being done in
certain industries.
Senator CAPEHART. Isn't it a fact that there is a lot of confusion at
the moment in respect to these so-called loss items, in that the manufacturers do not indulge in the practice of making and selling merchandise
at a loss, but the practice is indulged in and has been by your retailers
of selling certain items at a loss in order to get people into their store
to induce them to buy other merchandise? Aren't the items that are
sold at a loss sold at a loss by the retailers rather than by the manufacturers? In this instance, aren't we talking about manufacturers
rather than retailers?
Mr. B E S S E . I think that would be a very fair generalization.
Senator CAPEHART. I ha\e been in the manufacturing business
25 years. I ha^e never known of a single manufacturer that ever
made a single item deliberately at a loss. They do lose money, but
they don't intend to. I do know this: In practice in normal times
department stores and other stores and other retailers buy merchandise and sell it at a loss, or no profit; they use it as a leader in order
to get people into their store with the hope they will sell them profitable items. That is what is normally called in the retail business,
"Slocking."
I think we should differentiate between the manufacturer and the
retailer.
Senator BANKHEAD. What was that word?
288
e x t e n d p r i c e c o n t r o l a n d s t a b i l i z a t i o n a c t s o f 19 42
Senator CAPEHART. Slocking. I don't even know how to spell it.
That is what they call it. In other words, it is taking unfair advantage
of the customer by advertising merchandise at a loss, getting a lot of
people into the store, then trying to sell them merchandise on which
they do make a profit. It is a common practice. It has been indulged
in for years. I think we should differentiate between retailers selling
at a loss and manufacturers selling at a loss, or the producer. It is
the producer we are interested in at the moment, because we all want
to get goods. I don't believe any manufacturer ever deliberately
sold merchandise at a loss.
Senator BANKHEAD. I notice a statement here on page 4 :
If it had not been for the wool M A P there could have been in the fourth quarter
of 1945 and the first quarter of 1946 an added production of over 20,000,000
yards of men's wear fabrics, enough for 6,000,000 men's suits. We told Mr.
Bowles last August that this is what would happen.
I would like to hear you elaborate on that statement and tell us
why i* occurred, and how you know it has reduced production to
that extent.
Mr. BESSE. Well, ordinarily we would produce, as I said in my
written statement, approximately 62 percent of the total fabric for
men's wear and 38 percent for women's wear. During the war, naturally, there was a lot greater emphasis on women's wear because we
didn't count in our production materials which went to the armed
services, which primarily was made by the mills that made men's wear
fabrics.
Now, after VJ-day we not only had our normal production which
we should have returned to, but we should have increased the amount
of men's wear fabrics to take care of men who would be demobilized
from the armed services. So the percentage really should have been
higher than 62 percent. I was careful to say, Senator Bankhead,
that had the historical percentage of 62 percent been achieved there
would have been, or could have been, 22,000,000 yards of fabric more
than was actually produced.
I will go further than that and say that the bottleneck in men's
apparel is not woolen fabric.
The bottleneck today—and we think that this is being proved by
studies which the Government is making—exists in the lack of labor in
men's clothing factories, or a number of them.
Senator MURDOCK. Lack of labor where?
Mr. BESSE. In men's clothing factories. A lot of them have more
goods than they are able to cut at the present time, although they are
not in all cases just w;hat some people would like. The distribution
has not been exactly what some might desire; but we are ahead in the
supply of materials.
Senator MURDOCK. Does not that rather weaken your argument
against M A P ?
Mr. BESSE. I do not think SO.
Senator BANKHEAD. What brought about the shortage?
Mr. BESSE. The MAP, as I tried to point out, forces us to hit a
certain average price of deliveries and has tended to emphasize the
production of lighter-weight goods. This meant a shift from men's
wear to women's wear; it has meant a shift from overcoating fabrics to
top-coating fabrics, and from, men's standard 13K-ounce worsted suiting to tropical suiting.
289
e x t e n d price c o n t r o l and stabilization acts of
19 4 2
Senator BANKHEAD. Because you are required to produce a certain
amount of the lower-grade goods?
Mr. BESSE. We are required to hit a certain figured average price
for all deliveries.
The CHAIRMAN. In addition to the amendments which you have
suggested, your association has never suggested that OPA be repealed?
Mr. B E S S E . N O ; they have not.
The CHAIRMAN. Thank you very much.
Senator BARKLEY. Do I understand that you are speaking for
yourself, or as president of the association, or have they authorized
you by any resolution or any action that they have taken to present
this statement?
Mr. BESSE. They have not seen the statement. I wrote it at the
end of last week. We have had a number of meetings of our executive
committee and our board of directors, and we had our regular annual
meeting on April 9 at which the matter was discussed in some detail.
Senator BANKHEAD. Did the consensus of opinion develop at those
meetings?
M r . BESSE. Exactly.
Senator MURDOCK. I am a little surprised, Mr. Besse, at this
statement on page 3; and I think you admit by that statement that
there is a tremendous surplus of purchasing power in the hands of the
people. Is that right?
Mr. BESSE. That is correct.
Senator MURDOCK. And as a result of that we have a tremendous
threat of inflation, have we not?
Mr. B E S S E . I cannot follow you there.
Senator M U R D O C K . Y O U state here that Mr. Bowles is rather
anxious to keep people from spending too freely. It seems that that
is the purpose of all of us, not to allow this tremendous surplus of
purchasing power to be dumped into the market all at once and
thereby cause runaway inflation. But you say here that this should
be removed because it is a threat to inflation. That is, as I understand
your philosophy, people should be allowed to spend as extravagantly
and as rapidly as they possibly can in order to remove the threat of
inflation which exists by reason of the tremendous surplus purchasing
power in the hands of the people.
Mr. BESSE. But, Senator, it is not the spending of the money that
causes inflation; it is the existence of the money.
Senator BANKHEAD. And the running up of prices by bidding?
M r . BESSE.
Yes.
Senator MURDOCK. The threat of inflation is really worse than
inflation itself, as I understand you?
Mr. B E S S E . N O . I think we have all the elements of inflation
because of government policy in certain other directions that have
produced the tremendous amount of money.
Senator MURDOCK. We have a threat of inflation in this tremendous
surplus purchasing power in the hands of the people, and what you
want to do is to induce them to spend it as rapidly as you can, and
bring about inflation, as I see it
Mr. B E S S E . I cannot follow you on your definition of inflation,
which Mr. Webster defines as the production of an exceptionally
large amount of additional money or credit.
290
e x t e n d price c o n t r o l and stabilization a c t s o f
19 4 2
Senator MURDOCK. You made the statement here that there is a
tremendous surplus of purchasing power, and then you complain that
there is any restraint at all on the expenditure of it. So it seems to
me that your philosophy is that the threat of inflation is even worse
than inflation itself.
Senator BANKHEAD. Let me ask him a question there, if you do not
mind, before you leave that point.
The Senator has asked you about the inflationary effect of a large
purchasing power and the use of it by the people. Would the rapid
purchasing of goods in larger quantities than now be inflationary if
the goods were available and if the exceptionally large buying did not
run the prices up? Would the mere fact of the quantity of purchases
be inflationary?
Mr. B E S S E . N O ; I would not think so.
Senator MURDOCK. I am in full agreement; but.we have not the
supply of goods.
Mr. BESSE. That is right.
Senator M U R D O C K . SO, if we just turn the money loose and let
everybody run in and buy and compete in a market that does not
have the products to sell, then certainly inflation results from that
very thing.
Mr. B E S S E . Y O U have not gotten my philosophy at all. I am not
even suggesting that you stop price control.
Senator MURDOCK. Everybody that I hear talk about price control
always says, " W e don't want to do anything about getting rid of it;
we want to keep it, but, as far as I am concerned, it should be realistic."
Senator BANKHEAD. If you could read my mail you would not
think everybody wanted to keep it.
Senator MURDOCK. That is what I understand your philosophy
to be.
Mr. B E S S E . I have a little extra purchasing power, and I would
like an automobile. I cannot buy it, because there are none available. But if I bought a $2,000 automobile I would have $500 less
extra purchasing power than if I bought only a $1,500 automobile.
Of what use is my extra money if I want a $2,000 automobile and you
will not let me buy one for over $1,500?
Senator MURDOCK. But your money is in circulation whether you
have it or not. The mere fact that you have spent it for a $2,000
automobile does not do away with that money. It simply transfers
the $2,000 to somebody else, instead of your having it in your own
pocket.
I would like to ask you one or two questions on this MAP discussion which you have made here. Does MAP require that any more
of the cheaper fabrics be made than were made in 1941 when you
had a very high level of consumer goods production?
M r . BESSE. NO.
Senator M U R P O C K . Y O U
take the position that higher-price goods
should be allowed to be manufactured instead of requiring you to
manufacture low-priced goods; is that right?
Mr. BESSE. I do not exactly say that. In our industry, as I explained before, we operate on orders accepted from retailers, back
through the manufacturer. We are very responsive to the retail
demand. If they want cheaper goods we are going to make cheaper
291 e x t e n d p r i c e c o n t r o l a n d s t a b i l i z a t i o n a c t s o f
19 4 2
goods. If they want better goods, we make better goods. That is
what they want to do today, and I do not see how you can fuss about
their having money and not spending it if they want better goods and
are able to buy them and we are able to make them.
Senator MURDOCK. That is on the assumption that everybody has
more money to spend now than they had formerly?
Mr. B E S S E . N O ; it is not. We are making plenty of cheap goods
today. You can find certain places in the market where there is an
excess of cheap goods that are not wanted.
Senator MURDOCK. We do know that the discharged serviceman
has not any big surplus of money, so that there must be cheap products
for the people that do not have a surplus of money.
M r . BESSE. And there are.
Senator MURDOCK. Does M A P require that 4 percent be deducted
in computing the mills' maximum average price?
M r . BESSE. If it is on the 1944 basis; yes.
Senator MURDOCK. But there are some qualifications and modifications as to its application?
Mr. BESSE. That is right.
Senator MURDOCK. I think you have stated that so far as men's
fabric production is concerned there is no shortage of wool products
at this time?
Mr. BESSE. That is correct. We are not the bottle-neck.
Senator MURDOCK. The bottleneck, as I understood you, is labor?
Mr. BESSE. Labor in the garment-manufacturing plants.
Senator M U R D O C K . SO that M A P is really not causing any hardship from that standpoint, is it?
Mr. BESSE. Yes; it is. I say this once again. We are making
lighter-weight fabrics than we would like to make, and lighter-weight
fabrics than our customers would like to have us make, and we are
making topcoats instead of overcoats. It has an effect that you will
see next winter when people want to buy heavy-weight overcoats.
We are making men's wear, but not the kind that the public would
like if they could have freedom of choice. So that MAP is affecting
the garment worker and the public.
Senator MURDOCK. Does not the tendency to drop unprofitable
items and less profitable items in favor of the ones having the greatest
cost indicate a need for an order such as M A P to make sure that
production is not concentrated only on the high-profit items?
Mr. BESSE. The MAP has nothing to do with the high-profit items.
It is the high-priced items, which may or may not be high-profit items.
Sometimes they are profitable and sometimes they are not; it does not
necessarily follow.
Senator B A R K L E Y . Y O U have eliminated the cheaper ones to make
the more expensive?
Mr. BESSE. We have not eliminated the cheaper ones.
Senator MURDOCK. I think you stated that that is the very thing
you have done; drop the unprofitable item and you have gone to the
higher-profit items.
Mr. BESSE. But you are talking at one time about profit and at
another time about price. High price and high profit are not necessarily synonymous.
Senator MURDOCK. I confined my question to profits, and you
talked about price. I thought I was following you in your statement
292
e x t e n d price c o n t r o l and stabilization acts of
19 4 2
here that you had dropped the less profitable items and had gone to the
more profitable items.
Mr. B E S S E . I do not want an argument with you.
Senator M U R D O C K . I do not want to agrue with you, either.
Senator B A R K L E Y . I apologize for injecting my question there.
Senator T O B E Y . Y O U have placed M A P as the first amendment.
Is that the most important change that you would like to see?
Mr. B E S S E . I do not think so, Senator Tobey.
Senator T O B E Y . You*put it first.
Mr. B E S S E . Many of our people think it is the most important.
It is an amendment already in the House bill, and for that reason I
put it in here in exactly the same language as it appears in the House
bill.
Senator M U R D O C K . Are there any specific classes of wool products
which are unprofitable at the present time?
Mr. B E S S E . That is a very hard question to answer. It depends a
good deal on the specific mill. We have about 600 different mills in
the industry, and different mills are set up on a different basis. You
cannot say that a single item is unprofitable. The industry makes a
tremendous number of products, and it is difficult to put a single class
forward as being a particular class which is unprofitable.
Senator M I L L I K I N . I was very much interested in some observations that Senator Murdock made. I quite agree with you that if a
man has excess spending power he should be allowed to buy better
goods. I assume that you have no objection to some sort of control
as a ceiling for better goods?
Mr. B E S S E . I have no objection to a ceiling on anything, if the
ceiling is placed intelligently and runs to specific items.
Senator M I L L I K I N . I assume that.
Mr. B E S S E . That is right.
Senator M I L L I K I N . Senator Murdock made the point that a considerable part of this country has not shared in the outflow of this
illusory cornucopia; that they do not have excess spending power,
but they must have goods also. Is there any objection to a specific
allocation of goods, whether woolen fabrics or cotton fabrics or whatever it may be, to assure a supply of goods to people in that category?
Mr. B E S S E . We do not think that any allocation is any longer
necessary.
Senator M I L L I K I N . But if it were necessary, there would be no
objection to that?
Mr. B E S S E . It is a tremendously complicated thing in the apparel
field. Where you have thousands of customers, it is almost impossible. We are struggling with the CPA—and I did not want to bring
them in—as to certain priorities that we feel are not necessary but
which certainly are very complicated and bothersome if you do not
get them.
Senator M I L L I K I N . The evidence shows that there has been a great
deal of administrative inefficiency; but if we should find in the upset
economy of the times a great category of people that are not able to
indulge in buying better things and must buy the kind of things
they have always bought, and if it takes an allocation of goods to
supply that m*ed, and, again, assuming that it is efficiently administered; could there by any legitimate objection to that?
Mr. B E S S E . If you could show that the need is actually existent.
Senator M I L L I K I N . I am assuming that.
293 e x t e n d p r i c e c o n t r o l a n d s t a b i l i z a t i o n a c t s o f
19 4 2
Mr. BESSE. Some of these programs are based on a carry-over of
psychology, and the psychology persists after the need has disappeared.
Senator MILLIKIN. I think there is a distinction in the practice of
business when there is a buyers' market and when there is a sellers'
market. In normal times, when we have a buyers' market, I am
suggesting, and I would like to have your reaction to it, that the
buyer establishes the terms on which the goods are sold. That operates to the benefit of the man who buys cheap goods. For example,
in that kind of a market, the great mail-order houses, the great department stores, the great chain stores, the great mass purchasers, know
exactly the costs of the producer, the manufacturer, and the fabricator,
and hi that kind of a market they can get items at cost or just a little
above cost, and at the same time take some higher-priced items on
which the seller can get by and make a profit. Is not that a common
condition in a buyers' market?
M r . BESSE. In general; yes.
Senator MILLIKIN. When it comes to a sellers' market, the seller
can dictate his own terms as to whether he is going to indulge in loss
leaders or not, and naturally, in his own interest, in times of that
kind, which are times similar to these that we are having now, he does
not indulge as widely in loss leaders as he does when the buyer controls
the situation. Is not that correct?
Mr. BESSE. That is correct.
Senator MILLIKIN. Thank you.
Senator BARKLEY. What is your individual company?
Mr. B E S S E . I have no company.
Senator B A R K L E Y . Y O U are not a manufacturer yourself?
M r . BESSE. N o t at the moment; no, sir.
Senator M U R D O C K . O P A ' S compilations indicate a profit, before
taxes, in your industry of 33 percent in 1942. Do you disagree with
that?
Mr. B E S S E . I have the figures here. I have no reason to think
that they are not correct.
Senator MURDOCK. And 37 percent in 1943 on net worth, before
taxes.
Mr. B E S S E . I have the figures on profit, but not the percentage of
net worth for those years.
Senator MURDOCK. In your best judgment would that be far out
of line—33 percent in 1942, 37 percent in 1943, on net worth, before
taxes?
Mr. BESSE. It would sound high. I can only take the figures on
the actual profits after taxes. I have not got the OPA figures in
detail on our industry as far as net worth is concerned, except for the
base years and for 1946.
Senator TAFT, Can you put thosefiguresin the record later?
Senator M U R D O C K . I would like to have them in the record, if
there is no objection, Mr. Chairman.
The C H A I R M A N . Very well.
Senator CAPEHART. Does the able Senator from Utah have the
figures of the net profit after taxes?
Senator MURDOCK. The statement that I have here is an OPA compilation, indicating a profit before taxes of 33 percent in 1942 and 37
percent in 1943, on net worth.
Senator CAPEHART. On the net worth of the companies?
294
extend price c o n t r o l and stabilization acts of
19 4 2
Senator MURDOCK. Yes.
Senator CAPEHART. But what is the profit on sales after taxes?
Senator MURDOCK. I do not have that.
Senator CAPEHART. Of course, that is the real figure that should be
put into the record.
Senator MURDOCK. Their estimate also is that in 1944 and 1945 the
profits on the same basis are estimated to be equally as good; and a
comparison is suggested of these figures with your statement of 1.6
percent in a base period.
Mr. BESSE. The figure of 1.6 percent in a base period is the OPA
figure. I do not have any such figure. But I have the OPA estimates of profits, after taxes, in 1943 and 1944. They show $53,500,000,
approximately, for 1943, and $51,000,000 in 1944. During those years
we were doing a business of substantially $1,350,000,000, after taxes.
Senator C A P E H A R T . H O W many manufacturers?
Mr. BESSE. That is an OPA compilation. For 1 year there were 78
manufacturers, which would be a rather large segment of the industry, because they took the large outfits.
Senator CAPEHART. In your statement I think you said that there
are 500 mills?
M r . BESSE. There are.
Senator C A P E H A R T . D O those figures represent 500 mills or 78
mills?
Mr. BESSE. They are based on 78 organizations, and are blown up
to give an approximate industry figure. I do not question them; I
think they may vary one way or the other, but for all intents and
purposes they come pretty close to a fair average.
Senator BARKLEY. Did any of those eompanies make goods for
the Government?
Mr. BESSE. All of them, practically.
Senator TAFT. What percentage of their business was Government
business?
Mr. BESSE. At the peak of Government business, slightly over 40
percent.
Senator TAFT. That was all subject to renegotiation?
M r . BESSE.
Yes.
Senator TOBEY. That is only about 4 to 4K percent—$53,000,000
on $1,350,000,000.
Senator MCFARLAND. May I ask Senator Murdock one question
in order to complete the record? Do the figures you have there
show where the OPA got the net worth figure? Did they make it up,
or did they take it from the companies, or where does it come from?
Senator MURDOCK. The Senator has asked me a question that I
cannot answer; but I think there are some OPA officials here and
possibly they can tell us where it came from.
Senator MCFARLAND. I think it would be well if we knew where
they got their net worth figures.
Senator MURDOCK. Yes; I think the source should be in the record.
If they can give it to the committee I would like to have them do it.
Mr. SELLS. I do not know exactly which report Mr. Besse is
quoting from.
Senator MCFARLAND. It is not his figure; it is the one that Senator
Murdock has.
Senator M U R D O C K . I am supposedly quoting from O P A compilations here.
295 e x t e n d p r i c e c o n t r o l a n d s t a b i l i z a t i o n a c t s o f
19 4 2
Mr. SELLS. The source of the information is the Division of Research of the Office of Price Administration. The data are taken from
two sources: One is for the base period, reports either submitted to
the Government or trr.nscripts obtained from the Bureau of Internal
Revenue, and for the currect period the annual financial report made
to the OPA Accounting Division.
If the Senator wants a description of the mechanism used in the
Accounting Division for compiling the reports, I believe a representative of the Accounting Division is present.
Senator M C F A R L A N D . N O ; I did not want to take up a lot of time.
I thought it would be well to see whose figures the net worth was
taken from.
Mr. SELLS. Y O U mean, the individual companies, sir?
Senator M C F A R L A N D . N O . As I understand it, you said you made
base figures.
M r . SELLS. Y e s .
Senator B A R K L E Y .
But you do not make it up out of the sky. You
make it up from the figures of the Bureau of Internal Revenue for one
period, and from the reports of the Accounting Division of the OPA
for the other period?
M r . SELLS. Y e s .
Senator M C F A R L A N D .
What figures do you get from the Internal
Revenue Bureau?
Mr. SELLS. The Accounting Division of OPA obtains transcripts,
under certain conditions, from the Bureau of Internal Revenue for
previous years. Those are generally confined to corporations of certain sizes, and certain conditions of protecting the confidential character of the data are agreed to between the OPA and the Bureau of Internal Revenue before the transcripts are released. They are not
made available except to the head of the Accounting Division as individual company reports.
Senator M C F A R L A N D . I just want to ask one more question. Have
you ever submitted these figures to the companies as to whether or
not they were correct, or whether they challenged the net worth
figures?
Mr. SELLS. Whenever an OPA accountant gets a report from a company he usually is instructed to submit the information that he has
taken to the company's own accountants before he leaves.
Senator M C F A R L A N D . I do not think you understand me. I do
not want to go into a lot of details. When you make up these networth figures of companies do you submit them to the companies for
their approval?
Mr. SELLS. If you are referring to the income-tax transcripts
Senator M C F A R L A N D . N O ; I am not talking about that.
Mr. SELLS. Y O U are talking about the reports we get from them?
Senator M C F A R L A N D . These reports that you give us here—do the
companies challenge them, or have they had an opportunity?
Mr. SELLS. I think I understand your point. Any figures that the
industry submits to OPA are the industry's own figures. We do not
submit the arithmetic of putting the company reports together, to
them, except where a survey is made and we go over it with the
industry advisory committee. In these cases I would say the answer
is "Yes."
296
e x t e n d price c o n t r o l and stabilization acts of
19 4 2
Senator M C F A R L A N D . Y O U have not taken the individual companies' net worth and submitted it to them; all you have done is to
file a general record. Is that right?
Mr. SELLS. N O , sir; we have taken the individual companies' own
net worth as they submit it to OPA, and use that figure.
Senator MCFARLAND. In determining and 33 and 37 percent figures?
M r . SELLS. Y e s , sir.
Senator MCFARLAND. Why did you not answer me in that way in
the first place, then?
Mr. SELLS. I intended to. The 1936 and 1939 figures are from the
Bureau of Internal Revenue. The current period figures are from
reports made to OPA by the companies which we have put together
from their statements to us.
Senator TAFT. Are English woolens coming in yet?
Mr. BESSE. In very small amount.
Senator T A F T . D O you look for any considerable increase in the
importation?
Mr. BESSE. We are very much disturbed over the situation. The
passage of the reciprocal trade agreement last year permits a further
reduction of 50 percent in the tariff. Our wages here are approximately a dollar an hour as against an average in Great Britain, figured
at a pound being worth $4.02, of 31 cents an hour. It is a tremendous
differential for us to overcome.
Senator FULBRIGHT. The principal reason for your objection to
OPA is that it holds down production. Apparently that is not true
in your industry; there is no shortage of goods?
Mr. BESSE. There has been. We have gone ahead and progressed
faster than the clothing industry has.
Senator FULBRIGHT. You say there is a surplus of goods now?
Mr. BESSE. It has affected types of goods we have manufactured,
as I tried to bring out a number of times.
Senator FULBRIGHT. The quality is not the best you could make,
but there is more than they can make up. Is that one point?
Mr. B E S S E . I think that is correct today.
Senator FULBRIGHT. And the industry is reasonably profitable?
Mr. BESSE. There is no more than is needed. You have to make
that distinction. If the clothing manufacturers could obtain more
labor, then their next bottleneck is pocketing, in cotton goods. If
they get enough of that, then they are short in coat linings. Then
they would be short of woolen goods unless we could increase in the
interim.
Senator FULBRIGHT. So far as your industry goes, there is more
material now than the manufacturers can make up?
Mr. BESSE. That is correct.
Senator FULBRIGHT. And, furthermore, your industry is reasonably
profitable; is that correct?
Mr. BESSE. We are not too profitable. I might add for the record
that increased payments to labor following the OPA figures are something like $100,000,000 a year. Of course it is a little difficult to
determine exactly what the effect of that is after taxes. But, as
against the last tabulation that the OPA or the Treasury Department or anyone else has, we have increased wage payments in the
industry, plus a number of other benefits, vacations with pay, shift
premiums, and so forth, which would amount to approximately
$100,000,000 a year, which is a substantial item*
297
e x t e n d price c o n t r o l and stabilization a c t s of
19 4 2
Senator FULBRIGHT. All I was trying to develop was this. Is it
your method to get better prices or increased production if the profits
are satisfactory? I just wanted to know the exact reason why you
would like to change the OPA, if it is not either profit or production.
M r . BESSE. It is both.
Senator TOBEY. One complements the other, does it not?
Mr. BESSE. Exactly. There are certain things that we are not
going to produce unless they are profitable.
Senator FULBRIGHT. If there is sufficient supply in the hands of
the manufacturers, I do not see what you are worrying about.
Mr. BESSE. It is a little difficult to know what the future is going to
bring. We have only just recently come into the position where we
have begun to think about a possible buyers' market. That might
arrive by reason of the fact that we had gotten enough to satisfy the
public demand. It may also come because our customers are not in
shape to use our material as rapidly as they would like to.
Senator FULBRIGHT. When that time arrives, you have no doubt in
your mind about the OPA, have you?
Mr. BESSE. They want it for another year.
Senator F U L B R I G H T . D O you have any thought that there will be a
buyers' market before the year is out?
M r . BEESE. There may be.
Senator FULBRIGHT. In your line?
M r . BESSE. There may be; yes.
Senator FULBRIGHT. Then you have overproduction in your line?
Mr. BESSE. We have overproduction if our customers are unable to
use the goods; and we cannot tell exactly when they are going to reach
that point.
Senator T O B E Y . Y O U do not see it on the horizon yet, do you?
Senator FULBRIGHT. He said within a year.
Senator MCFARLAND. Who is going to be hurt if lighter clothing is
produced instead of heavier clothing?
Mr. BESSE. Probably the retailer. He will have an overstock of
undesirable goods.
Senator B A R K L E Y . IS the inability of your customers to use your
goods brought about by shortage of labor or shortage of some other
kind of goods they have to have?
Mr. BESSE. It is something of both. It is shortage of labor in
the clothing industry and shortage of trimmings and linings.
Senator BARKLEY. There is nothing we can do, through the OPA,
to remedy the shortage of labor?
Mr. BESSE. I do not think so.
Senator M I L L I K I N . D O the woolen manufacturers have statistics on
their present inventories?
M r . BESSE. In our hands?
Senator MILLIKIN. Yes.
Mr. BESSE. We have figures. They are not particularly important.
We do not have an inventory except by accident. We make goods
on order, and when the goods arefinishedwe deliver against the order.
When we have an inventory it is a mistake.
Senator MILLIKIN. Are you working pretty close to a hand-tomouth basis as you are going along now?
Mr. BESSE. From the standpoint of selling?
Senator MILLIKIN. From the standpoint of inventories. Are you
up with your orders, or are you piling up inventories?
85721—46—vol. 1
20
298
extend price c o n t r o l and stabilization acts of
19 42
Mr. B E S S E . We never pile up inventories.
Senator T O B E Y . Don't you, on a few staples?
Mr. BESSE. We do not mean to, Senator. Occasionally that is
true with a mill that makes only one product. A mill might make a
very heavy overcoating; and you have some in your State that have
to start in November making overcoats for next year. Perhaps the
customers do not want them until along in February or the 1st of
March. It is only a very short interim period. It is all sold and
merely waiting for delivery instructions.
Senator MURDOCK. I think this is a repetition of my first question,
but you did admit, I think, that in 1941 we had a very high level of
consumers' goods production; is that right? I think you answered
it in the affirmative before.
Mr. BESSE. Total production, when we started to make Government goods on a very large scale in 1941.
Senator M U R D O C K . There was a very high level of consumer goods
production in that year, was there not?
Mr. B E S S E . Reasonably high. It was not exceptionally high.
Senator M U R D O C K . You are not required today, under M A P , to
allocate any more fabrics to cheaper production than you were in
1941?
Mr. BESSE.. N O bigger proportion; that is correct.
Senator M U R D O C K . N O W , if I may ask this final question, Mr.
Chairman.
In reference to the general theory of price ceilings and OPA earning standards, did OPA force you to take losses in the application of
earning standards?
Mr. B E S S E . I am afraid I do not understand the question. In
what connection?
Senator MURDOCK. This is a question that was submitted to me
so, if you do not know what it means, we will pass it up.
Does it give base-period profits regardless of increase in investment?
Mr. BESSE. If I understand that question, you mean
Senator MURDOCK. I am not sure that I understand it.
Mr. B E S S E . A S I understand it, you are asking if, infiguringbaseperiod-profit percentage, you take into account changes in your net
worth during that period, the answer, I believe, is "yes." It certainly
should be.
Senator MURDOCK. This list of questions was submitted to me just
as I came in, and I think this has a particular bearing. However, I
must confess that I do not understand all the details myself.
Mr. SELLS. On this last point that Senator Murdock made, I would
like to point out that in measuring the necessity for a price increase
under the industry-earnings standards, the two loss years that Mr.
Besse cited in his testimony would not be treated as loss; they would
be sent in as zero, and if any increase had occurred since the base
period, in net worth, the increase would be reflected in determining
what the minimum profit to be allowed is so that even under the
OPA standards the industry would be allowed more than the 5 to
6 million dollars that he cited. It would be increased to the extent
that the net worth of the industry has increased since the base period,
although it must be pointed out that the industry's earnings even in
1945 are still so far above the base-period earnings adjusted for increases in net worth, that, so far as I know, no general price increase
299 e x t e n d p r i c e c o n t r o l a n d s t a b i l i z a t i o n a c t s o f
19 4 2
could be permitted. On the other hand, we have been discussing
with the wool industry recently a number of adjustments on baseperiod fabrics which are now being studied in order to bp sure that no
staple product should be required to be produced at a loss. The
industry knows that, and I believe Mr. Besse knows that, too.
Mr. B E S S E . I am amazed to hear Mr. Sells say that in figuring
base-period profits you deduct the two lowest years.
Mr. SELLS. I did not say that; I said they are sent in at zero.
Mr. B E S S E . That is about the same thing.
Mr. SELLS. N O ; it makes quite a difference.
Mr. B E S S E . According to S O 1 4 9 , that is not what you do. It says
that an adjustment will be granted only to the extent necessary to
permit the applicant to realize currently on his net worth the same
percentage return as he realized on the average in the years 1936 to
1939. There is nothing in here that says anything about putting in
as zero certain years.
Mr. S E L L S . Y O U are talking about an individual adjustment. I
was talking about a general adjustment for an industry.
I might point out that for the cotton and wool industries this order
you just quoted from permits any individual manufacturer a minimum return of 3 percent on net worth and a maximum of 6 percent,
even if that would bring him above the general ceiling permitted to
the industry. The point in that is to encourage full production in
both the cotton and wool industries.
Senator B A N K H E A D . I want to get a fair statement of the difference
between the base for ascertaining percentage of profit, the net sales,
and net worth. For instance, on woolens, in 1936 and 1939 you had
1.8 percent, and in 1944 the figure was 9.4. That is on net worth.
On net sales you had 1.4 in 1936 and 1939, and 3.8 in 1944. There
is quite a difference there. Is there any reason for that difference in
the two methods of ascertaining profits?
Mr. S E L L S . There are two different ratios. In the first case the
ratio of net profits before taxes to net sales is obtained by taking the
net sales from a consolidated profit-and-loss statement for the industry
and dividing that into the net profit. In the second case the net worth
is used rather than the net sales.
Senator B A N K H E A D . What is net worth?
Mr. S E L L S . It is an accounting term. I suppose a better way to
explain it would be assets over liabilities, or the stockholders' investment in the business.
Senator B A N K H E A D . It is not based upon a year's run of business?
Mr. S E L L S . N O . The net worth is more a measure of the investment
that the stockholders have in the business, and the sales reflect a
year's operations.
Senator B A N K H E A D . In connection with net worth, you get your
percentage by taking the value of the investment to begin with?
Mr. S E L L S . That is correct.
Senator B A N K H E A D . Which gives a higher percentage on the
average?
Mr. S E L L S . In general the return on net worth is higher than the
return on net sales as a ratio. On wool for 1944 the ratio of profit
on sales is 3.8 and on net worth 9.4 percent.
Senator B A N K H E A D . A S to cotton, in 1 9 3 6 and 1 9 3 9 you have a
profit by the companies on net sales of 4.5 percent.
300
e x t e n d price c o n t r o l a n d stabilization a c t s of
19 4 2
Mr. SELLS. That is correct; 4.5 as compared with 5.2. The net
worth is higher in the base period.
Senator BANKHEAD. In net worth you have 3.5 for 1936 and 1939.
Mr. SELLS. That is after taxes. If you want to compare the ratios
on net sales and net worth for cotton, it would seem to me that for the
base period the comparable figures would be column 1 to column 3,
which are both before taxes, or column 5 and column 7, which are
after taxes. If you look at columns 1 and 3, then the ratio of net
profit to net sales for the base period is 4.5, and then in column 3,
on net worth, 5.2, which is higher.
Senator BANKHEAD. Take 1944.
Mr. SELLS. Taking 1944, it shows from 10.6 on net sales to 22.7
on net worth.
Senator BANKHEAD. When you take net worth you have the profits
twice as much as you would in the operation of a business, without
considering the amount invested?
Mr. SELLS. The reason for that is the increase in the investment.
Senator B A N K H E A D . SO, when you use net worth on cotton and on
wool you show a very much larger or higher percentage of profit than
you would if you used net sales, which is the conduct of the business,
the difference between the outgo and the income. That is true, is it
not?
Mr. SELLS. The figures show that.
Senator BANKHEAD. That is all.
The CHAIRMAN. Thank you very much.
Senator MILLIKIN. Mr. Chairman, we had Mr. Devereux, representing textile mills, who gave us a recital of facts which, if
correct, seemed to impress at least some of the members of the committee as representing a grave injustice. Mr. Lieberman was here,
and it was agreed that over the week end the OPA officials would take
a look at that case and give us their reactions to it today, so that we
might see OPA in the actual process of studying a case and reaching
its conclusions.
Have you done that, Mr. Lieberman?
Mr. LIEBERMAN. We are in the process of doing it now, Senator.
Senator MILLIKIN. Are you prepared to testify this morning?
Mr. L I E B E R M A N . A S to the results which will be arrived at on the
completion of the processing, no, sir. We have not completed it yet.
The accountants will finish their work on it this noon, and we will be
happy to have an answer tomorrow morning as to the results,f
Senator M I L L I K I N . D O you think it would be better that we not
go into it now, but wait until tomorrow?
Mr. BAKER. If the question is on the adequacy of the result, we
can get that upon the completion of the accounting study. If the
question is on the length of time in which the application has been in
the shop, and our procedure, we can testify at this time.
Senator MILLIKIN. I think we understood from the testimony on
Friday that the particular application has been before OPA only a
short time.
Mr. BAKER. It, came in last week.
Senator MILLIKIN. I think it is clear in the testimony.
Perhaps, Mr. Chairman, we ought to defer this until tomorrow.
The CHAIRMAN. Very well.
301 e x t e n d p r i c e c o n t r o l a n d s t a b i l i z a t i o n a c t s o f
19 4 2
STATEMENT OF DOUGLAS WHITLOCK, CHAIRMAN, ADVISORY
BOARD, THE PRODUCERS' COUNCIL, INC., WASHINGTON 5,
D. C.
Mr. WHITLOCK. Mr. Chairman and members of the committee,
my name is Douglas Whitlock and I appear as chairman of the advisory
board of the Producers' Council, the national organization of building
product manufacturers.
The Council's membership is composed of about 80 concerns
manufacturing building materials and equipment, together with 20
national trade associations representing manufacturers of materials
and equipment.
The Council is vitally interested in legislation affecting the operation
of the OPA because OPA policies have been directly responsible for
delaying the construction of homes for veterans and for retarding
other types of essential construction. By restricting the output of
building products, the OPA not only has reduced the value of all
types of construction but also has directly and substantially increased
the cost of building.
Eight months have elapsed since the end of the war, and the manufacture of standard, low-cost building products needed for low-cost
veterans' homes still remains shackled by inaction on the part of
OPA. Recent reports indicate that production of the scarce building
materials is ranging from 30 to 70 percent below the 1941 rate at the
present time, mainly because of inadequate price ceilings.
Existing manufacturers have ample plant capacity to produce
enough materials to meet the full requirements of the Wyatt program
this year, but the OPA, after 8 long months, has not yet been willing
to make the ceiling price adjustments which not only would mean
more homes for veterans, but also would permit a substantial reduction in the total cost of the materials used in those homes.
Every additional day that the OPA continues in its present course
means fewer new homes this year. Every day that Housing Expediter
Wyatt fails to use his powers to order the OPA to make the needed
adjustments postpones the day when the critical housing shortage will
be overcome.
Our views on the subject of price controls are shared by at least one
well-informed Government official who is an authority on building
materials. I refer to Mr. Don Campbell, lumber consultant to
Housing Expediter Wyatt, who previously spent 3 years here in the
Lumber Division of the War Production Board.
According to a statement in the Louisville Courier Journal, Mr.
Campbell, in addressing the Louisville Building Congress last week,
made the following statement regarding building product prices:
The Office of Price Administration refuses to be realistic.
little give in the line, is all we need to produce.
Just a little break, a
At another point in his talk, Mr. Campbell said:
Lumber is going into black-market channels
made to see the light * * *.
*
*
*.
The OPA must be
He added that the OPA must increase lumber prices to get lumber
back into normal channels.
When the statements of the construction industry are backed up
in this forceful manner by a man of. Mr. Campbell's experience in the
302
e x t e n d price c o n t r o l and stabilization acts of
19 4 2
Government itself, it seems to us that there cannot be too much dispute
about the facts in the case.
We in the construction industry feel obligated to bring out these
facts, because someone ultimately is going to be blamed for the unnecessary continuation of the housing shortage. We wish to make it
perfectly clear that the blame does not belong, and cannot be placed,
at the door of the construction industry or the manufacturers of
building products.
If the goals of the Wyatt housing program are not met this year, the
blame will belong, and will have to be placed, squarely on the Office
of Price Administration, which seemingly is more interested in controlling the construction industry than in getting homes built for
veterans at lower cost.
However, the Council at this time is not asking that all price controls
over building materials and equipment be removed immediately. We
recognize that the supply of some products is so much less than the
demand that the sudden removal of all price controls might have
undesirable consequences during the period required for production
to catch up with demand.
On the other hand, we do ask that Congress take prompt and effective steps to make certain that the policies of the OPA will be so
directed in the future that the production of building materials can
be increased sufficiently to meet the pressing need existing today.
Senator M U R D O C K . I wonder if the witness later on in his statement states the products from which he thinks price controls should
be removed and those on which he thinks they should be continued.
Mr. W H I T L O C K . Senator, a little later on I outline in detail the
methods, but the actual product is not named.
Senator M U R D O C K . Could you not give us those products, so that
we will know what we are talking about and so, in interrogating the
OPA officials, we can ask them specifically about this or that product
and see what the agreement or disagreement is?
Senator M C F A R L A N D . I think there is on file with this committee
some testimony given before the joint committee of the Senators and
Representatives from the lumbering States, and that testimony will
point that out in detail.
Senator M U R D O C K . IS there any reason why this witness should not
include it in his statement?
Senator M C F A R L A N D . I know of no reason, except that it may be
very voluminous,
I might state, Mr. Chairman, that I received a phone call from
Arizona this morning asking that Mr. Warren be permitted to make
a short statement on this matter also, if that can be arranged.
Senator M U R D O C K . A S I understand the witness, he represents not
only lumber, but all types of building products.
M r . WHITLOCK. Y e s , sir.
Senator M U R D O C K . I think
a statement from him, unless it would
be too voluminous, certainly would be helpful to the committee on
the very question he raises. He wrants price control on some items and
wants control entirely removed from others. That is your position,
is it not?
Mr. W H I T L O C K . Senator, a little later on I want to explain how we
think OPA could work on building products. Of course, if the mandate of this Congress is to be made a little different from the present
303 e x t e n d p r i c e c o n t r o l a n d s t a b i l i z a t i o n a c t s o f
19 4 2
situation, it may be that we would need a very slight action and in
some instances no action.
Senator T A F T . I suggest that we let Mr. Whitlock finish his statement, and then ask him to cite us a dozen or so specific cases.
Senator M U R D O C K . I would like to have that done.
Senator T O B E Y . Before you go further: The Producers' Council,
Inc., is a national organization of manufacturers of building materials
and equipment?
Mr. W H I T L O C K . A national organization of manufacturers of building products.
Senator T O B E Y . What percentage of production in those lines do
you represent?
Mr. W H I T L O C K . Senator, through the trade associations I represent a very large percentage. The council has both types of membership: It has individual manufacturers, of whom we have some 80;
then we have 20 national trade associations which represent varying
degrees of production in their particular industries, some as high as
90 percent; others maybe not so high. So that we represent a very
large percentage of the production of building products.
Senator T O B E Y . More than a majority?
M r . WHITLOCK. Y e s , sir.
Senator M C F A R L A N D . Are
you the only witness dealing with
lumber?
Mr. W H I T L O C K . I think not, Senator. I think the National
Lumber Manufacturers' Association is to appear a little later.
During the war, the OPA endeavored to accomplish two purposes:
First, to prevent inflation by regulating sales prices; and second, to
restrict the use of critical materials and labor by discouraging the
production of nonessential goods.
But the war is over. Industry now faces the complex problem of
reviving its peacetime production. There still is need to prevent
run-away inflation, but there is no longer any need or any excuse for
trying to discourage the production of nonwar goods. Yet the OPA
seems not to recognize that fact. The OPA does not realize that
many of the very items which were least wanted during the war are
in greatest demand and are most urgently needed in peacetime.
We urge that Congress use every legislative device at its command
to make it mandatory on OPA to adopt and put into practice policies
which will permit maximum production of currently scarce civilian
products, including those low-cost, standard, building products needed
to build low-cost homes for veterans.
Since before the end of the war, OPA has failed on two counts to
discharge its responsibilities so far as the production of building materials and equipment is concerned.
First, it has failed to approve certain fully justified ceiling price
increases needed to permit manufacturers of building products to
make wage adjustments which are required to attract more labor to
their plants.
Second, it has failed to adjust price ceilings on certain low-cost,
standard, building products which are essential to home construction
but which cannot be produced in volume now because present ceilings
permit no profit.
In the case of some items, inadequate price adjustments have been
made. In the case of other building products, 4 to 6 months or more
304
e x t e n d price c o n t r o l and stabilization acts of
194 2
have been lost before the OPA finally has granted necessary ceiling
price increases.
Specifically, 6 months were required to get an increase in brick
prices; 6 months elapsed before manufacturers of clay sewer pipe
obtained necessary increases; 3 to 4 months passed before the OPA
made its decision with respect to ceilings on enameled plumbing
fixtures; essential price adjustments on coal furnaces and air conditioners were pending for 5 months without decision; 18 months were
required to induce the OPA to adjust ceilings on mill work; and 5
months passed in the case of window screens.
These examples can be multiplied several times, demonstrating
beyond question that the OPA has been consistently slow and reluctant to take action. Each major request for ceiling-price adjustments
requires endless argument, telephoning, surveying, and discussion.
And each month of delay means fewer homes built for veterans, fewer
schools, and fewer hospitals.
The OPA waits 4 to 6 months or more and then grudgingly grants the
requests which have been pending, indicating clearly that the manufacturers were fully justified in their requests and showing with equal
clarity that the fault lies with the OPA. That agency either doesn't
want to speed up construction or else doesn't have the ability to make
quick decisions.
Before making any specific recommendations as to the nature of
the legislation which we believe Congress should pass at this time, I
should like to stress the fact that this country cannot attain full production of building products or other goods, and cannot attain full
employment, until price controls have been removed completely.
I repeat, that the council is not asking removal of all controls at
this time, but we are asking that all controls be removed at the earliest
possible date.
Maximum production cannot be attained until industry is encouraged
to make bold plans and to take those risks without which all-out production is impossible. If we are to have maximum production and
employment, management must be able to plan with confidnece so
that it will be free to use its full ingenuity in achieving its goals, that
its plans will not suddenly be blocked by new or changing regulations.
Business is a gamble, and the odds must be favorable before stockholders and directors are justified in taking long chances. New investments in plants and tools and machinery cannot and will not be
made unless there is a fair chance of paying out the investment and
making at least a moderate profit.
The confidence needed, if risks and long chances are to be taken,
does not exist today and will not exist so long as the Federal Government is in position to change the rules of the game at any time, and on
short notice. How can anyone feel free to make large new investments when the Government stands in position to wipe out all chance
of profit merely by issuing a new restrictive order or lowering a ceiling
price?
Take the case of the small home builder who has the capital, the
organization, the land, and the know-how to build 10 small homes for
veterans. Under normal circumstances, he feels free to take the risk
because if he has guessed wrong about his costs or if costs increase
while the homes are being built, he can add a few dollars to his selling
prices and still make a profit or at least come out even. He is willing
305 e x t e n d p r i c e c o n t r o l a n d s t a b i l i z a t i o n a c t s o f
194 2
to take these chances. Experience has taught him that, with freedom
of action, he can usually come out all right on the average. He may
lose on his first group of homes and then make up the loss on the
second group. He understands that and is willing to take the risk.
But all of that is changed when the Government controls home
building. The Government can effectively prevent the builder from
obtaining the few extra dollars needed to make up for higher costs,
which may be incurred after construction starts. The decision is
made by a Government employee who may be completely new to his
job and without any practical experience in the building of homes.
Indeed, this new and inexperienced Government employee may prevent the builder from starting his project at all, by insisting on a selling price which will not cover costs.
Under these conditions, the only safe course for the small builder is
to play safe. Either he cuts down his building program, to avoid the
chance of heavy loss, or else he sits back and waits for conditions to
change. He can't risk all he owns, when the Government can wipe
him out by an unfavorable ruling.
Take the small manufacturer, or the large manufacturer, if you wish,
of a scarce building product. He has to decide whether to produce
at capacity or at half of capcity or not produce at all. He has to
decide whether to expand or improve his plants, whether to hire and
train new workers, whether to buy costly new machinery. The decision rests on the possibility of realizing a profit.
If he produces at capacity and if Ids costs rise suddenly with no
change in his ceiling price, the. manufacturer stands to lose heavily.
He knows that in advance. He knows how exceedingly difficult it
is to get an adjustment in ceiling prices from the OPA. The safe
course, and the course whichv many are following of necessity, is to
produce on a moderate scale, thereby running less risk of heavy loss.
Profits, if any, will be smaller, but so will losses be smaller. Continuation of controls means continuation of conservative policies, and
conservatism does not permit all-out production.
Those are the factors which prevail while controls remain in effect,
while the Government arbitrarily decides whether a businessman is
to make a profit—while the Government, not free competition and
ingenuity, determines the fate of business.
That is why we say that controls must be eliminated completely at
the earliest practical date. That is why we say that the policies of
the OPA must be flexible and sensible so long as controls remain.
Past experience convinces us, without the slightest doubt, that the
policies of the OPA will not be reasonable, or practical or sensible,
unless Congress can give the OPA a clear and unmistakable mandate
through new legislation.
Senator T O B E Y . Are we to interpret that statement that the policies
of OPA in the past have not been reasonable, practical, or sensible?
Mr. W H I T L O C K . Exactly, Senator.
Senator T O B E Y . That is your indictment?
Mr. W H I T L O C K . That is my interpretation.
Earlier, I said that the OPA has failed to approve many needed
price increases, and thus has prevented production of critically needed
building products. The time available to me here today does not
permit of a detailed report on these instances, and I shall not attempt
to enumerate them. Instead, I urge that your committee arrange
306
e x t e n d price c o n t r o l and stabilization a c t s of
194 2
to hear the chairmen of the OPA industry advisory committees who
have been dealing with these problems and can give you complete
information.
The C H A I R M A N . What is his name, sir?
Mr. W H I T L O C K . Senator, there is one in each industry—brick,
lumber, sewer pipe. There are 10 critical materials under Priority
Regulation 33, and there are seven advisory committees covering
those critical materials.
T h e CHAIRMAN. Y e s .
Senator C A P E H A R T . They would be good fellows to
Mr. W H I T L O C K . They could give you the detailed
hear from.
information of
their struggle with OPA to get ceilings that will permit the production
of those critical items.
Senator C A P E H A R T . Would they like to appear?
Mr. W H I T L O C K . I think, Senator, they probably would like very
much to come and appear. I know in one instance one has asked to
appear, but due to the time schedule of the committee he has received
a letter that he would not be able to appear.
Senator C A P E H A R T . Mr. Chairman, I suggest that we ask them to
appear, because they have been working with OPA for—well, I presume since the inception of OPA, over a period of 4 or 5 years, and it
would seem to me as though they would be better qualified to give
us the facts than any of the witnesses we halve listened to and may
listen to in the future, because they are experienced men, and they
should know what they are talking about.
Senator T O B E Y . Could they not call 1 spokesman for the 10,
instead of all coming in at length, and save time?
Senator C A P E H A R T . They represent different industries.
Senator T O B E Y . Could they not get together and make a concentrated solution?
Senator C A P E H A R T . I have no objection to that, but I think we
should hear from them either as a group or individually.
Mr. W H I T L O C K . Senator, I am in a capacity of representing all
building products, and in an effort to conserve time I am giving you
the general statement. However, if you want to know about the
problem of these individual products which are in short supply, the
man who knows the detail, the man who has worked with it through
the months, is the chairman of the advisory board to OPA from that
particular industry or product.
Senator T O B E Y . Appointed by OPA?
Mr.WHITLOCK. Appointed by OPil, but comes from the industry,
of course.
Senator T O B E Y . Yes.
Senator C A P E H A R T . He represents all the industry, and wit]? the
industry he will
The C H A I R M A N . Well, this gentleman, I understand, represents the
entire industry.
Senator C A P E H A R T . He represents the entire industry, but he is not
as familiar witL the workings of the factories and their problems as
these other gentlemen.
The C H A I R M A N . Well, I am doing the best I can
Senator C A P E H A R T . Oh, I appreciate that.
The C H A I R M A N . Within the next month or so to reach some decision by the committee.
307 e x t e n d p r i c e c o n t r o l a n d s t a b i l i z a t i o n a c t s o f 1 9 4 2
Senator C A P E H A R T . Yes. And I think it is important that we
reach a decision, and I think it is important also that w~e reach the right
decision.
The C H A I R M A N . I assume that when Mr. Whitlock has spoken he is
speaking for the entire industry.
Mr. W H I T L O C K . That is correct.
The C H A I R M A N . Isn't that correct?
Mr. W H I T L O C K . That is correct.
The C H A I R M A N . Then, here is the man that speaks for the entire
industry.
Mr. W H I T L O C K . However, if you wanted to know the detail of any
product, Senator, the advisory board chairman w^ould be best equipped
to give you that information.
Senator M U R D O C K . But there is none of them as well equipped as
you are to give us the general over-all picture; isn't that correct?
Mr. W H I T L O C K . That is correct, and that is what I am trying to
do here, Senator.
Senator M U R D O C K . If we want details with reference to particular
products, we can go to these advisory members.
Mr. W H I T L O C K . That is correct.
Senator M U R D O C K . But to get the over-all picture, you are the
proper man, are you not?
Mr. W H I T L O C K . That is correct; yes, Senator.
Senator C A P E H A R T . If we want to get the picture of the lumber
industry, you want the chairman of the advisory board; or the brick
industry.
Senator M U R D O C K . That is what I understood*
Senator C A P E H A R T . Or the roofing industry or the plywood industry. And they can give us more information than possibly what we
are getting. And I am not discounting what we are getting.
Senator M U R D O C K . Mr. Chairman, what is the rule now as to the
different—I have had innumerable telegrams from the hotel people
that they are
The C H A I R M A N . There is one representative to appear for the hotels.
Senator M U R D O C K . And they are dissatisfied with the time allotted.
I think it is a half hour.
Is that the general rule that the committee "has adopted?
The C H A I R M A N . I am just trying to reduce the time as much as I
can.
Senator M U R D O C K . Yes, I know.
The C H A I R M A N . SO that we can get in within the next 6 weeks
or so.
Senator M U R D O C K . But you are giving them the same time as you
are to any other?
The C H A I R M A N . The same as to any other, yes. Well, 1 minute,
gentlemen.
Senator M U R D O C K . I would like to hear from them.
The C H A I R M A N . Yes. I think we shall recess now until 2 : 3 0 , and
will you be back at 2 : 3 0 ? Will you promise to be back at 2 : 3 0 ?
Senator Taylor, will you be back at 2 : 3 0 ?
Senator T A Y L O R . Yes, I will be back.
The C H A I R M A N . The committee will take a recess until 2 : 3 0 , when
the Senators all promise to be here.
(Whereupon, at 12:10 p. m., a recess was taken until 2:30 p. m.
of the same day.)
308
e x t e n d price c o n t r o l and stabilization acts of
AFTERNOON
194 2
SESSION
The committee reconvened at 2:55 p. m., upon the expiration of the
recess.
STATEMENT OF DOUGLAS WHITLOCK, CHAIRMAN, ADVISORY
BOARD, THE PRODUCERS' COUNCIL, INC., WASHINGTON 5,
D. C.—Resumed
The C H A I R M A N . Mr. Whitlock, we shall go on now. Will you
continue your statement? You were on
Mr. W H I T L O C K . Page 7 , I believe, Senator.
The C H A I R M A N . Yes. If you would rather put the rest into the
record, you may do so.
Mr. W H I T L O C K . Well, perhaps I should cover it.
The C H A I R M A N . All right. Page 7?
Mr. W H I T L O C K . Yes; page 7.
The C H A I R M A N . All right.
Mr. W H I T L O C K . I said also that the OPA has failed to permit
ceiling-price adjustments needed to permit manufacturers to pay the
higher wages required to attract additional labor to their plants.
Without this additional labor, production cannot be increased. Again,
I urge that the committee seek the facts from the chairmen of the
industry advisory committees.
If you will consult the advisory committee chairmen, you will
conclude, I am sure, that the OPA itself has been the greatest bottleneck in home building. By delay and procrastination, the OPA already
has deprived veterans of thousands of new homes. The same will be
true in the future unless the policies of that agency are radically
changed.
Let us look now at the results of these misguided policies which the
OPA has been following. I have said that the OPA has retarded home
building. In addition, the OPA has increased the cost of building
homes, and the increases are substantial. In the first place, the
shortage of certain building products has resulted in a vicious black
market for some materials. The industry advisory committee chairmen can tell you what has happened. They can tell you about the
ingenious barter system which has been set up in some places to
circumvent ceiling prices.
The black market directly increases the cost of building homes.
But with a free flow of materials, there would be no need for these
illegitimate transactions, and the black market would soon disappear.
It exists only because of the shortages perpetuated by the OPA.
Home-building costs are further increased by the fact that builders
are compelled to buy the high-priced luxury grades of some essential
home-building products. The low-price, standard lines, needed to
build low-cost homes for veterans, cannot be produced because existing OPA ceiling prices do not permit a profit on these grades. Thus,
the builder, if he is to build at all, must pay far more for a luxury
grade than he would have to pay for the standard grade, even after
the necessary ceiling-price adjustments had been made.
In simple mathematics, ceiling-price discrepancies force the builder
to pay $2 for a fancy grade when he could buy the standard line for
$1.20 even after a 10-percent increase in the present ceiling. Forcing
309 e x t e n d p r i c e c o n t r o l a n d s t a b i l i z a t i o n a c t s o f
194 2
builders to buy luxury building products increases the cost of building
homes for veterans.
The inadequate ceiling prices which exist today in the case of some
scarce products also increase the cost of home Duilding by causing loQg
delays in construction. The builder has to wait 10 days for brick,
another week for millwork, 2 weeks for plumbing fixtures, and 10 or
12 days for electrical equipment, all because the supply is not sufficient to permit prompt arrival of materials and equipment on the job.
Meanwhile overhead continues to pile up, interest charges keep on,
laborers are paid for idle time, and the cost of the home mounts
higher and higher. These delays increase the cost of home building,
and all of the factors just enumerated also increase the cost of all
other types of essential construction.
We contend that as much as half of the recent increases in the cost
of building are a direct result of these factors. W*e also contend that
judicious increases in the ceiling prices of the standard building products which are scarce today would permit a saving in building cost
which would be twice as great as the amount of the increases in the
ceilings. In other words, the OPA is directly responsible for much of
the high cost of building today. The cost of building would drop
appreciably as soon as the OPA adjusted ceiling prices. Veterans'
homes would cost less.
Among the OPA policies to which we object in the strongest possible
way is the one by which industry must agree to pay increased wages
without any assurance of receiving^eiling-price adjustments to compensate for the increases.
In a set of questions and answers issued by the Office of Economic
Stabilization in connection with the Wage and Salaiy Regulations
issued March 10 by the Stabilization Director, the following question
and answer appeared:
M a y O P A advise an employer who is engaged in wage negotiations what price
increase he might be entitled to if he should make a certain wage increase and
secure approval of it?
The answer which appears in the document is "No."
Economic Stabilizer Bowles in a press release dated February 27
made this statement:
Under no circumstances will O P A set a price or promise a price adjustment in
advance of a wage agreement.
In other words, a manufacturer who is faced with a demand for
increased wages must agree to an increase; and then, and only then,
can he attempt to secure a compensating increase in his ceiling prices
to permit him to pay the higher wages.
We submit that this is a completely unrealistic policy. It means
that a manufacturer first must bind himself to increased costs and
then try to get fair treatment from the OPA.
, Under the OPA policy as enunciated by Mr. Bowles, the manufacturer either must close down his plant until the increased ceiling
is approved or else must pay the higher wages without a higher ceiling,
perhaps incurring heavy losses, during the period required for OPA to
reach a decision.
In actual practice, as stated previously, 4 to 6 months or 2 years are
required to get these decisions in case after case. Certainly, this is
not a policy calculated to speed up production of materials. Some
310
e x t e n d price c o n t r o l and stabilization a c t s of
194 2
effective means of assuring shortcuts in this procedure must be found,
if production is to reach the necessary increased levels. Many building-product manufacturers already are operating on so narrow a
margin of profit that they cannot possibly pay higher wages without
higher ceilings. And the OPA refuses to give any assurance of bridging she gap, if increased wages a^e agreed to.
Senator M I T C H E L L . Would you say that OPA is just as slow in
handling price increases now as it was 6 months ago?
Mr. W H I T L O C K . Well, there has been an effort made on the part of
OPA to try and speed up some of these building-material prices.
However, an example of just what I have been illustrating here to the
committee can be given you from the brick industry where we
Senator M I T C H E L L . And how many price increases have there been
in the brick industry, for instance?
Mr. W H I T L O C K . The brick industry has had two price increases;
that is, two general price increases. There are price increases area by
area; that is, they have 17 areas, and there were price adjustments
made in practically all of the 17 areas a little over a year ago. Then
in September last year they made a second general price increase
throughout the entire eastern part of country.
We have this situation today: That we have wage demands from
labor which we are not in a position to agree to without some assurance
there is going to be a price adjustment. Now, we have asked OPA
how long it would take to make a survey and give those adjustments
if we were able to agree with labtft on the high wage they are asking,
and they tell us that it will be anywhere from 90 to 120 days; so we
would have to be paying that high wage anywhere from 3 to 4 months
before they could complete their survey and the 700 brick plants
could make the adjustment. Now, we are simply—our hands are
tied when it comes to making those wage adjustments.
Senator M I T C H E L L . And you say your hands; you mean the whole
industry?
Mr. W H I T L O C K . The brick industry.
Senator M I T C H E L L . On a Nation-wide basis?
Mr. W H I T L O C K . On a Nation-wide basis. Individually there are
700 plants, and OPA tells us that they cannot make individual adjustments; they haven't got the staff to make the adjustments for the
individual plants. They tried that at the beginning of OPA, and they
were swamped with applications for price adjustments, so they went
to what they called a regional basis and put in 17 areas, and then
they made their surveys by areas, and even that was too slow. So
then they finally came to a Nation-wide adjustment on what they
called a discretionary basis.
Now, the only thing we know is that they tell us it will take 3 to
4 months, and we would have to be paying those high wages before
they could even make the survey, which would mean that we would
operate at a loss for from 3 to 4 months because of their lack of staff;
the time it takes, and the necessary delays that come through the
procedures of OPA.
Senator M I T C H E L L . Has the employment in the brick industry
increased materially in recent months?
Mr. W H I T L O C K . After the price increase last September, Senator,
the employment immediately increased; plants opened up. Nearly
half of the industry was shut down in September of 1945. With
311 e x t e n d p r i c e c o n t r o l a n d s t a b i l i z a t i o n a c t s o f 1 9 4 2
the price adjustment of September 18 all but about 169 plants have
opened up. They are recruiting their labor and training their crews
to work together.
Senator M I T C H E L L . And they are being able to recruit labor now,
are they?
Mr. W H I T L O C K . There are a few—:—
Senator M I T C H E L L . They are getting labor now, are they?
Mr. W H I T L O C K . There are a few spots, not many, where the labor
supply is not adequate, but generally the labor supply is adequate.
Senator M I T C H E L L . The shortage has not occurred generally.
Mr. W H I T L O C K . However, labor is demanding higher wages after
the settlement of the steel strike, and the brick industry is in a position now of not being able to negotiate tho
@FedFRASER