Hearings, Aug. 5-9,11-15, Sept.17-18,22-23,25, 1941

The committee met at 10:15 a. m., Hon. Henry B. Steagall (chairman), presiding. The members present were: Messrs. Steagall, Williams, Spence, Ford, Brown, Patman, Barry, Sacks, Gore, Mills, Monroney, Lynch, Kopplemann, Boggs, Hull, Wolcott, Gifford, Crawford, Gamble, Kean, Miss Sumner, Messrs. Smith, Kunkel, Rolph, and Dewey.

The CHAIRMAN. The committee is called to consider H. R. 5479. When this bill was introduced I gave the following statement to the press:

"As chairman of the Banking and Currency Committee of the House, I have introduced the administration's price-control bill. It is an administration bill with only a limited number of changes incorporated at my instance. I expect to sponsor the bill and give my earnest support to its substance in the effort to accomplish the purpose which seems to be recognized by all as desirable. I regard it as of paramount importance to preserve for agriculture the benefits of existing legislation and I favor a reasonable latitude above parity prices in the application of this legislation. There are many factors which affect the income of farmers over which they have no control, such as the vicissitudes of weather and the ravages of insects, so that we must regard not only prices but income as essential in any program affecting agriculture.

"The bill will receive full and free consideration at the hands of the members of the Banking and Currency Committee of the House, and it is my hope that the bill finally agreed upon will be satisfactory to the judgment of the House and that it will, with as little disturbance as possible to the orderly process of our business life, safeguard the country against wild and undue inflation during the months that lie ahead, and above all, that the Nation will not experience such confusion and collapse as it suffered so disastrously during the period following the first World War."

This statement expresses the attitude with which I approach consideration of this legislation. I am quite clearly of the view that the country should be safeguarded against a repetition of the experience with all the maladjustments and distress that followed the first World War. To accomplish this I am convinced that some agency of the Government should be established with power to stabilize prices of strategic and critical materials and all basic commodities essential to the defense program. It seems to me this is necessary not only to protect the Government against unjust and unnecessary expenditures but also to prevent fluctuations that disrupt and disturb our civilian economy. Probably no one measure

will be able to accomplish all that is desired but I think it is recognized on all sides that any successful program looking toward prevention of inflation must embrace some authority to deal specifically and directly with the price structure.

Such is the purpose of the bill before us. The bill, H. R. 5479, follows the message from the President transmitting a request for legislation stabilizing the price of various commodities and rentals and is designed to effectuate the purposes expressed by the President. The message of the President is as follows:

MESSAGE FROM THE PRESIDENT OF THE UNITED STATES' TRANSMITTING REQUEST FOR LEGISLATION STABILIZING THE PRICE OF VARIOUS COMMODITIES AND RENTALS

To the Congress of the United States:

Inflationary price rises and increases in the cost of living are today threatening to undermine our defense effort. I am, therefore, recommending to the Congress the adoption of measures to deal with this threat.

We are now spending more than $30,000,000 a day on defense. This rate must and will increase. In June of this year we spent about $908,000,000-more than five times the $153,000,000 we spent in June 1940. Every dollar spent for defense presses against an already limited supply of materials.

This pressure is sharply accentuated by an ever-increasing civilian demand. For the first time in years many of our workers are in the market for the goods they have always wanted. This means more buyers for more products which contain steel and aluminum and other materials needed for defense. Thus a rapidly expanding civilian demand has been added to a vast and insistent demand by the Government.

Those who have money to spend are willing to bid for the goods. The Government must and will satisfy its defense needs. In such a situation, price advances merely determine who gets the scarce materials, without increasing the available supply. We face inflation, unless we act decisively and without delay.

The consequences of inflation are well known. We have seen them before. Producers, unable to determine what their costs will be, hesitate to enter into defense contracts or otherwise to commit themselves to ventures whose outcome they cannot foresee. The whole production machinery falters.

Speculators anticipating successive price advances, withhold commodities from essential military production.

Costs to the Government increase, and with it the public debt.

Increases in the workers' cost of living, on the one hand, and excessive profits for the manufacturer, on the other, lead to spiraling demands for higher wages. This means friction between employer and employed.

Great profits are reaped by some, while others, with fixed and low incomes, find their living standards drastically reduced and their life-long savings shrunken. The unskilled worker, the white-collar worker, the farmer, the small businessman, and the small investor all find that their dollar buys ever less and less.

The burden of defense is thrown haphazardly and inequitably on those with fixed income of whose bargaining power is too weak to secure increases in income commensurate with the rise in the cost of living.

And over all hovers the specter of future deflation and depression, to confuse and retard the defense effort and inevitably to aggravate the dangers and difficulties of a return to a normal peacetime basis.

Economic sacrifies there will be and we shall bear them cheerfully. But we are determined that the sacrifice of one shall not be the profit of another. Nothing will sap the morale of this Nation more quickly or ruinously than penalizing its sweat and skill and thrift by the individually undeserved and uncontrollable poverty of inflation.

Our objective, therefore, must be to see that inflation, arising from the abuse of power to increase prices because the supply is limited and the demand inflexible, does not occur during the present emergency.

Today we stand, as we did in the closing months of 1915, at the beginning of an upward sweep of the whole price structure. Then, too, we enjoyed relative

1 H. Doc. 332, 77th Cong., 1st sess.

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