I have another chart which does not represent such a successful attempt on the part of the Government to obtain stability concurrently with an adequate supply. That is on steel scrap, which is one of the most troublesome (chart 11). We tried various methods of discussion and exhortation with the scrap dealers. Now, this is an industry that does not concentrate production within a small number. As you know, it is widely diffused and it does not lend itself easily to individual agreements with the Government. However, we found it necessary, after various kinds of sashays and operations, to issue a ceiling. The price did go down, but that price is being violated today. With great reluctance I have turned over to the Attorney General evidence we have of collusion on the part of the scrap dealers in order to evade that schedule and take advantage of a foreshortened market.

And may I say, as an aside, Mr. Chairman, that we have had the finest kind of cooperation from the Attorney General's Office, both in the way of information and ability to get prompt service. Very early in my work Attorney General Jackson told me he would give me a sort of priority where we found evidences that the Government was being taken advantage of. I believe that this is the first case where we have formally requested that action be instituted.

I would not want that to be taken as meaning there have not been evidences of a certain amount of understanding and telepathic communication as between producers, but I am saying, as far as those we have been trying most urgently to keep in line, this represents the first occasion I have had to call on the Attorney General.

Now, that represents not so much an innate wickedness of the steel scrap brokers as against the very fine example of the copper producers; it represents the pressure that has been developed against which people cannot sustain themselves, particularly if you have that old familiar person, called in the N. R. A., the chiseler. This time he is on the other side-not cutting prices, but raising prices. And it seems the remedies available in the last war to Mr. Baruch and Dr. Brookings for keeping prices in line are not available for the handling of that particular price. Something more of a direct undertaking supplied by this Congress is needed if that item is to be kept in line.

May I point out that on the price of that particular item, taken together with wages in the steel industry, depends what will happen to the price of steel. If these are kept in line, the price of steel can be kept in line. The price that we set as a ceiling for steel prices about 4 months ago has been sufficient to enable a fair return—at least for the lower cost producer; but if the price gets out of line, if iron ore should get out of line, if the cost of living should rise and wages should get out of line, there will be necessity for an increase in steel prices.

Zinc is another fine example of a price that has been kept in control (chart 12). There is a shortage of zinc capacity. The price of zinc has declined very substantially. After there had been a fairly large rise, one that seemed necessary to encourage producers, within the limits of their existing capacity, to bring production to the market, we asked the zinc producers to hold their prices at the

INDEX 400

WHOLESALE PRICES

BOTANICAL DRUGS AND ESSENTIAL OILS

AUGUST 1939 = 100

CHART 13

established level and chart 12 records of what has happened to that price.

Now, one of the most difficult groups of commodities in which to try to keep prices under control, is that of botanical drugs and essential oils (chart 13). Many of these products are imported from Central Europe, the Mediterranean countries, and South America, and ship-ments from all of these sources, as you know, have been drastically curtailed. In addition, shipping rates and insurance have been greatly advanced.

The price of belladonna root has advanced 1,300 percent between August 1939 and July 5, 1941; henbane leaves 2,200 percent; bergamot oil 400 percent; cassia oil 300 percent. Now, none of those commodities are of the same prime essentiality as basic metals, but I wanted you to see what happened to a price under the influence of the extraordinary costs a war brings about. It is not the result of an increase in the demand to such a proportion that the price should g0 that high; it is not a result of any particularly monopolistic effort; it represents what happens when the cruel hand of war begins to reach out and interfere with supply, while the exigencies of war demand higher supplies.

Now, I want to show you the response to the impact of war. Chart 14 has been specially constructed to bring to you what happened in those first few months after the outbreak of the war. Here [indicating] is cod-liver oil, gum arabic, orange oil, ergot, and that is the kind of tilt you get when all of the uncertainties about shipping and increases in rates and charges take place. I show this chart because it is representative, and truly representative of what can happen, what will happen, what did happen in the last war, to commodities very essential to the carrying forward of our defense effort and keeping our economy going at the same time. When the shortages begin to develop and there are more buyers than sellers, whether it is for copper, steel, cotton, or whatever the product happens to be. and the full effect begins to take place, unless there is a restraining influence, unless the law of supply and demand is set aside, this [indicating] will be the pattern of prices for items that go very heavily into the American productive effort.

I want to show you what has happened to the wholesale price of fats and oils [chart 15]. An acute situation has developed in all fats and oils since the outbreak of war, and particularly since the beginning of 1941, because of an increase in domestic demand, plus a demand for exports to Britain, coming at a time when our supply of imported oils is being cut off. The situation was seriously af fected by speculation, by a withholding from the market and by the concentration of endeavor in the hands of people who refused to sell.

I am going to read the index for June 1941 of several of these fats and oils on a basis of August 1939 representing 100. Butter is at 150, meaning a 50-percent rise; lard is 179; other food fats, 200, which means a doubling; soap fats, 181; drying oils, 130; cottonseed oil, 208; miscellaneous oils, 150.

Now, I want to point out what has happened in recent months to indicate why we have this tilt [indicating]. As I said, about February we began to see there were enormous forces at work in the