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was in session at that time, and an attempt was made to make corrections, but one of the great difficulties was the inability to get able men to take this post. I think the last war was so close to the present day that a great many men with ability to handle the job decided they were not going to stick their necks out and take such a job. That was one of the contributing factors to the delay.
Senator SCHOEPPEL. I wanted to go into that phase of the thing for one specific reason. There is one thing I want to clear up for the record. When we leave Washington and go back into our respective home areas, and people say “Well, how come this and that?" I think it is only fair to point out that in September last year we did give the mechanics and the machinery, so that therefore Congress did not come too far short. There have been some bad phases of it that needed correcting, and through orderly process we should do that, but by and large we did put at the command of the Chief Executive or the departments of the Government the machinery that I feel personally we should have moved out on, have eliminated many of the existing difficulties.
Secretary Tobin. Excepting, Senator, this must be made clear: You cannot set an organization of this kind up to control the economy the moment that the Congress enacts the law.
Senator SCHOEPPEL. I agree with you.
Secretary TOBIN. It does take some time to establish the machinery, and the worst thing that could happen would be to start before you are ready to be able to have some reasonable enforcement in an organization that could make the law that was passed by the Congress function.
Senator SCHOEPPEL. We are now facing the adjustments, in this over-all, inclusive act that has a lot of amendments in it. When we listened to Mr. Wilson, as we did yesterday, I find he goes a tremendously long way toward controls, and we want to get away from it as quickly as we can.
Now, on this question of price control, and all the incidental controls that go along with it, during the period of time when it was not put on, the prices of goods went up and wages went up. It was rather interesting to note that in June 1950, I think, you will find the hourly wage in all industries was $1.453. In February 1951 it was $1.563, or an increase there, of roughly, around 712 percent.
In Mr. Wilson's testimony yesterday he indicated he was advocating freezing parity at the beginning of certain seasons of the year, rather than on a monthly basis. I do not know how you can do that, myself. Maybe it can be worked out, but it is rather interesting to note that if we look at the futures market, which is a controlling factor in this country the projected or the futures market on grains—I think you men in the South in cotton will find that it is quoted below parity in all of those figures. It is rather interesting to note it portends something that might be ahead of us in the future, which points to a lot of difficulties that are going to develop.
Now, during this period of time, if we follow through on Mr. Wilson's program, we pass an act to freeze parity, and all those things. You are representing labor, an important segment of our country, tremendously important. I am wondering if your Department would feel as if you should say to your labor groups, “Let us freeze all those
wages and all of those agricultural products that labor is involved with during the same period of time."
I happen to come from a farming area, the heart of it. The incomes from my farms are going down, down, down even today, and here is a cattle-price ceiling put on.
The CHAIRMAN. Will the Senator yield?
The ceiling price has not been put on. That was the one quarrel I had with them. They are going to roll the price back in October starting in May, which I cannot understand.
Senator SCHOEPPEL. That brings in another factor, that from the standpoint of the producer somebody has not thought this thing through, and I think you have been a little ill-advised when you figure it all the way through. · Agriculture ties into food, the cost of food, and all those things. Imagine wanting to put ceilings on agriculture. You would put the industry in a strait-jacket. I think there has to be much thought and consideration given to the inequities that are already developing and will develop, and I do not think the problem can be solved by the stroke of a pen, by establishing ceiling prices and rollbacks. A lot of these factors have to be given pretty careful consideration. I, for one, certainly would want to see us, as the Banking and Currency Committee of the Senate, look very carefully at the attendant difficulties and mislocations and lack of equitable adjustments that could follow.
The CHAIRMAN. Will the Senator yield ?
The CHAIRMAN. You come from an agricultural section; a very heavy agricultural and meat section. Is it not your judgment that the farmer is not going to stand around and hold his cattle and herds until October when he has been told the price is going to go down?
Senator SCHOEPPEL. Already the movement has started.
The CHAIRMAN. What I want to get is production, and that is what you are for, but to tell a man you are going to put his price down in October and here it is May, what is he going to do? He is not going to keep the cattle and try to fatten them because the price will not warrant it. That is what I am complaining about.
Senator SCHOEPPEL. And the people up in the Secretary's good State and in Boston, Washington, Philadelphia, and a lot of these other places are going to find you are not going to have the poundage of meat in the butcher shops because it is going to come up short. It is bound to come up short. I know what is happening out in my area and in the semifeeding areas, yet we are talking here about this type of legislation, and getting some encouragement, to go in and impose further restrictions. It is not going to work unless we take a very realistic look at this thing. I am not giving you a lecture, because you know a lot more about some of these maladjustments than I do and than a lot of us here do, but it cannot be solved by a stroke of the pen and we cannot, by passing a law, remove these attendant difficulties when we see the things that are already developing this far ahead of time.
I do want to point out again that there are many factors that go into farming that tie themselves into the food side of this thing that must not be overlooked.
There is one other thing I wanted to ask you, Mr. Secretary, on page 9. You have there:
I further urge the importance of enacting these provisions of the proposed legislation which deal with more adequate enforcement of price controls.
Could you elaborate on that as to what you have in mind by that statement ?
Secretary Tobin. Yes. In the law there is a provision in which there will be a disallowance of overcharges for tax purposes. If you have charged into the costs of operation the manufacture of an item of goods bought at overceiling prices, you will not be permitted to use the excess over the ceiling price as an expense of the business for tax purposes. Then there is the provision for licenses in certain lines of business.
Senator BRICKER. Do we not have the power to do that now, the Treasury?
Secretary TOBIN. I do not believe so. It is not in the original law; at least, that is my understanding.
Senator SCHOEPPEL. You mean the proposed bill!
Secretary Tobin. By the amendments that are before you for consideration.
Then, secondly, any purchaser who has paid over the ceiling price has a right to sue the individual or firm that has sold him any time within a period after the sale and can recover not only the amount of money he was overcharged, but three times the amount of money. At the present time that is in the law, but there is a provision that he can recover-there is a $10,000, well, it is plus $10,000, and the $10,000 feature has been eliminated and you can now recover in any instance up to three times the amount of the overcharge.
Then there is also a recommendation for licensing features under which the price control agency would license firms, and in the event that after hearing and warning that they were selling over price, they could revoke the license, but there is also the provision for the individual or business concern to appeal to the court and the maximum period of time a license could be taken away would be for a year.
Those are the enforcement provisions I had reference to at that point.
Senator SCHOEPPEL. I was curious to know what were the points you had in mind there. I think some of these other matters that I had marked as I listened to your statement were covered.
There is one more thing. On page 11, that goes to the decontrol matter. I feel pretty strongly that we should go very slowly where a State or some local subdivision of the State, has taken some definite action. When they have taken that action I dislike very much to see us go on record in an over-all sweeping way, depriving those local self-groverning units of the handling of their own problem. Neither do I want to give the impression by granting over-all inclusive authority and power to the Federal Government, that the folks out in the hinterland are not fair and practical and have not just as high a degree of consideration for what is going on as the Federal Government. I think we would do that by giving the Federal Government over-all blanket authority, because I think we would nullify something that is very fundamental in this country.
Secretary Tobin. Senator, I would say that 90 percent of your State was not controlled during the last war, and in the post war period.
Senator SCHOEPPEL. That is right.
Secretary TOBIN. And I would hope that the Administrator would not impose rent controls unless it would be necessary, unless there was an unbalance of housing in an area in which there was a greater demand than there was a supply.
Senator SCHOEPPEL. We would have a situation, obviously, in some of these defense areas, highly congested, with new units going in, where the influx of population would cause matters to get out of balance very quickly, but where the State has its own machinery to look after it, I would think there would be just as high a degree of responsibility on the part of the State to meet that readjustment and put on and revoke controls as there would be on the part of the Federal Government.
Secretary Tobin. That would be nice if history proved that to be true, but history, within the last 18 months proved that not to be true on the basis of the communities that I have cited to you. It seems to me that if rents go up more than 50 percent in a period of 9 months, as they did in one city, and as they did in another community in 18 months, that there was need for action on the part of the local authorities, and they did not take that action. So in those spotty sections of the country they are not only contributing to a wild inflation in the country through an increase in the cost of living, but they are likewise unstable and bringing great hardship to bear on the people with low incomes, because the bulk of these increases came, as I told you earlier, in the low rentals that were started at $30 or below, per month.
Senator SCHOEPPEL. I think that is about all I have to say.
Senator BRICKER. Mr. Chairman; again, you do not take into consideration the time when you have to, to compare rent increases with your price, labor, and business increases from 1941 until the present time and not when rent control was taken off.
Your fundamental premise is just as unsound as it can be, if we are going to maintain the American Federal system of government. A city is going to do damage to itself if somebody down here sitting behind a desk in the Federal Government has got to tell them what to do back home. If we are going to maintain freedom in this country, we have to have some modicum of local self-government, and for you to sit here as a member of the Cabinet and say that the Federal Government has got to say to Houston, Tex., or to Columbus, Ohio, or any place else, “You do not know what is good for you and we are going to tell you and we are going to show you,” does not seem to me like it is consistent with our whole theory of government. For one, I just cannot subscribe to it.
Secretary Tobin. I think the Supreme Court passed judgment on that issue and they have determined, I think, that the founding fathers, in their good judgment, determined that certain duties would be performed by the Federal Government and others could be performed by the local governments, and as our economy has become more complicated and we became more interdependent one area upon the other, it became necessary for the common good to enact certain regulatory
laws that would cover the Nation end to end. Of course, the Supreme Court has passed judgment on this issue and they have decided that it is in keeping with the Constitution that was written by the founding fathers, so that it is basically American on the basis of the decisions of the Supreme Court.
Senator BRICKER. The Supreme Court has never said that the Federal Government should have the power to go in and tell a local community when the Congress has given it the power, that it has to reverse its position and that local government cannot maintain, under the police power, or cannot support under the police power, the best interests of their population. That is essentially what you are saying here, and the Supreme Court has only sustained this in time of war. Of course, we are in war now, I grant you, and they have perfect authority for granting the Federal Government such power as this, but nevertheless, in doing so, you are destroying the very foundation of our whole Federal System which is local government and the State's responsibility.
Secretary TOBIN. And it is only in case of grave emergency that such powers should be exercised by the Federal Government, and it seems clearly evident that some of the local communities are not acting in the best interests of the common security of us all.
Senator BRICKER. I am going on the premise that they know what is better for their community than you could possibly know down here.
Secretary Tobin. And in this great emergency it is necessary for the purpose of stopping this inflation, to have the Federal Government take such action. The moment that we can get back to normal times—and given communities are in balance as regards the supply and demand of housing, the power to control rents would not be necessary. Since housing is one of the most essential elements to decent living for the American citizen, I think it is a proper field in periods of emergency, whether war or postwar, or in such a situation as we are at the present time, to exercise such authority. Of course, Senator, I might say that the Federal Government cannot do it unless the chosen representatives of the people of all those respective areas by vote, in both branches and over the signature of the President of the United States, say that it is the proper thing to do in the emergency.
Senator BRICKER. I grant you that, but still we have elected representatives to determine the policy of this country and I am discussing policy as much as I am power.
Is it not true that we have more units of housing today per population, or per unit of population, than we had before the war?
Secretary Tobin. Oh, there is no question about that, but remember, we were coming out of the depths of a serious depression. Families were doubled up all over the United States.
Senator BRICKER. Compared with 1929, then.
Secretary TOBIN. Compared with the twenties; yes. We were coming out of that and it took quite a long period of time to come out of it. Many of the evidences of what happened during that period as a result of the crash of 1929 are evident in the problems that we have today, particularly the manpower situation. I described to you that in place of the 1,275,000 boys that we had coming of age in 1940 and 1941 we have only 1,050,000 boys coming of age today.
Senator BRICKER. What about your housing units in relation to your population, say, in 1929 compared with today!