(5) to make and furnish such studies, reports thereon, and recommendations with respect to matters of Federal economic policy and legislation as the President may request.

(d) The Council shall make an annual report to the President in December of each year.

(e) In exercising its powers, functions, and duties under this Act

(1) the Council may constitute such advisory committees and may consult with such representatives of industry, agriculture, labor, consumers, State and local governments, and other groups, as it deems advisable;

(2) the Council shall, to the fullest extent possible, utilize the services, facilities, and information (including statistical information) of other Government agencies as well as of private research agencies, in order that duplication of effort and expense may be avoided.

(f) To enable the Council to exercise its powers, functions, and duties under this Act, there are authorized to be appropriated (except for the salaries of the members and the salaries of officers and employees of the Council) such sums as may be necessary. For the salaries of the members and the salaries of officers and employees of the Council, there is authorized to be appropriated not exceeding $345,000 in the aggregate for each fiscal year.

JOINT COMMITTEE ON THE ECONOMIC REPORT

SEC. 5. (a) There is hereby established a Joint Committee on the Economic Report, to be composed of seven Members of the Senate, to be appointed by the President of the Senate, and seven Members of the House of Representatives, to be appointed by the Speaker of the House of Representatives. The party representation on the joint committee shall as nearly as may be feasible reflect the relative membership of the majority and minority parties in the Senate and House of Representatives.

(b) It shall be the function of the joint committee

(1) to make a continuing study of matters relating to the Economic Report;

(2) to study means of coordinating programs in order to further the policy of this Act; and

(3) as a guide to the several committees of the Congress dealing with legislation relating to the Economic Report, not later than February 1 of each year (beginning with the year 1947) to file a report with the Senate and the House of Representatives containing its findings and recommendations with respect to each of the main recommendations made by the President in the Economic Report, and from time to time to make such other reports and recommendations to the Senate and House of Representatives as it deems advisable.

(c) Vacancies in the membership of the joint committee shall not affect the power of the remaining members to execute the functions of the joint committee, and shall be filled in the same manner as in the case of the original selection. The joint committee shall select a chairman and a vice chairman from among its members.

(d) The joint committee, or any duly authorized subcommittee thereof, is authorized to hold such hearings as it deems advisable, and, within the limitations of its appropriations, the joint committee is empowered to appoint and fix the compensation of such experts, consultants, technicians, and clerical and stenographic assistants, to procure such printing and binding, and to make such such expenditures, as it deems necessary and advisable. The cost of stenographic services to report hearings of the joint committee, or any subcommittee thereof, shall not exceed 25 cents per hundred words. The joint committee is authorized to utilize the services, information, and facilities of the departments and establishments of the Government, and also of private research agencies.

(e) There is hereby authorized to be appropriated for each fiscal year, the sum of $50,000, or so much thereof as may be necessary, to carry out the provisions of this section, to be disbursed by the Secretary of the Senate on vouchers signed by the chairman or vice chairman.

Approved February 20, 1946.

The CHAIRMAN. The joint committee is composed of seven Members of the Senate, to be appointed by the President of the Senate, and

seven Members of the House of Representatives to be appointed by the Speaker of the House of Representatives. The act provides that it shall be the function of the joint committee

(1) to make a continuing study of matters relating the Economic Report; (2) to study means of coordinating programs in order to further the policy of this Act; and

(3) as a guide to the several committees of the Congress dealing with legislation relating to the Economic Report, not later than May 1 of each year (beginning with the year 1947) to file a report with the Senate and the House of Representatives containing its findings and recommendations with respect to each of the main recommendations made by the President in the Economic Report, and from time to time to make such other reports and recommendations to the Senate and House of Representatives as it deems advisable.

In a broader way our function is to try to develop governmental policies which may prevent the development of any depression, and consequently at this time we are interested in hearing from the business, labor, and agricultural interests of the country as to whether they think there is something which threatens the present condition of full employment, and also whether they think there is anything the Government can do about it, and if they do, what they think the Government should do, what powers might be granted by Congress, or what general policies might be adopted by the Executive.

You have a statement, Mr. Wilson, that you have filed with the committee, and it will appear in the record. Do you wish to proceed with your statement now?

STATEMENT OF C. E. WILSON, PRESIDENT, GENERAL MOTORS CORP., DETROIT, MICH.

Mr. WILSON. I think that would be the best way to do.

The CHAIRMAN. Our general plan is to have about an hour or so for each witness, perhaps 20 minutes or longer for the statement, and then questions by the members of the committee. You may proceed. Mr. WILSON. My name is Charles E. Wilson, and I am president of General Motors Corp. I am here at the invitation of your committee to testify regarding economic and social matters that affect the welfare of the Nation. I understand that your committee under the Employment Act of 1946 is charged with the responsibility of making recommendations to the Congress in respect to those matters of Government policy that have to do with the maintenance of a maximum of useful employment opportunity in free competitive enterprise.

As background for my remarks and recommendations I should first like to make some comment about General Motors, the automobile industry, and what I consider the essential elements of a free competitive system.

On March 22, 1944, I testified before the Special Committee of the House of Representatives on Postwar Economic Policy and Planning. The concrete plan General Motors had worked out for reconstruction, rehabilitation, and reorganization following the war is a matter of record in my testimony before that committee. This plan was put into effect immediately after the Japanese war, but progress was halted by a disastrous strike in the plants of General Motors and crippling strikes throughout industry generally. So after almost 2 years of peace we have fallen far short of what we had hoped to do.

As a result of the war and its troublesome aftermath, automobile production is far behind the country's need. This is clear when we consider that in the five prewar years 1937-41 the industry produced and sold 19,800,000 cars and trucks for civilian use; while in the five following years, including the war years, we produced only 3,800,000 for civilian use, a difference of 16,000,000.

In spite of all these production difficulties and the serious increase in costs, automobiles are still among the best bargains offered to the American public today. Throughout the country thousands of automobile dealers are selling cars for less than the public thinks they are worth and is currently willing to pay for them. The purchaser of a new car can immediately sell it in the open market for hundreds of dollars more than he paid our dealers for it. Some new purchasers have succumbed to the temptation to make this easy profit, hence the 1947 models on the used car lots at premium prices. Good automobiles have such recognized value that they are almost like money in the bank; and when our dealers sell $10 bills for $8 it isn't surprising that some of the purchasers use them for 10's.

Cars and trucks are so important to our American way of living and the unsatisfied demand for them is so great that more materials to work with is all the automobile industry needs now to do its part in maintaining a high level of prosperity. The industry alone, with its big use of raw materials, the millions directly and indirectly employed, and its stimulating effect on other industries and business generally, practically underwrites a high level of industrial activity for at least several years to come unless we have another wave of monopolistic and crippling strikes or a world catastrophe.

What the country needs most today is continuous, uninterrupted, efficient production. To make this possible the Nation must be protected from organized unemployment; that is, monopolistic strikes that paralyze whole vital industries or shut down one important community after another. The majority of the people of our country recognize this truth and an important step in this direction has been taken by Congress.

The development and production of our American automobiles is one of the best examples of what can be accomplished for the people of a Nation by the normal working of free competition in a free society. I have been associated with this development for 35 years. When I started with the industry its total production from its beginning had just reached 1,000,000 cars and trucks. Since that time 93,000,000 vehicles have been produced, and in addition more than 25 billion dollars' worth of war materials.

I think I understand what has made this industry develop and flourish and how it has been possible for it to make its outstanding contribution to higher American and world-wide living standards. This achievement has been possible only under a political system that recognized human rights in person and in property and that promoted the initiative of millions of freemen rather than the dictatorship of a few state planners. Customers are the only economic dictators that can be tolerated in a free society.

While this system is the best that has ever been devised, I still am in favor of making every effort to improve it with the objective of maintaining a high level of employment and of real purchasing

power. However, in adopting policies or establishing regulations. intended to accomplish this desirable purpose we must be very careful not to so restrict the initiative of individuals that we wind up by defeating the very purpose we intend to accomplish.

It is well to remember that our Americanism is still the new revolutionary, liberal philosophy in the world. Those who advocate communism, socialism, or any form of statism, while flying the flag of liberalism, are in fact reactionaries, advocating a system which would enslave the people of a nation. While mechanical and scientific invention is continuing at a rapid pace in many parts of the world, politically a great step backward has been taken in some countries. We again have slavery in Europe and a new form of serfdom where men and women are arbitrarily bound to their jobs and their machines if they are to have food cards and eat. The new dictators claim their reactionary philosophy is in the interests of the people, but they enslave the people just the same. Our system in America with public education and individual freedom for all citizens develops ability, provides individual opportunity, stimulates ambition, and greatly accelerates scientific discovery, invention, and the development and use of natural resources. This dynamic force that contributes so much to the health, prosperity, and happiness of Americans must be preserved at all cost.

Ours is the only important country in the world that has recognized the importance of free competition as evidenced by its enactment of antimonopoly and antitrust laws. It is clear that this same basic principle must also be applied to monopolies in labor. Failure to do this may well result in a business recession and chronic unemployment. We don't believe in business cartels in our country, and we can't stand for labor cartels either.

Before discussing measures to improve our system, a clear understanding of some of the important fundamentals of the system will be helpful. What are the fundamental principles that make our system work? Among others, the following seem to me to be highly important:

1. The necessity and responsibility for each citizen to qualify through education, experience, and willingness to work to make a social and economic contribution in proportion to the reward he expects to receive. This requires dropping the false philosophy that the state should look after the economic welfare of individual citizens and returning to the sound philosophy that each should make the effort to look after himself, and that the millions can plan their own lives better than a few state planners can plan for them. It does require continuing our system of public education so that all young people may have opportunity to qualify in line with their ambition, ability, and willingness to work.

2. The principle that thrift and industry must have their reward and laziness and dissipation pay their penalty. This is a sound incentive for all. If it is importantly violated by state planning, the negative incentives of fear and coercion must inevitably be substituted for the positive incentives of a free society.

3. The recognition that we can all have more only if we produce more. It requires reasonable hours of work as compared to leisure time, and continuing progress in making available better tools and

methods for doing all the kinds of things that have to be done to deliver products and services to customers. It requires giving up the false philosophy of something for nothing and that prosperity for the Nation can be achieved without efficient work by redividing the accumulated wealth of the past. To provide better tools, capital must be accumulated through savings to pay for them. The hope of profits is the incentive that encourages people to save, to invest their savings in productive enterprise, and to develop new businesses.

4. Customers must have free choice in the expenditure of their earnings and savings. An economy of plenty is the natural result of free competition, and the false philosophy of prosperity through regimentation and scarcity must not be encouraged, especially by law.

5. Respect for law and the rights of all citizens and the development of a social consciousness in our business and human relations. None of us can live entirely by his own efforts. To a great extent, we are all dependent upon one another, not only for health and safety but for our very existence.

In the light of these fundamentals, what are some of the major problems involved in maintaining full opportunity for employment? The CHAIRMAN. Excuse me a moment, Mr. Wilson. I meant to say that Senator O'Mahoney was very anxious to be here but had an appointment with General Marshall at 10 o'clock this morning and wanted me to announce that that was the only reason he was not here. He hopes to be here with us before you conclude.

Mr. WILSON. Thank you, sir.

As I was saying, in the light of these fundamentals, what are some of the major problems involved in maintaining full opportunity for employment?

1. Balancing supply and demand: The problem of dealing with temporary shortages and surpluses of goods and services.

Ordinarily, a free competitive system if allowed to function normally has inherent within it the power to balance supply and demand effectively. However, this requires that everyone concerned be informed of the facts so that they will be in a position to act intelligently and promptly in remedying the situation.

If the production of a certain product is in excess of the demand so that inventories are increasing unduly, production and/or prices must be adjusted to meet the situation. An accurate knowledge of the facts regarding such situations is very important because otherwise the producers may continue to produce and only add to the surplus supply, thus making the eventual readjustment that much worse. Conversely, if items continue in short supply and in great demand it is normal for the prices to increase, thereby stimulating production and to some extent temporarily curtailing the current demand, tending to bring supply and demand into balance. The balancing of supply and demand for all items can be taken care of only by a gradual shift in the employment of labor and capital from one industry to another and of labor from one occupation to another. The system must be flexible enough to allow this to be done promptly.

Of course, when the normal functioning of the system is interfered with for a considerable period of time, as by wars or major strikes, it takes longer afterward and more patience to surmount the problems created by such wars or strikes and to bring supply and demand into balance.