benefits of the compensatory gains which the market would allow on other products or items.

For example, most canners are selling standard grade peas at prices considerably below what would otherwise have been the market, while the market for fancy peas is below the ceiling averages. Market pressures on most canned fruits and juices have reduced the selling prices of these products far below the average of the applicable ceilings, while the same canners if they pack asparagus must, as a result of an inadequate ceiling, sell this product at a price considerably below what they could obtain in a free market. Innumerable examples of this unjust deprivation of compensatory returns could be supplied. There is a further unplanned effect of price controls which creates a downward pressure on the market for canned foods independent of the actual average of ceiling prices. In a sensitive market, the market price for a particular product tends to appraoch that of the lowest ceilings prevailing for a significant number of producers. When one or more canners are forced to sell at ceilings which may not be even commensurate with costs, other processors with more nearly adequate ceilings are forced to meet this competitive price. The result in many instances has been the setting of a general price level for a particular product below that of both the ceiling averages and the market which would otherwise have prevailed.

The same effect is produced by a restrictive ceiling on one item within a product or as between products. In a sensitive market, a restrictive ceiling on standard grade peas will depress the market on fancy grade peas as well. The result is a continual pressure in the direction of unjustified deprivation of profits.

We

We cannot believe that Congress, in legislating the price-control authority now contained in the Defense Production Act, ever intended to approve its use under circumstances such as these. cannot believe that Congress ever contemplated that price controls were to be used to produce the punitive effects presently being achieved. We cannot believe that price controls on canned foods can have any justification in the light of the supply and demand conditions apparent to anyone who wishes to investigate them.

The canning industry has expanded production to the point where demand is considerably overbalanced by supply. The Department of Agriculture by its action in relation to 1952 production goals has confirmed the fact that adequate supplies of canned foods exist and that the industry's ability to produce is more than equal to any demand that may be put on it. Continuance of controls in the face of this knowledge is, bluntly, control for the sake of control alone.

Nearly 2 years have passed since the enactment of the original Defense Production Act. Whatever conditions may have warranted its provisions at that time no longer exist. Price controls on canned foods today have no reasonable relation to the accomplishment of the purposes for which the price control authority was created. It is now prudent for this committee to take action to insure the suspension of price controls on those commodities no longer feeding the forces of inflation.

Now I want briefly to high-light for you our formal statement by using some charts.

These cold facts, you will see, make inevitable the conviction that price controls on canned foods are unnecessary-that they currently

serve no useful end in combating inflation, that the foreseeable futureindicates no justification for their continued existence, and that they are a burden and restraint on the production of the canning industry without reason or purpose.

These views, based on the facts I am going to summarize, should lead this committee to provide for the suspension of price controls where, as in the canning industry, they are not needed for the purposes for which they were authorized.

It was on this basis that early in March we informally requested the Office of Price Stabilization to establish standards for the suspension of price controls on products in ample supply where the prevailing prices are exerting no inflationary pressure as in the case of canned fruits and vegetables.

On April 22 Price Director Arnall announced preliminary standards for suspension of price controls. On April 28, President Fred C. Heinz of the NCA, in a letter to Mr. Arnall, formally advised that the current situation with respect to canned fruit and vegetable prices meets these standards and respectfully requested that controls of canned fruit and vegetable prices be suspended. Mr. Arnall acknowledged this letter on May 8, but no action has been taken and promises as to what or when action will be taken are vague. A copy of this letter is filed in our statement.

We believe the staff of the Office of Price Stabilization is conscientious, hard working and able, but we also believe that no Government agency, no matter how conscientious, hard working and ably staffed it may be, can ever hope to reproduce the flexibility and self-adjusting characteristics of a free market.

No controls are even a moderately adequate substitute for the operation of the forces of supply and demand in a free economy. As illustrated in our statement, under price controls current distortions are frozen into the price structure; shifts from product to product are stopped, and confusion results. Connection by normal competitive means is prevented. And correction by Government agency seems a mirage which recedes as we approach it.

Let's look now at the facts.

The productive capacity of the canning industry is so great that it is fully equal to the demands currently being made on it. No one can challenge that the operation of the forces of supply and demand in the canning industry are currently more effective in combating inflation than are price controls.

The supply and demand picture for canned fruits and vegetables can be vividly and quickly seen from my first three charts.

The first one shows the production record for three periods: 1943-45, 1948-50, the year 1951.

(The chart referred to appears on the following page.)

You can quickly see that following World War II civilian supplies of fruits and vegetables were vastly increased over those previously available.

For 1951 the supplies, after allowing for Government requisitions, were even greater than in the pre-Korean period.

These total supplies available for civilian use, translated into available per capita civilian supply are: During World War II, 32 cans per person; and during the pre-Korean period, 39 cans per person;

and during 1951, 46 cans per person. You can readily see that the per capita civilian supply in 1951 was 11⁄2 times that during World War II when we had rationing and price control and 118 percent of the pre-Korean period when supplies are presumed to have been adequate.

Mr. BROWN. Mr. Taylor, we have been called to the House, and I understand there will be another roll call immediately after that. Can you come back tomorrow morning?

Mr. TAYLOR. I certainly can, sir. I will be very glad to do so.
Mr. BROWN. We are awfully sorry.

Mr. TAYLOR. I understand, Mr. Brown. I will be glad to come back in the morning, and maybe I will have a few more members of the committee.

Mr. BROWN. We will adjourn now until tomorrow morning at 10 o'clock.

(Whereupon, at 4:38, Thursday, May 15, 1952, the committee was adjourned to 10 a. m., Friday, May 16, 1952.)

(The following statements were submitted for inclusion in the record of the hearings:)

Hon. BRENT SPENCE,

WASHINGTON, D. C., April 1, 1952.

Chairman, Banking and Currency Committee,

New House Office Building, Washington, D. C.

DEAR MR. SPENCE: As Washington counsel for the National Retail Credit Association, I am enclosing a resolution adopted by the legislative committee of that organization at its annual meeting on February 14, 1952, wherein NRCA recommends termination of existing controls over consumer credit.

I would very much appreciate it if you would have our resolution included in the record on the hearings shortly to be held on the National Production Act of

1950.

You will observe from the first clause of the resolution that NRCA is comprised of and represents some 30,000 members engaged in every form of business where consumer credit is granted.

Very truly yours,

Enclosure.

JOHN F. CLAGETT.

RESOLUTION ADOPTED BY THE LEGISLATIVE COMMITTEE OF THE NATIONAL RETAIL CREDIT ASSOCIATION, WASHINGTON, D. C., FEBRUARY 14, 1952, RE FEDERAL RESERVE BOARD REGULATION W

Whereas the membership of the National Retail Credit Association is comprised of and represents more than 300,000 members engaged in every line of business where consumer credit is granted, including merchants, furniture and apparel stores, banks, loan and finance companies, utility companies, household appliance dealers, jewelry merchants, etc., and represents every phase of the economy where consumer credit is extended to the public; and

Whereas it has been noted that the President's Economic Report to Congress calls for continuance of and even more stringent controls over instalment credit, known as regulation W; and

Whereas at present there are no shortages of consumer goods, curable or otherwise; and

Whereas it appears that the present income tax rates and other taxes, and the high cost of food and other items of living, have drained away and will continue to drain away any so-called excess purchasing power; and

Whereas in any event it appears as a practical matter that consumers spend for other purposes if the purchase of needed durable goods is withdrawn or discouraged by the existence of regulation W: Now, therefore, be it

Resolved, That the legislative committee of the National Retail Credit Association does hereby recommend to the Serate and the Congress of the United States and to the Board of Governors of the Federal Reserve System, that the policy of the National Government shall be to terminate existing regulations over consumer credit.

Clarence E. Wolfinger, chairman, Philadelphia, Pa.; Joseph A. White,
cochairman, Pittsburgh, Pa.; J. K. Althaus, Washington, D. C.;
E. M. Arthur, Washington, D. C.; S. E. Collegeman, Washington,
D. C.; R. W. Reichard, Washington, D. C.; C. F. Roycroft,
Baltimore, Md; R. M. Severa, New York, N. Y.; J. P. Stede-
houder, Washington, D. C., Members of Committee; L. S.
Crowder, general manager-treasurer, St. Louis, Mo.; John F.
Clagett, counsel, Washington, D. C., ex officio.

SUMMARY OF THE POSITION OF THE NATIONAL ASSOCIATION OF CREDIT JEWELERS, INC., WITH RESPECT TO THE EXTENSION OF THE DEFENSE PRODUCTION ACT OF 1951

The National Association of Credit Jewelers, Inc., is an association of approximately 1,800 member retail jewelers located in all sections of the United States and operating within all sales volume classes. Sales of its member stores account for approximately 70 percent of installment jewelry sales in the country. The association maintains its principal offices at 545 Fifth Avenue, New York City, under the direction of William Wagner, executive secretary. Officers and directors are drawn from the association membership.

In its consideration of a possible extension of the Defense Production Act, the association asks that the Congress consider the following:

PRICE CONTROL

Section 402 (b) of the act has resulted in the imposition of general price controls as authorized in subparagraph (4) thereof.

Inevitably, under a general control of prices through Government regulation, individual inequities arise, the immediate correction of which, perhaps, may be justifiably delayed in view of the over-all problems which must first be met.

At this time, however, after more than a year since the imposition of controls, it seems appropriate and desirable to examine certain individual situations and take corrective action.

This association has concluded, after careful analysis, that the imposition of price control on jewelry generally, and strictly adornment jewelry particularly, creates a burden without a benefit and, therefore, the controls on adornment jewelry should be removed. The reasons which compel this conclusion are briefly stated as follows:

1. Adornment jewelry, generally speaking, has been selling below the ceiling prices established.

2. The demand for jewelry is limited and even within its limited market sales have been, and analysis indicates will continue to be, slow.

3. Competition is keen and on the increase.

4. Supply is plentiful and no shortages are anticipated in the foreseeable future. 5. The 20 percent excise tax now imposed on jewelry sales, besides being an additional burden on jewelers, has exerted an effective brake on jewelry sales. 6. Jewelry is perhaps the classic example of a noncost of living item and, as such, its prices have little or no perceptible effect on the national economy.

7. The average jeweler operates a small specialized business. It is recognized that compliance with Government directives for the keeping of special records, etc., is more difficult for the small operator because, generally speaking, he is not equipped to cope with the record-keeping problem.

The effect of control, therefore, has been to add to the already over-burdened jewelry industry an additional burden-a burden without a compensating effect since, as has been shown above, the prices of jewelry are stabilized by other factors. Decontrol of some lines of goods would be meaningless to the seller, insofar as the record-keeping burden is concerned, since other lines sold by the same merchant would remain under control. The elimination of the control of jewelry, on the other hand, would be extremely beneficial to a large number of merchants whose sales are principally confined to jewelry.

In view of the circumstances enumerated above, the National Association of Credit Jewelers urges that, if the Defense Production Act is to be extended, provision be made therein for the decontrol of items of merchandise where a substantial number of the reasons enumerated above exist or, in the alternative, that the act as extended include a directive that controls be suspended where, as above, the circumstances warrant.

CONSUMER CREDIT

Control of consumer credit, as promulgated by the Federal Reserve Board in the form of regulation W pursuant to section 601 of the act has not been extended to the sale of jewelry. This exclusion has been wise. There has been no perceptible increase in accounts receivable arising from the instalment sale of jewelry. In its previous application to jewelry, regulation W has been found to be harmful to the industry. It served to dislocate the industry but did not curtail buying. For these reasons, the National Association of Credit Jewelers urges that the Defense Production Act, if extended, include a provision which would prohibit further extension of regulation W without specific findings as to the necessity therefor, which findings should be required to be based on compelling and competent evidence, after hearings participated in by representatives from the affected industries.

Chairman, Banking and Currency Committee,
House of Representatives, Washington 25, D. C.

DEAR MR. SPENCE: We are submitting herewith the views of the Manufacturing Chemists' Association, Inc., with reference to extension of the Defense Production Act which we respectfully ask be made a part of the hearing record of your committee.

For your information, the Manufacturing Chemists' Association is an association of chemical companies, small and large, which account in the aggregate for approximately 90 percent of the chemicals produced in the United States. In 1951 our industry had aggregate sales of over $18 billion, second in volume only