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and during 1951, 46 cans per person. You can readily see that the per capita civilian supply in 1951 was 1% 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.

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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:)

WASHINGTON, D. C., April 1, 1952.
Hon. BRENT SPENCE,
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,

JOHN F. CLAGETT. Enclosure.

or other

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, Joan 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 the are no shortages of consumer goods, curab wise; 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 Senate 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 consi mer 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. Stedehouder, 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.

NATIONAL ASSOCIATION OF CREDIT JEWELERS,

WILLIAM WAGNER, Executive Secretary. HENRY H. BRYLAWSKI,

Washington Counsel.

MANUFACTURING Chemists' AssociaTION, INC.,

Washington, D. C., March 24, 1952. Hon. BRENT SPENCE, 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

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to the food industry and greater than the other basic industries, including the steel industry. Both as producers of chemicals and as American citizens we have a vital stake in the success of America's program of industrial mobilization.

If the Defense Production Act is to be extended, we favor an extension of 1 year only and urge that the following specific amendments to the present act be incorporated in the draft which your committee will report:

(a) To insure that there is a cessation of the use of the priorities and allocations authority at the earliest practicable date: any given commodity or product should be "decontrolled” as soon as possible, without having to wait for a time when it is possible to decontrol all commodities and products.

(6) To insure that price and wage control is used for the purpose Congress had in mind when it enacted the 1950 act and the 1951 amendments-instead of being used as a device for limiting profits and thus destroying incentive. We have reference here to the so-called Johnston amendment with its recent modification which we believe is un-American and usurps the taxing prerogative of the Congress.

(c) To insure that price and wage controls are so administered so as to control both prices and wages-to the end that prices and costs are held down to the maximum practicable extent, but to the end, also, that cost increases are recognized as a justifiable basis for price increases in those cases where the Government does not succeed in "holding the line" on costs. (To accomplish this, title IV of the act could be amended so as to require that all price control regulations provide for the redetermination at the election of manufacturers of ceiling prices thereunder at 6 months intervals to take into account any increase in wage rates placed in effect since the last determination of such prices and increases in material costs resulting from such wage increases).

The attached memorandum for the committee record takes up the foregoing in detail. Very truly yours,

M. F. CRASS, Jr., Secretary. Attachment.

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STATEMENT OF MANUFACTURING CHEMISTS' AssocIATION, INC., WASHINGTON,

D. C., on EXTENSION OF THE DEFENSE PRODUCTION Act of 1950, AS ÁMENDED

THE POLICY OF THE UNITED STATES AS DECLARED BY CONGRESS

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Congress has declared it to be the policy of the United States to oppose acts of aggression and to promote peace, and to develop and maintain whatever military and economic strength is necessary for this purpose. (Defense Production Act, declaration of policy, sec. 2.)

All will agree that to accomplish military and economic strength, it is of paramount importance that production be increased, that necessary revenues be obtained by the Government, and that inflation be prevented insofar as possible and controlled equitably to the extent that it cannot be totally prevented.

The close relationship between production, Government revenues, and inflation cannot be overemphasized. Unless production is increased and unless the Government is able to pay its bills without borrowing, inflation cannot be prevented, and military and economic strength cannot be attained. Even though prices be frozen and rigid ceilings imposed, if the nature of the controls is such that production is retarded or the sources of Government revenue dried up, the controls fail in their purpose and the policy of the United States cannot be carried out.

Underlying this policy and the reason for it, is the deep-seated determination of the people of the United States to preserve their basic freedoms and the Amer. ican way of life. Any controls must be fair and bear equally upon all segments of the national economy; they must be divorced from political considerations and favors; and they must preserve that great motivating force and incentive, the opportunity for economic reward provided by the American system of competitive enterprise which has made possible our achievements in the past and is our best reliance for the future.

In title IV of the act, relating specifically to price and wage stabilization, Congress wisely stated

“It is the intent of Congress that the authority conferred by this title shall be exercised

with full consideration and emphasis, so far as practicable, on the maintenance and furtherance of the American system of competitive enterprise

and the maintenance and furtherance of the American way of life

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To insure that the American system of competitive enterprise and the American way of life would be preserved in any action taken to establish controls, Congress imposed a number of specific requirements, including the following: “A ceiling may be established

only when the President finds that

(v) such ceiling will be generally fair and equitable to sellers and buvers

*?(sec. 402 (b) (2)). “Whenever ceilings on prices have been established on materials and services comprising a substantial part of all sales at retail and materially affecting the cost of living, the President (i) shall impose ceilings on prices and services generally, and (ii) shall stabilize wages, salaries, and other compensation generally” (sec. 402 (b) (4)). "In stabilizing wages

the President shall issue regulations prohibiting increases in wages, salaries, and other compensation which he deems would require an increase in the price ceiling or impose hardships or inequities on sellers operating under the price ceiling” (sec. 402 (b) (5)).

From the above there can be no doubt of the intention of Congress and the requirement of the act that sellers are to be fairly treated and when stripped of all legal verbiage, the plain meaning of these provisions of the act is that when & seller's prices are frozen, his labor costs are also to be frozen so as to avoid "hardships or inequities on sellers."

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THE JANUARY 1951 GENERAL PRICE AND WAGE FREEZES

The requirement of section 402 (b) (4) of the act that wages be stabilized concurrently with the imposition of price ceilings was met in January 1951 by issuance of OPS general ceiling price regulations and WSB regulations freezing prices and wages at the levels then prevailing. However this general freeze coming many months after Korea and the enactment of the 1950 act of necessity created inequities in both price and labor fields die to the fact that in the interim some prices and wages had been increased while others had not.

OPS-CPR-22

The next major step in the price field was the announcement by OPS of a new pricing regulation applicable to manufacturers, to become effective May 28, 1951. This regulation was designed to roll back those January 1951 prices reflecting higher increases than were justified by cost increases since Korea, and to permit roll-forwards of other January 1951 prices not reflecting increases warranted by such higher costs. Under CoR-22, the general manufacturers' price regulation, ceiling price is determined by selecting the highest price at which the particular commodity sold during any one of the four calendar quarters in the year ended June 30, 1950, and adding thereto increases in direct costs of materials occurring before December 31, 1950, and of labor occurring before March 15, 1951.

Many of the principles in CPR-22 were soundly conceived. Its purpose was to restore at realistic levels the price relationships between commodities which existed before Korea. By using changes in prices of materials and changes in labor rates as the basis for determining cost increases which could be added to base period prices, instead of requiring cost increases to be calculated on a unit cost basis, CPR-22 preserved incentive; if a manufacturer could develop more efficient methods of operation whereby less materials and labor were required and his unit costs reduced, he could retain the rewards of such efficiency. Furthermore in CPR-22, OPŚ expressly recognized the impossibility of attempting to control equitably by one general regulation the prices of all manufactured products, and stated its intention to issue supplemental regulations where necessary to correct inequities. Many such regulations have been issued.

Unfortunately there are basic weaknesses in CPR-22 and other price regulations of OPS. One of these lies in the fact that they are predicated upon an assumption which has not been realized, the assumption that the intention of Congress clearly expressed in the act would be carried out and that wages would be effectively controlled.

WSB AND SSB---WAGE “STABILIZATION" In the field of wages, WSB properly recognized the need to correct inequities occasioned by the fact that many wage earners had received increases before the January 1951 general wage freeze which left them in a better position than those not receiving increases. This was accomplished by Wage Stabilization BoardGeneral Wage Regulation 6 and Salary Stabilization Board-General Salary

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