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contributing to a collapse of values. On the contrary, even with price-control legislation the cost of living went up (as indicated in subparagraph c), while the cost of bowling did not. In short, bowling prices enjoy a stability uncommon to general trade. One of the reasons for this is that league bowling is sold upon a fixed price, by written or oral contract for the entire bowling season, which is invariable. In fact these contracts are usually arranged many months in advance of the season, so that the stability of the price is usually for a period of at least a full year. Open bowling, by the same token, cannot vary appreciably in price since, after all, bowling is bowling, be it open play or league play. The game, by its peculiarities, does not readily lend itself to erratic price fluctuations. If anything, it induces stability rather than variance and is an excellent influence upon the national economy to the limited extent that so small an activity can possibly influence our national expenditures.
7. From all of the foregoing, it becomes evident that when Congress enacted the Defense Production Act of 1950, and its amendments, for the reasons which then existed, the prices charged for bowling were not the motivating causes for this legislation; that the factors which prompted the Congress to impose controls did not then, and do not now, apply to bowling; that bowling is subjected to controls by impelling conditions pertaining to the sale of commodities and services other than bowling; and finaly that none of the purposes of the act are accomplished by regulating bowling.
8. The imposition of controls over this game has subjected the bowling alley operator to filing of ceiling price schedules and other additional record keeping and compliance provisions which have burdened the bowling operator with an onerous and difficult problem. Many bowling alleys maintain a snack bar for food and beverage refreshments. The ceiling prices on the food and beverages are governed by an OPS regulation (CPR 11) under which ceilings are imposed on the basis of percentage of "food cost" and not unit prices, as in bowling. The result is that in so small a business the operator has two incompatible standards of prices; that is, for food and beverages he has a variable price depending upon the cost of the food and beverages to him, without regard to increased costs of rent, heat, light and power, insurance, labor, and other overhead items, while in bowling there is a fixed price dependent upon a base-period price, which, presumably, did take into account these overhead items. Yet the overhead for both phases of the business is one and the same. At this late date, the Office of Price Stabilization has still been unable to establish any formula or rule of procedure to allocate these overhead costs in determining applications for ceiling price adjustments, probably due to the difficulty, if not the actual impossibility, of promulgating a practical approach to the problem.
9. In addition, enforcement of a regulation fixing the amount a patron should pay to go bowling, which varies from one establishment to another by only a few pennies, imposes a burden and expense upon the Government which is wholly incommensurate with the benefits such regulation could possibly attain. In fact when the Office of Price Stabilization decontrolled bowling pins (General Overriding Regulation 5, amendment 4, January 30, 1952), it stated the following as among its reasons for decontrol:
"Furthermore, any ceiling price restrictions imposed on these commodities would involve an administrative and enforcement burden out of all proportion to the importance of keeping them under price control. Considering the types of commodities exempted, this amendment will not have any material effect on the general level of prices.'
It seems incongruous for OPS to exempt bowling pins, the most expensive replacement item in a bowling alley and not to decontrol bowling.
In addition, it is pointed out that bowling proprietors are small-business men. Bowling is not a gigantic enterprise. The cases where more than one establishment are owned by the same proprietor are few and far between. The complicated duties of compliance place a very heavy onus upon these small-business men who are not equipped to comply with these onerous duties as compared to big business, when there is so little purpose that may be accomplished by this burden.
10. Sufficiently important and not to be overlooked is the disturbing fact that it may well be that Congress did not intend to regulate the price of bowling in the first instance, and that the Office of Price Stabilization has extended its jurisdiction over this activity beyond the scope of the Defense Production Act of 1950, as amended, and beyond the authority vested in it by the Congress. A serious question presents itself: "Is bowling a service?". Or does not the bowling alley operator merely make available to a bowler his facilities, upon which the bowler renders to himself his own "service"? Does not the bowling proprietor merely
sell a privilege? Did not Congress intend, by the use of the word "service," something that is performed by a person such as cleaning a suit, or painting a house or fixing a car, etc.?
11. In point of fact, this question has completely confounded the Office of Price Stabilization to a point where one division of the Office of Price Stabilization, by its definition of the word "services," has and still does violently contradict another division and the extent of the jurisdiction of the Office of Price Stabilization depends upon the mere accident of which division one deals with. For example:
(a) The original general ceiling price regulation, issued January 26, 1951; which governed both sales and materials, as well as services, defined "services' (sec. 22) as follows:
“This term includes any service rendered or supplied otherwise than as an employee, and contracts to sell or supply such services."
This is a simple definition along logical and obvious lines, wholly within the intent of the congressional statute. Later, Ceiling Price Regulation 34, issued May 11, 1951, divorced many services from general ceiling price regulation but excepted certain services which are still governed by the original regulation, A new definition of "service” was added (CPR 34, sec. 27 (a) (17)), which reads as follows:
“ 'Service' or 'services' means any act or acts performed or rendered, otherwise than ås an employee, for a fee, charge, or other consideration. The term includes any privilege sold or granted, or any forbearance to act, for a fee, charge, or other compensation. The term also includes the rental of any commodity or services if the rental charged is not covered by another ceiling price regulation and has not been exempted from price control."
It should be noted that the Office of Price Stabilization has added to its definition the sale of a privilege or a rental of a service. Thereafter on June 7, 1951, the original general ceiling price regulation was officially reissued, embracing all amendments thereto up to that date. There, the definition of a service was given as follows:
“This term includes any service rendered or supplied, other than as an employee.”
Thus we have three separate definitions of the meaning of the word "services," one of which was issued on January 26, 1951 (GCPR), which gives a fair definition of the term; another issued on May 11, 1951, under CPR 34, which has added thereto the sale of a privilege and the rental of a service, which was not contained in the earlier definition; and finally, a third definition issued on June 7, 1951 (GCPR), which again reverts to the original definition and does not include the sale of a privilege or rental of a service.
Whether an activity is subject to controls depends, apparently, on potluck, If the so-called service comes under CPR 34, the definition includes the sale of a "privilege,” but if the service comes under GCPR, the definition does not include the sale of a “privilege."
12. Does the Office of Price Stabilization have a right to include the sale of a privilege, or is there such a thing as the rental of a service, or can a “service” be rented out?
The answer to these questions is to be found in the act itself. Congress did not expressly define the word "service." It follows that its meaning must be deduced from the manner in which it is used in the statute. For example, section 402 (c) of the statute, in describing the manner in which regulations shall be promulgated, used the word "services” in such a way as fully to describe its intended meaning, leaving no room for doubt as to the maximum activities to be embraced by this word. In that section appears the clause: "* * * and general increases or decreases on the profits earned by sellers of the material or by persons performing the service * *" (italics ours). A "service" as contemplated by Congress is that which is performed by a person. It is not something that can be rented, Rentals apply to real property and in certain instances to chattels, but not to an intangible activity.
When Congress used the phrase "performing a service,” it indicated what type of service it contemplated. “Performance” cannot be the subject of a rental. The definition of the word "service” in CPR 34 not only goes beyond the intent of Congress, but has created a standard which is nonexistent and which is unauthorized. The lack of congressional authority is indicated by the utter confusion on the part of OPS in its attempt to enlarge and extend its definition of services at one time, and to restrict it within logical bounds at another time. Nevertheless, bowling proprietors, having been specifically named in an OPS press release of May 11, 1951 (although not in any regulation), find it necessary to appeal to the
legislature for specific exemption. The mere fact that bowling had not been specifically excepted in the original statute does not of itself infer that it was intended to be excluded. For example, a theater or motion-picture house clearly performs a service in preparing and presenting its show or picture. Hence, if they are to be excluded, the statute must state that fact, which it does. But an activity which is the sale of a privilege, as the OPS puts it, is not the sale of a service, and, ordinarily, would not require a specific statement that it is excluded. It is because of the Office of Price Stabilization's extension of its authority by its own definition that makes it necessary for Congress to state whether bowling, which is not a service, is not to be included under controlled activities.
13. In summary, it is respectfully urged upon this committee that with respect to bowling there is no need for price regulation for the reasons that:
(a) The price or expenditures for bowling do not affect the national economy; and
(6) That bowling does not qualify under any of the aims and purposes of the Defense Production Act of 1950, as amended; and
(c) That no substantial benefits derive from controls to warrant subjecting this activity to regulation; and
(d) That the burden upon the operator and the Government far outweighs any advantages to be attained by controls; and
(e) That bowling is not a service and was not intended to be subject to controls.
14. It is respectfully requested that the 1952 amendments to the Defense Production Act specifically exclude bowling along with motion pictures, theaters, barbers, and beauticians. Respectfully submitted.
Joseph G. GUBMAN, Esq. NEW YORK, N. Y., March 3, 1952.
STATEMENT OF SYDNEY M. Cone, JR., PRESIDENT OF National AssociaTION OF
FINISHERS OF TEXTILE FABRICS ON PROPOSED EXTENSION AND AMENDMENT OF THE DEFENSE PRODUCTION ACT OF 1950
The executive committee of the National Association of Finishers of Textile Fabrics is of the opinion that no justification exists today for the continuation of price controls on the finishing of textile fabrics. Our association is convinced that the Defense Production Act of 1950, as amended, should contain provisions for the suspension of price controls on textile finishing, or complete abolition of such price controls. This step can have no adverse effect on the national economy or the purposes of the Defense Production Act.
Current textile prices are substantially below the OPS ceilings. The same condition applies to the finishing charges of the commission finisher, who processes approximately 70 percent of the finished cotton fabrics produced each year.
Costing and pricing of textile finishes is a complex operation. There are thousands of colors and print designs, as well as 578 special finishes in use at the present time. Confusion and uncertainty result from endless red tape of any price regulation, and, if continued, our industry will be further hampered in its efforts to emerge from the present depressed condition of the textile market.
In the year immediately following the start of the Korean war, production in finished cotton fabrics amounted to approximately 7.7 billion yards. This rate of production exceeds the peak reached in the war years and reflects the new finishing capacity built in the postwar period. In the 8-month period since July 1951 the production rate has dropped 15 percent as a result of the depressed textile market. Inventories of grey and finished fabrics at the finishing level are estimated to be 25 percent above the pre-Korean level. It is obvious that the productive capacity of the finishing industry is more than sufficient to meet any foreseeable demands by our national economy.
We are confident that the Congress does not favor controls on our economy when it is clear that the need has passed. It is our considered judgment that a careful examination of the situation will sustain our recommendation to decontrol prices of textile finishing.
STATEMENT OF NATIONAL PAINT, VARNISH AND LACQUER ASSOCIATION, INC., IN
CONNECTION WITH HEARINGS ON EXTENSION OF THE DEFENSE PRODUCTION ACT
The National Paint, Varnish and Lacquer Association, Inc., with headquarters at 1500 Rhode Island Avenue NW., Washington, D. C., is a voluntary, nonprofit trade association originally organized in 1888 and comprising today approximately 1,400 members, who are engaged in the manufacture and distribution of paint, varnish, lacquer, and allied products, or of the materials used in such manufacture, and who, collectively, produce about 90 percent of the total national volume of paint, varnish, lacquer, and allied products,
The long established policy of the association has always been to support any Government programs which are designated to protect the interests of the public and to strengthen the Nation's defenses against aggression. In addition, any system of controls, voluntary or compulsory, which are required by reason of emergency and need, have and will receive the association's support.
We submit that, today, the bases for complete and further extension of the Defense Production Act no longer exist. We request that the committee and the Congress terminate price controls as of June 30, 1952, and modify the production controls of the present act.
Any control of material, product, or service, required for the national defense or for the authorized military assistance of friendly, foreign nations, is desirable and is supported by the association. We believe that any congressional authorization of production or material controls should be specifically set forth and applicable only to military needs. We request that no authority be granted to permit any allocations, restrictions or limitations upon the use of any material or products for civilian use. A free, competitive market for civilian uses is desirable. ' In view of the recognized fact that supplies of many items are increasing and will continue to increase, Congress should reexamine, early next year, the portions of the act relating to the flow of strategic materials and end products for defense needs.
Price controls as presently applicable to the paint, varnish, and lacquer industry are serving no demonstrable purpose. In fact, price controls impose undue burdens upon the industry, require excessive reports, and place upon the members of the industry, the almost impossible task of manufacturing products for sale under restrictive price controls, although most of the volume of the materials used in the manufacturing of these products are uncontrolled as to price.
Paints, varnishes, and lacquers are devoted to two main uses. The first is the ordinary commonly accepted view of paint for the interior and exterior protection and decoration of buildings and structures. About 60 percent of the dollar volume of the industry's products are used for these purposes. The second is for the highly specialized competitive products, usually known as industrial product finishes. These are the specially formulated coatings which follow strict specications and are sold only to manufacturers of products for application on their products as part of the manufacturing process. The finishes on furniture or on automobiles, or the coatings on metal filing cabinets are a few examples of literally thousands of such coatings. These products are many and, of necessity, vary. A manufacturer of such products, in reality, is a prescription man, the same as a pharmacist, who compounds medical prescriptions.
The result is that it is not unusual for one single manufacturer to have 10,000 different products or formulations. Under price control, he must compute separate ceiling prices and file reports in detail. This task, of itself, would be enough, but the industry must, and does progress, and, through laboratory research and development, new products, and new formulations are brought to market. Here, again, he must adhere to the computation, filing and reporting provisions of the Office of Price Stabilization.
One manufacturer, who'may be classed as a medium sized member of the industry, has stated to us:
"I find that in our own company we have just sent in to Washington, D. C., prices for approximately 4,000 special items in addition to all of our standard products. We do not exactly know how much this has cost us, but we feel that it is very high, perhaps as high as a hundred thousand dollars. We have had to have legal advice and have had to use many of the highest priced people we have on our payroll to do the actual complicated figuring.
“After it is all sent in to Washington I am convinced that there isn't the slightest possibility that they can make any real use of the material we sent them. If this work is duplicated by other paint companies and then by other industries, we would certainly find that the amount of dollars spent runs up in the millions and actually this would increase costs rather than decrease them.”
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Another important factor is that by volume over 60 percent of the materials used in paint, varnish and lacquer products are uncontrolled as to price. For example, fats and oils, as well as metals used in some pigments, are either processed from an agricultural, parity product or are imported. No program of price control can be substituted for the flexibility and self-adjusting characteristics of a free market. To require the members of an industry to strait-jacket its prices within the limits of a price regulation, while, at the same time, being required to purchase at least 60 percent of its materials by volume in an uncontrolled market is imposing upon such an industry confusion, uncertainty, disruptions and unnecessary burdens. Such is the lot of paint, varnish and lacquer manufacturers,
If prices of paints, varnishes and lacquers had skyrocketed, or if inflationary pressures were of such strength that the national economy were jeopardized, the association believes that such limitations, although burdensome, would be necessary and worth while. However, no such pressures exist, nor do they appear to be anticipated. Mr. Roger L. Putnam, Administrator of the Economic Stabilization Agency, has stated:
"There is no justification for maintaining the burden of controls in areas where the controls do not presently serve a demonstrable economic purpose and where these controls can presently be suspended or relaxed without resulting in a wave of unstabilizing cause-and-effect reactions, and where they can be reimposed quickly and effectively whenever that might become necessary.”
This statement is applicable to the paint, varnish, and lacquer industry. Mr. Ellis Arnall, in a statement on March 19, 1952, to the Senate Committee on Banking and Currency, in its consideration of the extension of the Defense Production Act, stated, in reference to suspensions of ceiling prices:
“When I' testified before this committee 2 weeks ago, I told you that the conditions under which price ceilings or record-keeping and reporting requirements may be suspended in such areas are now under study. This study has made some further progress in these last 2 weeks and the committee which is charged with the responsibility for this study has made its first report to me.
"This report proposes standards for the selection of certain kinds of commodities whose ceilings may be suspended and procedures which should be used to make certain that suspension of ceilings can and will be terminated when there is serious danger that present ceiling levels might be pierced."
To date, the Office of Price Stabilization has effected decontrol or price suspension on only a few commodities, although some of these are fats and oils and cotton, which further enlarge the decontrolled material market for paint, varnish, and lacquer manufacturers. The economic facts have been available to OPS to demonstrate the decontrol of paint, varnish, and lacquer products for some time, particularly with respect to industrial product finishes. These products are sold only to a manufacturer, never reach a retail counter, are used only in a manufacturing process and are made strictly to specifications in a highly competitive market. The operation of competitive markets for these products and the acknowledged fact that the manufactured end items are in great supply and now selling at lower prices with the attendant supply and demand effect of pushing down the prices of these products, results in the condition today, that only a few of these paints, varnishes, and lacquers are selling at or near their ceiling prices.
Why does the association, in behalf of the paint, varnish, and lacquer industry, object to the continuance of price controls on the industry's products when so many manufacturers do not have buyers at current ceiling prices?
First. We wish to state that our objections stated herein bear no criticism of the Office of Price Stabilization or of its officials. That agency and its administrators have been as helpful and cooperative as possible. It must be stated, however, that price controls are never a desirable substitute for the law of supply and demand in a free competitive market. It is impossible for any Government agency, no matter how efficient, to meet the adjustment needs of the industry and supply the flexibility of the open market. Of necessity, the Office of Price Stabilization is required to establish general policies, which, by mere issuance, create inequities and disruptions.
Second. The enormous burden, the time, money and effort spent to compute prices for each item, which for many run into thousands of products, with variations of color, grades or quality. This burden is on both large and small manufacturers. The result is a computed ceiling price which bears no relation to the price the manufacturer can get for the product.
Third. The complex nature of the industry's products. Every product is made according to formula-each specially suited for a particular use. Colors, tints,