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price of meat or any commodity in line quicker than when she goes on a buying strike.

I thank you for the opportunity of being able to express these views, and I can assure you that you would have to hunt to find a hog man or any other kind of livestock man in any State who thinks any different than these views.

Mr. Chairman, if I may, I would like to submit the two charts appended to my statement for inclusion in the record.

Mr. BROWN (presiding). Without objection, that may be done. (The information appears on the following pages.)

Mr. BARRETT (presiding). The chairman advised me that we may be called to the floor very shortly, and we want to try to gage the time in order to give everyone a chance to at least get their remarks in the record.

Any questions?
Mr. TALLE. Mr. Chairman.
Mr. BARRETT. Dr. Talle.

Mr. TALLE. I want to say again that we are very happy to have you here. I know that you are fully capable of presenting the facts as they really are and you have done in your testimony.

Mr. BARRETT. If there are no further questions, you may stand aside. Thank you very much.

The clerk will call the next witness.

The CLERK. The next witness is Mr. L. Blaine Liljenquist, Western States Meat Packers Association, Inc. STATEMENT OF L. BLAINE LILJENQUIST, ON BEHALF OF THE

WESTERN STATES MEAT PACKERS ASSOCIATION, INC. Mr. BARRETT. You may proceed as you wish, Mr. Liljenquist.

Mr. LILJENQUIST. My name is L. Blaine Liljenquist, Washington representative of the Western States Meat Packers Association, Inc.

The members of our association are independent meat packers and processors in the Rocky Mountain and Pacific Coast States. There are more than 400 companies in the association.

We appreciate this opportunity to appear before you to state our belief that price and wage controls are ineffectual, unworkable, and contrary to the interest of the people, and that title IV, containing the authority for price, wage, and rationing controls, should be deleted from the Defense Production Act of 1950.

The stated purpose of the Defense Production Act is to achieve all-out production of goods and to check inflation. With respect to the livestock and meat industry, it has been demonstrated that price controls disrupt the industry, hamper production, and fail to remedy the real causes of inflation.

Efforts to control prices are as old as recorded history. There is no case on record where they have succeeded for any length of time against inflationary factors. The code of Hammurabi, promulgated over 2000 B. C., fixed prices, wages, interest rates, and fees without success. Nation after nation has tried it and likewise failed.

Market at Lighter Weights---When Adequately

Finished Which Pork Chop Do You Prefer - Which Can We Sell the Most of?

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Study Chart on Back Cover for Differences of Fat at Different Weights.

PER CWT

PER CET

270-300*

m270-300* HOGS

Larger Demand for Light Weight Cuts-
Limited Demand for Heavy Weight Cuts
HEAVY HOGS SELL FOR LESS
Than Light Hogs
I prices)
for 1939-40-47-47

200-220*
PORK PRODUCTS
From Heavy Hogs
SELL FOR LESS
for 1939-40-41-47

FROM

12

10

10

360-400*

because

JAN

FEB

MAR

APR

MAY

SEP

OCT

NOV

DEC

PER CWT

PER CWT

26

[graphic]

24

22

22

[blocks in formation]

20

20

[blocks in formation]

SOURCE: National Provisioner Daily Market Service. Prices are for Thursday, except for holidays.
LIVE HOG PRICES are those reported by the United States Department of Agriculture.
PORK PRODUCTS PRICES are an average of the following items: skinned hams, picnics, bellies, loins,
Boston butts and lard, weighted in relation to the proportion that each item makes up of the hog carcass.

prepared by American Meat Institute

*

By the year 1550 an Englishman named John Mason commented on price controls as follows:

I have seen so many experiences of such ordinances; and ever the end is dearth, and lack of the things that we seek to make cheap. Nature will have her course, and never shall you drive her to consent that a pennyworth shall be sold for a farthing.

For who will keep a cow that may not sell the milk for so much as the merchant and he can agree upon?

During the French Revolution, paper money was issued with reckless abandon. With prices rising rapidly, the Government imposed price control. The first result of the maximum-price-control law was that every means was taken to evade the fixed price imposed, and the farmers brought in as little produce as they possibly could. This increased the scarcity, and the people of the large cities were put on an allowance. Tickets were issued authorizing the bearer to obtain at the official prices a certain amount of bread or sugar or soap and wood or coal to cover immediate necessities. Shopkeepers could not sell such goods without ruin. The result was that very many went out of business, and the remainder forced buyers to pay enormous charges under the very natural excuse that the seller risked his lfe in trading at all. This excuse was valid because the daily lists of those condemned to the guillotine frequently contained the names of men charged with violating the maximum-price laws. Despite the adoption of rationing, the price-control law could not be enforced and after a period of a little more than a year was repealed.

In our own country neither the Democrats nor the Republicans were responsible for abolishing price controls in 1946. Price controls broke down, and late in the year President Truman merely officiated the final rites.

You may recall that on October 14, 1946, President Truman in a prepared statement said:

Some have even suggested that the Government go out onto the farms and ranges and seize the cattle for slaughter. This would, indeed, be a drastic remedy. But we gave it long and serious consideration. We decided against the use of this extreme wartime emergency power of government. It would be wholly impractical because the cattle are spread throughout all parts of the country.

In other words, here was a President of the United States, in a democratic country, planning to take the cattle away from the farmers and deciding against it only because it was impractical.

President Truman likewise said on October 14, 1946:

Another remedy suggested by many people was to have the Government seize the packing houses. This offered no real solution, however, because the seizing of empty packing plants would avail us nothing without the livestock.

This was a dramatic way of expressing the situation. Price controls broke down, and they will break down again if inflationary pressures develop.

OPS has been trying to take curtain calls for the recent stability and declines in prices. Since a majority of prices are below ceilings, OPS has been revising the ceilings downward to current market-price levels. OPS, in taking credit for prices falling below ceilings, does not explain exactly just how they were responsible for this.

But just why the taxpayer should finance public officials to fix prices at just above current market levels is another one of those Washington mysteries which are hard to explain.

It was high production, not price controls, that stopped the wave of buying following Korea. The people finally became convinced that goods would continue to be available in adequate supply.

Wholesale prices have risen by 46 percent in France and 27 percent in Great Britain, since Korea, while they advanced by only 12.5 percent in the United States, despite the relatively far greater outlay on defense production in this country. We think that speaks pretty well for the productivity of this Nation.

France and Britain certainly have their fill of government controls. The relative stability of the price level here must be attributed, therefore, to the remarkable production record of American industry.

During World War II the Government took about 40 percent of the total production output of the United States. In 1951 it took 21 percent of our production, just slightly over one-half as much as during the late war. But production has reached a level whereby the amount of goods left for consumers is exceeding demand and prices are falling.

High production is the real answer to the problem of inflation, but if we are to achieve full production the unrealistic, arbitrary, confusing and unsound price controls must be removed. Controls are the greatest handicap to production. They cause a lack of confidence in future markets, because if production costs rise the producer or manufacturer finds himself inevitably in a price squeeze.

In our own industry the administration's price-control program is noteworthy for its impracticability. It leads to blackmarketing, disruption of meat production, maldistribution of products, and diversion of millions of man-hours of time for studying confusing regulations and making reports. It adds to the burden of the taxpayer, breeds contempt for law and Government, creates health hazards when livestock are illegally slaughtered by black marketeers, and results in loss of byproducts and life-saving medicines.

With the present control system in effect we feel doubtful that production of meat can be stepped up to meet our full requirements. It is well known to the industry how millions of pounds of beef were lost last year by the reduction in feeding due to Government control and roll-back policies. Now we learn that this spring's pig crop was cut by 5 million pigs due to Government controls at a time when greater production is needed.

Nevertheless compared with prewar the meat-price situation is not as critical as it has been made to appear. Cattle numbers are at a record high and per capita consumption of meat is considerably above prewar. Consumption during the 5 years before the war, 1935 through 1939, averaged 126 pounds per person. According to the Department of Agriculture consumption was at the rate of 141 pounds in 1950 and is expected to increase in 1952.

When Paul Porter was administrator of OPA he said that the purpose of price controls was to keep the law of demand and supply from operating. If controls reduce or hold down meat prices in the face of rising income, consumers demand more meat than before and a scarcity occurs.

On the other hand price ceilings on livestock means that farmers and feeders receive less compensation for their work if their costs increase and the incentive to produce more animals and more meat is reduced. Fear of arbitrary action on the part of the Government always throws a damper in farmers' plans for growing and feeding livestock. The

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