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Then he went on to say:

The 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.

In 1946, when the administration was considering the seizure of the cattle and the packing plants, approximately 90 percent of all the beef in the United States was selling in the black market. This should remind us again of the letter from Mr. Witherspoon to George Washington, in 1777:

To fix the price of goods, especially provisions in the market, is as impractical as it is unreasonable. The whole persons concerned, buyers and sellers, will use every art to defeat it and will certainly succeed.

Mr. LILJENQUIST. Controls don't work any better today than they did then. We have learned a lot, I suppose, since 1777, but I don't believe that we will ever learn enough to substitute successfully manmade controls for that great old law of ours, supply and demand.

It is a wonderful regulator and it gets production, and it gets production of the things that consumers want.

Mr. TALLE. The great price fixer of all time was Emperor Diocletian in the year A. D. 301.

Mr. WOLCOTT. Was it successful?
Mr. Talle. It was a total failure.

Mr. LILJENQUIST. We have worked out in our industry a plan to increase the production of livestock. About twenty-some-odd farm and livestock organizations are cooperating. We feel that we are making considerable progress. We have attacked the problem from every conceivable point of view. We will increase production of livestock by the production of more feed, better use of feeding, by increasing the use of our grass resources, by improved breeding, and by a host of other ways.

Everyone in the industry is pitching in and cooperating in this. And we feel that we can provide the meat which will be demanded and needed by our military forces and by our civilian population, if we are not stymied too much by price controls. They can upset everything, or practically everything we'are attempting to do, to increase production.

Gentlemen, we would like you to insist on turning this country to the system which we all know works, free enterprise, and the rewarding of individual initiative.

We sent a letter to Members of Congress recently concerning the cost of OPS. We noted that the OPS payroll in Helena, Mont., where they have a district office, was $246,780 a year. This is an indication of the high cost of the price stabilization program. The OPS will spend over $70 million in fiscal year 1952.

The cost of controls to business and industry is higher than most people realize. Every month thousands and thousands of man-hours of labor are required at all levels of production and distribution, to study confusing price regulations and make endless reports to the Government. This labor should be put to productive use to supply more goods.

An increase in the supply of goods is the safest and surest way to lower prices. Controls reduce production and living standards. They sap the strength of business and industry, and add to the cost

of goods. Finally, and worst of all, controls are socialistic, and create disrespect for law and government, because they are arbitrary, inflexible, inequitable, and unworkable.

Gentlemen, we hope that you will take the controls off, let them end this June 30.

Mr. Brown. One question. Are you in favor of quotas?
Mr. LILJENQUIST. În favor of quotas?
Mr. BROWN. Yes, sir.

Mr. LILJENQUIST. No, sir, Congressman Brown. The Western States Meat Packers Association is on record as being opposed to livestock slaughter quotas. We feel that it is an additional burden on the industry and serves no useful purpose.

Mr. BROWN. Some of your people were in favor of quotas last year, were they not?

Mr. LILJENQUIST. Not in our organization.
Mr. BROWN. That is all.

Mr. LILJENQUIST. We had considered the problem fully, and our board of directors and the membership in annual convention had voted to oppose quotas, and we were on record last year as being against them.

Mr. BROWN. Judge Montague said this morning that he was very much against quotas.

Mr. LILJENQUIST. Yes, sir.

Mr. BARRETT. If there are no further questions, thank you very much for your testimony.

The committee will adjourn, to meet at 10 o'clock Monday morning.

(Whereupon, at 3:25 a. m., Friday, May 16, 1952, the committee was adjourned to 10 a. m., Monday, May 19, 1952.)

(The following statements were submitted for inclusion in the record:) STATEMENT ON BEHALF OF THE AMERICAN MUNICIPAL AssociATION IN SUPPORT

OF H, R. 7079 This statement is submitted in behalf of the American Municipal Association in support of H. R. 7079, a bill which will exempt from price control "rates, fees, and charges for services supplied directly by the States, Territories, and their political subdivisions and municipalities, the District of Columbia, and any agency of any of the foregoing.”

The association represents over 11,000 municipalities in the United States and is the national Federal representative of 41 State leagues of municipalities. Its activities include the exchange of experience, solving critical municipal problems by providing research, information, and public relations services, and the development of a national policy in order to solve effectively such problems as the municipalities have in common.

I appear here today to point out one particular problem every municipality faces today and to tell you why we think H. R. 7079 would solve that problem without jeopardizing in any way the purposes of the Defense Production Act.

The problem is caused by the Office of Price Stabilization insisting that charges for municipal public-utility services are not covered by the general exemption of public-utility charges in the Defense Production Act. To us this is such a perversion of the intent of the Congress that it should be promptly repudiated by the Congress so as to spare both the Federal Government and the municipalities the expenditure of public money and the time and energies of public officers which would otherwise be squandered in litigating the point.

Section 402 (e) (v) of the Defense Production Act unqualifiedly exempts from price control “rates charged by an common carrier or other public utility * The Congress did not say "public utilities except such as are publicly owned.” Nor did it say "public utilities which are subject to outside regulation.' Yet the

Office of Price Stabilization seeks, without your permission, to amend, on its say-so, your language to read these qualifications into the act and to discriminate against municipal operation of public utilities.

If there ever was any previous doubt about the intent of Congress to exempt self-regulated publicly owned utility charges, it was forever dispelled in the pages of the Congressional Record in connection with the 1951 amendments to the Defense Production Act. The intention was dramatically revealed when the Senate and House version of the 1951 extension act differed radically on this point. The House bill introduced for the first time the OPS-sponsored qualification which would have limited the public-utility exemption to cases where the charges were subject to outside regulation.

However, the Senate had a different view of the matter and it voted to retain the exemption unqualified, in its original state. The final enactment on this point was the Senate version, as a result of the conference-committee recommendation that the House yield.

So far as the intent of the House was concerned, its incorporation of the qualification in its original version was a recognition that without the qualification the charges of self-regulated publicly owned utilities were already exempt and would continue so. In the case of the Senate we have even more direct evidence of the same intent.

Senator Maybank, chairman of the Senate committee which considered extension of the act-the Senate Banking and Currency Committee answered direct questions by Senator Knowland and explained that by refusing to accept the House version, the Senate had assured the continued exemption of charges made by public operators of public utilities despite the complete absence of any form of outside regulation of their charges.

While this record would alone be sufficient to defeat the OPS position in court litigations, we deplore the prospect of such unnecessary court proceedings and support H. R. 7079 as the soundest solution to our problem.

You will notice that we have not called our publicly owned utilities "nonregulated” but rather "self-regulated." There is a world of difference. If to the OPS there is a legal need for regulation to quality for exemption as a public utility, then we submit that regulation by the municipal officers upon whom the States have imposed that duty completely satisfies that legal need. And if there is a policy need for prices to be regulated by some public officers if we are to dispense with OPS regulation, then again in our case that policy need is fulfilled.

After all public officers setting the charges for the services their public agencies render are not motivated by any desire for private profit; their motivations from first to last are as fully in the public interest as are those of the OPS. Among the factors in the public interest which local public officers must consider is the important factor of avoiding increasing the cost of living in their communities. This philosophy they share with OPS. However, their viewpoint is not so narrow and this is only one of the factors they must consider.

For example, one of our member municipalities recently ran afoul of the OPS viewpoint when it sought to install parking meters in an attempt to alleviate congestion and meet its severe traffic problem. The OPS regional office served notice that this violated the Defense Production Act because the municipality now sought to charge for outside parking for which there was formerly no charge at all.

To the OPS regional office the beginning and end of the problem was the existence of a price increase. To the municipal officers the installation of parking meters was a vital step in the solution of a serious municipal governmental problem. If it were argued to the municipality that their step would increase the cost of living of motorists, they probably would have answered that that was exactly what had to be done to discourage unnecessary motoring into the congested business heart of the city.

While the central office of OPS solved the particular problem by granting administrative permission for the parking-meter charges it never conceded that Congress had forbidden its regulation of such a municipal activity, and presumably today it would contend that it could withdraw its permission and vitiate the charge.

Obviously, Congress never intended to supersede local government officials in such attempts to solve local government problems.

Basically, however, this conflict is inherent in any attempt by OPS to frustrate municipal government decisions to increase prices for municipal services. This is a reason not only why Congress never intended to permit OPS regulation of municipal utility charges but also why Congress never should give a moment's


consideration to any future suggestion to permit such OPS regulation. Municipalities must continue unhampered in their efforts to solve their own problems.

Not only is OPS regulation of municipal charges unnecessary and an unwarranted superseding of local government but it would even be futile.

Since profit is not an ultimate governmental purpose, municipalities would not attempt to increase their charges unless it became absolutely necessary to meet increased costs. If they suffered such pressure they could still fall back on taxation to balance their budget. Taxation in such cases just as effectively increases the cost of living in these communities as would an increase in prices. That is why we say that the OPS program would be futile in such cases. It could force a choice of method by the municipality but it could not prevent the increase from being collected in one way if not in the other.

Obviously, a Federal price-control agency should not have the power to decide whether a municipality should charge users or tax the general public. A host of factors beyond the purview of OPS but within the scope of local government must dictate such a choice.

At the present time the OPS insistence that it has statutory power to regulate publicly owned utility charges is proving a constant source of vexation. Our member cities face the problem of deciding whether to tilt with OPS, whether to seek to justify necessary price increases under present permissive regulations, whether to come hat in hand for OPS permission on a hardship basis or whether to absorb increases in costs by cutting down on some public service.

Believing as we must that Congress intended municipalities to be exempt from OPS regulation, we submit that we should not be forced to choose between these courses. Apparently, only an unmistakable reaffirmation of the congressional purpose can avoid our dilemma. For that reason we respectfully submit the urgent need for the prompt enactment of H. R. 7079.

National Wool GROWERS AssociATION,

Salt Lake City, Utah, May 12, 1952.
Chairman, Committee on Banking and Currency,

House of Representatives, Washington, D. Č.

(Attention: Mr. William J. Hallahan, clerk.) DEAR CONGRSSSMAN SPENCE: This is to advise you that it will not be possible for Mr. W. H. Steiwer, president of the National Wool Growers Association, to personally appear for 15 minutes to testify before your committee on Friday, May 16, relative to H. R. 6546, a bill to amend and extend the Defense Production Act. As you probably are aware, it would be necessary for Mr. Steiwer, of Fossil, Oreg., to incur a substantial increased expense and travel a great distance to attend this hearing.

Under the circumstances, therefore, we would appreciate it if you would incorporate in the record at the proper point in the hearings, the statement of the National Wool Growers Association relative to H. R. 6546. Two copies are enclosed, which is in accordance with the instructions of your committee. Sincerely yours,



GENERAL The National Wool Growers Association is a service organization for the growers of sheep, lambs, and wool in the United States. The present membership consists of State sheep growers' associations in 12 western range States, including Texas. These 12 States have 64 percent of the sheep population of the United States. In addition, our organization also has individual members in eastern and midwestern sheep-growing States.

We are the only national organization which attempts to speak for the whole domestic wool- and lamb-producing industry and we believe that we do express the views of more than a large majority of the 350,000 growers of wool and lambs in the United States.

THE SHEEP INDUSTRY FROM 1942 TO DATE Present stock sheep numbers in the United States are approximately 56 percent of what they were January 1, 1942, or approximately 22,000,000 head short of our 1942 sheep population peak. The Bureau of Agricultural Economics, as a result of the 1950 census, found that the reduction in stock sheep by 1950 was even greater than their estimated figures last year. Instead of a 44-percent reduction from January 1, 1942, to January 1, 1950, a reduction of 47.5 percent has now been indicated for that period by the Bureau of Agricultural Economics.

On Friday, May 25, 1951, we appeared before the Senate Committee on Banking and Currency which at that time was considering the extension of the Defense Production Act, with amendments, and as recorded in the hearing on page 1761. On Saturday, May 26, 1951, the same statement was presented to the House of Representatives' Committee on Banking and Currency, as recorded on page 1135. At that time we outlined in some detail what had happened to the sheep industry under the Office of Price Administration, showing that a freeze order was placed on wool December 8, 1941, and prices remained firmly pegged at that level until September 1, 1946. We showed further that on August 1, 1942, prices of lamb carcasses and wholesale and retail cuts of lamb were frozen. On June 21, 1943, meat prices were rolled back and payment of subsidies to packers commenced. It was not until August 5, 1945, that the Commodity Credit Corporation was authorized to pay subsidies to those selling sheep and lambs to legitimate slaughterers. In our opinion the producer received little benefit under this order. Thus the sheep producer's income was stationary during a 5-year period on wool and a 3-year period on lamb, whereas costs of production continued to rise and resulted in a 47.5-percent decrease in stock sheep in the United States. This story is told in detail in the hearings to which we have referred above. We predicted what would happen at the time of OPA; again with the institution of price ceilings and regulations under the OPS; and we now have evidence that the same ti ing is happening again,

After the revisions reported in stock-sheep numbers for the year 1950, by the Bureau of Agricultural Economics, the increase in stock-sheep numbers January 1, 1951, over January 1, 1950, is still indicated as 4 percent. From January 1, 1951, tó January 1, 1952, a year when the demand for wool and meat was at its height, the increase in stock-sheep numbers was only 2 percent. Higher wool and lamb prices producing an income which would meet high production costs and still return a profit, made sheep raising attractive during 1950. This encouraged more farmers and ranchers to raise sheep and to save more ewe lambs and breeding ewes to increase production. That resulted in a 4-percent increase in stock-sheep numbers during 1950. However, after the wool market rose to unprecedented heights during 1950 and early 1951, there followed a continuous decline, now in its twelfth successive month, and brought about by actions on the part of the executive department and threats of action, primarily by the OPS. This once again made the sheep industry less attractive and is slowing up the rate of increased production.

On the one hand the Government is supporting the price of wool to encourage production, and the OPS, on the other hand, has, during the past year imposed price ceilings and regulations on wool which had no effect on inflation but which did in effect, discourage domestic production. It is unrealistic to have an essential and strategic commodity such as wool burdened with price ceilings, Government regulations and price supports when domestic production constitutes only about 25 percent of domestic consumption. It is true that the OPS very recently issued an order suspending wool price ceilings, but they are subject to reinstatement at the will of this Agency.

A fairly good yardstiek which shows what has happened to the domestic sheep industry is the report issued by the Bureau of Agricultural Economics on the slaughter of sheep under Federal inspection. In the years prior to OPA, only from 6 to 8 percent of the total sheep and lambs slaughtered in the United States consisted of older animals, which were a part of the breeding flocks. During the years of declining numbers the ewe slaughter went as high as 21 percent of the total slaughter. In 1950 the ewe slaughter had declined to under 10 percent of the total as more breeding animals were held back for increased production. However, 1951 shows the slaughter of mature breeding animals on the increase, reaching 11.6 percent of the total slaughter for the year.

Ceiling prices are only one phase of the OPS program which has discouraged the sheep industry. This Bureau, in its lust for power, has milked dry every possible authority granted to it by writing complicated rules and regulations which further

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