widely-from month to month (actually from day to day) and between one another. For example, during the period January-August, 1950, wholesale prices for beef ribs declined about 40 cents per pound-from $1.00 to 60 cents. At the same time prices of beef rounds advanced 10 cents per pound-from 401⁄4 to 50%1⁄2 cents. OPS regulations would stop such fluctuations in their tracksunless of course prices fall below ceilings, in which case the controls are not holding meat prices down anyway. We think it is important to note that meat prices, along with some other perishable commodities, simply cannot be held at a fixed level for any length of time. Because of the perishable nature of meat products, the variable supply can only be balanced against the demand by a continual process of price changes. This is quite different from a product such as tooth paste, which is relatively nonperishable and can be produced in direct response to volume of sales. Price Relationships Between Meat Products This is how the variable and uncontrollable supply of a highly perishable product is moved into consumption without loss or spoilage May July Sept. Nov. Source: National Provisioner USDA. Prices are as of mid-month SUPPLY AND DEMAND, NOT CEILINGS, DETERMINE MEAT PRICES The accompanying table is a listing of recent prices for a number of typical meat items, compared with packers' ceilings and prices for the corresponding dates a year ago. It will be noted from this table that current prices for meat and other livestock products are mostly well below both ceiling and year-ago prices. This is particularly true in the case of pork and the so-called livestock byproducts. Bellies, for example, are 26 percent below the ceilings and 25 percent below a year ago. To be noted, also, are the sharp declines which are shown for lard, tallow, hides and wool. Most beef prices, particularly prices of the lower grades, also have dropped away from ceiling levels. But there still is pressure on the ceilings in the case of veal, supplies of which have continued substantially (10 percent) below a year ago. We feel that these price declines are significant in that they have been established by supply-and-demand conditions in the competitive market. Price controls can claim no credit for these reduced prices. Another point which we would like to emphasize in connection with the general price situation on meat is this-notwithstanding the fact that current market prices for meat are well below ceilings, meat processing and distribution are still hampered by innumerable regulations contained in the price control orders which have nothing to do with prices themselves. For example: The industry is prevented from selling fabricated cuts of meat to retailers. Such regulations tend to stifle the efficient distribution of meat to the consuming public. A further hampering feature of the regulations-even with prices below ceilings-is the voluminous record-keeping and reporting requirements imposed on the meat industry. It is estimated that the industry cost of administering price control regulations within the individual meat packing companies during 1951 totaled close to $7,000,000. MANY MEAT PRICES WELL BELOW CEILINGS-LIVESTOCK BYPRODUCT PRICES DOWN PREDICTIONS OF RUN-AWAY INFLATION HAVE NOT MATERIALIZED One of the strongest arguments for direct price controls during late 1950 and early 1951 was the fear that this country was entering a period of intense inflationary pressures which might drive prices to fantastic levels. The outbreak of the Korean war, plus the scare buying which developed in this period, did result in an advancing price level which, if it had continued, would have proved serious to everyone. However, as we now have seen, the predictions of run-away inflation have not materialized. As the accompanying chart shows, the price level actually has declined substantially since the peak of last spring. The wholesale price index as of late February stood at 175 percent of the 1926 base. This was 9 points (about 5 percent) below the peak of 184 which was reached in February of last year. Much of this decline occurred at the very time when Government officials were loudly proclaiming the outlook for further large advances in prices. These predictions were aimed particularly at Congress which was being requested to provide "stronger" and more far-reaching regulations upon the economy. While we have no elaborate analyses to explain the downward course in the price level during the past 10 months, it seems obvious that price regulations themselves have had practically nothing to do with this improvement in the inflation problem. Experts seem to credit the action of the Federal Reserve Board last summer, plus the really remarkable ability of the country to produce goods, as the really significant factors in this situation. We should like it understood that the meat industry is as interested as everyone else in preventing run-away inflation and the accompanying devaluation of the dollar of this country. We feel strongly, however, that a program of direct price controls-which merely hamstring our economy and interfere with its ability to produce is not the way in which to deal with this problem. The recent suspension of regulation W, thus permitting the purchase of many items of substantial cost with no down payment, also raises the question as to whether price controls are needed. Regulation W was an anti-inflation measure which exercised control over one of the fundamental factors tending to push prices upward. It seems inconsistent to abandon measures of this kind while retaining direct price controls, which merely attempt to put a lid on prices without curing the cause of the price increases. REGULATIONS NOT FAIR AND EQUITABLE The Defense Production Act requires that ceilings on products processed from agricultural commodities, including livestock provide fair and equitable margins for processing. This provision is similar to the McKellar amendment to the Stabilization Act of World War II. OPA adopted an "over-all industry profit" test under which a ceiling price was considered fair and equitable if the industry as a whole, and in the judgment of OPA, was earning normal profits. Under this "test," many meat packing companies suffered severe financial losses without being able to obtain relief. This situation not only threatened the financial stability of the meat packing industry but was an important factor in the development of black markets. Passage of the Barkley-Bates amendment gave recognition to the fact that for ceiling prices to be fair and equitable they would have to provide for a reasonable margin of profit on the processing of each species of livestock considered separately. If OPA is sincere in its statement that price controls are needed, then it should give heed to the experience of its predecessor and accept the necessity for treating each segment of the meat packing industry equitably. In so doing, it would be taking a practical step toward preventing the development of black markets. Unfair treatment of an industry creates a situation which is ready made for crooks and racketeers to step in. We urge that Congress recognize the need for preserving the meat supply system and for checking black markets by giving serious consideration to an amendment similar to that which was found to be necessary under OPA. The text of the Barkley-Bates amendment read as follows: "Provided further, That on and after the date of the enactment of this proviso, no maximum prices shall be established or maintained on products resulting from the processing of cattle and calves, lambs and sheep, and hogs, the processing of each species being separately considered, which taken together, do not allow for a reasonable margin of profit to the processing industry as a group on each such species." If, as OPS contends, price controls are necessary, then an amendment similar to this is also necessary, to preserve the integrity of the meat industry and to prevent black markets. One of the witnesses who recently appeared before this committee said that pressure for decontrol of prices is coming from those who wish to be in a position to raise prices without violating the law. Such a charge is without foundation, since most meat prices have been below ceiling levels for several months. It also ignores the damage done to the Nation's meat supply, which has tended to cause higher, rather than lower meat prices. Probably the most enthusiastic advocates of price controls are those operators who hope to profit illegally by the artificially created scarcities which result from price controls. CONCLUSIONS In conclusion, we should like to reemphasize our position that the public generally has derived no real good from the price control program on meat for these reasons: 1. Meat prices have been below ceilings much of the time. Price controls can take no credit for this. 2. When meat prices were bumping the ceilings during the past year (which incidentally was due largely to the OPS induced reduction in cattle marketings) black markets developed immediately. 97026-52-pt. 2——23 3. Price controls have seriously disrupted the economical distribution of meat in this country and have interfered with the normal processing and merchandising of meat, even when prices have been below ceilings. 4. Those who observed the ceilings have been penalized, while those who did not, have enjoyed a premium for their dishonesty." 5. The total meat supply in 1951 was substantially lower than it would have been if there had been no controls. Hence, meat prices have actually been higher (even though they are below ceilings) than they otherwise would have been. Furthermore, we feel that the consuming public will not benefit from price controls on meats in the future, because: 1. There is ample evidence that price regulations are incapable of holding mest prices below any administratively determined level. 2. If it were possible to fix prices for meat below the free market, supply-anddemand price, distribution of meat throughout the country and among individual consumers could only be accomplished with a system of rationing, such as was used during World War II. We strongly doubt the consuming public would support such a program, to say nothing of supplying the civilian manpower that would be necessary for its administration. 3. With the cattle population at an all-time high level (88 million head on January 1), and hog production still large (although now tending downward), the potential supply of meat is still large providing production is not discouraged further by continuation of price control regulations. 4. With the population of this country increasing at a rate of 21⁄2 million people per year, every effort should be made to encourage, not discourage, meat production. It would be unfortunate if we were to pursue a course which does not take into account our rapidly expanding population. 5. The use of direct price controls seem to us only to confuse the real issue involved and, therefore, dilute our efforts to control inflation. We think it is unfortunate that the public should be led to expect any real effective control over prices by the so-called direct-control method. STATEMENT OF American National Cattlemen's Association, Denver, Colo. The American National Cattlemen's Association has its headquarters at Denver, Colo. Its membership is composed largely of range cattle growers in the States west of the Missouri River and of pasture cattle operators in the Southern States of Georgia, Florida, Alabama, Louisiana, and Mississippi. We have also quite a number of members who are cattle feeders in the irrigated valleys of the West and a scattered membership throughout the Corn Belt and the Eastern States. Our association held its January 7, 8, and 9, 1952. controls: OFFICIAL RESOLUTION fifty-fifth annual convention at Fort Worth, Tex., on The following resolution was adopted relative to price "Price controls "Whereas consumers have spent over the years approximately 6 percent of their income for meat and today are using no more than that much of their earnings for the purchase of meat; and "Whereas, the OPS has attempted to upset this historical relationship by imposing controls on marketing and selling of meat and livestock products, particularly singling out the cattle industry for price roll-backs and making little similar attempt to control wages; and "Whereas, such controls on beef have not benefited the consumer but have instead only interfered with the orderly production and marketing of the product, as controls did under OPA, when lowered production, black marketing, and widesspread disrespect for an unworkable law forced abandonment of controls; and "Whereas nevertheless the cattle industry is in prime condition to furnish, if not hampered by controls, more meat to the consumer than ever before in its history and today carries record inventories of beef animals; therefore be it "Resolved, That, in the interest of the consuming public and the livestock and meat industry, the American National Cattlemen's Association expresses unalterable opposition to the continuation of the unworkable price controls on meat." In support of the above resolution we call attention to the following facts, all of which indicate that it is neither practical nor equitable to continue price controls beyond the expiration of the present law on June 30, 1952. INCREASED PRODUCTION SOLVING THE PROBLEM We have urged from the beginning that price controls on livestock and meat were impractical and unworkable and that the real solution to the problem is increased production. This has been obtained in the livestock and meat industry despite shortages of labor and materials. It is true that production of meat last year did not come up to the advance estimates made by the Department of Agriculture, but this was almost entirely due to the chaos created in the industry by the program of Administrator DiSalle of OPS. When he announced that he was rolling beef prices back 10 percent on May 20, 1951, and that two further rollbacks of 42 percent each would be made on August 1 and October 1, immediately there was a rush to market and thousands of cattle were marketed at considerably lighter weights than would have been the case without these announcements. It was Mr. DiSalle's plan to lower meat prices simply because it is the major item on the American diet and this one industry was singled out to be penalized as a vote-getting measure. The ironic part of the whole business is the fact that actually Mr. DiSalle did not save the consumer one thin dime on meat prices. Instead prices were advanced on May 14, 6 days before the 10 percent reduction was made; the two projected reductions to be made later in the summer and fall were canceled, and the net result was that OPS cost both consumer and producer a great deal of money and in the process reduced the available supply of meat. CATTLE NUMBERS The increase in total cattle numbers last year of approximately 4,000,000 head (the increase was largely in beef cattle), bringing the total number up to more than 88,000,000, the highest ever recorded in this country, gives assurance of an ample beef supply in the period just ahead. It is almost certain, barring some great disaster in the remainder of 1952, that there will be a substantial increase in cattle numbers again this year. Cattle on feed April 1 in the 11 Corn Belt States showed 3 percent or approximately 80,000 head more than on the same date a year ago. The percentage of she stuff in the federally inspected slaughter is running very light, indicating that there is no liquidation of breeding herds underway. PACKER SLAUGHTER QUOTAS It is now encouraging to note that since the packer slaughter quotas were discontinued on July 31, 1951, and since the failure to reimpose them which was made late in the session last fall, there has been a turn for the better. It is now believed that cattle slaughter will exceed that of last year by some 3 million head, putting it back to approximately the basis of the 1950 slaughter. It may even go higher than that and the beef supply, of course, will be increased accordingly. SHORTAGES DISAPPEARING Numerous recent announcements have been made of the easing of controls in the construction industry and in the manufacture of automobiles and other commodities chiefly affected earlier by the shortage of metals. Actually at the moment there appears to be more necessity for making work through the medium of easing controls as mentioned above than there is of controlling prices. creased production takes better care of the latter matter than anything Government agencies possibly can do. DECLINE IN WHOLESALE COMMODITY PRICES In Wholesale commodity prices took a sharp rise immediately following the outbreak of the Korean war and reached a peak in February-March 1951. Since then they have eased off gradually but steadily. This drop in wholesale commodity prices was also reflected in the index for the total cost of living. The drop in total cost of living between January and March 1952 was slightly less than 2 percent, but the drop in the cost of food, included in that figure, was more than 5 percent. INCONGRUOUS SITUATION IN PORK It is interesting to note that while representatives of various departments of the Government have appeared before your committee and demanded the continuation of price controls, an incongruous situation has developed relative to |