wise provided in this Act. and be exported, destroyed, or sent into customs territory of the United States therefrom, in the original package or otherwise; but when foreign merchandise is so sent from a zone into customs territory of the United States it shall be subject to the laws and regulations of the United States affecting imported merchandise;" and section 15 (c) reads: "The Board (the Foreign-Trades Zones Board) may at any time order the exclusion from the zone of any goods or process of treatment that in its judgment is detrimental to the public interest, health, or safety." From the time of their establishment, the grantees and users of the ForeignTrade Zones have predicated their operations upon the basis that the articles prohibited by law from entering the foreign-trade zones were those specifically and absolutely prohibited from entering the territory of the United States; that articles which Congress by law had deemed inimical to the morals, health, or best interests of the Nation if they were so much as discovered within the sovereign limits of the United States were in like manner denied admittance to the foreign-trade zones. On the other hand, laws and legal regulations thereunder which denied or restricted the introduction of articles into the domestic commerce of the United States have long been considered by zone grantees and users not to be applicable to the bringing of merchandise to foreign-trade zones unless specifically excluded by the foreign-trade zones board under section 15 (c) of the act quoted above. In construing section 3 of the act quoted above, the zone grantees and users have operated on the assumption that foreign and domestic merchandise of every description properly in a zone was not subject to the customs laws and, further, that foreign merchandise was not subject to the laws and regulations of the United States affecting imported merchandise until and unless such foreign merchandise was sent from a zone into the customs territory. Now the laws and regulations of the United States affecting imported merchandise are far broader than the customs laws and govern the conditions under which foreign merchandise may enter into the commerce of the United States. Such conditions may be imposed not only under the Tariff Act but by laws under which the Department of Agriculture, the Pure Food and Drug Administration, the Department of Commerce, and other agencies including the emergency agencies are given power to regulate conditions of importation and processes of treatment. It is with deep concern for the integrity of the Celler Foreign-Trade Zones Act of 1934, and the continued functioning of the United States foreign-trade zones that zone grantees and users have viewed the assumption of jurisdiction over merchandise and processes of treatment within foreign-trade zones by agencies other than the legally constituted foreign-trade zone board. Under section 104 of the Defense Production Act of 1950, as amended, the Production and Marketing Administration of the Department of Agriculture defines "import" in section 1 (g) of their regulation DFO-3 as follows: 'Import' means to transport in any manner into the continental United States, Puerto Rico, the Virgin Islands, or any territory or possession of the United States from any foreign country. It includes shipments into a free port, free zone, or bonded custody of the United States Bureau of Customs (bonded warehouse) in the continental United States, Puerto Rico, or the Virgin Islands and shipments in bond into the continental United States, Puerto Rico, or the Virgin Islands for transshipment into Canada, Mexico, or any other foreign country." [Italics supplied.] This assumption of jurisdiction is taken despite the Secretary of Agriculture's statement of policy in his Determination Relating to Imports Under the Defense Production Act (Fed. Reg. of Aug. 11, 1951): "It is hereby determined that imports (other than by the Government of the United States) into the commerce of the United States of the commodities and products hereinafter listed, except as herein specified, would with respect to each such commodity or product (a) impair or reduce the domestic production of a commodity or product specified in said section 104 below present production levels, (b) interfere with the orderly domestic storing and marketing of a commodity or product specified in said section 104, or (c) result in an unnecessary burden or expenditure under a Government pricesupport program." [Italics supplied.] The receipt in a foreign-trade zone of butter, cheese, and the other products of section 104 cannot possibly be considered as having entered the commerce of the United States and to exclude these products from the zones could not have been intended by Congress under the Defense Production Act or by the Celler ForeignTrade Zones Act. The second Government agency which has assumed jurisdiction over merchandise in foreign-trade zones under the Defense Production Act is the National Production Authority. Their definition of "import" (regulation M-8 as amended April 2, 1951), which it is to be noted differs from that of the Production and Marketing Administration although arising out of the same statute, follows: 'Import' means to transport in any manner into the continental United States from any foreign country or from any territory or possession of the United States. It includes shipments into a United States foreign-trade zone, or bonded custody of any United States collector of customs (bonded warehouse) in the continental United States and shipments into the continental United States for processing or manufacture in bond for exportation. 'Import' does not include shipments in transit in bond through the continental United States without processing or manufacture to Canada, Mexico, or any other foreign country, or shipments through United States foreign-trade zones to a foreign country without processing or manufacture. However, if any material in such shipments in transit in bond is because of a change in plans, to be sold or used in the continental United States, or subjected to processing or manufacture in the continental United States, it becomes an 'import' for the purposes of this order and requires the reports specified in section 14 of this order." This definition, too, is not consonant with the Celler Foreign-Trade Zones Act, for it brings within the jurisdiction and control of NPA foreign merchandise that is processed or manufactured in a zone. The NPA has stated that its authority goes beyond regulating the importation of articles into the customs territory of the United States that have been processed or manufactured in a foreign-trade zone. It claims the authority to prohibit or control manufacture and processing of any commodity, domestic or foreign, within a zone. It is again pointed out, however, that the Celler Foreign-Trade Zones Act excludes foreign merchandise from the application of import laws and regulations until such merchandise is brought into customs territory, despite the broad application of the Defense Production Act, and it is the firm belief of the zone grantees and users that the NPA should not control the processing and manufacture of foreign materials within zones. It may be within their realm to control the bringing of foreign products into the customs territory and so control, indirectly, processing and manufacture within a zone; but under the Celler Act, foreign merchandise brought to a zone has not been imported into the commerce of the United States nor such importation signified by the making of a customs entry. The third Government agency which is presumed to have authority within foreign-trade zones under the Defense Production Act is the Office of Price Stabilization. This agency, too, has a definition of "import" which differs from those of the Production and Marketing Administration and the National Production Authority. The OPS definition as found in CPR 31, section 2, follows: "A commodity is imported which is transported from a place outside the continental limits of the United States to a place inside the continental limits of the United States, its territories, and possessions. However, commodities shipped into the United States, its territories, and possessions from outside thereof and entered in a foreign-trade zone or under general order or in a bonded warehouse for transshipment and actually transshipped to a destination outside the continental limits of the United States shall not be deemed to be 'imported'." Of the three agencies, the Office of Price Stabilization has gone farthest to preserve the purpose of foreign-trade zones and the status of foreign merchandise therein. It does not presume to impose its control regulations upon sales of foreign merchandise in zones. The OPS takes the position that when such merchandise is sent from a zone into customs territory, then it comes within the jurisdiction of the OPS. If the merchandise is transshipped to a foreign country, the OPS has no interest. To summarize, we have the situation of having three separate Government agencies taking their authority from one statute, the Defense Production Act, writing three separate definitions for imported merchandise, each one different from the other, although all three have claimed full jurisdiction over zone merchandise for such purposes as they choose to exercise. The foreign-trade zones board has supported these agencies in their application of authority to zones and zone merchandise. Foreign-trade zone grantees and users do not subscribe to this view of diverse authority. They maintain that the Cellar Foreign-Trade Zones Act has not been repealed or superseded in its intent to exempt foreig merchandise in a zone from "the laws and regulations of the United States affecting imported merchandise.' They also feel that Congress in enacting the Defense Production Act did not intend that the usefulness of foreign-trade zones be impaired. It is therefore requested that the Currency and Banking Committee of the House write into H. R. 6546 or a subsequent similar bill a provision that "Foreign merchandise brought to a foreign-trade zone in the United States for any purpose shall not be deemed to have been imported into the continental United States for the purposes of this act." Assurance is given that by thus preserving the integrity of the foreign-trade zone principle by stopping the jurisdiction of the foregoing agencies at the zone boundaries, no weakening of the purposes of the Defense Production Act will result. It will remain within the authority of these agencies to apply all legal controls on merchandise if and when withdrawn from zone areas. For example, all commodities subject to section 104 could not enter customs territory from the zones except under the same conditions as though they arrived directly from abroad. Hence, the Secretary of Agriculture's statement of policy "that imports * * * into the commerce of the United States" of certain commodities would be controlled, is properly interpreted. In like manner, the National Production Authority could determine the terms and conditions under which commodities in a zone shall enter the customs territory of the United States, as could the Office of Price Stabilization. For purposes of clarity, although the agency is not involved in this act, the powers of the Export Control Board of the Department of Commerce would continue to be effective insofar as any Merchandise is withdrawn from a zone for shipment abroad in the same degree as such powers are effective for merchandise in transit through the United States. Respectfully submitted. STERLING ST. JOHN, Jr. (For and on behalf of Foreign-Trade Zone No. 1, New York; Foreign- The CLERK. The next witness is Mr. Leo Goodman, representing the CIO. The CHAIRMAN. Mr. Goodman, you may proceed. Do you have a written statement? If so, you may read it or put it in the record, as you desire. STATEMENT OF LEO GOODMAN, DIRECTOR, COMMITTEE ON HOUSING, CONGRESS OF INDUSTRIAL ORGANIZATIONS Mr. GOODMAN. Thank you very much, Mr. Chairman. On the behalf of the CIO and the CIO housing committee, I appear here this morning particularly in regard to title II of H. R. 6546, supplementing the testimony of James B. Carey, who appeared here last week on the whole bill. The CIO sent me on a trip throughout the United States to make a first-hand study of the effect of this committee's work on rent control these past few years, and I hope to have an opportunity to present the full report of that trip to the committee. This committee has considered this subject seven times in the last 5 years, and I would like to call the attention of the committee to one set of the hearings, and information you have had on this subject. This is the hearings conducted in 1947, 1948; 1947 has 600-odd pages; 1948, 460 pages; 1949, 852 pages; 1950 Mr. COLE. That is solely on rent control? Mr. GOODMAN. Solely on rent control. 1950, 560 pages; the special act, for temporary extension, again in 1950, 51 pages, and then it was included in the extensive hearings on the Defense Production Act, as amended, in 1951, and the separate hearings on those further extensions. There you have thousands of pages of testimony, gentlemen, regarding the problems of rent control in this country, and this Congress, which works as hard as it does, I think just as a time saver, ought to adopt the provision which the chairman has put in this bill extending the act for at least 2 years, so that you will not once again have to have another one of these thick volumes every 6 months, as you have had, and overwork yourselves and the other Members of the Congress, who take the time to read these hearings, to be familiar with the testimony that has been brought before this committee, and vote the action which the facts require. The CIO has been interested in this subject because rent and housing costs have constituted the largest single expenditure of its members, and the CIO's interest is expressed each year in a resolution which is adopted by its annual convention-its governing body-and I have handed to each of you a copy of this resolution and would like, at this time, Mr. Chairman, to insert it in the record. The CHAIRMAN. It may be inserted at this point. (The resolution referred to is as follows:) CIO RESOLUTION No. 30 ON HOUSING AND RENT CONTROL, CIO THIRTEENTH ANNUAL CONVENTION, NEW YORK, N. Y., NOVEMBER 5-9, 1951 With millions of American families already without adequate housing, the mobilization program since the Korean war started has created new and additional housing problems throughout the country. With the supply of building materials once again growing short, the shortage of housing once again impedes the production-program schedules. Millions of families forced to live in slum areas are being compelled by greedy real-estate interests to pay an increasing portion of their family income for rent. The census of 1950 reveals the astounding fact that a growing portion of lowincome families, particularly those with incomes of $3,000 a year or less, are paying 35 percent or more of their income for housing. In return for this exorbitant charge, more than 2%1⁄2 million families are only able to rent units described by the Bureau of the Census as dilapidated, and an additional 61⁄2 million families secure housing either without running water or without private toilet facilities. Despite these deplorable conditions, the National Association of Real Estate Boards is conducting a campaign to "raise the whole scale of residential rents * * * to from 35 to 50 percent of family income." Though it extended rent control for another year, the last session of Congress was pursuaded by the real-estate interests to provide a 20 percent increase above the rent level in effect in the middle of 1947. Congress also provided for continuation of decontrol under local option. Thus, while permitting Federal rent control in critical areas affected by the mobilization program, the local-option loophole makes possible the immediate decontrol of these areas by local governing bodies subservient to real-estate interests. Federal housing officials have also used their powers to evict families from, and to destroy, Lanham Act World War II housing in areas where there is a shortage of low-rent housing but a surplus of over-priced apartments, built with Federal credit, at rentals beyond the ability of workers to afford. Concentration of the Federal program on the manipulation of credit controls has rationed the reduced supply of new housing to those who can afford to pay most, rather than those who need housing most. Meanwhile construction in military and defense areas has dropped off due to withholding of funds by the mortgage banking industry in its campaign to force higher interest rates, particularly on GI home loans guaranteed under the GI bill of rights. While the Government guaranty protects the mortgage lenders, veterans who have purchased housing under the GI bill are not being protected from unscrupulous speculative builders who fail to meet contract specifications provided in the law. The House of Representatives has set up a special committee to investigate failure of the Veterans' Administration to make the required inspections. Congress responded to the position taken by the CIO on regulation X by suspending this regulation in critical areas in order to make housing available at the place, time, and rental needed to assist the mobilization effort. The restrictive effect of regulation X on home buying and home building already has caused an excessive use of trailers and other types of mobile housing as substitutes for permanent housing in vital production centers throughout the United States. Thus workers' families are being forced into high-cost inadequate temporary housing in areas where housing is needed for permanent use for many years to come: Now, therefore, be it Resolved: 1. That the Administration should recommend, and Congress should enact, amendment of the Rent Control Act to provide for stabilization of rents throughout the United States as long as the defense mobilization effort continues and the housing shortage prevents normal bargaining relationships between landlord and tenant. The act should permit decontrol of rents in a local community only when the vacancy ratio in low and middle income housing in that community is equal to 10 percent of the housing supply. 2. The CIO urges President Truman to call a conference to review housing legislation and administration of the present housing program, such a conference to include representatives of labor, veterans, farm, church, welfare, and other organizations concerned with the interest of the millions of families who need good housing at rents and prices they can afford to pay. 3. That Congress should provide for the full use of all Lanham Act World War II housing located in defense production areas without reservation as to veteran status of defense workers eligible to occupy such housing. The Government must properly maintain this valuable asset. 4. That Congress should enact a middle-income housing program to permit workers in newly established production centers to meet their housing needs through mutual and cooperative associations eligible for long-term, low-interest rate contruction and mortgage loans from RFC. 5. That Congress should authorize sale of Government-owned low-rent housing to occupants whenever 50 percent or more of the occupants exceed the existing income ceiling for occupancy of such housing. Proceeds of such sales should be used to build additional housing for low-income families. 6. That Congress should remove the restriction in the present appropriation act which limits public housing to 50,000 units a year, and it should permit the public housing program to proceed up to 135,000 units a year, insofar as materials are available, in accordance with the 1949 Housing Act. Mr. GOODMAN. The total presentation which I hope to make this morning is an implementation of the recommendations contained in that resolution, and to amplify those recommendations with the experiences which I have had in the production lines, in the factories, and with the workers who are producing the war goods throughout this country, and their experiences with the administration of the act which this committee has put on the books. Probably the most serious effect which our organization attempted to bring to the attention of the Congress last year was stated most succinctly by the mayor of the city of Los Angeles, Calif., who at that time had said, in a bulletin, a copy of which each of you has, a reporting of our economic outlook entitled "The Housing Fiasco." 'Manpower requires houses. No house, no manpower, no airplanes." And gentlemen, today in San Diego, Calif., aircraft workers are living in automobiles. The effect of that was stated to the Congress here just a day or so ago by Secretary of Defense Robert A. Lovett, when he said that the increase in military plane production "was not good enough." The reason for that is that we have not implemented, to the intents and purposes of this committee, the Rent Act which is on the books, and the Rent Act which is now law has a loophole and a weakness which I hope to illustrate to you in some detail. But before I go into that, in amplification of Mr. Lovett's statement, I would like to insert into the record the report of the experience of some two hundred em |