I believe that that amendment would be extremely bad for consumers. I think it would very unfairly cut the imports into the country from nations to whom we sell twice as much in exports as we get in imports, notably France, the United Kingdom, and Western Germany, and I believe the main fallacy is demonstrated by this one very brief example:

We are great manufacturers of automobiles and we consider that a necessity.

In France, the United Kingdom and West German, an automobile is considered a luxury. Enormous amounts of strategic materials go into automobiles. Now naturally we have many commodities under allocation, which in those countries, because they are willing such small amounts of those materials as they have to other products, not automobiles, would be available to be part of their exports, and yet, by this kind of broadsword amendment which is being discussed in terms of the Ramsey amendment, their imports to the United States would be excluded, despite the fact that the social basis upon which the allocation rests, in our country, with respect to automobiles, is completely as different as night and day, from some of the products they send over here.

I think this would be as cruel an amendment to consumers that the committee could consider and I hope the committee rejects it.

Just one last point, Mr. Chairman. I am the author of a bill to create a joint committee on consumers, in the Congress, which I think is vitally necessary to do just what Mr. Dollinger says, and what I feel, that there unfortunately is very little mobilized interest around here to protect consumers. My resolution is Concurrent Resolution 190, and Mr. Chairman, I propose to seek to amend the Defense Production Act, in section 712 (a) to substitute for the Joint Committee on Defense Production, a joint committee on consumers. Thank you very much.

Mr. BROWN. We are delighted to have your testimony.

Mr. JAVITS. May I have permission to include some tables, Mr. Chairman? I have a rather interesting digest of this export and import question, and also a newspaper article with respect to the predictions of certain top economists concerning inflation.

Mr. BROWN. That may be done.

(The tables and newspaper article referred to are as follows:)

MEMORANDUM ON H. R. 6843 TO ESTABLISH IMPORT QUOTAS ON PRODUCTS CONTAINING MATERIALS WHICH ARE SUBJECT TO DOMESTIC PRIORITIES OR ALLOCATIONS

ILLUSTRATION NO. 1-THE UNITED KINGDOM

Consider the impact of these restrictions on the United Kingdom. Last year the United Kingdom sold $467,000,000 worth of its products to the United States. On the basis of last year's import pattern, application of the proposed restrictions would have reduced United Kingdom sales in the United States in the general magnitude of $140,000,000. This would have meant, for example, that dollar earnings from such items as machinery would have been reduced from $20,000,000 to $8,000,000; leather goods, from $7,000,000 to $1,000,000; automobiles, from $37,000,000 to $9,000,000, and pottery from $4,000,000 to $1,500,000.

Such restrictions would, of course, have reduced the supply of goods available to the American consumer. They would have done basic harm to the economy of the United Kingdom, which in turn would have tended to retard United States export industries and other supporting industries, as well as agriculture. The serious nature of the danger to the United Kingdom becomes more clear when related to the fact that whereas United Kingdom exports to the United States in

1951 were $467,000,000, its imports of American goods totaled some $900,000,000. Thus, even without any new restrictions, the United Kingdom's trade deficit with the United States amounted to more than $433,000,000.

United Kingdom imports from the United States included wheat ($89 million), tobacco ($147 million), cotton ($100 million), and lard ($47 million), such agricultural products amounting to $383,000,000. The United Kingdom's imports also included machinery ($76 million), petroleum products ($77 million), and a wide variety of other commodities totaling $517,000,000.

ILLUSTRATION NO. 2-FRANCE

United States imports from France last year totaled $229,000,000. These imports included nearly $80,000,000 worth of steel products, some $57,000,000 worth of chemicals, machinery, and leather products, making a total of $137,000,000 worth of goods generally subject to the restrictions proposed in H. R. 6843. During the entire 3-year period 1947-49, however, total French exports to the United States of these categories of goods were less than $10,000,000. The average annual French exports to the United States during the base period were less than $4,000,000. Applying the provisions of H. R. 6843 to these facts, the restrictions would constitute a virtual embargo on imports of these products from France.

ILLUSTRATION NO. 3-GERMANY

In 1951 we imported $229,000,000 worth of goods from Germany. Of the total about $118,000,000 would have been affected by H. R. 6843, including such goods as steel mill products in the amount of $86,000,000, machinery, $14,000,000,* scientific instruments $3,000,000, advanced iron and steel manufactures $6,000,000, and pottery and glassware in the amount of $9,000,000.

In the same year the United States sold $519,000,000 worth of goods to Germany, the largest categories of which were tobacco ($28 million), coal ($57 million), cotton ($112 million), and wheat ($145 million). Notwithstanding a greater need for dollars in the face of its defense objectives, Germany had a trade deficit with the United States in 1951 of nearly $300,000,000.

Since Germany's economic efforts during the period 1947-49 were primarily devoted to postwar reconstruction, it exports to world markets were insignificant. As in the case of France, the restrictions provided in H. R. 6843 would have constituted a virtual embargo on the principal imports from Germany.

ILLUSTRATION NO. 4- BELGIUM

United States imports from Belgium in 1951 amounted to $215,000,000. Of this total about $89,000,000 would have been subject to the restrictions proposed by H. R. 6843, consisting of such items as iron and steel products in the amount of $77,000,000, glass products in the amount of $7,000,000 and firearms and machinery in the amount of $5,000,000.

The United States exported $367,000,000 worth of goods in 1951 to Belgium. These exports included over $190,000,000 worth of wheat, tobacco, cotton, oil seeds, and other agricultural commodities and nearly $177,000,000 worth of industrial and manufactured products.

The restrictions of H. R. 6843 would have reduced Belgian exports to the United States by more than 40 percent last year.

ILLUSTRATION NO. 5-ITALY

In 1951 we imported $140,000,000 worth of goods from Italy, of which some $36,000,000 consisted of machinery ($7 million), iron and steel products ($5 million), pottery ($4 million), and musical instruments ($6 million) which would have been subject to the restrictions of H. R. 6843.

United States exports to Italy in 1951 amounted to $452,000,000. largest exports were cotton, wheat, coal, and machinery.

Among the

Under this bill its exports to the United States would have been reduced by some $30,000,000, increasing its trade deficit with the United States from $312,000,000 to $342,000,000. In view of Italy's extreme and chronic economic difficulties and of the impact of other recent United States trade restrictions on Italian exports (hatters' fur, fur-felt hats and hat bodies, almonds, and cheese), the prospective damage which new restrictions may inflict upon Italy's economy cannot be underestimated. In addition to their direct economic consequences, new restrictions will tend to strengthen those vociferous minorities who charge

that the United States is set upon maintaining and enlarging export outlets for its domestic production while excluding Italian products from the American market.

[From the New York Times, May 18, 1952)

TEN TOP ECONOMISTS PREDICT INFLATION

GROUP AT CONFERENCE agrees, HOWEVER, NATION WILL HAVE SOME BREATHING SPELLS

MINNEAPOLIS, May 17 (UP).-Ten of the Nation's top economic and financial experts predicted today that the country faced an “indefinite period of long-term inflationary threats."

There may be intermittent relief, they said, but it is "unlikely" that prices and wages will return to the levels of pre-World War II.

Interviewed at the University of Minnesota while attending an economic conference, the experts agreed that the American economy faced an unstable future. Some also said that Federal controls and high taxes should be maintained if inflation is to be held in check.

One economist, David McCord Wright of the University of Virginia, said the country might be facing a choice between unemployment or inflation.

"For the past few years we've been imposing on ourselves a 10 percent annual increase in money wages on an economy that can only stand a 3 percent annual rise in wages, Mr. Wright declared. "That gears the whole pattern of our economic society to inflation."

FEDERAL DEFICIT A FACTOR

Roy Blough, a member of the President's Council of Economic Advisers, said that "in view of the large rise in the rate of defense expenditures yet to come, the anticipated Federal deficit and the uncertainty of the world situation, the danger of renewed inflationary pressure is not yet over.'

"It is highly important that full powers for a comprehensive stabilization program be continued to be available for use if and when needed," Mr. Blough asserted.

Galen van Meter, vice chairman of Investors Diversified Services, Inc., sponsor of the university conference, said that inflation "is still an enemy despite some current deflationary signs."

Dr. E. A. Goldenweiser of Princeton University gave the view that the "immediate prospect is for some sideways movement of prices for some months, but the next phase is still inflationary."

"We will probably not do what is necessary in the way of higher taxes and airtight credit policies to relieve inflationary pressure,' ," Dr. Goldenweiser said. "Hence, barring real peace in the world, we are likely to have another dose of inflation."

John K. Gailbraith, economics professor at Harvard University, also stressed the need for keeping present controls and taxes.

"We should play it safe," Professor Gailbraith held, "until we can see more clearly what demands the world political and military situation may make on America's economy.

Arthur F. Burns of the National Bureau of Economic Research and James Duesenberry, another Harvard economist, also could see nothing ahead but inflation. Mr. Dusenberry predicted a fairly slow rise in prices and wages over the long term.

Raymond W. Goldsmith, of the Life Insurance Association of America, believed that despite inflationary pressures, spectacular increases in contractual savings had been a strong factor in stemming the tide of rising prices and wages. "Such savings, including pension-plan contributions, may exert a strong stabilizing effect in the future." Mr. Goldsmith observed.

Woodleaf Thomas, economic adviser to the Board of Governors of the Federal Reserve System, held that some economic measures taken during the last depression to increase the flow of money might well have turned out to be inflationary "under present conditions."

"I must warn," Mr. Thomas said, "that institutional investors must continue to share the public debt burden by allocating a considerable portion of their assets to government securities. This will help avoid undue monetary reactions with their attendant inflationary dangers."

Alvin H. Hansen, another Harvard man, said that during the accelerated defense effort "we need to encourage thrift to help hold down inflation.”

Mr. O'BRIEN. Mr. Javits, I would like to ask you this question: From the standpoint of curbing inflation, is there any difference in principle between controlling residential rents and controlling commercial rents?

Mr. JAVITS. There is some difference in principle, but it is not major. I will tell you what I think the difference in principle would be. Mr. O'BRIEN. If we control one why do we not control the other? Mr. JAVITS. We do in New York.

Mr. O'BRIEN. By the State law?

Mr. JAVITS. Yes; I will tell you what I think the difference to be. I think you have more flexibility in the commercial rent field, for other reasons than just stark standard-of-living basis. In other words, the family has a limited income and a rather rigid division of that income, whereas the commercial firm has much more margin for saving in other things if they have to pay more rent.

Mr. O'BRIEN. My point was, from the standpoint of curbing inflation, is there any difference in principle?

Mr. JAVITS. From the standpoint of curbing inflation you should have both but I think you should have a much more flexible scheme with respect to commercial rents for the reasons I have discribed and we have exactly that in New York.

I might say that there are some excellent figures, Mr. Chairman, on rent control coming out of New York, which show that in uncontrolled cities, housing rent increases show an average of 15 percent over the past year as compared with a little over 3 percent in New York, showing what good rent-control administration will do. I think we have a very fair law.

Mr. BROWN. Thank you very much.

Mr. JAVITS. Thank you.

Mr. NICHOLSON. Mr. Chairman.

Mr. BROWN. Mr. Nicholson.

Mr. NICHOLSON. I would like to ask Mr. Javits a question. Do I get your idea that rent control in New York is better than the Federal rent control?

Mr. JAVITS. I believe it is.

Mr. NICHOLSON. Do you suppose that could happen in other States, too?

Mr. JAVITS. It could, sir, but the difficulty is I have explained this before and I will just take a second to say it-you have got a legislature heavily weighted in favor of people who are not interested in rent control. But the damage to our economy is just as great if the city people are a minority in the State legislature. Hence they need the protection of the Federal Government. So there is an area in which Federal rent control must operate, for the benefit of those States where they could not get it through their legislatures and where nevertheless it is needed.

Mr. DOLLINGER. Mr. Javits, I want to differ with you on the one point. I do not want my silence to indicate that I agree with your statement that State rent control is better than Federal rent control. I think it is worse. It is given more increases than those given by the Federal Government.

Mr. JAVITS. Both the gentlemen from New York are very unpartisan in many things. I hope they will be in this.

Mr. COLE. Mr. Chairman, I see in the presence of the committee, Mr. Van Veen of the Housing Expediter's office.

Mr. VAN VEEN. I checked that, Mr. Cole. There has been a long, turbulent discussion between our offices and Atomic Energy. We have set those rents. They are set under the standards of the act. In the last year the Defense Production Act was before the committee we were directed specifically to do that and the rents are based on comparability, and are comparable to similar rents in the Philadelphia area, and similar rents in other areas, for trailers.

Mr. COLE. Well I have this to say. I said a $20 subsidy. It is $221⁄2 subsidy, either to the worker or the trailer company, I do not know whom, but that is $22.50 per month for every person that occupies one of those trailers, and that runs to a great amount of money. This atomic energy place down there is not comparable to Philadelphia.

Mr. VAN VEEN. No, and the rents set down there were set higher than in Philadelphia. I mean it puts the Government in a very unfortunate position.

Mr. COLE. Yes, it does.

Mr. VAN VEEN. If they take the position that, on Government property, there should be no control, and on the individual owner's property, there should be control.

Mr. COLE. Yes, but these men down there, in my judgment, are not the type that cannot afford to pay an economic rent, and for the Government to subsidize either them or the trailer company-I do not think it is right. I understand they are doing it to the extent of $22.50 per month, which this Government is paying for people who are making high salaries in the defense effort.

Mr. VAN VEEN. Of course, we have no control over that. We have to fix the rents under the law.

Mr. BROWN. I would suggest that you stay around. We may want to interrogate you further.

Mr. VAN VEEN. I will be delighted to remain here, Mr. Brown. Mr. BROWN. Now we will hear from Congressman Sadlak.

STATEMENT OF THE HONORABLE ANTONI N. SADLAK, A MEMBER OF CONGRESS FROM THE STATE OF CONNECTICUT

Mr. SADLAK. Mr. Chairman and members of the committee, when I was told I would be given an opportunity to testify before this committee in regard to my amendment as proposed in H. R. 7157, it was my belief that time would permit me to draw up a formal statement to be presented to each member of the committee. However, such was not possible due to the preparations that were necessary in connection with the Connecticut State Republican Convention which concluded at Hartford last night.

I therefore request that I might present a longer written statement for the record.

With that, Mr. Chairman, I also request the privilege of including a report which I recently submitted with several Republican_colleagues in the House, dealing with the International Materials Conference, particularly its allocations of copper.