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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 $22% 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 MEM

BER 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.

My interest in this matter became very enthusiastic after being named as chairman of this Investigation Committee by Congressman Martin of Massachusetts, especially when I noted the large effect and ramifications of the committee or conference, as IMC is called, which was set up without any statutory authority as far as I can ascertain.

It is my belief that remedial action had to come about by removal of the International Materials Conference. In this respect I will say to the committee that Senator Ferguson of Michigan was the first to note the harmful operation of the functions of the International Materials Conference, and I have become very interested in the same activity.

When the Senator introduced S. 2873 I introduced H.R. 7157, which is the same bill in every detail.

My bill by segments or divisions, and commencing with line 5 on page 1, states:

If the domestic production of any commodity is in excess of the amount neergsary to meet allocations for defense stockpiling and military assistance to any foreign nation authorized by any act of Congress, no restriction or other limitation shall be imposed under this title upon the right of any person to purchase such commodity in any foreign country, and to import and use the same in the United States.

This, Mr. Chairman, would permit the United States consumers to purchase any commodity, such as copper, abroad for import, and use in this country, without restriction, in cases where the domestic production is sufficient to meet the needs for defense, stockpiling and military assistance programs, but not sufficient to meet all civilian needs.

Part 2 of my bill, starting on page 2, line 1, reads:

No restriction or other limitation shall be imposed under this title if the domestic production of any commodity is sufficient to meet all civilian domestic requirements and the requirements for defense, stockpiling, and military assistance to any foreign nation authorized by any act of Congress.

This, Mr. Chairman, would permit unlimited domestic usage of any commodity produced in this country, in sufficient quantity to meet all civilian needs, as well as the needs for defense, stockpiling, and military-aid programs.

Section 2 of my bill, which deals with price control, reads:

No rule, regulation, or order issued under this title shall apply to purchases by any person of any material outside of the United States or its Territories and possessions for importation into the United States for his own use or for fabrication by him into other products for resale.

This, Mr. Chairman, would prohibit import price ceilings under any conditions.

Mr. Chairman, I did not lay the foundation here for the International Materials Conference, and I did not do so in order to save the time of the committee this morning, but it is outlined in detail, as we have found it during our investigation. The report being placed in the record will tell about the IMC's background and its functioning.

Upon my return this morning, I also found that a Mr. Loree had testified here on Friday, and to my surprise he testified for my amendment, and I find that he had somewhat gone into the International Materials Conference, and for that further reason I did not desire to go into that here today.

Mr. Brown. Do you desire to insert any material into the record?

Mr. SADLAK. I would like, Mr. Brown, to insert in the record the report which we made as a result of our investigation in regard to the shortage of copper, and how it is caused by the International Materials Conference.

Mr. Brown. That may be done.

(The information referred to is as follows:) REPORT TO REPRESENTATIVE JOSEPH W. MARTIN, JR., REPUBLICAN LEADER OF

THE HOUSE, ON THE ELECTRICAL INDUSTRY AND THE INTERNATIONAL MATERIALS CONFERENCE

Report is by a specially appointed committee of eight House Republicans: Řepresentative Antoni N. Sadlak, of Connecticut, chairman; Representative E. Ross Adair, of Indiana; Representative William G. Bray, of Indiana; Representative John C. Butler, of New York; Representative Robert J. Corbett, of Pennsylvania; Representative James P. S. Devereux, of Maryland; Representative Albert P. Morano, of Connecticut; Representative Paul F. Schenck,

of Ohio. On March 10, 1952, some 70 Republican Members of the House of Representatives met at the call of Representative Joseph W. Martin, Jr., of Massachusetts, House minority leader, to discuss the International Materials Conference and the unemployment and hardship the Conference has brought about. The Members present represented areas where unemployment has resulted because of materials shortages, which in turn were largely traceable to the actions of the International Materials Conference.

At the close of the meeting, Mr. Martin appointed four committees to study and report on various aspects of the problem that had been created by the International Materials Conference. These committees were to examine the electrical manufacturing industry, the automotive industry, various consumer industries, and the question of the legality of the International Materials Conference.

Following a month of study of the IMC and its many ramifications, this committee, which was assigned to examine the electrical industry, has reached certain conclusions. Before stating the conclusions, however, it is necessary, for the sake of a clear understanding of the problem, to start with the background of the IMC itself and outline its development since its start more than a year ago. In this report, emphasis is placed on IMC actions affecting the supply of copper, the basic material which has been the major determining factor with regard to the production rate and employment in the electrical industry.

BACKGROUND OF IMC The story of the International Materials Conference goes back to December 1950, when Clement Attlee, then Socialist Prime Minister of Great Britain, came to Washington to visit President Truman and request a larger share of the world's key commodities. Messrs. Truman and Attlee agreed to form an intergovernmental organization specifically designed to handle the problem of raw materials. The French Government was then consulted, and on January 12, 1951, the United States State Department issued a release announcing the formation of what was to become the International Materials Conference.

The purpose of the new organization, according to the release, was to "bring about cooperation among the free countries of the world to increase the production and availability of materials in short supply and to assure their most effective use." Thus, the IMC's birth was accompanied by a flow of vague, high-sounding verbiage that gave little hint of the damage the organization would eventually cause in the electrical and many other important industries.

However, the third paragraph of the State Department release gave a strong indication that the IMC was intended to wield world-wide power in dividing up the resources of the various countries. The release stated that "commodity problems cannot be dealt with on a regional basis but must take account of the needs and interest of the whole free world."

The release also disclosed that it was the Government of the United States, under the prodding of Socialist Prime Minister Attlee, that was taking the most prominent role in organizing the IMC. The release stated that “the Government of the United States has * agreed to send invitations immediately to

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