I have read your statement carefully, particularly as to rent control, and I wonder if you could not just high light it.

Mr. GREEN. I would be glad to submit it.

The CHAIRMAN. Then we would move on to wage stabilization, which you are more interested in.

Mr. GREEN. We will insert it for the record.

The CHAIRMAN. It will be put in the record, Mr. Green, just to save time, if it is agreeable to the committee.

(The information referred to follows:)

RENT CONTROL

Rent is the second most important item in the family budget and therefore deserves special attention in any stabilization program.

Ever since the start of today's acute housing shortage, the American Federation of Labor has supported effective and equitable rent controls as a necessary program for safeguarding the welfare of not only our own members but all American families.

This protection is particularly necessary during the present defense emergency. We have had clear and unmistakable evidence since the outbreak of the Korean war that availability of housing at reasonable rents in defense areas is an essential component of the defense program itself. Workers cannot be expected to migrate to or remain in defense production centers unless they can obtain decent housing at reasonable rents for themselves and their families.

The provision in the 1951 Defense Production Act amendments for acrossthe-board rent controls in critical defense areas was extremely wise and, in the main, has proved beneficial not only for the workers in these areas but also for the conduct of the defense program itself. However, we feel that the requirement in section 204 (1) (2) that there be evidence of "substantial in-migration of defense workers or military personnel" into a defense area has proved too strict and artificial. For certain areas this section has prevented the application of rent control even though the area has had a severe housing shortage and excessive rent increases. Details for three major areas are attached to this testimony (appendix B).

We believe that, whether or not substantial in-migration can be demonstrated, rent controls should be imposed in any area where the other requirements in section 204 are met; that is, (1) where there is defense activity and (2) where a substantial shortage of housing for the defense workers in the area has resulted or tends to result in excessive rent increases, thereby impeding or tending to impede the defense activities in the area.

We can see no reason whatever to permit the defense program to be hampered by skyrocketing rents simply because there does not seem to be a substantial in-migration of workers into the area. This is particularly true in view of the fact that in the past many areas exercised the so-called local-option feature of the law to remove rent controls, even though the need for them still existed. We therefore propose that the Secretary of Defense and the Director of Defense Mobilization should be authorized to establish rent controls in areas where there is substantial defense activity and where such activity is or may be hampered by actual or threatened rent increases.

We have one other suggestion for a change in the rent-control provisions of the law. We believe that local communities should not have the power to remove rent controls in areas certified as critical by the Secretary of Defense and the Director of Defense Mobilization. Rent controls in such areas have been established because they are necessary for the success of the defense program itself. Rent control in that kind of a situation is not simply a local matter. It is intimately related to the entire defense effort. If, in the judgment of those charged with the success of the defense program, rent controls are needed in such areas, no local officials should be given the power to remove them.

We therefore propose that the rent-control law be amended so that the authority of State legislatures, local governing bodies, and rent advisory boards to remove rent controls shall not extend to areas which have been certified as critical to the defense program by the Secretary of Defense and the Director of Defense Mobilization.

In considering this rent-control legislation, attention must be paid to the special problems of building-service workers. This is the only group of workers

in our economy whose attempts to obtain equitable wage increases have met difficulties because their employers have been subject to controls continuously since 1942.

Although wage increases granted to building-service workers constitute legitimate grounds for seeking rent adjustments, the paper work and technical problems involved in granting these adjustments have made more difficult the settlement of wage disputes among building-service workers. Moreover, these rent adjustments can only be based on the application of each individual landlord, whereas wage settlements normally cover an employers' association in a large city with hundreds of individual landlords.

Therefore we recommend that a provision be included in the Defense Production Act which provides that rent increases or rent adjustments should be made where it is shown that such action is necessary to absorb wage increases.

A rent increase sufficient to absorb the increase in wages should take place on an area-wide or association-wide basis.

In addition, we see no reason why luxury apartments renting for over $150 could not be decontrolled. This would also ease the settlement of labor disputes in this industry.

REAL-ESTATE CREDIT REGULATIONS

Last year Congress included in the Defense Housing and Community Facilities and Services Act a provision requiring lower down payments for low- and moderate-priced housing. This action was taken because Congress was dissatisfied with the standards for regulation of housing credit established by the Federal Reserve Board and the Housing and Home Finance Agency.

The American Federation of Labor welcomed these provisions because we were strongly convinced that the housing credit regulations originally administered by the Federal Reserve Board and the Housing and Home Finance Agency had made it all but impossible for ordinary families without large accumulated savings to purchase new houses. The high down payments originally required under regulation X forced home builders to shift their output from lower-priced to higher-priced homes.

The new law with its requirements for lower down payments has been in effect only a short while. Not enough time has elapsed to determine the exact effect of the change. In fact, it is unfortunately true, that not enough information is collected about new housing construction to pass judgment on this issue. However, there is some evidence that, as a result of the revisions in regulation X reducing down payments on the lower-priced houses, a higher proportion of new houses have been constructed in the lower-priced brackets.

There is no evidence that the terms now in effect for residential real-estate credit are in any sense inflationary. On the contrary, purchases by families of houses in the lower-priced brackets tend to conserve the limited amount of manpower and materials available for housing construction.

In view of the manner in which regulation X was administered by the Federal Reserve Board and the Housing and Home Finance Agency before Congress revised the down payments required for low-priced homes, we do not believe that these agencies should be given the same type of unlimited discretion again.

We therefore oppose the adoption of section 104 (a) in S. 2645 which would amend section 605 of the Defense Production Act of 1950 to give the President complete discretion with regard to residential housing credit terms. We believe that the standards established by the Congress in the 1951 Defense Housing Act were sound and should not be altered.

MATERIALS

Although we have no legislative recommendations regarding titles I, II, and III, we do feel that the problems involving supply of scarce materials are so important that they require additional comment at this time.

The administration of our defense program has been guided by the overriding conviction that it would have to cope with material shortages. The controlled materials plan was instituted to divert scarce metals from civilian use to military usages and production. The great war industries developed and hurried plans for new plants and equipment. From July 10, 1950 through 1951, business firms invested over $33 billion in expansion to meet the defense needs of our Nation. The administration accelerated this expansion through provisions for rapid amortization constituting tax relief. About half of this program benefits thereby.

As industrial expansion moved rapidly, so did supplies of materials, and scarcities did not develop in expected amounts. Great increases in the supply of war materials have been conspicuously obvious in the past 60 days as increases in allocations to civilian industries in nearly all scarce materials have 'been made by the Defense Administration. Because of underestimates of supplies and overestimates of requirements, many industries have closed down departments or reduced their capacity, and workers trained in these jobs either lost their employment or retrained for other work with resulting losses in income. We are accustomed to state and believe that next to our free citizenry our free-enterprise system is our main dependence in emergencies. Free enterprise develops a spirit of responsibility, flexibility, and originality not possible under national economic planning with bureaucratic controls. Free enterprise can function without injury under central controls only for a definite limited time. It is in the national interest to return to free enterprise with its free markets as soon as possible.

The American Federation of Labor has consistently maintained that defense undertakings should follow the principle of equal sacrifice. The principle requires technically based decisions for allocation of controlled materials and equitably balanced control of prices and wages. Materials allocations affect employment and may result in unemployment while wage-and-price controls are vital elements in our inflation control program, essential to economic security. The construction industry has had serious defense unemployment. This industry is basic to our entire economy. It is our largest industry; its product in 1951 of $39 billion was larger even than the product of agriculture, which previously held first place. The cut-back in construction has been particularly severe. Today this great industry is operating far below capacity, due solely to Government controls and restrictions. When construction is slowed, the effect is felt throughout the whole American economy. New homes are still greatly needed; the housing shortage is by no means filled. The cut-back in housing re:sults not only in overcrowding but it also slows the industries which supply home furnishings, appliances, furniture, rugs, and other household equipment. It reaches back into the building-materials industries and slows employment and production there. The latest figures show that employment today is below last year by 50,000 in plants making furniture and fixtures, carpets and rugs, appliances with lamps, and 88,000 in lumber, cement, and clay-products industries. Today building materials other than steel, copper, and aluminum are in abundant supply, and steel is plentiful in some areas. Restrictions on the industry prevent private building contractors from making adjustments which would permit work to go ahead in areas where materials can be had. The effect on employment in the industry is most serious. The Labor Department estimates that on the average employment in 1952 will be below 1951 by 400,000. Already scores of thousands of building tradesmen are unemployed in our large cities, forced to walk the streets or to leave their homes and families to seek work elsewhere.

In addition to these present problems, Government controls have an effect on this basic industry which reach far into the future. The work of planning and drafting heavy construction projects has come almost to a standstill in leading architects' offices in our large cities. Since it takes from 18 to 24 months to develop a construction project from the planning stage to the stage when work can begin, this means a serious slow-down in construction for a long future period. This means that when military construction tapers off jobs will not be ready for the workers released.

Much of the unemployment developing in towns and cities throughout the country will disappear when materials can flow freely to consumer-goods industries and when construction controls are lifted. The Labor Department in mid-February cited 23 cities as labor-surplus areas where 6 percent or more of the labor force are unemployed, often affecting a very large number of workers. These sore spots of unemployment, even in the midst of our defense effort, are chiefly in consumer-goods industries. Many plants making metal consumer products have been forced to lay men off, cut production, and run part time due to metal cut-backs, even though they have orders waiting to be filled.

The American Federation of Labor executive council in its February meeting reviewed the defense situation and decided to urge three proposals: (1) That, when supplies of materials were available in adequate amounts, controls should be ended; (2) that free organization of management and workers within industries should be brought into the administration of defense mobilization to participate in policy making and execution; (3) that a civilian board on military

requirements and allocations, consisting of civilian experts drawn from business and labor, be set up to screen defense requirements and sift out superfluous requests for materials which have resulted in unnecessarily starving civilian industries.

NEED FOR ESTABLISHMENT OF RENT CONTROL IN THREE SELECTED AREAS Milwaukee, Wis.

Federal rent control in Milwaukee ended on August 5, 1949. It was superseded by a State law which permitted rent increases up to 30 percent over those in effect under Federal rent stabilization. The State law expired June 1, 1950, The rent index for Milwaukee of the Bureau of Labor Statistics shows the tremendous increase which has taken place since removal of Federal rent controls:

Date:

Ren' inder (1955-39=106)

Aug. 15, 1949 (date Federal control was dropped and State law took
over).

May 15, 1950 (date just before State control law expired).
August 15, 1950...

Nov. 15, 1951 (latest data available)..

123. 8

140. 9

145. 2

168. 6

The above data reveal an increase of 36 percent in rents between the dropping of Federal rent control in August 1949 to June 1950, rents increased 14 percent. of State rent control, August 1949 to June 1950, rents increased 14 percent. From the expiration of State rent control in June 1950 until November 1951, rents rose 20 percent.

This is an area in which the Labor Department reports no substantial labor in-migration. However, many plants in the area are engaged in defense work. Kansas City, Kans.-Mo.

In the Kansas City, Kans., portion of the area rents were decontrolled by the Kansas State Legislature in April 1951. A survey of rents made there recently indicates that rents have increased over 50 percent since that time.

In the Kansas City, Mo., portion of the area rents have remained under limited control. A recent rent survey there indicates uncontrolled units are 115 percent over comparable units under rent control.

There is considerable defense activity in the Kansas City area including both military installations and defense plants.

Pueblo, Colo.

The city of Pueblo and immediate vicinity are under limited Federal rent control. The remainder of Pueblo County is decontrolled. Uncontrolled rents in Pueblo average 50 to 60 percent higher than the rents of comparable controlled accommodations. Substandard uncontrolled shacks are renting for the same amount as fair-to-good controlled units.

Local employers report difficulty in recruiting and retaining employees because of the scarcity of housing and the extremely high rents asked for decontrolled units (there being practically no controlled units available). Defense workers are reported to be developing a "shanty town" northwest of the city, consisting of boxcars, abandoned bus bodies, etc., because of excessive rents for decontrolled accommodations.

Defense activities include the Pueblo Ordnance Depot and iron and steel production. The latter is engaged in a very large expansion program.

Mr. GREEN. All right, I will go to wage stabilization.

WAGE STABILIZATION

The American Federation of Labor has accepted wage stabilization for the present period of emergency, not because we regard it as a necessary or desirable objective in itself, but because the harsh realities of our times require sacrifice of all groups, and labor is prepared to bear its share. We have cooperated with the wage stabilization program and we will continue to do so, as a part of our contribution to the efforts of our Nation to defend itself against inflation and against

the enemies of freedom. We believe that the Wage Stabilization Board, as now constituted, is equipped to administer this program in a fair and equitable way.

At this time, therefore, we have no new recommendations to make with respect to those sections of the Defense Production Act which deal with wage stabilization.

This does not mean that we are entirely satisfied with the actions, policies, and regulations of the Board as they now exist. On the contrary, we believe that many of these regulations and policies are unduly restrictive of collective bargaining and fail to do equal justice to the wage earners of this country. There are also a number of areas in which the Board has so far failed to act, where action is long overdue.

For example, the Board has yet to adopt a general policy allowing for increases in wages in recognition of increased productivity. This is a glaring inequity, which must be adjusted in such a way that workers may receive their proper share in the proceeds of industrial and technological improvement. The Wage Stabilization Board cannot operate successfully unless its policies assure equity in the distribution of the proceeds of industry.

Furthermore, the Board has yet to adopt a policy to allow for the correction of substandard wages and conditions of life. The Board's present policies discriminate unfairly against low-income workers, freezing them and their families into subhuman patterns of existence, far below the level of decency or parity with the rest of our democratic society. This means that the greatest and most onerous portion of the burden of inflation and defense is being borne by the weakest and most depresesd section of our economy. This is not a situation which we find readily tolerable.

Senator CAPEHART. You feel that the law at the moment is all it should be in respect to this matter?

Mr. GREEN. In that respect, yes.

Senator CAPEHART. Unless we write into the law some mandatory provision?

Mr. GREEN. We feel that the law itself deals with it so far as we feel they should go.

Senator MOODY. In other words

Mr. GREEN. It is the administration of it under the law that we feel can be changed so as to help.

Senator MOODY. Mr. Green, the charge has been sometimes made that because of increases granted to labor, prices have been forced up, and I think the tone of that criticism is that the enforcement of wage stabilization has not been of the same caliber as enforcement of price stabilization.

I take it you disagree with that categorically, and feel that far from forcing prices up, in general labor has been held down at least as severely as prices have been held down, is that correct?

Mr. GREEN. Yes; I think your conclusion is correct.

Nevertheless, these are matters that are properly subject to administrative rather than legislative determination and adjustment. The Board has all the power it needs, under the present act, to handle these problems in a reasonable and proper manner, when and if it sees fit to do so-and we believe they should be left to the discretion