changes in our industrial outlook. We have a law that is operating and being tested daily. We know its faults and its good points, if anyone will agree such a law can have good points. It seems to me, therefore, Mr. President, that this is the ideal time for Congress to legislate on the subject of controls, free as it is from the stress, strain, and tensions of a great national emergency. Moreover, as I indicated before, 3 months is hardly enough time in which to write an economic-controls law from scratch. Even starting, as I do, pretty much from our present law, and with all the advantages that I indicated the present time offers in writing such a law, the existence of such a law on a standby basis would give those who are administering it, and those business and labor advisory groups who would be constantly meeting and working together with them, time and opportunity to perfect recommendations for changes in the law or in regulations which might be issued if such a law ever was invoked. Congress would be receiving monthly reports on the agencies' operations and would continuously be kept informed and educated with respect to the various problems that arise or might develop if the controls were invoked. In my conception such a standby agency's important function and that of the advisory committees would be constantly to study and agree on ways and means of perfecting the basic statute and develop efficient, effective, and fair means of administering it.

It seems to me, Mr. President, that industry and agriculture most of all, would benefit from such a standby type of law and agency. During previous times industry and agriculture had no such opportunity to help in framing the law or to assist to any great extent in helping to develop and formulate the regulations. Under the pressure of time, it was almost impossible, even if the administration had desired it, for business and agricultural groups to play such an important and constructive a part in the controls program. Speed was of the very essence. A standby type of organization and a standby type of law will afford the time and the opportunity for business to share its know-how with the administration and the Congress in the formulation, revision, administration, and operation of such a law, should it ever be invoked. Without such a law, this is for all practical purposes impossible.

In addition to this, industry and agriculture and labor representatives would' become acquainted with the key staff that would be operating the program, if such a time should ever arrive; and it could be familiar with the organizational' structure and the full meaning of the law and the regulations issued under it. In a word, millions of man-days of study, frustrating search for information, advice, and decision wou'd be spared, not to mention the millions of man-days saved business, the administration, and the Congress in attempting to straighten out and revise what had already been done improperly or unfairly.

Also, industry, in the process of working with such a standby agency in constantly thinking about suh problems that might arise, would be keeping itse'f educated with respect to the law and its operation and could, therefore, be able to adjust itself to its requirements more efficiently and with less cost in time and money. Personnel who, because of their knowledge of the law and of the standby agency, would not only re valuable to the industry involved, but such personnel would also be listed in the roster of qualified persons available in the event of activation of controls as provided in the bill.

With industry being forced, as it were, to be constantly meeting with others in the industry, with industry generally and with those studying price, wage, and salary trends and other conditions in the various industries and in the economy generally, it is quite conceivable that many of the problems that might arise and eventually lead to the imposition of controls would be foreseen and adjusted or taken care of voluntarily without the need for invoking the law.

With the bill providing, as it does, a National Advisory Council composed of distinguished representatives of business, industry, agriculture, labor, the military, and the consumers, all of whom would be subject to Senate confirmation, to advise the President on the imposition of each of the controls in the different titles of the bill and to advise the President generally on policies relating to general mobilization. I am sure you will agree that we have provided sufficient opportunity for the President to secure the best advice available before he would take any action. I am satisfied that such a Council will prevent any hasty or unwise decisions in the use of any of the authority granted in the bill.

The most important function of price, wage, and salary control can perform in my opinion is to give assurance to the consumers that prices will remain relatively stable. Once the freeze took effect in January 1951, the average citizen seemed satisfied that prices were not going up very much any longer, and immediately the enormous pressure on consumer durables began to drop off. With

the outlook for prices fairly stable, the average consumer purchased only what he needed, and again he began to save rather than spend his savings. It is this psychological effect that price control has on the consumer and causes him to save rather than spend, which reduces the flow of income into consumer-goods industries and relieves the marginal pressures on prices for these goods, and at the same time serves as a source of investment capital for defense industries that makes price controls an effective instrument of economic stability in periods of emergency.

A standby law would cause consumers and businessmen to have that same sense of assurance that prices would not be allowed to spiral upward, and as a result they would not rush out with the first sign of an emergency in panic to stock up on all they could get their hands on. Thus prices would tend to remain more stable, as would savings, and the very need for invoking a control program might be avoided by the very confidence it would engender. If controls finally had to be invoked, fear of price increases could be considerably lessened and so too would the problem of controlling such prices.

Mr. President, I have devoted most of my remarks, thus far, to my philosophy and approach to the problem of price, wage, and salary control and the need and good practical sense for a standby system of such controls. The reason I have done so is because this is the more controversial part of my proposal and, if I may say, the side which I have heard very little argument for and which, it seems to me, ought to get some very serious consideration. It should be given especially serious consideration by those who have been most unsatisfied with controls. I think standby controls offer the best means that I know of by which the most irritating and unsatisfactory effects of controls can be eliminated or considerably lessened.

Very briefly, the bill would continue until June 30, 1954, the various loan, purchase, loan guarantee, and development programs of financial aid to and would likewise extend the Small Defense Plants Administration.

It would continue the priority and allocations programs of title I and the power of condemnation and requisition in title II, of the Defense Production Act, on a standby basis. The authority in these titles could only be invoked on the advice of the National Advisory Council.

Similarly, rent control would be continued on a standby basis with the National Advisory Council advice necessary to invoke it initially on critical defense areas. Its advice would also be necessary when rent controls are initially invoked on defense-rental areas.

Credit control would likewise be on a standby basis and could be invoked initially on consumer goods (regulation W) only after consulting the National Advisory Council and a similar procedure would be required for the activation of real estate credit control (regulation X).

The price and wage controls would be continued on a standby basis and the trigger of advising with the National Advisory Council would be required before invoking initially either selective or general controls. With a few exceptions the price and wage provisions are similar to those in the present act and it would be left to Congress to decide on the representative base period for adjusting ceilings prices after the freeze which would be imposed on prices and wages on the business day preceding the imposition of the control or controls.

In introducing this bill, I am aware that there are many who have long shared my point of view on most economic and social problems who may disagree with me at this point. To those, all I can say is that my views have not changed. My experience and my study of this subject have increased my knowledge about it, and in sponsoring this legislation, it is my most profound and considered opinion that I am laying the best groundwork I know of to further promote and facilitate the system of free competitive enterprise, which has been the basis of my whole economic philisophy. It would take a great deal less courage and would result in a great deal less criticism, no doubt, if I chose not to introduce such a bill. But I believe it is my responsibility and my duty as a Senator and one who is privileged to serve as the chairman of the Banking and Currency Committee to bring this bill before you for your thoughtful deliberation and action.

The bill does not contain all the provisions that I would prefer it to have, nor does it exclude many of the provisions that I would prefer to see out of the bill. It probably can be improved in many, many respects; but I believe it does offer a reasonable and satisfactory basis upon which you can begin thinking and acting. It is modeled after the most recent bill you enacted last session.

If all my efforts but result in greater knowledge, if not action, my purpose will have been served.

[S. 1081, 83d Cong., 1st sess.]

A BILL To provide authority for temporary economic controls, and for other purposes

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the Defense Production Act of 1950, as amended, is amended by adding at the end thereof the following new title:

“TITLE VIII—TEMPORARY EMERGENCY PRICE, WAGE, AND RENT

CEILINGS

"SEC. 801. In spite of substantial increases which have occurred since the outbreak of the conflict in Korea, prices are now generally in normal relationship and the economy as a whole is relatively stable. It is the sense of the Congress that stability can be maintained by the full and effective use of indirect controls barring unanticipated and adverse international developments. There is, however, the ever-present possibility of further Communist aggression which may seriously jeopardize the American economic system unless proper safeguards exist for the immediate imposition of certain economic controls. The necessity for such safeguards is emphasized by the speedily destructive force of modern warfare which allows no delay in the taking of Executive action to insure the preservation of the well-being of the economy. The purpose of this title is to provide a basis for the imposition of price, wage, and rent controls for a temporary period in the event serious economic dislocations develop which threaten the national security or welfare.

"It is the sense of the Congress that direct economic controls are incompatible with the American free-enterprise system and should be invoked only if an emergency arises serious enough to threaten the economic well-being or security of the United States. However, if such an emergency should develop the President must have the power to employ immediate economic controls for such reasonable period of time as will give Congress an opportunity to act.

"SEC. 802. There is hereby established a National Advisory Council composed of members to be appointed by the President, by and with the advice and consent of the Serate. The membership shall be representative of business and industry, agriculture, labor, the military, and consumers. The President shall designate a Chairman from among the members. Such Council shall, upon request, advise the President on general policies relating to economic mobilization, in addition to performing the functions prescribed elsewhere in this title. Fach member may receive compensation not in excess of $50 per diem for each day he is actually engaged in the performance of his duties as a member, and, while away from his home or regular place of business, he may be allowed transportation and not to exceed $15 per diem in lieu of subsistence and other expenses while so employed. The members shall, in respect to their functions on the Council, be exempt from the operation of sections 281, 283, 284, 434, and 1914 of title 18 of the United States Code, section 412 of the Mutual Defense Assistance Act of 1949, and section 190 of the Revised Statutes (5 U. S. C. 99).

"SEC. 803. (a) The President is authorized and directed, after consulting the National Advisory Council, whenever he shall find and declare that the exercise of such authority is necessary in the interest of national security or economic stability, to establish by Executive order ceilings on (1) the price, rental, commission, margin, rate, fee, charge, or allowace paid or received on the sale or delivery, or the purchase or receipt, by or to any person, of materials and services, (2) wages, salaries, and other compensation paid or received with respect to employment, and (3) rents paid or received for the use or occupancy of housing accommodations, at the levels prevailing as of the close of business on the business day next preceding the day on which the action is taken, or, if none prevailed on such day, then those prevailing on the nearest date on which, in the judgment of the President, they are generally representative. All ceilings established under this title shall terminate ninety days after the issuance of such order, or at such earlier time as Congress may by law provide, and the authority conferred by this title to establish ceilings shall not thereafter be exercised.

"(b) The President may provide exemptions from ceilings in the case of any materials or services or transactions therein, or types of employment, or housing accommodations of any class or in any area, if he finds that (1) such exemption is necessary for national defense, or (2) the imposition of such ceilings would be impracticable or unnecessary in order to effectuate the purposes of this title.

(c) Notwithstanding any other provision of this section the President may exercise any authority granted to him by this title without prior consultation with the National Advisory Council in the event a state of war exists.

"SEC. 804. The President may make such rules, regulations, and orders as he deems necessary and appropriate to carry out the provisions of this title. Whenever in the judgment of the President such action is necessary or proper in order to effectuate the purposes of this title, he may, by regulation or order, regulate or prohibit speculative or manipulative practices or renting or leasing practices (including practices relating to the recovery of possession) in connection with any housing accommodations, which in his judgment are equivalent to or are likely to result in rent increases inconsistent with the purposes of this title. "SEC. 805. (a) Regardless of any obligation heretofore or hereafter entered into, it shall be unlawful

"(1) for any person to sell or deliver, or in the regular course of business or trade to buy or receive, any material or service, or to demand, accept, receive, or retain any rent for the use or occupancy of any housing accommodations, or otherwise to do or omit to do any act, in violation of this title or any regulation, order, or requirement issued thereunder, or to offer, solicit, attempt, or agree to do any of the foregoing; or

"(2) for any employer to pay, or any employee to receive, any wage, salary, or other compensation in contravention of any regulation or order promulgated by the President under this title.

The President shall prescribe the extent to which any payment (including any wage, salary, or compensation payment), either in money or property, made in contravention of any such regulation, order, or requirement shall be disregarded by the executive departments and other governmental agencies in determining the costs or expenses of any person for the purposes of any other law or regulation, including bases in determining gain for tax purposes.

"(b) Any person who willfully violates any provision of this section shall, upon conviction thereof, be subject to a fine of not more than $10,000 or to imprisonment for not more than one year, or both.

"SEC. 806. Nothing in this title shall be construed to require any person to sell any material or service, or to offer any housing accommodations for rent, or to perform personal services.

"SEC. 807. As used in this title

"(a) The term 'rent' means the consideration, including any bonus, benefit, or gratuity, demanded or received for or in connection with the use or occupancy of housing accommodations, or the transfer of a lease of housing accommodations. "(b) The term 'housing accommodations' means any building, structure or part thereof, or land appurtenant thereto, or any other real or personal property rented or offered for rent for living or dwelling purposes (including houses, apartments, rooming or boarding house accommodations, and other properties used for living or dwelling purposes) together with all privileges, services, furnishings, furniture, and facilities connected with the use or occupancy of such property. "SEC. 808. This title shall become effective on May 1, 1953."

SEC. 2. (a) Subsection (a) of section 717 of the Defense Production Act of 1950, as amended, is amended by inserting before the period at the end thereof a semicolon and the following: "and title VIII of this Act and all authority conferred thereunder shall terminate at the expiration of ninety days after the President proclaims that the existing international emergency requiring the involvement of armed forces of the United States in actual hostilities in the Korean conflict has ended".

(b) Subsection (b) of such section 717 is amended by adding at the end thereof the following:

(4) Sections 702, 703, 705, 706, 707, 710, 711, 713, 715, and 716 of this Act shall continue in effect until the expiration of title VIII of this Act; except that section 705 shall not become operative until the President establishes ceilings on prices, wages, and rents under title VIII."

DIGEST BY SECTION OF TITLE VIII, DEFENSE PRODUCTION ACT OF 1950 AS AMENDED

SHORT TITLE

Temporary emergency price, wage and rent ceilings.

Section 801

DECLARATION OF POLICY

Prices now relatively stable and in normal relationship, though substantially above pre-Korea. Congress feels such stability can be maintained by indirect controls, barring adverse international developments. Threat of further Com

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munist aggression and speedily destructive force of modern warfare require legislative and organizational safeguards to provide machinery for speedy Executive action in the event of serious economic dislocations to insure preservation of well-being of our Nation.

Congress believes direct economic controls incompatible with free enterprise system and should be invoked only if emergency seriously threatens economic or national security. However, should such emergency develop, the President must possess authority to invoke immediate economic controls for reasonable period of time until Congress has opportunity to act.

Section 802

NATIONAL ADVISORY COUNCIL ESTABLISHED

Members appointed by President by and with the advice and consent of Senate. Membership shall be representative of business and industry, agriculture, labor, the military, and consumers. Function to advise President on general policies relating to economic mobilization. Compensation $50 per day while engaged in duties and transportation costs plus not over $15 per diem allowance. Members are exempt from "conflict of interest" statutes.

Section 803 (a)

SO-DAY FREEZE

President authorized and directed, after consulting with National Advisory Council if he finds exercise necessary in interest of national security or economic stability, to establish ceilings by Executive order on (1) prices, (2) wages, (3) rents on housing accommodations at levels close of business day next preceding day freeze ordered. If no such levels prevailed, then those prevailing nearest date generally represented. All ceilings effective for 90 days after freeze order issued, or for such shorter period as Congress may by law provide.

Section 803 (b)

EXEMPTIONS

President may provide exemptions if he finds (1) necessary for national defense, or (2) imposition impracticable or unnecessary.

Section 803 (c)

STATE OF WAR

In event state of wars exists, President may exercise authority without prior consultation with National Advisory Council.

Section 804

RULES AND REGULATIONS

President may make rules and regulations and orders necessary to carry out purposes of title. President may prohibit speculative or manipulative practices (including eviction practices) in connection with housing accommodations which in his judgment would result in rental increases.

Section 805 (a) (1)

VIOLATIONS AND PENALTIES

Violations of price ceilings made unlawful.

Section 805 (a) (2)

Violation of wage provisions unlawful.

President may prescribe extent overpayment may be disregarded in determining costs or expenses for purposes of any other law, including basis in determining gain for tax purposes.

Section 805 (b)

Willful violation punishable by fine of not more than $10,000 or imprisonment for not more than 1 year, or both.

Section 806

INVOLUNTARY SERVITUDE PROHIBITED

No person shall be required to sell any material or service or perform personal services.