DEFENSE PRODUCTION ACT AMENDMENTS OF 1951

THURSDAY, AUGUST 30, 1951

UNITED STATES SENATE,

COMMITTEE ON BANKING AND CURRENCY,

Washington, D. C. The committee met, pursuant to notice, at 10:30 a. m., in room 301, Senate Office Building, Senator Burnet R. Maybank (chairman) presiding.

Present: Senators Maybank, Robertson, Frear, Douglas, Benton, Moody, Capehart, Bricker, Ives, Schoeppel, and Dirksen.

The CHAIRMAN. The meeting will come to order, and with the indulgence of the Senators present I would like to make a very short statement.

First it has been requested of Senator George, Senator Connally, Senator Russell and myself that in holding hearings today we would recess promptly at 12 o'clock so there could be a real quorum present on the Senate floor, and it would not take a half an hour for quorum calls. They are very anxious to get through with the foreign-aid bill, as everyone knows, and they want to start debate if possible by a quarter past 12, so I told them we would recess by noon.

Senator CAPEHART. Will we hold any meetings this afternoon? The CHAIRMAN. No.

Senator CAPEHART. We will meet again in the morning?

The CHAIRMAN. Yes.

Senator CAPEHART. Will the same situation exist tomorrow, that we are limited to two hours?

The CHAIRMAN. We could start at 10 o'clock, but I should imagine we will do the same thing tomorrow. There is a desire on both sides to finish the legislation before the Senate by Friday night. Many Senators are going to San Francisco in connection with the Japanese peace treaty.

Senator CAPEHART. Is it the intention to hold meetings every day this week on this matter?

The CHAIRMAN. It is not. It was decided at a previous meeting that because of other meetings already scheduled, and for other reasons, we would go further into the matter later, starting on the 10th of September.

We have before us several bills that will repeal certain sections of the act. The Ferguson, Nixon, and Welker amendments, the CapehartMaybank amendment, and the Dirksen amendment. They will be inserted in the record at this point.

(The bills referred to follow:)

[S. 1928, 82d Cong., 1st sess.]

A BILL To provide for equitable allocation of livestock available for slaughter

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the following sentence be added at the end

of section 402 (d) (3) of the Defense Production Act of 1950, as amended: "Whenever the President finds that such action is necessary to assure realization of fair and equitable margins by processors of livestock, and to effectuate administration and enforcement of this title, he may, notwithstanding any other provision of this Act, provide for distribution of each species of livestock among the processors of such species by reasonable measures designed to assure each such processor his normal share (based generally on slaughter during the year 1950) of 100 per centum of the volume of that species of livestock available for slaughter for civilian consumption. Such measures may include (i) a requirement of registration as a condition of engaging in the processing of livestock: Provided, That no person shall be denied registration who shows that he was lawfully engaged in the processing of livestock on the effective date of this sentence or that his proposed processing will effectuate the purposes of this title; (ii) a requirement that the volume of slaughter by each processor shall ħot be so great as to prevent other processors from obtaining such normal share; or (iii) suspension in whole or in part of processing of livestock by any processor who makes false representations or otherwise violates this Act."

[S. 2048, 82d Cong., 1st sess.]

A BILL To repeal certain provisions of the Defense Production Act of 1950, as amended

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That (a) the last sentence of section 101 of the Defense Production Act of 1950, as amended, is hereby repealed.

(b) Paragraph (4) of subsection (d) of section 402 of such Act, as amended, is hereby repealed.

(c) Subsection (k) of section 402 of such Act, as amended, is hereby repealed.

[S. 2073, 82d Cong., 1st sess.]

A BILL To amend the Defense Production Act of 1950, as amended, in order to limit the use of the powers relating to credit controls and stabilization of prices and wages.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That section 2 of the Defense Production Act of 1950, as amended, is amended by adding at the end thereof the following new sentence: "It is the further intention of the Congress that none of the powers contained in this Act with respect to the control of consumer and real-estate credit, or with respect to the stabilization of prices and wages, shall be used unless and until other indirect means of effectuating such controls and stabilization presently provided in other Acts for use by the Secretary of the Treasury and the Federal Reserve Board have been utilized, and then only to the extent necessary to implement and supplement such indirect means of control and stabilization.”

The CHAIRMAN. It is my judgment if we are going to make changes in the law, we are going to have to have extensive hearings. I have a list of people who are ready to appear, national concerns of magnitude desiring to be heard. I will not read them all, but they include the American Labor Party, the National Automobile Dealers Association, and so forth.

I want to make it clear, for the benefit of this committee, that when we went to conference on the so-called slaughter quota amendment, the House raised the point of order that we could not touch that provision in conference because the Hope amendment and the Butler amendment were in essence the same, and if any change was going to be made on that matter by the conference committee, a point of order would be made, and therefore there was nothing done on that. That being the fact, Senator Capehart and I introduced an amendment for hearings.

There are other amendments by Senators Ferguson, Nixon, and Welker, which repeal the Capehart amendment, the Herlong amendment, and the Butler-Hope amendment. I think that the ButlerHope amendment could be continued in hearings beyond September 10, if it were the desire of the committee.

Senator CAPEHART. Will the hearings continue after September 10? The CHAIRMAN. Yes; we will recess until September 10. That was agreed at the meeting the other day.

Senator CAPEHART. The meeting I did not attend. The only hearings we will have for the present are today and tomorrow, and then we will recess until the 10th.

The CHAIRMAN. That was the motion made at the previous meeting. It was unanimous, as I remember it.

Senator CAPEHART. Then we will have no more witnesses until after September 10.

The CHAIRMAN. That is right; and tomorrow afternoon we will decide how many witnesses we will have-what we are going to do. I want to make this statement in behalf of myself, as chairman of the conference, and chairman of this committee.

It is my judgment that if some clarification could be had regarding these amendments, rather than the repeal of sections of the law, we might be able to get somewhere. With the House in recess until the 16th of September, and with the list of witnesses of national importance that we are going to have to hear if we are going to repeal any section of the law-I will abide by the wishes of the committee, but I think some thought ought. to be given to whether we can clarify these amendments. It was the intention of the conference and of this committee not to do anything that would cause inflation. All we were trying to do was maintain a reasonable profit margin on a pre-Korea basis with the addition of reasonable increased costs. The Administrators would like to have that clarified, but I do not know what the committee would do. Certainly, I would be one who would believe we should clarify what should be determined as reasonable or unreasonable.

Before you came in, Senator Moody, I announced that the hearing would end promptly at 12 o'clock, because the chairmen of the Senate. committees have been asked not to hold any meetings after 12 o'clock because of the desire of both sides to clear up the foreign aid bill.

Senator MOODY. I am delighted to hear the chairman say that we might take prompt action on clarifying amendments.

The CHAIRMAN. I only speak for myself. I do not see how we can repeal anything.

Senator MOODY. If we are only to make two or three changes in this law, it is not necessary to call a long list of witnesses.

The CHAIRMAN. If you are going to start to repeal something, I will be frank with you, people have called wishing other sections of the act repealed also.

Senator MOODY. If we clarify some of the amendments, we might put them in shape so they will work, whereas if we call a lot of witnesses it will take up the time between now and the adjournment of Congress so we cannot act.

The CHAIRMAN. These are all top national organizations, automobile, meat, agriculture, and so forth, who will want to be heard. Senator MOODY. Did I understand you to say it would not be necessary to call all these people just to clarify the amendments?

The CHAIRMAN. We will have to determine that tomorrow, when we recess until the 10th. If we are going to repeal any amendment, I think as chairman, and I believe other members will agree, we should hear the people who will be affected.

Senator DIRKSEN. This committee does not operate on a one-waystreet basis. If the President is going to ask for modifications, everyone who has an interest should have the opportunity to be heard.

The CHAIRMAN. The President asked for modifications, and bills were introduced by Mr. Ferguson, Mr. Nixon, and Mr. Welker, and Senator Dirksen introduced one yesterday.

I am not going to pass upon the Ferguson, Nixon, and Welker amendment without hearing from people over the country.

Senator DIRKSEN. I understand these are open hearings, and anybody who wants to be heard, whether it takes until snow flies, has a right to be heard on the matter.

Senator CAPEHART. Mr. Chairman, as the ranking Republican member I feel I can speak for those on our side that we will be very happy to sit here night and day for the next 10 days listening to any and every witness who wants to be heard.

Senator BRICKER. What do you mean "happy"?

Senator CAPEHART. Well, we will not be happy, but we will be willing to sit here. We will do anything that you want to do, that you as the chairman want to do, with respect to hearings.

The CHAIRMAN. Well, Senator, you and I have always thought alike on hearings, that the public should be heard. That is what we are here for.

Shall we

I do not know how the committee feels as to Mr. Wilson. let Mr. Wilson finish his statement before we question him. Senator ROBERTSON. Mr. Chairman, may I make an observation? The CHAIRMAN. Certainly.

Senator ROBERTSON. I am sure the distinguished representatives of the Government realize the log jam that faces us if we are to finish before the 1st of October, and they also realize how highly controversial some of these issues are. Those who participated in the job of reconciling the differences between the House and Senate faced a very difficult task when we were forced to stay in session all day long and all night long to meet a given deadline. I can well appreciate the criticism that has been leveled at us that at 3 o'clock in the morning our brains were not working as well as they were at 3 o'clock the previous afternoon.

If there are those who sincerely believe, as I know Mr. Wilson and Mr. DiSalle do, that the so-called Capehart amendment includes an opportunity for the producer, under the heavy penalty of excess profits, to engage in prestige advertising that I may say is far in excess of the average advertising he did during his base period, I want to point out that there is one weakness in this amendment that could be inflationary. There might be some reasonable chance for congressional action on details of that kind, and I would be less than frank if I did not tell you that there is no chance, in my opinion, of the Congress between now and October 1, October 10, or whenever we wind up, making all the changes in this act that were covered by the Presidential message.

Facing this matter from a very practical and realistic standpoint, I would like to see the witnesses center their attention to the Capehart amendment to point out to us whether they object to increased labor costs being considered, increased material costs being considered, and if they think it is fair to let a producer show those costs if the ceiling has been fixed that ignores those increases, then indicate to us what in

this amendment would permit the inclusion of costs that are not necessary to returning a reasonable profit to the producer.

The CHAIRMAN. Gentlemen, are there any other observations? Senator BRICKER. Mr. Chairman, I had not intended to make any, but since it has been suggested we would all be happy to sit here today and tonight and listen to testimony, I do want to make an observation. There was not a member of the conference committee who did not know exactly what was in this bill when it passed, both the House Members and Senate Members. We worked hard, we worked long; I deny the allegation of the Senator from Virginia that we did not know as much at 5 o'clock in the morning as we did at 3, because we had worked on it day in and day out.

Senator ROBERTSON. I said our minds were not as vigorous at 3 in the morning as they were at 3 in the afternoon.

Senator BRICKER. The conversation was just as loud.

I want to say, honestly, without any word of criticism of Mr. Wilson, Mr. DiSalle, Mr. Johnston, or anybody else that I think the country would be better off if you would go back downtown and administer this law instead of being up here constantly, before you have a try at it, besieging Congress to amend and change it. The President sent a political message down here that Congress did not know what it was talking about, that it was a bad bill; I think it was a good bill, that you can work under it, and if you would go back downtown and start working on it, the country would be a lot better off. The chances of getting out of difficulties after they show up would be easier handled later than at the present time.

Senator ROBERTSON. May I make this comment?

At 2 o'clock in the morning I was not satisfied with the language of the Herlong amendment. I undertook to redraft it, and I thought I had improved it. I found I had made it worse, and then Mr. DiSalle very kindly sent me up a substitute which we adopted in the exact language that he sent me, and that was better than the House amendment. I think it is a very satisfactory amendment, in that the House amendment would have permitted each retailer virtually to fix his own mark-up.

We took in that bill the exact language Mr. DiSalle sent me that night, and it was certainly better than what I tried to do at 2 o'clock in the morning.

Senator DOUGLAS. Mr. Chairman.

The CHAIRMAN. Senator Douglas?

Senator DOUGLAS. I thought we came here to listen to the witnesses, not to make observations ourselves. I had not intended to make any observations, but since my brethren have expressed themselves, perhaps Mr. Wilson will excuse me if I delay his appearance for a minute or two.

I was not privileged to be a member of the conference committee, and so I do not know the details of the discussion that took place within that body, but I do believe that it is quite within the province of the President, and of the Director of the Office of Defense Mobili zation, if he is given a law which he thinks cannot be administered to appear before this body and ask for changes. As to whether we should make the changes which he suggests, that is another question, but certainly he is within his rights, and I think he is merely conforming to his duty when he appears before us, so I am sure that we would