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Senator IVES. That is right; we were stuck either way; we had to give way either one way or the other.

Now, that being the situation, it occurs to me, the Senate having spoken in such unmistakable terms, never mind what some of us individually think about it, that it behooves you people who are the administrators of that act to work out an amendment, to replace the Capehart amendment, which you believe is workable. Do you think you can do so? I am sure Senator Capehart would be the first to accept it, from what he has already said here this morning. I am sure the Senate would accept it.

Senator ROBERTSON. Would you yield for a question?

Senator IVES. I cannot, because of the amount of time. I would like to get the answer to that question, it is quite important.

Mr. WILSON. Yes; I think we could work out an amendment which would overcome these difficulties, but I do not know whether it would be acceptable to the Senate.

Senator IVES. We cannot tell if it is acceptable until we get the amendment.

Mr. Chairman, I suggest that the committee ask Mr. Wilson to work out such amendment.

The CHAIRMAN. Is there objection?

The Chair has no objection.

Senator BENTON. I thought Mr. Wilson stated he wants the law of last year.

The CHAIRMAN. Senator Ives made a motion, is there objection to the Senator's request?

Senator BENTON. We have the answer.

The CHAIRMAN. Is there objection?

Senator BENTON. I object, Mr. Chairman.

The CHAIRMAN. All right; as many as favor Senator Ives' request raise their hands.

Senator IVES. That is not a motion, and I do not want it to be considered a motion. I am trying to get this thing straightened out. Senator MOODY. May I ask a question?

Senator IVES. The members will remember when we were in committee meeting I was opposed to anything preventing roll-backs. I think we are faced with a situation in the Senate, not only in the committee but in the Senate and in the House, and we have got to take these things into consideration whether we like it or whether we do not.

Senator MOODY. Mr. Chairman, may I ask a question?

The CHAIRMAN. Senator Benton?

Senator BENTON. Has not Mr. Wilson already answered the question?

Have you not already answered the question Senator Ives has just addressed to you--that you want the language of last year's bill?

Mr. WILSON. That would be far better, and I presume what we would come up with, from anything I know of now, would be quite similar to that.

Senator BENTON. May I say as an aside, I have never seen the Senator more right in his judgment of the Congress and what it is going to do, and his fear of it, than Senator Robertson was when he urged upon us months back that we ride ahead with last year's bill instead of moving in and trying to fix it up.

Senator MOODY. I second that judgment.

Senator BENTON. If this bill is unworkable and unenforceable, do you not think this phrase, "an economic booby trap" is merely a vivid, colorful way to state that?

Mr. WILSON. Well, it is vivid all right, and I guess it certainly indicates what the President intended it to mean: that it is an economic booby trap in his judgment.

I am not going to approve or disapprove of language of the President of the United States.

Senator BENTON. I have been trying to get an exact quotation from the President's statement. It was said it would automatically give every manufacturer the right to increase his prices. Do you not agree it does give every manufacturer the right to come in with his lawyers and accountants and claim, "I want the increase in prices," and that is the thing that makes it administratively impossible?

Mr. WILSON. That is right. They come in in great numbers. Senator BENTON. In New Britain I know of a small firm of a thousand employees that makes 40,000 items, and think they have the right to put in 40,000 applications.

Mr. WILSON. That is right.

Senator BENTON. Is that not, on the face of it, manifestly impossible to administer?

Mr. WILSON. I think it is.

Senator BENTON. You may recall on the floor I called this amendment a paradise for lawyers and accountants.

that phrase?

Would you agree with

Mr. WILSON. I am afraid that is the way it would turn out. Senator BENTON. Last night Senator Bricker and I attended a dinner in honor of General Wood, of Chicago, and he commented on the great ingenuity of American manufacturers, and the tendency to overlook their ingenuity on the part of our administrators in Washington. Do you not believe that that factor of ingenuity would have come into operation in the way you would have administered the old bill, and given the manufacturers the reasonable breaks they are entitled to in time of crisis?

Mr. WILSON. I think that ingenuity does go to work in many, many ways, and, I think, for the benefit of the American people. For example, on account of the increase in prices of certain scarce materials, running up the cost to certain manufacturers, they brought to bear great ingenuity, and they made substitutions, and they still were able to make the items profitably, and so on, and that will go on.

Senator BENTON. I have one final question, and I would like to have you take the rest of my 5 minutes

The CHAIRMAN. There is only 1 minute left.

Senator BENTON. The indication of Senator Capehart's questioning about the committee is the same thing, of course, with which you were charged by our many mutual friends in the business community: that the committee had become duped; that they do not know what they are doing; that you have become a dupe and a captive of the men who work for you and have merely become a funnel through whom these unsound ideas are presented to the Congress.

Now, I would like the consent, Mr. Chairman, as part of the hearings, to insert in the record Mr. Wilson's remarkable article in the

New York Times magazine section of last Sunday and let him comment on this question, if he will.

The CHAIRMAN. Now, he has only 1 minute to comment in answer to your question.

Senator BENTON. I want to know

The CHAIRMAN. Without objection, the article by Mr. Wilson will be made a part of the record.

(The article referred to follows:)

"I HATE CONTROLS, BUT WE NEED THEM. Now"

THE DIRECTOR OF DEFENSE MOBILIZATION ARGUES THAT OUR HUGE TASK REQUIRES A REGULATED ECONOMY

(By Charles E. Wilson)1

"What has happened to Charlie Wilson?"

I understand this question is being asked in some quarters in Washington and elsewhere. It arises from the fact that I urged Congress to reenact a strong anti-inflation measure, including the power to regulate prices and wages. This position, they say, is contrary to my known hatred of controls-a hatred I have often expressed in normal times.

Let me make it clear right at the start that I still hate controls. I am still opposed to controls by the Government in normal times.

But these are not normal times.

Last December, when the President declared the existence of a national emergency, he asked me to take over the job of Director of Defense Mobilization. I believed, and still believe, that our country is in very great danger. I took the job because I thought it was my duty to do so and certainly not to gratify any personal ambition. Nor did I take it to foist any undue regimentation on this country that the country didn't need or want. When I came into office I felt that the only way to do the job was to carry out whatever, in my opinion, the welfare of the Nation as a whole dictated, regardless of whom it might pinch here or there.

All my life I have believed in the doctrine of free enterprise, and that means I am opposed to a controlled economy. But the principles of a free economy are for times of peace. Who will dare say we are now at peace, whatever be the outcome of the truce discussions in Korea? Can anyone divine whether or when the puppeteers of communism will decide to pull the strings on their minions and send them surging against the free world? Can we afford to go on living under a placid business-as-usual philosophy with a gun pointed at our heads? These are times of great peril to our country and this chilling realization is brought home to me every day in my present job.

It is that realization that has made this fellow Wilson a procontrols manonly so long as the present emergency exists. No mysterious alchemy has altered my way of thinking. It is simply this:

First, instead of being a representative of any one industry, or of big business generally, I am now, as Defense Mobilization Director, a representative of all the people-not serving merely one segment or a few segments of the Nation, but all of them.

Second, from my vantage point, I have access to full and authentic information and get a fuller view of our situation. This brings with it the realization that extraordinary measures are needed to cope with the situation-measures such as price, wage, materials, and credit controls.

We are spending $50 billion or more a year for 3 years in our rearmament program. We estimate military production will cut into the gross national product by about 20 percent. In the cases of some materials, we will use as much as 50 percent or more of our production for defense. It is obvious to me, a lifelong production man, that somebody has got to control the allocation of these materials; priorities must be established; a plan must be administered. This is being done by the National Production Authority. This is one form of Government control of industry. I don't like it, but I know it is absolutely necessary in the present circumstances.

Charles E. Wilson left the presidency of General Electric Co. to act as Director of Defense Mobilization, during World War II he served as Vice Chairman of WPB.

Military power depends to a great extent upon the ability of this Nation to produce more and better machines than our potential enemies. And this military production is closely linked with our basic economy in all its interrelated segments. There can be no divorcement between our military strength and our economic strength. The constant thought in my mind, then, since I am charged with the responsibility for building America's might, is that our economic structure not be undermined while we are building our Armed Forces. What would it profit us to build a mighty military establishment only to have the civilian economy collapse beneath the weight of its armor?

Normally, our lush economy remains more or less in balance because of the natural law of supply and demand. But that natural law is disrupted when we produce guns and tanks and planes instead of autos and refrigerators and washing machines. So, when consumer goods begin to get scarce and people with money in their pockets start bidding up the prices of what goods are available, the situation has in it the seeds of runaway inflation. This inflation could wreck the family budget, destroy the value of the dollar, and bankrupt the Nation.

I saw what happened before price and wage controls were invoked. The cost of living had been rising steadily and we did not yet have large-scale military production. Since we actually put to work the price-and-wage-ceiling provisions of the Defense Production Act last January 25, the trend of prices has been slightly downward. I am sure in my own mind that those controls played a large part in preventing prices from soaring out of sight. Recently, when it appeared that Congress, perhaps allowing itself to be lulled by the apparent approach of peace in Korea, or perhaps lending a sympathetic ear to powerful and selfish interests, might scuttle the controls program. I could see disaster ahead. I went to bat for the program which I see as our only salvation. And in so doing I became a renegade to the controls haters.

What nonsense.

I have been asked many times recently how I can have been so outspoken against controls in 1946 and so vehemently for them in 1951. The point is: I haven't changed, conditions have.

If the same conditions obtained today that obtained in 1946 I would still be heartily against price controls. I simply do not believe in price or wage controls in the kind of economy that existed in 1946. In other words, there was no shooting going on then. But when our security is threatened as it is today; when we are expending some $50 billion a year for defense material production, as we are today, with all the difficulties attendant upon that program, then I believe that a nation must use price and wage and credit controls to guarantee against runaway inflation. In my opinion, there is a wide gap between the eras of 1946 and 1951.

In 1946 our military production was sharply tapering off, and we were going all out for an increase in civilian production to fill the tremendous backlog of demand for homes, automobiles, refrigerators, radios, and the like that had developed during the war. Today the situation is exactly the opposite. We are sharply tapering off civilian production in order to devote these materials to military production. We cannot do so unless we have controls with which to channel our production in the right directions.

Just take a look at the following figures to illustrate the difference between 1946 and 1951. The left-hand column is the gross national product-almost the same as national income-in billions of dollars. The middle column is the amount devoted to defense, in billions of dollars. (All dollars are at the average 1950 value.) The right-hand column is the percentage of defense expenditures in relation to gross national product.

The figures are given by quarters. Notice how in each quarter of 1946 the amount and percentage of the defense expenditures sharply decline-and also how in 1951 they sharply mount.

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Not long ago somebody said to me: "I hear some of your best friends in big business won't talk to you; they don't know what's got into you. What do you tell them when you meet them?"

And my answer was this: "I hadn't noticed any snubs, but if any of these friends should ask me, I will simply tell them they'd better examine the situation today and compare it with the situation when I, too, was against controls-say, 1946. And I believe they, too, would come to the conclusion that we need these controls today."

I must dispute, also, the idea that all businessmen are against me on this matter of controls. I know there are many who agree with me and many more would agree if they had the benefit of viewing the situation from my vantage point, where they could see all sides of the matter. Businessmen, as a class, are not economically blind. Many of them are aware that it is better to adopt a controls system now and maintain the stability of our economy during this abnormal period of rushing to rearm, than to leave everything to chance, invite inflation, and send the dollar tumbling in value. I am also aware that some individuals from other walks of life as well as from business, and organized groups of individuals, are not so clear-headed on this subject. And I know to what lengths they have gone in their opposition. But more on that later.

I will be supremely happy to see controls lifted once the need for them is gone. Also, we will not wait until the time comes to lift controls completely, but will relax them gradually the moment conditions permit. I am as aware as anyone of the dangers inherent in interminable government regulation of commerce. But I am utterly confident that the controls will be lifted as soon as we are sure those artificial safeguards are no longer needed.

If I felt that the opposition to a reasonable program of price and wage controls welled from a genuine fear that it was symptomatic of the birth stirrings of totalitarian dictatorship, I could be more sympathetic to that opposition. Even then I would feel compelled to ask whether these opponents are so dedicated to a tradition of laissez faire that they would sacrifice the Nation on its altar. For want of a bit of temporary restraint in our pricing system, governmentally decreed and enforced, they would invite the disaster of having the entire economic structure collapse. This is sheer folly-a form of cutting off the nose to spite the face.

Some oppose controls because they are against anything the administration is for. They express amazement that I, a Republican, could go along with the administration on this matter. I sit in wonderment at such political partisanship that would sacrifice the country because of dislike for the administration.

The most unpleasant aspect of the fight against the controls program has to do with greed and selfishness and high pressure by powerful groups. Lobbies of all kinds have been at work either to kill controls completely or else to wring the law to their own particular advantage. They don't object to controls--for the other fellow. None will accept graciously the thought of sacrificing any part of his own substance for the common welfare. An awareness of all this grasping for advantage out of emergency-born opportunity helped me to an even firmer conviction that my stand on controls was a proper one.

Price controls would not deny to these groups their fair and reasonable profits. In fact, the pricing systems are worked out with the advice and assistance of representatives of various producing groups so as to give them a fair return for their investment or labor. The shameful picture was one of pressure groups not accepting a fair slice out of the Nation's pocketbook but insisting upon inordinate profit.

Such callous indifference to the welfare of the Nation and concern only for the pocketbook are particularly revolting when compared with sacrifices that have been made elsewhere in human life and limb. The Government takes young men from their schools and homes, subjects them to military discipline, and sends them to far away places, sometimes to be killed or maimed. These young men have no recourse, no lobbies in Congress to forestall their sacrifice.

Yet powerful interests fight the Government because they want only outsized profits. Lives can be sacrificed, dollars never.

I have also been asked why I, a strong advocate of ever more and better production, have not come out for more production as the answer to inflation. The argument is that if we produce more to meet the rising demand, the supplies will suffice to meet the requirements, and there would be no pressure on prices.

That argument holds water in normal times, but it's a sieve in abnormal times. We simply do not have enough materials to permit all-out production of durable civilian goods at the same time that we are striving to produce tanks, planes, and guns in sufficient numbers to deter Russia from an attack.

83762-51-pt. 4—3

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