think that Congress intended to have businessmen take the attitude that we should operate as usual. We were under an emergency period, and some persons, as the previous witness pointed out, are going to be hurt. That is true under any type of controlled economy. What we hope to accomplish is to have the present emergency taken care of, and allow matters to stand in status quo until that emergency is over.

I would like to read the last sentence that I have in my prepared statement, which I think is a good one.

Without quotas it is likely that the historical relationships with respect to slaughter and meat distribution will be seriously disrupted. Areas, especially New England, which depend heavily upon the in-shipments of meat, and these are generally the heavily populated areas, not the livestock-producing areas, will feel the pinch. Such conditions can be avoided by the authorization by the Congress to restore livestock slaughter quotas as an effective distribution tool.

On behalf of the associations who are represented in favor of the reimposition of quotas, we urge the restoration of slaughter quotas. It is our opinion that complete chaos is bound to happen in the distribution of meat if slaughter quotas are not restored.

If there are any further questions, I would be glad to try to answer them.

Senator FREAR. Senator Schoeppel.

Senator SCHOEPPEL. Well, I am interested in what you said at the last there. We heard that from the steel people when Kaiser moved into the market to make steel. United States Steel, Bethlehem, and everybody threw up their hands in holy horror when this new competitor came in.

He is in the field, furnishing more steel. What we need is more processors of meat, because we have more cattle running on the range. But what we need more than ever now is the type of administration in policing it that we are not getting. They are licensing all slaughterers. Anybody that tells you you cannot trace an animal from the stockyards, or where it is sold, right straight through, is not quite keeping up with what the facts of the situation are.

When you talk about black markets, an enforcement feature pressed to conclusion rapidly is the best deterrent for stopping black markets. If the Department in its wisdom sees fit to license slaughterers as they have, they can then follow that meat through in all of these cities. They should put more emphasis on enforcement instead of bellyaching about a law we have got which they say cannot work before they have really tried it. They will get further, in my humble opinion, in taking care of John Q. Public down the line. We have not had enough of that; namely, proper enforcement.

They have been winking at too much of it, letting these fellows get away with it.

Mr. WIDETT. Mr. Senator, I would like to answer that statement, although it was not put to me in the form of a question.

Senator SCHOEPPEL. I am merely expressing my views from the hard, cold, factual record.

Mr. WIDETT. All slaughterers who slaughtered in 1950 are licensed; they are licensed now, they are registered so that they could determine who is to do the slaughtering, and from an enforcement standpoint, which is one point that I had rather rushed over, and I think

it is a good one, if you cannot have slaughtering quotas, you cannot have enforcement at the slaughtering level. That is brought out very clearly in the example that I cited, where a new slaughterer takes over the business of his predecessor, and immediately, without quotas, begins slaughtering five or six hundred percent more than his predecessor slaughtered, resulting in an uneven and disrupted distribution of the available meat as well as placing the competitor, who normally purchased his livestock in that market, at a competitive disadvantage and out of compliance. You cannot get enforcement at the slaughtering level unless you can check those unscrupulous slaughterers who will seek to increase their slaughter when meat becomes short, when cattle become short, to the detriment of all honest businessmen.

Senator SCHOEPPEL. Of course, all I can say is that I went through the war as Governor of the State of Kansas, and they said rationing was the answer, there would not be any difficulty. But they are running away from rationing now. You could not get them within 10 miles of going to rationing now, which at that time they said was the answer to everything.

There are a lot of unknown factors around here I say they do not want to touch on, but I say that more vigorous enforcement would stop a lot of the things that you fellows are being confronted with in the twilight zone of the black marketing areas.

Mr. WIDETT. I say again you will not get enforcement unless you have slaughtering quotas.

Senator SCHOEPPEL. Well, you and I are of different opinion there. You are entitled to yours, and I am glad to have yours in the record. Senator FREAR. Thank you, Mr. Widett.

(The prepared statement of Mr. Widett follows:)

STATEMENT OF Harold WidetT, GENERAL COUNSEL, NATIONAL ASSOCIATION OF HOTEL AND RESTAURANT MEAT PURVEYORS, NEW ENGLAND WHOLESALE MEAT DEALERS ASSOCIATION, NEW ENGLAND HOTEL AND RESTAURANT MEAT PURVEYORS, MASSACHUSETTS SAUSAGE MANUFACTURERS ASSOCIATION, AND BOSTON WHOLESALE MEAT DEALERS ASSOCIATION

My name is Harold Widett. I am general counsel for the National Association of Hotel and Restaurant Meat Purveyors, New England Wholesale Meat Dealers Association, New England Hotel and Restaurant Meat Purveyors, Massachusetts Sausage Manufacturers Association, and Boston Wholesale Meat Dealers Association, as well as counsel for numerous independent slaughterers.

I appear before this committee for the purpose of speaking in favor of the slaughter control program.

Livestock slaughter quotas are the keystone in maintaining an adequate meat distribution in legitimate trade channels. They are a device to provide for the fair sharing among established slaughterers of the livestock which comes to market, whether it be less than last year or more than last year. They accomplish this purpose by allowing each established slaughter to kill in 1951 the same proportion of live animals which he killed in 1950.

You are no doubt familiar with the compliance regulation issued by the Office of Price Stabilization. That regulation establishes the maximum price which slaughterers may pay for livestock. If every slaughterer were assured of his fair share of the livestock coming to market, it would be possible for him to purchase livestock at prices which would afford him an opportunity to stay in compliance. However, where the supply is limited and where some slaughterers find difficulty in obtaining sufficient amounts of livestock to supply their needs, there will be a strong tendency on their part to further bid up the prices. As a result, they will be out of compliance and either have to operate at a loss or sell the dressed meat above ceiling prices. These undesirable effects can be minimized by the quota system, since it will help each slaughterer to obtain his share of the available livestock.

The livestock slaughter quota program is one of the most effective tools to prevent the need for rationing. As long as we have adequate and historical distribution of meat at the primary point of distribution, it is reasonable to assume that this distribution will continue on down through the channels of trade to the American housewife. However, if there are great changes made in the pattern of slaughter and the way in which meat is distributed, we are sure to have, at least, area shortages. There will be considerable diversion from normal channels which will result in inadequate meat supplies in so many places that the general impression will be that we have less meat than we need.

It is necessary to register all slaughterers, in order to prevent the entry into the industry of fly-by-night operators whose only aim is to seek exorbitant profits. During World War II, we observed the effect of this influx into the industry. It constituted one of the principal sources of supply for the black market and served to increase supplies in areas where high prices could be obtained and reduced supplies in other areas. If all slaughterers were registered and if only registered slaughterers were permitted to kill animals, a close check could be kept of all slaughtering activities. New firms could be granted registration only in those areas where additional operations were required for the national defense effort. Through registration, meat can be channeled to legitimate distributors and another disturbing factor thus eliminated.

Another important end served by the slaughter-control program is to facilitate procurement for the Armed Forces needs. We observed this tendency during the time slaughter quotas were in effect. Priority was given to the needs of vital institutions, such as hospitals and institutions of involuntary confinement, such as prisons and mental asylums. All of these things were accomplished, as well as maintaining a reasonably, normal pattern of regional distribution.

Difficulty was experienced by the Quartermaster Corps in filling its needs because of rapid price rises and the great ease with which supplies could be disposed of in the civilian market. Beginning in May, 1951, the quotas of slaughterers who had Army contracts were adjusted so that they could take care of the Armed Forces needs. In June, the regulation was amended to provide for an automatic increase for those slaughterers who supplied Armed Forces requirements. This automatic quota increase encouraged slaughterers to help to fill the meat needs of the Armed Forces and the difficulties that had existed earlier were overcome to a great extent.

Because of the strong demand for meats in the retail market, a number of hospitals and State institutions reported to the agency a lack of response to their invitations for bids from historical supplies. Office of Price Stabilization acted promptly to correct this situation and to guarantee these institutions meat supplies by requiring mandatory delivery to these hospitals and other institutions by their historical suppliers.

There are prevalent a number of misconceptions with respect to the slaughter control program which I would like to try to dispel.

Some people think that livestock quotas limit the amount of meat available for civilians by limiting the marketings of farmers. For example, they believe that when quotas are set at 80 percent, the remaining 20 percent of the livestock available is withheld from the market. That belief is absolutely erroneous. understand that quotas are set in the following manner:

I

The Office of Price Stabilization, in cooperation with the Department of Agriculture, estimates each month the quantity of livestock that is expected to be marketed in the coming month. If the quantity of this livestock is less than the quantity which was marketed in the corresponding month of the previous year, it is reasonable to assume that each slaughterer-if he maintains his relationship with all other slaughterers in the business-would kill less livestock. quantity of livestock coming to market, in a particular month, is expected to be only 80 percent of the quantity which was marketed in the same month in the previous year, then obviously, if each slaughterer kills at a rate of 80 percent of the corresponding month of the previous year, an equitable distribution of all of the livestock that came to market would be had.

If

Quotas were not set arbitrarily or capriciously, but were merely estimates expressed in percentages related to the previous year of the livestock expected to come to market. The quota for each month represented 100 percent, not 80 percent or 110 percent but 100 percent of expected marketings. In that way, you will see there was provision to permit all livestock which came to market to be slaughtered by legitimate slaughterers.

An insight into an understanding of quotas can probably be gained more quickly by looking at the situation with respect to hogs. Hogs have been marketed and

slaughtered in much greater numbers this year than last. Quotas on hogs were set at levels above 100 percent from the time they were first instituted until they were discontinued because of congressional action. The percentage figures of 110 and 115 percent that were used as quota percentages in the program meant that the marketings of hogs were expected to be these percentages of the hogs marketed in the corresponding months of the previous years. Permitting each slaughterer to kill his proportionate share of the larger marketings kept a normal distribution of the live animals among established slaughterers, and prevented distortion in meat supplies by requiring slaughterers to conform to the slaughter pattern established by all of them in 1950. This had the effect of having meat produced in historic locations and available for distribution throughout established territories.

Who are the people who oppose slaughter quotas? Surely, it cannot be those legitimate businessmen who wish to maintain their business and continue to serve their customers as they have always done. The people who don't want slaughter quotas are those who want to take advantage of their fellowmen in a period of emergency and to drive out of business thousands of established American citizens, some of whom have worked for generations to establish the businesses they now have. Some people say the slaughter quota program stifles free American enterprise. Free American enterprise is our great protection against destruction, and if we are not enterprising enough to see the results that face us, if we do not take steps to prevent widespread black markets and serious distortions in meat supplies, we as American citizens are failing in our trust.

Is it not logical for us to realize that when Congress passed the Defense Production Act of 1950, it recognized an emergency and said to the country that some of the things we have been doing we shall have to stop doing temporarily until we get out of this emergency. The normal scramble in the public market is intensified by the emergency situation and unless it is controlled, chaotic conditions will result. I admit that there will be some slaughterers whose operations would be required to be conducted at levels lower than they want to operate, but by requiring them to do so, you are protecting them and the rest of the fellow businessmen to the same degree. In other words, the status quo is being maintained until the emergency is over.

Without quotas it is likely that historical relationships with respect to slaughter and meat distribution will be seriously disturbed. Areas which depend upon the in-shipments of meat-and these are generally the heavily populated areas, not the livestock producing areas-will feel the pinch. Such conditions can be avoided by the authorization by the Congress to restore livestock slaughter quotas as an effective distribution tool.

The associations that I represent are on record as favoring the restoration of the slaughtering quotas. They have all expressed the opinion that complete chaois is bound to happen in the distribution of meat if slaughter quotas are not restored.

Senator FREAR. Mr. Peter H. Petersen, National Association of Hotel and Restaurant Meat Purveyors.

Mr. PETERSEN. I have a prepared statement, but I would like to make some comments, and I will be as brief as I can, because I know you have other witnesses.

Senator FREAR. Would you like your statement included in the record?

Mr. PETERSEN. Yes, sir, I certainly would.

Senator FREAR. It is so ordered.

STATEMENT OF PETER H. PETERSEN, NATIONAL ASSOCIATION OF HOTEL AND RESTAURANT MEAT PURVEYORS

Mr. PETERSEN. Mr. Widett, national counsel for our association, has covered a lot of the high spots. However, I am here as chairman of the Washington Committee of the National Association of Hotel and Restaurant Meat Purveyors, and also as president of the Marketmen's Association of the Port of New York.

We are very, very strongly in favor of slaughter controls, and I was happy to hear the Senator's comments about enforcement, because I

believe without slaughter controls you have chosen the only weapon, or the best weapon, that price control has a possibility of living with and using.

If slaughter controls are not enforced, a great many things can happen to us. The Senator commented on the movement of meats to the East. I think a great deal of that can be traced to the fact that those people in the East are killing heavier than they previously killed, or would be permitted to kill under quotas. They are bidding these cattle up in the markets, in the livestock markets. To further prove that, two of the larger packers in the New York area are today killing less than 50 percent of what they normally killed, and one, a subsidiary of the one of the larger packers, closed down for 2 weeks, and killed nothing..

In our opinion, when a man is permitted to go out and bid for cattle, so that he in turn can slaughter more cattle it is harmful. Mr. Lee pointed out in his testimony earlier, the historic practice of the packing business is to put more units in operation, because they then become cheaper per unit to handle.

We are not in the twilight of a black market in my opinion. We had an active black market in certain areas of the country right now. Senator SCHOEPPEL. Do you have any evidence you might offer? Mr. PETERSEN. No, sir; I have not.

Senator SCHOEPPEL. We hear that same story all the way down. No one wants to get his foot wet on that.

Mr. PETERSEN. I do not think anybody could give evidence unless he was involved in the transaction.

Senator SCHOEPPEL. He would not walk up and confess, I grant that.

Mr. PETERSEN. I think that is the only evidence you can get, because I do not think hearsay evidence works out.

We are firm believers that price control is necessary. We go along with the theory in back of it. We would like to see it work.

Senator SCHOEPPEL. Would you recommend one price being set in all the markets of the United States, that is the legitimate stock marketing centers, putting a ceiling on the animal that is prime, choice, good, commercial, and down the line?

Mr. PETERSEN. Senator, if that were practical-I heard Mr. Lee answer that. He is in a better position to answer that than I am-we are in the hotel supply field. We buy the carcass.

Senator SCHOEPPEL. They ration how long I can stay at the Mayflower, or the Statler all over the country.

Mr. PETERSEN. We do not have anything to do with that.
Senator SCHOEPPEL. Those are the folks you supply.

Mr. PETERSEN. We supply them. We also supply hospitals, institutions, governmental agencies.

Senator SCHOEPPEL. They ought to get first call, the hospitals, the military, and all of those.

Mr. PETERSEN. I do not believe, Senator, you have any complaint on record of hospitals and institutions not getting the proper amount of food, in the right category.

Senator SCHOEPPEL. General Marshall, when he was before us, testified that the military had no difficulty in getting the meat; they were getting the meat. Some would have you believe, according to press reports, that the military is in a bad shape, even in the police. action in Korea, which I call a first class war.