Now, there has been no loss in these industries in terms of profitability. These scarcities are created artificially, and that is what we suggest is detrimental to the interest of our Nation, especially in time of need.

The prices are high in these fields. It is not that copper or other products coming from abroad have reduced the profits or reduced the prices. The prices are artificially high.

The CHAIRMAN. Mr. Carey, would you mind suspending for one minute?

Senator Sparkman has an engagement and has to leave immediately, and, while we have a quorum here, I want to say that I have the report on the B. & O. which we discussed yesterday morning; and, unless someone objects, with the committee's permission, I intend to have it sent down to the Printing Office and have it printed, so the press and others can have copies of it.

Senator BENTON. Would it be advisable, Mr. Chairman, in the printing, or in any other way, to point out it isn't actually a report; it was a proposed report?

The CHAIRMAN. It was a proposed report.

Senator BENTON. I thought in listening to the discussion yesterday that it might be helpful to point out that it was a proposed report, and never became a report.

The CHAIRMAN. It will be headed up "Proposed report,” and will be sent down this afternoon so the press may have it.

Senator BRICKER. I don't know that it was ever actually proposed to the committee. It was never submitted to the whole committee. The CHAIRMAN. I just want to have the thing printed, as everybody wants it.

Senator BENTON. It was not a report, at any rate.

Senator BRICKER. It wasn't a report to the committee. I don't know whether it was ever presented to the subcommittee or not.

The CHAIRMAN. It was a proposed report, submitted to the subcommittee.

Senator BENTON. It would be well to note that on the printing.

The CHAIRMAN. We will give it to the press. The committee can make any decision it wants, of course. I didn't want to hold it over until next week. It was a proposed report which was submitted to the subcommittee.

Go ahead, Mr. Carey.

Mr. CAREY. (b) If a substantial part of a material has to be allocated, all of it should be allocated. The idea that 60 percent or 70 percent of a scarce material can be taken out of the market through allocations and the remaining part be left for the civilian economy to scramble over is like putting a few pieces of bread in a closed room with a group of hungry men, some of them strong and some of them weak.

We are much concerned for the future of small business if this idea of "open end" allocations is continued. We believe that small business will suffer, that black markets will be promoted, that unemployment will increase.

(c) The Government must be armed with power to meet the refusal of producers to produce goods necessary to our defense and civilian economy. The Government should be empowered to build

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and operate plants or to lease them. if private industry falls to br its job or insists upon coercas terms.

In this connection we believe that the strmation summing the issuance of tax-amortization certicates is nothing less that sendalous. The original basis of such Certificates of Decessity" is 2 there were plants such as gunpowder or special-purpose plants that had only a war use. The semiborates were to enable the owner vi de preciate them in 3 years, but these certibates have been granted I almost everything with no questions asked. All the profarer be to do is to demand the certificates as a condime of expanding per duction and be gets them. In a large number of cases they wi sued for plants which had already been planned before the evergency began

The CHAIRMAN. They were issued for buildings, 100L

Mr. CAREY. Over $5 billion of such certificates have been issued the last 6 months.

I

The CHAIRMAN. I don't know whether you draw the suDE NOclusion I have, or not: but after some were given temidates of necessity. I thought it would be a good thing to gave them to don't see any other fair thing to do. That may be extreme: bar, when I see who got them and whó tin't get them. I don't think in le fai Mr. CAREY. I have a list of the large ones that go Shlid küllbra iz tax amortization

The CHAIRMAN. I was thinking of an amen iment to this bill mi I have discussed it with the Finance Committee, some members of in that before any certificates of recessity can be received that ther must wind up the ones that they have already got.

In other words, they have small firms who have had requests for certificates in size November and December. I can understand they couldn't act upon them all one way or the other. I don't know bow you feel about it, but I was thinking of proposing an amendment that they would have to take these certificates of necessity from the Site that they were applied for and act upon them in order before they issue any more.

I can see some difficulty in that, because there might be something really urgent, but at the same time some people have been woning 30 long that I do not think they should be told "Yes" or "No" and sime explanation given in some instances.

Mr. CAREY. I think. if they are going to cut out the issuance of new ones, it would be well to review those that have been issued

Frankly, this Nation Leeds this expanded capacity: and rather than not get the expanded capacity, we would prefer that even this scandalous method be adopted. We are not seeking to eliminate the expansion of the capacity which we so sorely need

The CHAIRMAN. Neither am L. I only suggest that the people whe have been waiting a long time should first be given a final answer after review, to save them the expense of trips to Washington and continuous phone calls.

Senator DOUGLAS. When the head of NPA testified here, I made two suggestions to him. The first was that those who had already received certificates of necessity for accelerated amortization should Lot be given a second helping before firms who had not yet been given such a certificate had received a first helping.

Secondly, I suggested that no future certificates should be issued for plants upon which construction had been started before the Korean attack. At that time they promised to let this committee have a list, both the applications for certificates of necessity for such plants, both those which have been approved, and those which were then pending.

I should now like to inquire of the chairman whether he has heard from the NPA on this matter?

The CHAIRMAN. At this time I am going to introduce this amendment so the Senators will have a chance to look it over. I start off first by requiring DPA to process pending applications on a product classification basis before it can process a second application by a manufacturer who has previously been granted a tax-amortization certificate for the same product. I think that is what you suggested.

Senator DOUGLAS. I think that is a very good amendment, but I should like to ask: have we heard from NPA on this matter?

Mr. MCKENNA. No, sir.

Senator DOUGLAS. I want to point out that NPA made a promise that they would let us know, and their failure to report indicates either delay or desire to flout this committee.

I think the chairman is completely correct in what he is doing, but I would like to point out that NPA has apparently been guilty either of willful delay, or a desire to stall or postpone action.

Senator BRICKER. The same might be said of the Government people who were to report to us on credit controls, the ad hoc committee appointed by the President. That was promised to us about 2 weeks ago, and we haven't got it yet.

(Mr. Gibson's letter on the tax amortization policies will be found on p. 234. Mr. Murphy's letter enclosing the report on private credit expansion and monetary policy will be found on p. 349.)

Senator BENTON. Mr. Gibson also said he would immediately investigate giving high priorities to examination of these certificates for the smaller independent businesses. Whether that report has come back or not. I don't know, either.

I have glanced a little ahead in your testimony. That would seem to be almost equally important with what you have just said. This whole policy automatically puts great productive capacities in the hands of great corporations who anticipate being in the excess-profits brackets and therefor are in here asking for these certificates, while the smaller manufacturers aren't even going to have a chance to buy the plants after the war as they would have if the Government were building the plants. I think that the proposed act setting up this Government corporation is very weak in not more explicitly giving to the Government the power directly to build plants as indicated, when it is more in the public interest than doing it through these certificates.

Under what they are asking, they can't even build the plants. I wonder if you are aware of that. They have just been asking for authority to build plants in strange, remote, out-of-the-way places, making products that are never going to be made again, where manifestly no private individual could be induced to do it through giving him a certificate of necessity. The power being requested is much too narrow, in my judgment.

Senator SCHOEPPEL, Mr. Chairman.

These certificates are now being issued at the astounding rate of $200 million a week.

I wish that I could see among the economy advocates in Congress and the NAM, some indignation on this issue as an example of waste of taxpayers' money. I wish some of the economy advocates who scream about funds for housing or health would get excited about this raid on the Treasury.

This problem has not only a financial aspect. In granting 50 percent of the total to some 20 companies there arises the promotion of monopoly-pure and simple.

About one-third of these certificates have been given to the steel industry. This is the same industry that has been crying about overexpansion for 20 years, yet we never seem to have enough steel. Because of the policies of this industry we are always facing shortages.

The Government should reexamine this whole problem and to stop this raid on the Treasury and the pocketbooks of the taxpayers.

These corporations have come in demanding the certificates and yet after they have been granted we have no assurances that we will get the expansion of basic materials or productive facilities. For there is nothing to stop a company, after having gotten a certificate, from "sitting on it" for a time.

The CHAIRMAN. You are basing that on what has already been done? Mr. CAREY. What these corporations will save, and what has already been done, issued in the last 6 months, the American public will have to make up in taxes to the extent of $600,000,000 a year for the next 5 years for what has already been done.

Senator MOODY. Mr. Chairman, along that line, I hope this NPA report will include a complete justification of the certificates that have already been granted.

The CHAIRMAN. I didn't read the whole report-it is a long report-but I have from time to time been getting the memorandums of what has been done.

Senator BENTON. Of course, in many cases in these big companies they get better than 60 percent. Your 60 percent is just an average. Some of these certificates will run higher than 60, up to 77 percent for a company that is in the top excess-profits bracket and has a full certificate.

Mr. CAREY. But this 60 percent I refer to is not the amount of amortization. It is the amount that the corporation would save in taxes.

Senator BENTON. It is an average, because some of the certificates are 50-percent certificates and some of them are full certificates, but a lot of the biggest corporations have certificates against which they will save 77 percent.

Mr. CAREY. There are other ways of doing it that they might even increase it to 80 percent.

Senator BENTON. I agree. How high does the excess-profits bracket run now? I thought it was 77.

The CHAIRMAN. I was thinking of the certificates.

Senator BENTON. What you have done in your 60 percent is take the average that it costs the taxpayer, but some cases do much better. Do you have cases of the kind that you mention of "sitting on it"? Mr. CAREY. We have; yes.