The CHAIRMAN. Let's take the situation we have been talking about, where every purchaser of a given item is either the Government, itself, or civilian, taking every pound or every unit the manufacturer makes, and would take more but he doesn't have it. Under those circumstances, do you think that he will just voluntarily, as a good samaritan and patriotic citizen, keep his price down?

Mr. BROWNLEE. I would doubt if he would feel that he could expand his margins very greatly. I think he might expand them some. The CHAIRMAN. You think there would be pressure there?

Mr. BROWNLEE. Yes.

The CHAIRMAN. Under those circumstances, at least, we might give some thought to price control.

Mr. BROWNLEE. We have discussed it at very considerable length in the agency.

The CHAIRMAN. We have, too, with our staff here. There aren't any of these things that we haven't discussed; there aren't any of them that we haven't had from time to time, with 3, 4, or 5 alternative plans.

As I have repeatedly said, the purpose of these hearings and the purpose of the introduction of these bills was to solicit the cooperation and the help and the support of everyone in arriving at what we should do, if anything; and if we should do something, how is the best way to do it. That is the purpose of all these hearings, realizing that some day we may get into an emergency where we would have to use them. Dr. Flemming, the next title is V, rent control.

Mr. FLEMMING. In the original Defense Production Act, of course, the next title was on the settlement of labor disputes, but in view of the fact that title on price and wage control lapses, we felt we would recommend this title also lapse. And then, title VI is control of consumer and real-estate credit.

The CHAIRMAN. Let me get back. I have a title here on rent control. Are you going to make any comment on that?

Mr. FLEMMING. Yes. That will be the next one I will comment on in detail.

The CHAIRMAN. Your agenda is a little bit different than mine. Mr. FLEMMING. I have been following the Defense Production Act here.

On title VI, on the control of consumer and real-estate credit, at the moment we are not asking for any extension of that authority. The matter is still under discussion within the executive branch. We might possibly want to supplement the testimony on this point the first part of next week. I would do it myself, or conceivably Secretary Humphrey would do it, who I understand will appear before the committee on Monday.

The CHAIRMAN. You don't care to get into the matter of control of consumer and real-estate credit at the moment, but you would like to make a statement?

Mr. FLEMMING. That is right.

The CHAIRMAN. You are considering standby controls on control of consumer and real-estate credit?

Mr. FLEMMING. Also, studying the situation as far as the Trading With the Enemy Act to see what authority that does give to the executive branch.

The CHAIRMAN. I don't think you need to study it any more. I don't think it gives you any authority. I know it is under consideration.

Mr. FLEMMING. We have asked the Attorney General for a memorandum on it.

The CHAIRMAN. I think that would be quite an awkward way to catch the chicken running around the barn.

Mr. FLEMMING. We may have something more to say on that. That brings me to title V dealing with rent control. On that we recommend that the Congress extend the authority for rent control in those communities which have requested continuation of the control until September 30, 1953, and that it extend authority for controls in critical defense housing areas until April 30, 1954. The President in his state of the Union message said:

I recommend the continuance of the authority for Federal control over rents in those communities in which serious housing shortages exist. These are chiefly the so-called defense areas. In these and all areas, the Federal Government should withdraw from the control of rents as soon as practicable. But before they are removed entirely, each legislature should have full opportunity to take over, within its own State, responsibility for this function.

It seems to us that the key sentence in this message is the one that states

in these and all areas, the Federal Government should withdraw from the control of rents as soon as practicable.

At the same time, however, the President believes that before controls are removed entirely, each legislature should have full opportunity to take over within its own State responsibility for this function. As the members of this committee appreciate, there are now 5,600,000 rental units covered by the Federal rent-control program. These dwellings are in two types of areas.

About 1,300,000 rental dwellings are located in critical defensehousing areas and about 4,300,000 rental dwellings are located in communities which have individually requested continuation of Federal rent control.

Critical defense-housing areas, which are certified as such by the Secretary of Defense and the Director of Defense Mobilization, are located in 41 States, with the largest number of critical rental units being found in California, Connecticut, Indiana, Pennsylvania, Virginia, Ohio, and Missouri.

The 1,400 communities which requested continuation of Federal control are located in 32 States and in Alaska and Puerto Rico, with some of the States containing a large number of rental units of this type being Pennsylvania, Illinois, Massachusetts, New Jersey, Ohio, Missouri, and California.

We feel that it is not sound under present conditions for Federal employees to continue to administer a Federal rent control law in 1,400 communities where rent control is continued on the basis of local option.

If the people in these communities desire rent control, then their State legislatures should put them in a position where they can enact control ordinances and have those ordinances administered by their own employees.

As we see it, the sole question confronting us at this time is what constitutes giving each legislature "a full opportunity to take over within its own State responsibility for this function."

In our judgment, if the authority for Federal rent control in these communities is extended until September 30, 1953, each State legislature will have a full opportunity to determine whether or not it desires to take over this function.

In the critical defense housing areas we feel that the authority to impose Federal rent controls should be extended for 1 year.

We believe, however, that the criteria for determining whether or not an area should be certified as a critical defense housing area should be tightened.

In our judgment, certification of an area as a critical defense area should be restricted to those areas where the problem that may exist is caused by the activation or reactivation of a military base, an Atomic Energy Commission facility, or a Government installation such as a shipyard, air depot, ordnance depot, or arsenal.

Really, we feel the primary emphasis should be placed on the activation or reactivation of a military base or an Atomic Energy Commission facility. In other words, we believe that the present provision of the law which makes it possible to certify an area as a critical defense area because of some industrial expansion connected with the defense program should be eliminated. In view of the fact that we are now relinquishing most of our material controls, it follows that most of these industrial plants will be producing for the civilian economy to a far greater extent than they are for defense. They, therefore, should be looked upon in the same light as the communities where the Federal Government is going to step out on September 30. In other words, if these communities need a rent control law, they should obtain authority for it from their State legislatures.

I think I ought to say, parenthetically, it is our feeling that the change in criteria should not become effective prior to September 30; in other words, keep these communities that would come out from under this setup on the same basis as the other communities within their State.

Under such a program the Office of Rent Stabilization would be closed out as of October 1 and the administration of critical defense areas would be placed in a continuing agency of Government.

We estimate that number might be reduced down to around 100, or something of that kind.

That, Mr. Chairman, is our position on the question of rent control. The CHAIRMAN. The legislatures of each State have had an opportunity to do what you are recommending now, it seems to me, for about 3 years, and they haven't done it.

Mr. FLEMMING. The only thing is, Mr. Chairman, I am not sure. the Federal Government has been too firm about it. I think this particular proposal would indicate very clearly to the State legislatures that the Federal Government means business, although I appreciate the fact that the point you have just expressed can be argued. The CHAIRMAN. I don't know how much firmer you can expect to be. It states in the law it is going to expire on April 30. They know it is going to expire on April 30.

Mr. FLEMMING. The thing that was not known, certainly up until the time of the present state of the Union message, was what the attitude of the new administration was going to be on this question of rent control.

There was a considerable amount of speculation as to what direction the administration might move. The state of the Union message, it seemed to me, did give a clear indication of the direction in which the administration was going to move. The only thing that was left somewhat ambiguous was the statement that before they are removed entirely, each legislature should have full opportunity to take over. It is a question of spelling that out.

The CHAIRMAN. My point is, they have had that opportunity now for many, many months. I think they have had it for nearly 3 years, at least 2 years, and they haven't done it.

Senator BENNETT. May I add one point, Mr. Chairman? I have the impression, and I haven't the figures or the list to back it up, that most of the legislatures in the States have met for 1953 and adjourned. and this would require the calling of a special session if there is to be action in this particular area.

The CHAIRMAN, Do you have a record of when the legislatures meet?

Mr. FLEMMING. I had one table here, Mr. Chairman, which I think might be helpful. I do have a complete list. I also have 10 States where we find 3,600,000 of the 4,400,000 rental units that are in these defense rental areas at the present time. Pennsylvania, for example, as far as I know, is still in session and has no limit on the length of the session. Illinois, still in session with no limit. Massachusetts, still in session and no limit. New Jersey, still in session with no limit on the length of the session. Ohio, still in session and no limit on the length of session. Missouri, the same. Come to Maryland; I think it is still in session but the adjournment date is April 6. But Maryland does have some enabling legislation on the statute books already in case Federal rent controls should go off. California, still in session, adjournment date, May 11. Connecticut, still in session, with adjournment date, as I understand it, July 7. It also has some standby legislation on the books already. Minnesota. still in session, adjournment date on April 6. I understand they have had some legislation under consideration, but I don't know what action they have taken.

So that gives you the 10 States where you find a very large percentage of these rental units. I guess you have the same table that I have in front of me, which also provides information on the other States likewise. It is a spotty picture.

The CHAIRMAN. Without objection, it will be inserted in the record at this point.

(The material referred to follows:)

Limited Federal rent control-Scope of Federal program and data on State legislation Mar. 20, 1953

(The following was later supplied for the record by Senator Bennett:) SOME DATA ON STATE LEGISLATURES WITH REFERENCE TO OPPORTUNITY TO ACT ON RENT CONTROL IN 1953

Forty-four States having sessions in 1953 (see attached list):

42 had already met as of March 23, 1953; 11 had adjourned as of March 23, 1953.

Four State legislatures are not meeting during 1953. They are:

Virginia: Decontrolled by legislature 1950. No World War II rent control

now.

Louisiana: No World War II rent control except in towns of Hammond and Minden.

Mississippi: No World War II rent control.

Kentucky: No World War II rent control except in towns of Allensville, Elkton, Guthrie, Trenton, Audubon Park, Jeffersontown, Richlawn, Owensboro; city of Louisville.

Sixteen States have been freed completely from World War II Federal rent control: