section 19 of CPR-5 violates the intent of Congress in several respects under section 401. The act violates the limitations imposed upon the President by section 402 of the act and is otherwise inequitable, arbitrary, and illegal.

The Director (ÖPS Docket 1006-1-P) has handed down an opinion denying the relief requested in the protest. It is not my purpose here to question or discuss the propriety of the Director's opinion. This will be done before the Director by way of a petition for reconsideration, and in the event of the necessity therefor, by way of review by the Emergency Court of Appeals; but it is my intention to relate to your committee a fact which has arisen in connection with that decision, which fact, if permitted to stand, would, in effect, deny to James Flett Organization, Inc., due process of law. That fact is the action by the Director of making findings of fact which do not appear in the record at any place except in the Director's opinion. Presumably, these facts have been found under title 4 of section 407 (b) of the act permitting the President to take—

*

* official notice of economic data and other facts

I can readily understand why the Director, in promulgating the ceiling price regulation and in making the statement of considerations on which it is to be based, must, in view of the emergency situation, be freed from the operations of the Administrative Procedure Act as provided by section 709 of this act. I can also easily see how the Director of Price Stabilization must, in the rendering of his opinions, necessarily have a broader scope in determining facts than that commonly given to courts under the doctrine of judicial notice, but I cannot see why the Director should be permitted, under the doctrine of official notice, to find as a fact, or facts, matters which, at best, must be matters of private knowledge not even generally known or accepted in a trade or industry. These private facts may be so far from the knowledge of experience of the protestant, that protestant would not even be in a position to file a counteraffidavit, and yet, unless the Director is to be limited, such facts might conceivably be included in the Director's opinion as true findings of fact under the doctrine of official notice.

Accordingly, I have suggested an amendment which limits the doctrine of official notice on judicial review alone to

** * (a) economic data and other facts of which Federal courts may take judicial notice, (b) economic data and other facts issued by governmental agencies or published in newspapers and periodicals, and (c) economic data and other facts which may be determined to be of general knowledge in trade or industry.

If those three amendments, as proposed here in the statement that I have made, are adopted, I believe the Defense Production Act will be relieved of a great many discriminations and inequities, and that it will be stronger and more to the advantage of the Office of Price Stabilization itself.

The CHAIRMAN. We will give consideration to your request. I am sure the whole matter will be properly investigated by the committee. Are there any questions?

Mr. BETTS. Your objection is primarily to procedural matters there, is it not?

Mr. KILEY. Well, these amendments set forth the objections, procedurally, and not so much procedurally, as I will agree, in accordance with the Defense Production Act and its own regulations.

It seems that they can interpret virtually as they choose, irrespective of your intent, gentlemen.

The CHAIRMAN. If there are no further questions, you may stand aside, Mr. Kiley, and the committee will adjourn, to meet at 10 o'clock tomorrow morning.

(Whereupon, at 12:35 p. m., the committee adjourned, to reconvene at 10 a. m., Thursday, May 8, 1952.)

(The following statements were submitted for inclusion in the record of the hearing:)

STATEMENT OF O. R. STRACKBEIN, CHAIRMAN, THE NATIONAL LABORMANAGEMENT COUNCIL ON FOREIGN TRADE POLICY

This council is composed of some 30 management and labor groups that are concerned over import competition. Employment in the represented industries

is well above a million workers.

We wish to urge adoption of H. R. 6843 as an amendment to the defense production bill.

Our support of H. R. 6843 arises from the competitive advantage that may be enjoyed by imports in those cases where domestic producers are prevented from manufacturing the normal output because of curtailment of raw material supplies.

as an emergency measure.

We would not fear such competition as a purely temporary phenomenon that would disappear with decontrol of domestic materials. The danger lies in the development and entrenchment of an abnormal volume of imports during this period and the great difficulty of recapturing the accustomed share of the market by domestic producers.

An example of the difficulty just referred to may be found in the experience of the domestic watch industry during and after World War II. The watch-making facilities of domestic watch manufacturers were converted in considerable part to other lines of production, i. e., to the making of war materials. During this time imports were able to absorb a growing share of the market and since the end of the war, the watch industry has not succeeded in recouping its prewar share.

During the last war many other countries were so absorbed industrially in manufacturing military supplies and equipment that there was relatively little to fear from the kind of competition that now threatens us. The manufacturing facilities of other countries have now been largely rebuilt and foreign manufactures are in a position to supply our market in many instances where our own producers are forced, because of the control of materials, to cut back their output.

It is not fair treatment of domestic producers to expose them without defense to foriegn competition that is free from the restrictions that have been or may be placed upon home industry.

Should an increase in imports be necessary to prevent a shortage of products needed for national defense, no restrictions should be imposed, and H. R. 6843 makes an exception for such circumstances.

There is little danger that the law could be abused, should the bill be enacted, because relief could be obtained only through the United States Tariff Commission. We believe that H. R. 6843 is meritorious and deserves to be enacted. Its enactment would not represent permanent legislation and provisions would be coterminous with the Defense Production Act.

STATEMENT OF H. R. NORTHUP, EXECUTIVE VICE PRESIDENT OF NATIONAL RETAIL LUMBER DEALERS ASSOCIATION

My name is H. R. Northup. I am executive vice president of the National Retail Lumber Dealers Association, with offices in Washington, D. C. I appreciate this opportunity to present the views of the thousands of retail lumber and building materials dealers of the country on the proposed extension of the Defense Production Act as provided in H. R. 6546.

Although the retail lumber dealer is, of course, interested primarily in the distribution of building products, he also is sincerely interested in maintaining a sound national economy within which the free enterprise system will flourish and in providing the materials needed for defense.

The bill before your committee would authorize an extension of emergency controls for two additional years and would eliminate from the existing act many of the safeguards which Congress added to the law last year.

In view of recent developments, we respectfully but emphatically urge the Congress to permit all existing wage, price, credit, rent, and materials allocations control to lapse as of June 30, 1952, except that we believe that for the time being there should be some means of assuring an adequate supply of critical materials for direct defense production purposes.

In support of this position, we offer the following facts:

1. Wage control.-There is no effective control over wages, and there has been none since the inception of the act. Political considerations have made a mockery of wage control provisions. Industry and labor can do a far more effective job of controlling wages than would be done under any legislative language Congress might approve.

2. Price control.-There is no longer any need or excuse for control of prices. The price trend has been downward for some weeks. Control officials are glossing over the deflationary forces now at work. Continuation of price control merely puts industry to the heavy expense and inconvenience of filling out useless reports. 3. Credit controls. There is no justification for continuing credit controls, as the Federal Reserve Board itself has recognized by its abandonment of voluntary credit restraints and by suspension of credit regulation W. The problem today, so far as housing is concerned, is to bring more, not less, money into the mortgage market. Housing starts have been running at a relatively high level, but the sale of homes has been slowed down drastically, both by the shortage of mortgage funds, due to low interest rates on FHA insured and VA guaranteed loans and to other factors, and by the high down payment requirements.

4. Rent controls.-Rent controls are serving no other purpose than to permit a relatively small number of families to enjoy special advantage at the expense of other taxpayers. The temporary postwar housing shortage which gave rise to this repugnant legislation ceased to exist many months ago.

5. Materials allocations.-The readjustment in defense production schedules, together with increased production of critical materials, has removed all need for continuing materials allocations so far as private construction and industrial requirements are concerned. Supplies of most materials already are outrunning demand. As stated above, we believe that an appropriate agency of the Federal Government should have the authority to allocate supplies of critical materials actually required for defense production, but we believe there is ample evidence that supplies over and above those needed in the defense program will be adequate to meet civilian requirements.

Those who urge that all controls be continued seem to be basing their plea on the position that, even though controls are not needed today, they might be needed in case of a sudden worsening in the international situation. In that connection, we wish to point out that, unless Congress removes controls, those empowered to operate them will (1) cling to them as long as possible to the detriment of the economy and the public welfare, and (2) continue to misuse them for political and other purposes.

Furthermore, should a new emergency arise, inflation can be effectively controlled by adjusting taxes, by revising the Government's fiscal policies, and by encouraging consumer savings; materials needed for defense production can be made available by encouraging further expansion in production capacity, on the one hand, and by discouraging production of less essential civilian goods through tightening of Federal fiscal policies on the other hand.

Continuation of the Defense Production Act beyond June 30 will lead only to further disruption of the civilian economy and render the Nation less able to sustain its basic strength.

Respectfully submitted.

H. R. NORTHUP.

STATEMENT OF THE AMERICAN INSTITUTE OF ACCOUNTANTS FOR AMENDMENT OF THE DEFENSE PRODUCTION ACT TO EXEMPT FROM SALARY STABILIZATION THE COMPENSATION OF CERTIFIED PUBLIC ACCOUNTANTS IN PUBLIC PRACTICE The American Institute of Accountants is the only national professional organization of certified public accountants. Affiliated with it are the societies of certified public accountants in every State. Its members include partners or principals of most of the firms of certified public accountants throughout the country and members of their staffs.

The American Institute, by authority of its executive committee, respectfully requests that the Defense Production Act be amended as follows:

"Insert in Subsection (e) of Section 402 of the Defense Production Act of 1950 as amended, in paragraph (ii) after ‘by an attorney or firm of attorneys engaged in the practice of his or their profession' the following: ; wages, salaries, and other compensation paid to certified public accountants licensed to practice as such employed in a professional capacity by a CPA or firm of CPA's engaged in the practice of his or their profession.'

This amendment would grant to certified public accountants holding State certificates, and engaged as employees in the public practice of their profession, the same exemption which was granted in the amendments of 1951 to attorneys employed by attorneys or law firms, and to physicians employed in a professional capacity by licensed hospitals, clinics, and similar medical institutions. professional fees charged by certified public accountants, like those of doctors and lawyers, are exempt from price control, and as in the other two professions, the salaries paid to their professional employees should also be exempt.

The

The need for professional services of certified public accountants in public practice has been growing even faster than the number of CPA's, although we are the fastest growing profession in the United States. The number of certified public accountants has more than doubled since 1940. There are now nearly 42,000, but many are not in public practice.

As in World War II, the present emergency has further increased the demand for CPA's services. In addition to their normal work of auditing, systems installation, preparation of business financial statements, and business tax returns, certified public accountants are now giving invaluable assistance to business in connection with excess-profits taxes, price stabilization, cost analysis in connection with Government contracts, renegotiation, and solution of the many special financial problems faced by companies engaged in defense production.

Firms of certified public accountants are finding it increasingly difficult to recruit and maintain the high-caliber professional staffs which they must have if they are to continue to provide these essential services. The problem is now rendered doubly difficult by the fact that industry is drawing away more and more of these highly skilled men from the public accounting field. Corporations can offer salaries to members of our staffs whom they hire as controllers and assistant controllers, or for other key positions in their accounting departments, which we under salary stabilization simply cannot match. We have found that many of our best men are willing to remain in the public accounting field for less money than they can get from industry, but obviously they will not stay with us if the discrepancy becomes too great. At the same time, they are obviously aware of the fact that the extra efforts which all of us are putting in to meet the increased demands for our services bring in additional fees to the firms which employ them. These fees are not subject to price control. Our employees therefore naturally feel that they are entitled to a fair share of the income which their services produce. What we are asking for, quite simply, is an opportunity to share it with the professional employees who help us to earn it.

On the other hand, the scale of fees charged by certified public accountants not been increased nearly as much as prices generally, and we do not expect the scale to increase to anything like that extent. Our extra income is derived from extra work, and from work of a more highly skilled and specialized nature, and it is this which we ask permission to share with our professional staffs.

We are asking this exemption only for employees who have had sufficient training and experience to obtain certificates as certified public accountants after passing a rigorous examination of their professional attainments. Of the 42,000 certified public accountants in the United States, not more than 10,000 are employees of public accounting firms. Thus the group for which we are asking exemption is small, and even a substantial increase in their compensation could have virtually no inflationary effect. However, these are key people, without whom it would be impossible for firms of certified public accountants to continue to provide the essential services which they are rendering to business and the national economy in the present emergency. If the Members of Congress believe that controls should be removed wherever they are clearly unnecessary for stabilization of the economy, and where they are likely to do more harm than good to the defense program itself, this amendment should receive favorable consideration.

Hon. BRENT SPENCE,

Chairman, Banking and Currency Committee,

House Office Building, Washington, D. Č.

MAY 1, 1952.

MR. CHAIRMAN AND MEMBERS OF YOUR COMMITTEE: My name is Gibbs L. Baker, attorney at law, with offices in the Shoreham Building, Washington 5, D. C. I represent Charles Niedner's Sons Co., 10-20 James Street, Malden, Mass. It is requested that this statement be made a part of the record of your hearings on H. R. 6546, and similar bills.

Charles Niedner's Sons Co. is a small, well-established business which has for more than 50 years manufactured one product, namely, unlined linen fire hose. It is understood that linen fire hose is classified as essential by the Munitions Board. Niedner produces about 40 percent of the linen fire hose in the United States.

Niedner opposes repeal of paragraph (4) of subsection (d) of section 402 of the Defense Production Act of 1950, as amended, for which repeal is provided in section 103 (a) of H. R. 6546. Until enactment of this provision of the so-called Capehart amendment and the long-delayed regulations were issued thereunder by OPS, Niedner was forced under ceiling prices to operate at a loss due to substantial increases in its costs, principally materials costs. Also, it was faced with a substantial rollback of its prices established under GCPR, by reason of the fact that OPS was about to make mandatory CPR 22. Although Niedner appealed to OPS, and established there a meritorious case, it was not until OPS issued regulations under the so-called Capehart amendment that Niedner was able to obtain the necessary relief in its case.

Linen fire hose is made entirely from flax which has to be imported for the most part. It is understood that the Munitions Board has classified flax fiber and yarn as essential imports. Since flax yarn has been in short supply for some time, the prices of imports thereof skyrocketed. These prices which are not controlled by the United States, increased over 50 percent since December 1949, of which increase about half was after March 15, 1951.

Niedner could not absorb such large increases in materials costs. Therefore in April 1951, it sought relief from OPS, but not until November of that year, when OPS issued regulations under the so-called Capehart amendment, did Niedner get the necessary relief. The resources of small businesses, such as Niedner, are generally limited, and therefore they must obtain adequate relief quickly. Some businesses do not fall in the industry patterns prescribed by OPS, which is often the case in respect to small businesses. Consequently, the individual adjustment features of the Capehart amendment are highly desirable.

It is therefore urged that section 103 (a) of H. R. 6546 not be enacted and that paragraph (4) of subsection (d) of section 402 of the Defense Production Act of 1950, as amended, not be repealed.

Respectfully submitted.

GIBBS L. BAKER.