Mr. SYMINGTON. I don't know the subject well enough to answer it. I do know that in this bill he would like to be able to do all those things with the Federal Reserve Board, and control bank credit as well as consumer credit.

Mr. WOLCOTT. I assume that, from the declaration of policy and the title in here with respect to credit. We are told, as you have told us here, that this bill is necessary to control credit. This bill is necessary to prevent inflation which might result from the adding of 10 or 15 billion dollars to our national debt.

There are orthodox methods which could be used. The thing that bothers me a little bit is why we are asked to develop this unorthodox program before we have used the orthodox method of controlling credit.

Mr. Eccles made a speech, dated July 18, at Salt Lake City, Utah, in which he, as a banker, suggested the increase of reserve requirements, the increase of rediscount rates and many other things. I should like to read them and want you to comment upon whether you think that perhaps they are not desirable to try before these other unorthodox methods are put into effect.

He says the President—I don't know that he uses the word “President" but the President could, or the Secretary of the Treasury could

request the insurance companies and mutual savings banks not to sell their Government securities for the purpose of getting money to increase their loans and other investments

a thing which was very successfully done heretofore by a request on the part of the Secretary of the Treasury.

Mr. Eccles would also require the Reconstruction Finance Corporation to stop making loans except for military purposes when they cannot be gotten elsewhere.

The President could issue a directive through RFC which would deactivate RFC in all particulars if he wanted to stop the possibility of withdrawing credit, increases and the velocity of credit getting out of hand.

Those are orthodox ways by which we could prevent inflation that have been at our disposal for the past 4 years.

In the last 6 months, FHA has reduced the interest rates from four and a half to four and a quarter. It seems to me, before they issue a directive cutting off veterans' financing and FHA financing, that at least they should restore the interest rate to where it was and see if that would stop them a little bit before we fold up altogether with respect to housing, the lack of which, up to 30 days ago, was the bottleneck in our economy.

Mr. Eccles would reduce the effective demand for consumer goods. The President can at this moment give the Federal Reserve control over consumer credit to the point of preventing anybody from buying any goods on any credit terms, by the declaration of an emergency, an economic emergency.

He could even have done it a year ago, 6 months ago, and he could do it now.

This is Senate Joint Resolution 148, Public Law 386 of the Eightieth Congress. It sounds rather negative but listen to it very carefully. After November 1, 1947, the Board of Governors of the Federal Reserve System shall not exercise consumer credit control pursuant to Executive order No. 8843.

That stops the consumer credit control.
Then:

No such consumer credit control shall be exercised after such date except during the time of war beginning after the date of enactment of this joint resolution or any national emergency declared by the President after the date of enactment of this bill.

Mr. MONRONEY. Is that all the authority of law?

Mr. WOLCOTT. No; through the Trading With the Enemy Act.
Mr. MONRONEY. That refers to?

Mr. WOLCOTT. The Trading With the Enemy Act is where he gets his authority to issue directives to the Federal Reserve banks to make regulations controlling credit.

Mr. MONRONEY. There is foreign commerce.

Mr. SYMINGTON. May I comment on some of the things you have said first?

Mr. WOLCOTT. Wait until I finish this. There is only a little more, Mr. Symington. [Reading:]

that he would require the Treasury to permit short-term interest rates to rise moderately and thereby take off the pressure and cause long-term interest rates to go down.

In addition to that, he makes certain recommendations in respect to the fiscal program, with respect to taxes. With respect to that, he mentioned the fact that he can increase reserve requirements. A few years ago, we successfully prevented the President from getting control of the lifeblood of American economy, which is credit. In fact, in 1935, we deleted language which would have given him that authority before the Banking Act of 1935 was passed.

Mr. SYMINGTON. There were several thoughts I had for your consideration, sir. The first is that there is a great deal of credit we want to continue and expand. For example, we don't want to have the military suffer because a man who can make military goods can't get credit, so it is a channeling of credit just as much as it is a restraint of credit. That is one thought I submit for your consideration.

Another is that 60 percent of housing today, the Federal Government is not interested in, and is not lending money for. Therefore, you would also want to control the housing credit the Federal Government was not interested in, which is a majority of all housing credit.

The third point is that naturally this country has been working for peace over a period of years, whereas other people apparently had different ideas, and I was not quite sure that I followed you, but I don't think it would help our picture with the world if at the same time. we have this military trouble we should declare an economic emer

gency.

Mr. WOLCOTT. We are asked to declare an emergency, which attends the Korean situation and what might come after it.

Mr. SYMINGTON. I don't think you are asked to declare an emer-? gency, but for powers to control an inflationary situation.

Mr. WOLCOTT. What is the justification for this bill if it is not predicated upon the fact that this will spread into another world war III? We have all the facilities now to carry on this police action, as it is called.

Mr. SYMINGTON. Suppose it did spread to world war III. You would be glad, I am sure, to give these powers, and suppose that it

was necessary to back the troops up, but didn't spread into world war III? I am sure you would also be glad to give these powers. Mr. WOLCOTT. I am going to make my position clear. I am not going to quibble about whether I would want to insist on anybody in the administration tell us, "There is going to be a world war III” before we grant these powers. We will take the chance on granting them if we have some reason for granting them.

In other words, the administration should make out in public hearing or executive session a prima facie case and you won't have to be too specific to this committee, I am sure, to get the necessary authority to do everything we can do for defense and carry out our commitments under the United Nations or within the country, but we must at least make out a prima facie case.

Mr. SYMINGTON. I don't want to quibble the point with you, but I don't think there is anybody in the United States who can decide whether this will or will not be a third world war.

During many years in Government, my position has been clear with respect to the importance of preparing ourselves so that the decision does not lie entirely in somebody else's hands. I think that bill is along those lines, and that is the reason that I am for it.

Mr. WOLCOTT. Getting to another point, the Housing Act of 1949, Public Law 171 of the Eighty-first Congress, title I:

The Administrator of the Housing Finance Agency may make loans for slum clearance and the community development and resettlement.

We gave them, for immediate use, $25,000,000 and said that, subject to certain positions, opinions by the Economic Council, on which the President would predicate his actions, that he have another $225,000,000 on July 1, 1950, and a further allowance of $250,000,000 on July 1 in each of the years 1951, 1952, and 1953.

Do you know whether the President has authorized the use of that $225,000,000 which is to be released on July 1, 1950?

Mr. SYMINGTON. I think he has ordered a heavy cut-back on that, sir. I am not sure. I would like to check that and give you the facts. Mr. WOLCOTT. It has not been clear to me just what he has done, so I asked if you knew.

Mr. SYMINGTON. Yes, I would like to get that information for you, if I may.

Mr. WOLCOTT. Coming back to the control of credit, title II, the authority to requisition, it is a pretty broad story.

Whenever the President determines (1) that the use of any equipment or component parts thereof, or material or facilities necessary for the manufacture, servicing or operation of such equipment or supplies or component parts is needed for the national defense

and so forth.

The courts, in interpreting the laws, frequently try to determine legislative intent by reading the reports of the committee, the hearings before the committees, and the debates on the floor, in addition to the law itself.

Let us clear up one thing, if we can. Does the word "facilities" as it is used in this section 201 include credit facilities?

Mr. SYMINGTON. I think this part of the act is dealing primarily with materials and is similar to the rights the President already has under the Selective Service Act of 1948.

1

The use of the word "facilities," I gathered, sir, was an effort to clarify many of the troubles in the last war. For example, a ship or the taking over of a railroad. And I really feel that this title II was an effort to clarify the position primarily between industry and Government as to what the rights of both parties were in case we ran into some more trouble. Specifically, I never heard the word, "facilities" being applicable in an way to any credit agency.

Mr. WOLCOTT. Would you say that the President would or would not have the authority to take over banks?

Mr. SYMINGTON. I would say that he would not.

Mr. BUCHANAN. Will the gentleman yield?

Is title II not merely an authorization to requisition property needed for national defense and to pay fair compensation for the property taken?

Mr. SYMINGTON. That is correct, sir. You see, in the Selective Service Act of 1948 the President already has, you might say, complete rights with respect to steel, and, also, the rights to take over, manufacture, and set the price on any goods which are to be built exclusively for the Armed Forces. Therefore, there is no representation here about manufacturing, for example, because it is not necessary. He already has that power by law.

It was necessary, in the opinion of those of us who worked on this bill, to clarify, based on the past experience, the question of such items as ships and railroads as to what the power was.

Mr. MONRONEY. It is physical property, in other words. If he had to have a bank building, it might refer to the bank building but not to the banking institution?

Mr. SYMINGTON. That is right.

Mr. WOLCOTT. Let us not confuse this issue by saying that.

Taking over the bank building meant taking over the bank. You did not mean to say that.

Mr. SYMINGTON. If the bank building were empty. I think Mr. Monroney's point is well taken.

Mr. MONRONEY. In answer to your question about whether you could take over the operations of credit facilities or whether you are talking about physical facilities, he made himself clear that it was physical.

Mr. WOLCOTT. If he goes that far, then he can take over the component part of a bank building, which would be the banking business.

Mr. BUCHANAN. How about copyrights and patents?

Mr. SYMINGTON. I would say no; not under this title, sir.

Here is an interesting point, Mr. Wolcott, that might apply here. During the last war the auto graveyards were very important for steel. There were 25,000 of these reported, and the bulk of them were purchased by the Government. A good many of them, or quite a number, would not sell, and, therefore, the Government went in and requisitioned those auto graveyards and decided what the fair compensation was.

Mr. WOLCOTT. Auto what?

Mr. SYMINGTON. Junk steel. I will change the word "graveyard" to "junkyard."

Mr. GAMBLE. That is, when the Government needed scrap very badly?

Mr. SYMINGTON. Yes, we needed steel.

Mr. WOLCOTT. Will Mr. Symington keep himself available for further questioning?

I understand you are leading off on this and the program is being built around you.

Mr. SYMINGTON. I would not say that, Mr. Wolcott, by any means. I think that other departmental heads, specifically Secretary Sawyer, would probably be much more intelligent about the details of this program than I.

Mr. WOLCOTT. We did not expect you to answer questions in detail. We will question the other witnesses with respect to detail; but if there is a question of policy that bothers us, will you keep yourself available?

Mr. SYMINGTON. I certainly will, sir.

The CHAIRMAN. Mr. Symington, the inflationary tendencies, which are likely to be increased during the pressure of war, are not only obstructive to the soundness of our national economy but induce a great expense to the Government in the prosecution of the war; is that not true?

Mr. SYMINGTON. That is correct; yes.

The CHAIRMAN. I do not think there is anybody who knows what will eventuate from this war. The people highest in the Government do not know what is going to happen; is that not true?

Mr. SYMINGTON. I think that is quite true; yes.

The CHAIRMAN. It is at the discretion of the Kremlin and, as I understand it, this is a precautionary measure in order to meet any conditions that might arise. Certainly the President does not want to use these powers in an arbitrary or dictatorial way. I think we can all assume the he wants to use them for the benefit of his country, and I do not believe that the powers that were suggested by Mr. Eccles would be sufficient to serve the purposes for which this bill is neces

sary.

Mr. SYMINGTON. I do not think Mr. Eccles thinks that those are the only powers necessary. He came over and talked to me about it, and he was talking about his particular field, in which he is an expert. I think, personally, that he would be for more power than just the points raised by Mr. Wolcott.

Mr. WOLCOTT. Are you going to ask later on for the powers that Mr. Eccles suggested be exercised?

Mr. SYMINGTON. We have not necessarily placed what he suggested into this bill, sir.

The CHAIRMAN. Those powers would be entirely inadequate for the purposes that you try to subserve by the passage of this bill; is that not it?

Mr. SYMINGTON. I cannot talk about the ones that would be inadequate, but I think that these powers may be adequate that are requested in this bill; and if we get them quickly, without any delay, or without any appreciable delay, we may well prevent the necessity for further drastic measures such as price and wage control.

The CHAIRMAN. You think that expeditious action on this bill is absolutely essential?

Mr. SYMINGTON. I think it is essential to the security of the United States.