proposals lose sight of the fact that once price ceilings are imposed on a particular commodity, any substantial advance in wages will be effectively prevented by the very presence of such a price ceiling. Wage determination is the result of voluntary agreement of labor and employers. Employers subject to price ceilings may be willing to make some wage adjustments which would not increase prices and which are in their direct effect not inflationary. But where a wage increase would necessitate an increase in the price, such wage increases would, of course, be denied by the employer. He will say no.

If Congress chooses to enact a comprehensive anti-inflation program which accords with the recommendations I have made, I would like to advance a proposal which I believe can be most effective if carried out as a part of the Nation's anti-inflation drive. And this deals with the real remedy for inflation, and that is production-production built up to the point where that balances with market requirements.

I recommend that labor and employers be called upon to enter into voluntary agreements, made pursuant to collective bargaining, to extend the hours of work by 1 hour per day with the prevailing standard of overtime compensation for the additional hour worked.

I cannot help but believe that that increased pay of overtime can be absorbed by the industries of the Nation without adding a single mill or penny to the increase in prices.

Senator ROBERTSON. I was surprised to read the other day that our total manufacturing production was less in 1946 and 1947 than it was in 1945. Is that correct?

Mr. SHISHKIN. That is right.

Mr. GREEN. That is correct, I think.

Senator ROBERTSON. Yet, we have about 9,000,000 more industrial workers now than we had then.

Mr. GREEN. Yes; total employment is that much greater, but in manufacturing it also dropped off sharply.

Such agreements would make possible a substantial increase in the rate of production of goods and services, without a proportionate increase in the unit cost. Addition of 1 hour per day with overtime pay would not be inflationary, because by making an uninterrupted use of overhead and equipment the per-unit cost of the goods produced in the extra hour would more than absorb the overtime compensation. Nearly 16,000,000 workers are currently employed in manufacturing alone. Even if such agreements extended to only half of such workers, we would add 8,000,000 man-hours of production per day, 40,000,000 man-hours of production per week. This in itself would make a strong contribution to the increased production and would help alleviate scarcities of industrial products.

It is true that in some industries where continuous operations prevail, or other special conditions intervene, such an arrangement may not be feasible, but in all other situations a proposal to substitute an additional hour of work a day at overtime compensation for increase in the rates of pay would make an important contribution toward the concerted national effort to achieve stability. This proposal can only be workable if an effective program is adopted to halt the rise in the prices paid by workers for the necessities of living. I offer this suggestion as a practical recommendation of the ways in which employers and workers could jointly make a contribution to the antiinflation fight.

That would increase the take-home pay and it would make it possible to utilize the skill and the training and the productive ability of these millions of workers for 1 hour more per day.

Senator MAYBANK. That is being done anywhere now, to speak of the 48-hour week?

Mr. GREEN. Very little, now. be done, but it seems that the this overtime pay for 1 hour.

There is no reason why it should not employers hesitate to do it because of

I am sure though that the progressive employer can absorb that cost without passing it on to the public. There is not any reason under the sun why they cannot.

Senator MAYBANK. There is not any law against it.

Mr. GREEN. Pardon me.

We are on a 40-hour workweek, but our workers will work an extra hour per day on the terms of the contract which provides for overtime.

Senator MAYBANK. There would not be anything in the law or anything now that we have to change.

Mr. GREEN. No law at all. That is a recommendation.

The CHAIRMAN. Nothing to hinder that being done pronto right now, if it is agreed upon; no legislation is necessary for that.

Mr. GREEN. No legislation necessary. I said that merely it was a recommendation on the part of Congress and would have a tremendous

effect.

Senator MAYBANK. It would have some weight with the employers, recommendation from us as you suggest would have some weight with the corporations also.

Mr. GREEN. That is right.

I would like to enter a strong objection to the provisions embodied in the Barkley bill (S. 1888) which would place wage controls in the hands of the particular Government department vested with the responsibility for setting prices. Under this bill, wage ceilings would be mandatory whenever the executive department enforcing a price ceiling decided that

an increase in wages to the employees producing such commodity would result in substantial increases in the cost of production thereof, and would require an increase in the established maximum wholesale price for such commodity.

There is no discretion in this directive; there are no standards set up to guide the various departments who would be enforcing a price control program; there is no arrangement for any consultation with. labor or industry groups. The only manner in which any type of labor consultation is provided is through membership on the temporary wage stabilization board which is established, not for the purpose of determining whether wage ceilings should be set but rather of determining what the wage ceiling should be.

I submit that the proposed system of wage controls is unrealistic and is bound to prove thoroughly unworkable. It is my considered judgment that an attempt to regulate by Government fiat a vast multitude of wage adjustments throughout our economy would be doomed to failure and even under the most favorable conditions would not accomplish the purpose intended.

Senator ROBERTSON. I assume, then, that you are definitely opposed to any law that imposes wage ceilings no matter how they would be administered. You just do not favor it.

Mr. GREEN. Yes, I am opposed; we would be opposed to that. That
is where the Government is getting into a field where it should not

enter.

Senator SPARKMAN. You did support the Wage Stabilization Board
during the war, did you not?

Mr. GREEN. During the war, yes. Oh, yes.

Senator SPARKMAN. You do not think a plan like that would work
now?

Mr. GREEN. And we made a no-strike pledge during the war and
kept it. That was war; that was for the winning of the war.
The CHAIRMAN. You have not won the peace yet.

Mr. GREEN. Well, we are not fighting on the battle fronts, though.
We are not killing men now.

I agree with you, and we are disappointed, tremendously disap-
pointed.

The CHAIRMAN. Disillusioned.

Mr. GREEN. Yes.

Senator ROBERTSON. Samuel Gompers made the same kind of a
pledge in World War I that you made, and he kept it.

Mr. GREEN. Yes, he made it and kept it, and we kept it. We carried
out that religiously.

An important part of the anti-inflation program is the tax legisla-
tion pending before this Congress. The American Federation of
Labor after study of all proposals advanced to date wishes to indi-
cate its preference for the tax program presented by the President.
It is clear that millions of wage earners in lower brackets who have
been squeezed the hardest by the increased living costs are now bearing
a disproportionate burden of taxation as compared with others. While
tax relief for them is necessary as a matter of equity, it is important
to realize that at this time a general tax reduction of the character
proposed in the Knutson bill is not only undesirable, but dangerous.

We believe that excess-profits tax on corporations should be reim-
posed. It has been proposed that such excess-profits tax be accom-
panied by tax credits to corporations showing a substantial reduc-
tion in the prices of their products. Such a proposal is worth study

and consideration.

Recent increases in profits as shown by the figures I have already
cited and by the recorded increase in dividend payments, reflecting
increased earnings, present an alarming picture. As stated in the
President's Economic Report to this session of Congress (p. 41):

Although a portion of the large profits earned during 1947 merely compen-
sated for changes in prices profits on the whole were above the levels necessary
to furnish incentives and funds for the expansion of business and to promote
the sustained health of the economy.

As the President's Economic Report also points out at page 40:

This stability of profits throughout the year indicates that business generally
reacted to increases in costs by increasing prices rather than by absorbing them
in whole or in part by reducing profits.

This behavior of profits indicates that many of the price levels are
set higher than is reasonable and that there is room for price reduc-
tions in many areas of our economy.

What we have at stake in this effort to stem the tide of inflation is
not only the future stability of our domestic economy, but also the

future security of the Nation itself. Stability of prices at home is essential to the success of the Marshall plan abroad. In making the Marshall plan fully effective we have to recognize that much of the money spent in providing relief to European nations will be spent here, or when spent abroad will eventually find its way back to the United States and to South America. In preparing to launch this program, our Nation must make sure that this plan is squarely placed upon a firm foundation of economic stability. The far-reaching importance of the action pending before this Congress cannot be overemphasized. It is my earnest hope that the statesmanship of this Congress will fully measure up to the challenge given by history to the people of the United States.

(The tables are as follows:)

TABLE I.-Changes in selected economic factors, 1944–47

Source: Bureau of Labor Statistics, Department of Labor; Bureau of Foreign and Domestic Commerce, Department of Commerce.

SUMMARY TABLE.-Comparison of wage and price indexes for specified periods,

SUMMARY TABLE.-Comparison of wage and price indexes for specified periods, 1945-47-Continued

The CHAIRMAN. Mr. Green, I am grateful to you, we all are, for what you have given us. We have had a good morning together, and I will be very grateful-I know I speak for the committee, if you will kindly agree, because of this disparity that arose here on this very important equation of the ratio of wages to living costs today that exists between the testimony of Mr. Clague and your testimony this morning, if you, yourself, or if you will have Mr. Shishkin or whoever you deputize, sit down with Mr. Clague and come back to us with some meeting of the minds on this issue, so we will know crystal clear what the truth is in this question. Because of the importance of the time element here, if you can do that as early as possible, it would be very helpful to us.

Mr. GREEN. Very well. We will try to do that.

The CHAIRMAN. We will meet in this room at 2 o'clock, gentlemen, on another matter. This hearing will recess until 7: 30 p. m. tonight. (Thereupon, at 12 noon, a recess was taken until 7:30 p. m., the same day.)

AFTER RECESS

(The committee reconvened at 7:30 p. m., upon expiration of the afternoon recess.)

The CHAIRMAN. The meeting will come to order.

We have here with us the nucleus of the committee. You gentlemen who are here as witnesses will realize that this is an extraordinary meeting, in that it is the first evening session we had, made necessary, it seems to me, to catch up and keep up with the strain of work we have with us.

This talk tonight will be upon the grain situation. Mr. Flanders is chairman of the Subcommittee on Grain. You gentlemen know the