Senator BRICKER. You think there is? Mr. SYMINGTON. Yes, sir. Senator BRICKER. How would that apply to farm land? Mr. SYMINGTON. I don't just know how that would apply to farm land from the standpoint of the present situation. My feeling, Senator, is that all forms of credit-as we move into this Korean situation-should be controlled, and that we should have higher taxes. In that way we may be able to avoid price and wage controls. If we don't immediately take steps to handle all forms of credit, we will not be able to avoid price and wage controls. Senator BRICKER. At the present time, of course, the President has great power over credit of member banks. There is almost unlimited power to control the financial operations of the banks of the country through the Federal Comptroller and through the Treasury, to control the interest rates and all of those things. What I want to get at, if I can, is just what additional power is needed at the present time if we do increase taxes to take care of the additional cost. Mr. SYMINGTON. I will be very happy to get you that information. I have something here on credit which might be of interest. I would like to read it to you. Senator BRICKER. I wish you would. Mr. SYMINGTON. Thank you, sir: In the first half of 1950 housing starts totaled 680,000, exceeding the first half of 1949 by 50 percent. This rate of construction cannot be maintained while our military program is being stepped up sharply without serious inflation and without delaying defense output. I would like to make a comment on that. Our figure on aluminum production today in this country is close to the peak aluminum production in the war, the chief reason being the tremendous amount of aluminum that goes into housing. It has in it a relatively vicious cycle. One of the reasons we have stockpiled relatively little aluminum is because of our knowledge of aluminum capacity. Senator BRICKER. And the increased utilization? Mr. SYMINGTON. Exactly. To continue my quotation: Prices of building materials have increased more than 7 percent from the 1949 low and are near their postwar peak. Daily reports of shortages of materials threaten the more rapid increase in prices. The price increase is particularly disturbing because of its effect on the ability of veterans to purchase homes. If not stopped, the rise will lead to a more drastic curtailment of home buying than now appears necessary or that would result from the imposition of moderate credit restraints. New nonfarm mortgage recordings reached a record level of $7,000,000,000 the first 6 months of this year, or 30 percent above the first 6 months of 1949. Installment credit increased nearly $200,000,000 a month during the first half of this year, or more than twice last year's rate. Total consumer credit outstanding is fast approaching $20,000,000,000. Down-payment requirements for installment purchases have been relaxed, and the repayment period has lengthened. A rising proportion of new automobile paper is on maturity terms exceeding 24 months, and more loans for used cars are being made on maturity terms exceeding 18 months. Credit controls by themselves are an important part of a general program to restrain inflation. Recent expansion of consumer and mortgage credit has contributed to the current high demand for durable goods and housing and also to the demand for all other consumer goods and for all materials entering into their production. Many of the materials used in construction and durable-goods production are already in short supply and are vitally needed in defense production. Already the President has instructed Government agencies operating in the housing field to take specific measures in tightening credit terms. The authority now requested from Congress will provide an effective means of tightening up on the 60 percent of total mortgage volume which is not federally insured or guaranteed. The relative advantages that veterans have in getting funds will not be disturbed by this measure. The authority here provided would be generally comparable to the regulation of consumer credit as exercised by the Federal Reserve Board under regulation W from 1941 to 1947, and again from September 1947 to June 1949. This experience indicated that reasonable restrictions on consumer credit are effective in keeping consumer demand related to available supplies. The Federal Reserve received excellent cooperation from the trades concerned and active assistance from State and Federal bank examiners. Experience shows that this type of regulation can be administered with a small force, and it need not entail burdensome restrictions on business and consumers. Senator BRICKER. Of course, your bankers and credit agencies could be made to police a program of that kind and would help. Mr. SYMINGTON. Certainly it would help. Senator BRICKER. I want to think that that is a serious situation, maybe a necessary one as an adjunct to the other powers, because the income is what?-$250,000,000,000 or $260,000,000,000 this Mr. SYMINGTON. $270,000,000,000, I think. year? Senator BRICKER. $270,000,000,000 is estimated? Maybe the first year or 6 months' production justifies that. I do not think that a $10,000,000,000 increase in consumer credit, in light of the high national income causes such tremendous impact on our total economy. But I am not arguing against that provision. Would not the control of the steel utilization, the allocation authority now that the President has, and which would be enhanced under this bill, pretty much obviate the necessity for the control of credit in that field? Automobiles would be cut down. That would be the first place it would hit. Mr. SYMINGTON. I think it is a two-way street. Senator BRICKER. You think you have to have both avenues of control? Mr. SYMINGTON. Yes, sir. Senator BRICKER. What is the most immediate shortage? Mr. SYMINGTON. I think I would rather talk to you about that off the record, Senator, if that is all right with your, sir. Any time you would like to see me, I would be very glad to come down and talk to you about it. Senator BRICKER. Thank you very much. Just one further question about the housing situation, the material that is going into housing. How many houses under the low-income title have been built? Maybe Senator Sparkman or Chairman Maybank have that information? How many houses under the public housing act during the first 6 months of this year were authorized? I noticed the President has cut the allocation down to 30,000 for the second 6 months. Senator SPARKMAN. They cut it down to 30,000 for 6 months, or less than one-half the amount authorized; none have been built. There have been a few starts, but none have been completed. Senator BRICKER. This year's total would be between 35,000 and 40,000? Senator SPARKMAN. Thirty thousand, I think, out of an authorized amount of 135,000. Senator BRICKER. I believe that is all I have. The CHAIRMAN. Senator Frear? Senator FREAR. Chairman Symington, when you take over these powers that are to be granted to you, will it be the intention of the Government to first try to deal with industry rather than requisition property? Will you try to have industry do the work for you, rather than do it for yourself? Mr. SYMINGTON. Senator, I am sure that that is the President's wish, and all members of the Government that I know. Senator FREAR. You feel as though you will have the same results from industry or even better than you had during World War II? Mr. SYMINGTON. I think that the results will be better, because I think the danger is greater. Senator FREAR. I believe the counsel said a few moments ago that under this bill, the President can requisition but cannot operate. Am I correct in that? Mr. SYMINGTON. That is right, under this bill; but he can operate, based on his permissive powers under the Selective Service Act, sir. Senator FREAR. But he cannot requisition under selective service. Mr. SYMINGTON. I think he can requisition. I know he can allocate steel. Senator FREAR. And plants and facilities? Can he also requisition property and facilities? Mr. KENDALL. The authority, sir, under that act is to take over the plant when he does not secure from the plant the materials he needs; and it further authorizes him to operate the plant so as to produce those materials. Mr. SYMINGTON. That is a very broad power he has got there. He can set the price of what he takes if he wants to take it, too. Senator FREAR. You mean after requisition? Br. SYMINGTON. Yes, sir, what he gets. Senator FREAR. Then, that depends a great deal on the cooperation of industry. Mr. SYMINGTON. I am a great believer in industry cooperation. I am sure that American industry is the greatest in the history of the world. I also think the Fresident ought to have the power to insure that the very small percentage of them who will not cooperate do cooperate, especially because way over 90 percent will cooperate; and the fellows who will not should be forced into line. Senator FREAR. Then, really this bill is to take care of that 10 percent? Br. SYMINGTON. I would not say that, because the nature of cooperation is a matter that you have to discuss. Senator FREAR. Would the Government tend to hold a big stick, so to speak, over this 10 percent of the industry that might fail to cooperate? Mr. SYMINGTON. The Government's primary interest now is supporting the troops; and the Government should have the right, because it represents all the people, to decide what is necessary to support the troops as against any segment of the people. Senator FREAR. Yes, sir, Mr. Chairman. I do not believe I would want to deny that, either. But what I am trying to get is that, if industry is willing to cooperate, it is the intention of the Government to go along on those bases. But if they do not cooperate and it is necessary for the Government to have the material, they want to have the authority to go in there and requisition and operate. Mr. SYMINGTON. I am sure that we all want to do what is necessary to proceed with maximum military strength at minimum cost; and I am sure that the great American industries are going to do everything they can to cooperate in this war effort. Senator FREAR. Do you know if the Government has stopped sales of surplus properties that they now have? Mr. SYMINGTON. I am happy to say my knowledge of surplus property gets less every day. Senator FREAR. Other than foods, anyhow. Senator CAPEHART. Mr. Chairman, will the Senator yield? I want to get back to one question you asked a moment ago. Now, on one or two occasions, Mr. Chairman, both you and your general counsel have stated that, under title II-the authority to requisition and to take over-that even after they take them over, they cannot operate them. Do you want to say that? Mr. SYMINGTON. The bill does not give them permission to operate. They do have permission to operate them under the Selective Service Act of 1948, as renewed. Senator CAPEHART. What good is title II? Why do you want the authority to take over every business in America if you do not have the authority to operate it? Mr. SYMINGTON. Senator, you are a better lawyer than I am. I have got my general counsel here now. We are getting pretty technical. Senator CAPEHART. Why did you put title II in, if it does not mean anything? Mr. KENDALL. Senator Capehart, you have drawn attention to the possibility that this title might be used to take a plant. It is not drawn for that purpose at all. It is intended to cover equipment, supplies, component parts thereof, and so on. It is to take over materials. It is to take, if necessary, machinery which cannot be secured in any other way. Now, the first question you asked, remember, was whether it could be extended to a plant. It might be, but it is not an appropriate instrument for that purpose. That is why I mentioned the selectiveservice title. If you want to take a plant and operate it, you would use the other authority. This is the sort of thing you would have to use to pick up a copper inventory or perhaps a molybdenum inventory, if the man who had it was unwilling to sell it to the Government. Senator CAPEHART. But you are not saying under title II that the Government could not take over a plant? Mr. KENDALL. No, sir. Mr. SYMINGTON. I have a little further information on that. Mr. SYMINGTON. I would like to give you a little further information on this from the past war. As I understand it, in the past war the question of taking over a railroad or a ship became a moot question under that legislation; and title II here was an effort to clarify exactly what could or could not be taken over. Senator CAPEHART. I would like to ask you this question: What does "facilities" mean? What is your definition of "facilities," Mr. General Counsel? Mr. KENDALL. A facility is any thing which makes the accomplishment of a purpose easier. That is a facility. It is a very general word. Senator CAPEHART. Would you not say "facilities" on line 4, page 4, includes a factory? Mr. KENDALL. The word "facilities," as I said before, sir, is broad enough to include a factory. It is not what this title is intended to deal with. This title is not suited to that sort of thing. Other authority is suitable for taking a plant over and operating it. This is peculiarly suitable for taking over inventories and machinery, if necessary. Senator FREAR. Mr. Chairman, I have just one more question. If this bill is enacted in its present form, will it give the President authority to socialize industries? Mr. SYMINGTON. I would say definitely, no, sir. The CHAIRMAN. Senator Douglas? Senator CAPEHART. Mr. Chairman, I want to get back again to this title II. The CHAIRMAN. Let Senator Douglas ask a question or two. We will stay here as long as you want to stay, but give him a chance. Senator DOUGLAS. Mr. Symington, I wonder if you would turn to title I? Mr. SYMINGTON. Yes, sir. Senator DOUGLAS. Which gives the President power to impose priorities and allocations. Mr. SYMINGTON. Yes, sir. Senator DOUGLAS. Priorities being amounts needed directly for national defense. I wanted to take an illustration. Let us take the steel industry and assume that it has productive capacity of 95,000,000 tons. Mr. SYMINGTON. Yes, sir. Senator DOUGLAS. And let us assume that the direct needs for national defense are 25,000,000 tons. We impose a priority upon the steel industry of 25,000,000 tons, and very properly; and they, through the various stages of fabrication, would produce those quantities for direct or indirect Government order. Mr. SYMINGTON. Yes, sir. Senator DOUGLAS. But that would leave 70,000,000 tons for nondefense purposes. I wondered whether this title carried with it the power of the Government to allocate between one set of nondefense producers as compared with another? Does it give you the power to say, for instance, that steel or aluminum should be used for housing rather than for cocktail bars? Mr. SYMINGTON. I think that is a very good point, and I do think it would give us that power, sir. Of course, an important point is— the civilian economy must have a minimum standard. Therefore it would give the Government the right to do just what you say, eliminate the steel from a cocktail bar. Senator DOUGLAS. Should not those powers be used sparingly in the sense of creating a certain list of industries which are distinctly either nonessential or antiessential, rather than in the attempts to determine whether John Jones or Tom Smith will get a particular allocation? Mr. SYMINGTON. There is no question about that, sir; and the whole allocation situation, in my opinion, should be in proportion to the need. |