distribution, established in any industry, except where such action is affirmatively found by the President to be necessary to prevent circumvention or evasion of any regulation, order, or requirement under this title.

When they were told by their trade association representative, shortly after issuance of the GCPR, that OPS was familiar with the inapplicability of the regulation and that relief would be granted momentarily, dealers took for granted that it could not be the intent of the OPS to insist upon a literal adherence to the regulation that would put dealers out of business contrary to the plain letter of the Defense Production Act. It was not abnormal for them to consult with their trade association representatives and with other dealers in their industry to determine how the GCPR was being interpreted, especially in view of the known reluctance of the OPS to hand out advisory opinions on hypothetical cases.

The predicament of the typical wholesale lumber dealer was well brought out in the hearings held on May 8, 1952, in the following colloquy between your committee counsel and George C. Wathen, Chief, Distribution Section, Lumber Products Branch, OPS:

Mr. L'HEUREUX. Supposing you had been in the wholesale lumber business during GCPR and you had been one of those that you mentioned among those who could not comply, what do you think you would have done as an industry man?

Mr. WATHEN. Well, I would have been sunk, I guess. I do not know just exactly what I could have done. I would have taken the first train to Washington, I suppose, if I was not too far away, and tried to fiddle my way around a little bit to get something done, to have a regulation written which would have conformed to the spirit of the regulation that was issued.

Mr. L'HEUREUX. In the meantime you would have done no business because it was impossible for you to comply?

Mr. WATHEN. I would either have had to go out of business-we are assuming that I cannot comply at all?

Mr. L'HEUREUX. Yes.

Mr. WATHEN. Or have violated. I would have no choice; one or the other. And depending upon the extent of my bank balance and the hunger of myself and family, you can figure out what I would do.

Mr. L'HEUREUX. I was just trying to get an example of what a lumberman, placed in that predicament, was likely to do.

You gave one very good alternative getting in touch with Washington. Supposing it were a small lumber dealer, however, and they cannot have a representative in Washington, and going to Washington they would not know where to begin and all, is it not more likely they would speak with other lumber dealers and find out how they interpreted the regulations?

Mr. Wathen after a further discussion conceded that it might be likely that most of them would choose this alternative.

Your committee brought this matter to the attention of the Senate and House Banking and Currency Committees. The House Banking and Currency Committee wrote language in its report on the Defense Production Act Amendments of 1952, which language was adopted by the conferees from the Senate and House and later approved as part of the conference report by both the Senate and House. This language which is the clear congressional intent reads as follows:

The committee of conference has received several complaints concerning the General Ceiling Price Regulation affecting lumber distributors in southern areas with respect to which the committee believes relief must be afforded. The General Ceiling Price Regulation was issued in January 1951 shortly after the general price freeze. The provisions of the regulation as it affected such distributors was ambiguous in many respects, and attempts were immediately made to bring this to the attention of the agency. However, a period of a year elapsed before a new regulation was issued correcting and clarifying the matters com

plained of. During this period it is the understanding of the committee there were some technical violations of the General Ceiling Price Regulation of a nonwillful character. Such technical violations would not be violations of the order now in effect and but for the long period of time it took to issue the current order would probably never have occurred. It is not the intention of the committee to condone willful violations of any price regulation or order in this instance or any other. But in view of the circumstances of these cases it is the opinion of the committee that there should be no prosecution of technical violations, which were nonwillful and which would not constitute any violation of the order currently in effect.

Since the adoption of this language, OPS representatives have informed this committee that questionnaires are being sent to all lumber distributors who have actions pending against them in the courts, in the Justice Department, or in OPS for a violation of the GCPR in an effort to determine whether these violations were merely technical and not of a deliberate and willful nature.

It would seem to your committee that this should have been done by OPS in the initial stages of these enforcement cases without a congressional directive. Your committee will never sanction the prosecution of mere technical and nonwillful violations which have been prompted or caused by inept regulations whether they pertain to lumber distributors, manufacturers, or any other type of business. It will follow the activities of OPS to insure complete fulfillment of the congressional mandate in this matter.

SMALL-BUSINESS MERCHANT EXPORTERS

On July 24, 1951, your committee staff held a conference with the National Association of Steel Exporters, the Office of International Trade, the National Production Authority, and the Defense Production Administration to iron out the problems of merchant exporters who are largely of the small business category. The purpose was to ensure that these small-business men would fare equitably under various governmental regulations. On September 14, 1951, a staff hearing or round-table discussion was held on the exportation of secondary tin plate. Members of the industry and of the various Government agencies involved in pertinent regulations were present. Much information was gathered which was of benefit to the agencies and to the industry. Representatives of the various agencies informed your committee that the hearing was helpful to them in the drafting of regulations. Industry representatives advised your committee that they had gained a greater understanding of the intricacies of the regulations and they felt that they had succeeded in pointing out to the agencies the unnecessary hardship in certain governmental policies and procedures.

Early this year, merchant exporters reported that there were ample supplies of secondary tin plate. In the first quarter 75,000 tons were authorized for export. In the second quarter, only 62,500 tons were initially authorized. At this point, on April 21, 1952, your committee authorized another staff hearing to determine whether this decision was warranted in the face of repeated assurances on the part of industry that large stocks of secondary tin plate existed and that they were unable to sell this metal domestically.

At the hearing, it was developed that the agencies had made no survey of the existing stocks in the hands of merchant exporters.

These latter agreed to survey their own industry at their own expense and to report their findings to the agencies. Upon the strength of the representations of the industry at this hearing, a modest increase was immediately made in the general allocations for exports. Within a few weeks, the survey was completed, the agencies were convinced that warehouses were bulging with secondary tin plate, and 125,000 tons (instead of the initial 62,500) were authorized for export.

As a result of this hearing, small-business merchant exporters were freed of many onerous restrictions and were allowed to ship certain metals which were in excess supply in this country. This development not only gave a needed stimulating shot in the arm to this segment of small business in this country, but also made available for the canning of food metal that was urgently needed abroad to prevent the spoilage of crops.

GRIEVANCES OF AUTOMOBILE DEALERS

Ceiling Price Regulation 83, issued October 15, 1951, established ceilings on the basis of special orders issued under the regulation setting "basic" retail prices for various makes of automobiles. These basic prices included the dealer's mark-up over wholesale factory cost. In addition, the dealer was allowed to make certain other charges, including one for preparing and conditioning the car for delivery. This conditioning charge was based on a dealer's prevailing rate for this service during the period January 26 to February 24, 1951. However, under CPR 83, this amount could not exceed 5 percent of the basic price of the automobile.

A number of dealers in Texas and in a few other States complained to your committee stating that the 5-percent ceiling on conditioning a new auto for customer delivery ran counter to historical practice in Texas and violated the Herlong amendment to the Defense Production Act. These dealers further charged that in establishing "basic" prices under CPR 83, OPS placed heavy reliance on manufacturers' list prices. They proved that these dealers in Texas and in a few other States historically did not follow manufacturers' suggestions in arriving at their retail prices because such suggested price lists violated State antitrust statutes.

At the request of the staff of your committee, a panel of three top OPS officials was appointed to hear these grievances and to make recommendations to the Director of the OPS based upon their findings in the matter. As a result, the regulations were amended and these dealers were able to continue their traditional business customs.

This is but one example of numerous grievances which are rectified daily through close cooperation between your committee and the defense agencies.

SOYBEAN PROCESSORS

The processors of soybeans have been faced with the problem of a severe drop in the market price of soybean oil, one of the two ingredients derived from the processing of soybeans. The other ingredient is soybean meal. After the drop in the price of soybean oil the Office of Price Stabilization made an adjustment in the price of soybean meal. Even after the ceiling price was raised complaints were received that soybean processors were being forced to operate at a loss or being

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forced out of business. There was then a growing practice to add other ingredients in small quantities to soybean meal and to establish a ceiling for the mix substantially higher than the ceiling price of the major ingredient. The OPS stated that this was done by using provisions in existing ceiling price regulations under which conventional formula feeds are priced.

The Office of Price Stabilization then announced that amendments would limit the ceiling price of oilseed feed mixes to that of the ingredients plus $1 per ton mixing allowance. The question arose as to whether this ruling would apply to contracts which had already been entered into for the forward delivery of oilseed feed mixes. Officials of the Office of Price Stabilization were contacted by the staff of your committee and it was suggested that if these contracts for the forward delivery of feed mixes were entered into in compliance with the existing laws and regulations as of the date of the contracts the later regulation should not cut across these existing contracts, as had been reported was being considered.

The Office of Price Stabilization complied with the suggestion of your committee in issuing the new regulation. The ceiling prices on the oilseed mixes will apply to all deliveries after November 30 under contracts entered into through August 1952. They will apply to all deliveries after October 31 under contracts concluded between September 1 and the date when the new ceiling prices on soybean mixes is. announced.

PRESENT STATUS OF DEFENSE PRODUCTION PROGRAM

Your committee has during the past year been continuously concerned with all phases of the defense production program, with particular emphasis as to supplies of critical materials, machine tools, allocations and priorities, adequate facilities for generating electric power to support the production of military equipment and the atomic energy program, and the protection of our economy through price controls. and the wage stabilization program.

The present status of these programs determines to a great extentthe progress we have achieved to date in meeting the goals of the mobilization program. The Congress has appropriated $129 billion. for military procurement and construction since Korea. Of this. amount $41 billion worth has been delivered or constructed, $60 billion more is on order, and contracts covering $28 billion are to be awarded. The $60 billion referred to as being on order is being delivered at the rate of $2.7 billion per month at present. The rate of delivery is gradually being increased and is expected to reach $3.6 billion per month by mid-1953.

Approximately 16 percent of the projects covered by tax amortization have been completed and are in operation, and it is estimated that 48 percent will be completed by the end of this year. Private investment proposed under certificates of necessity granted since Korea totals $23.4 billion. Of this amount only $13.7 billion will be written off at the accelerated rate.

Ammunition production cannot, for the most part, make up losses resulting from the steel strike during the year 1952. For the JulySeptember period total deliveries in all military procurement and construction programs did not decline from the previous period and.

are estimated to be slightly over the $7.7 billion total of the April-June quarter.

Steel production for this year will be approximately 95 million tons due to the impact of the steel strike, which would have otherwise been around 112 or 113 million tons.

Imports of copper in July totaled 55,000 short tons as compared to a monthly average of 43,000 short tons in the first quarter. The copper picture is considerably brighter than at any time since Korea, but we have not yet been able to pay back appreciable quantities to the stockpile.

Losses in aluminum production in the Pacific Northwest and Tennessee Valley have threatened the realization of some rather substantial increases in aluminum supply. This has been due to the cutting off of interruptible power because of low water conditions and delays in bringing in new pot lines. The result of these losses will be to delay the scheduled deliveries of aluminum to the stockpile. Our original expansion program called for a doubling of aluminum capacity from 750,000 tons per year to 1,500,000 tons per year, which would amount to a quarterly average of 375,000 tons. In the third quarter of 1952 aluminum production was 248,400 tons, and is scheduled to increase at an average rate of 22,400 tons per quarter through 1953.

Requirements for aluminum are so large and will accelerate so sharply that it has been determined by DPA and the Munitions Board after exhaustive study that it is vital to our national security to move promptly to secure additional capacity. Originally, DPÅ proposed to obtain this additional aluminum through a purchase agreement with Alcan. After hearings and continuous consultation between your committee and DPA (see p. 18), a domestic aluminum expansion of 200,000 short tons per year has been announced. The Defense Production Administration is now negotiating with new independent producers for this capacity.

High heat ferro-alloys are materials of critical importance to the production of key military items such as jet engines. The present view is that this is perhaps the most difficult of the remaining material problems and the one which will take longest to overcome. A program has been initiated to increase the capacity of ferro-alloys to achieve stockpile goals at the earliest possible time. The Defense Mobilizer has given the Defense Materials Procurement Agency firm authority to enter into the necessary contracts to reach these goals. The stockpile program includes a total of 75 materials. Stockpile goals have been reached on 20 of the total. On 26 materials, satisfactory contracts have been negotiated and deliveries are proceeding on a satisfactory basis. These goals should be reached within the time scheduled for completion. There are five other materials in critical supply for which satisfactory substitutes have been developed. This leaves 24 materials, or approximately one-third of the total, which still present difficult problems. Various methods are being used to reach stockpile goals on these 24 items. A continuous search is being made for satisfactory substitutes, conservation is being emphasized in military and other uses of these materials, expansion of supply is being secured, and alert and thorough contracting methods are being used. In terms of dollar value we are past the half-way mark in our stockpile program.