Office of Price Administration-Comparison of personnel in fiscal year 1943 appropriation estimates as submitted to Bureau of Budget and to Congress with amount approved by House of Representatives-Continued

The statement requested is as follows:

Office of Price Administration, 1943 estimates

Senator MCKELLAR. Then there is one other question, more of a local nature, that needs answering. I think that this is one of the questions that I wrote you about, but you did not answer and, therefore. I am asking you here.

The State of Tennessee is a lumber State, a hardwood lumber State, and you have divided it into three parts. About half of it you have put in one area, and the most of the remainder in a second area, and four or five counties in southeast Tennessee in a third

area.

You have fixed the price of hardwood lumber in the east Tennessee and middle Tennessee mountainous area, as I recall, something like. $75 a thousand and in the second area, $62 a thousand, and in the third area, which composes the counties of Shelby, Fayette, Hardeman, and Tipton, and McNairy, I think that those are the five

counties, and incidentally doing the largest lumber business in the State, Memphis being the center, you have fixed there the price of this same hardwood lumber at $52 a thousand.

Now, manifestly, just a mere recital of those figures shows that there is apparently a very great injustice to the lumber dealers somewhere, and I want to know why you fixed those prices, and why you fixed different prices for the different sections of my State. Now, you can proceed, because those are questions that you will have to look up.

Mr. HENDERSON. I do not have the information now.

Senator MCKELLAR. Will you bring that information tomorrow? Mr. HENDERSON. Yes.

I did not get through with what I had intended to present to this committee and there are several very important considerations here: One is the magnitude of this job, and I am embarrassed to know what are the things that would register with the Members of Congress as to the extent of the operations.

Now, I take, of course, responsibility for the nature of the organization and what it would cost, and I represented it to the Bureau of the Budget.

QUESTION AS TO WHETHER PRICES ARE TOO HIGH

Senator THOMAS. Do you think prices are now too high?

Mr. HENDERSON. I would prefer that they be much lower. I think, Senator Thomas, that a price system has a certain balance in it, a balance of relationships so that when you get a working relationship between prices under which you can go forward with production, that that is a satisfactory price relationship. I feel that we achieved such a relationship some time after we passed the 90 percent mark in the 1926 Bureau of Labor Statistics Index. We recognized that there probably would be some increases as the demand reflected itself on agricultural products, and as certain inequities were worked out or as we had to incur additional cost over things which we have no control, such as imports. I think that the country is genuinely alarmed at the prospect of the increase in prices.

I feel that there is a gap between the amount of purchasing power that will be available this year, for the buying of goods, of something in the nature of $17,000,000,000. I think that that amount of excess purchasing power, pressing on commodities, can only change the price tags and that that change in the price tags means inflation.

I mean inflation in the terms that I have chosen, which is a standard and accepted definition, of an increase of prices without a corresponding increase in production.

Senator THOMAS. Who has decided that about 90 on the old 1926 price level was about the place for us to stabilize our prices?

Mr. HENDERSON. Well, I took that base because when the Price Control Act was passed or when it was assured of passage, we were somewhere around there, and the directive of the legislative was to stabilize prices.

Senator THOMAS. The Congress put in at least four ceilings, and the Congress is presumed to make the policy.

Mr. HENDERSON. You mean four ceilings on agricultural commodities?

Senator THOMAS. Yes.

Mr. HENDERSON. Well, I had no intention, as I say, of interfering with them. On the other hand there are many commodities under which the final price to the consumer would not have to be raised in order to reflect any of the standards and particularly 110 percent to the agricultural producer.

QUESTION AS TO WHETHER FARM PRICES ARE TOO HIGH

Senator THOMAS. Do you feel like the price of farm commodities to date are too high?

Mr. HENDERSON. I feel that there are a number of them that are not too high, but I do feel that when you have increases in those that you have an increase in the cost of living and you have a balancing as between the equities in the situation and what is the effect on the price level.

WHEAT

Senator MCKELLAR. Do you think the price of wheat is too high? Mr. HENDERSON. No.

CORN

Senator MCKELLAR. Do you think the price of corn is too high? Mr. HENDERSON. If you ask me in terms of what a farmer is entitled to, it is not too high; if you ask me in terms of the demandsupply situation we can have under what is being considered today, a price of wheat which will increase the cost of bread by at least a half a cent

Senator MCKELLAR. Do you think the price of corn is too high? Mr. HENDERSON. I cannot make individual judgments on the individual commodities. My general subscription to the parity policy has been one which I sustained many, many years, at times when it was more disagreeable than it is now, to be in terms of asking for a parity for farmers. I am not opposed to parity on such things.

COTTON

Senator McKELLAR. What about cotton?

Mr. HENDERSON. I am not opposed to parity on cotton. I have taken no action that would prevent cotton from reaching the parity price.

Senator THOMAS. Do you not have ceilings on the things manufactured with cotton, that so long as they are maintained there is no chance for cotton to ever reach parity?

Mr. HENDERSON. No; there is a chance on the cotton-textile ceilings, there is a liberal margin, and at the production end cotton can reach the ceiling.

Senator THOMAS. My question was probably not clear. There are three ceilings for cotton. One is parity, and it is 110 percent of parity, and one is the level between 1919 and 1929 and the level of the price of cotton between 1919 and 1929 is higher than 110 percent and, of course, 110 percent is higher than 100 percent and well, 100 percent now is 18.85, unless it was changed on the 29th of June, I have not

seen.

Mr. HENDERSON. I think not.

Senator THOMAS. The chances are it has gone down a little.
Mr. HENDERSON. I think it has stayed about the same.

Senator THOMAS. Well, the Congress enacted a law which fixed the maximum ceiling under which you should not fix the price of either i the raw product or the products made from the raw product, and yet something has happened to prevent the price of cotton from reaching even parity, or certainly not 110 percent of parity, and far from the level of 1929.

Senator MCKELLAR. It has gone down about $10 or $12 a bale.

Mr. HENDERSON. The price which was set on cotton textiles is a ceiling price, ample enough to sustain the highest standard for cotton under the Price Control Act. That is my considered judgment.

THREAT OF INFLATION

Senator THOMAS. I take seriously the direction and the general attitude of the country to try to prevent inflation. I think we face a terrific threat. I see it every day and I am compelled to make decisions every day in the face of the strongest kind of pressure, arising either from transportation costs, or import costs or labor costs or raw material costs, which can only mean that we are in the same kind of a situation as we were in the last war. The situation is one that is compounded by the fact that there is a $17,000,000,000 gap between the amount of funds available for spending and the amount of goods available because of the dractic reduction in production of civilian goods, in favor of Army production.

I should like to be interrogated as to whether in going forward with that, the request that I made for personnel is not a fair one and one that would be somewhat approximated, no matter who is selected as Price Administrator. I think that that is the essence of my problem.

EFFECT OF REDUCING APPROPRIATION

Mr. Chairman, what I am faced with is this: If we do not get an addition to this appropriation, it will not mean that I will suffer as to my salary, nor will it mean that people that we have to lay off will go without employment; that is not the question that is here.

The question as I see it is simply this: This law was debated. There were certain implicit mandates there and I have accepted those, and I have taken the necessary steps, in order that the retailers of this country may have decisions promptly and adequately. I have planned a decentralization of administration which, although it looks large in terms of its total personnel, is relatively small when you view it on the basis that we are going to operate in every one of the counties. In terms of what we are expected to do in rents, I cannot go forward in rents although I have already issued the 60-day notice for rents.

Senator O'MAHONEY. I was about to help you.

Mr. HENDERSON. I mean I can carry a lot of threads in my mind, Senator, and I have been doing it all day and trying to get a connected statement.

Senator O'MAHONEY. Just let me interrupt you and you will find I am helping you out: I was about to say that there are two subject matters here. We have been discussing this matter; primarily the