Mrs. CHURCH. Your prepared statement will be inserted in the

record.

(The statement is as follows:)

STATEMENT OF GEORGE D. RILEY, MEMBER, NATIONAL LEGISLATIVE COMMITTEE, AMERICAN FEDERATION OF LABOR

The American Federation of Labor favors the purposes of Reorganization Plan No. 9, dealing with the reestablishment of the Council of Economic Advisers in the Office of the President.

At the May 1953 meeting of the executive council of the American Federation of Labor, the A. F. of L.'s position was made clear on this point and in the language as contained in the exhibit attached to this statement. More immediate reference to the Council of Economic Advisers appears in the fifth and sixth paragraphs of the exhibit.

Of course, the original authorization and direction for creating the Council of Economic Advisers is contained in Public Law No. 304 of the 79th Congressknown as the Employment Act of 1946.

In section 4 (a) reference made to the Council of Economic Advisers to the President, which would be composed of 3 members all appointed by the President by and with the advice and consent of the Senate. Certainly, if the Congress recognized the need for such Council in 1946 the desire and necessity for such Council today is just as real as it was 7 years ago.

Unfortunately, the preceding Council of Economic Advisers ceased to exist for want of an appropriation. This is one of the hazards which every agency faces from year to year; although, in the instance of the Council of Economic Advisers it might be presumed that its work would be entirely on a long-range basis.

I assume that the members of this committee are informed on the details of the plan to reestablish the Council to the point that a staff of some 25 or 30 persons would be hired for a budget of approximately $150,000.

The American Federation of Labor agrees in the necessity for having this Council reestablished and hopes that the Congress will take no action forbidding its reestablishment.

STATEMENT BY THE EXECUTIVE COUNCIL OF THE AMERICAN FEDERATION OF LABOR,

MAY 22, 1953

With the exception of a few industries and areas suffering from chronic dislocation, the American economy is now near the top of prosperity. We do not anticipate a precipitous economic decline in the immediate future. It is plain realism, however, to expect that, in a free competitive economy such as ours, far-reaching adjustments will take place sooner or later unless forestalled by affirmative programs and policies pursued in concert by the Government and by voluntary groups and institutions.

Courses of action to assure continued prosperity must be formulated now. It is too late to try to dam the destructive floodwaters of depression when they are already in full tide. Americans have the right to insist on timely formulation of policies that would help sustain continued prosperity and on advance actions which would help prevent a recession.

While there is no reason for immediate anxiety, danger signs overshadow the future economic outlook. Wholesale prices have been steadily declining for over 2 years. Consumer prices have not responded significantly to this downward trend. Production of a number of key consumer durable goods is already coming in a volume greater than the estimated potential consumer demand. The recent increase in interest rates on Treasury bonds and insured home mortgages will set off a general rise in interest rates with widespread deflationary effects and with resulting tightening of credit.

The exceptionally high rate of investment in new plants and production maintained in recent years is not likely to continue unless future stability of consumer buying expenditures coming on top of these other developments are bound to have a further depressing effect on the economic activity. These factors are clearly in the picture regardless of the possibility of an early settlement of the Korean war. While a Korean settlement should not weaken the defense effort, it will no doubt create a psychology of hesitation and perhaps even anticipation of an economic decline.

The Employment Act of 1946 provides a limited method of keeping the President, the Congress, and the public at large informed about the meaning of cur

REORGANIZATION PLAN NO. 9 OF 1953

15

rent economic developments and advised regarding future prospects through the Council of Economic Advisers and the Joint Committee on the Economic Report. We believe that this machinery should be strengthened and made fully effective.

It is our considered judgment, however, that in the present situation additional measures are needed to enable the country to anticipate and meet any possible threat of an economic crisis.

To this end we ask that consideration be given to the establishment in the near future of a special Presidential Commission which would be charged with the task of making a thorough study of the economic outlook and of bringing forward specific recommendations designed to assure continuing economic expansion, financial stability, and full employment of men and factories on a sound and stable basis. We recommend that this Commission be composed of qualified representatives from the Government agencies concerned, including the Department of Labor, the Department of Commerce, and the Council of Economic Advisers, as well as of representatives of labor, business, and the farmers. We would like to such a Commission established in the near future and charged with the responsibility of presenting its report and recommendations to the President for transmittal to the next session of Congress.

Mrs. CHURCH. Have you any questions, Mrs. St. George?
Mrs. ST. GEORGE. NO.

Mrs. CHURCH. Mr. McCormack?

Mr. MCCORMACK. Well, of course, it is very apparent, Mr. Riley, that this council performs a very important function in carrying out the 1946 act, which we all want to keep our economy strong.

Mr. RILEY. Quite so.

Mr. MCCORMACK. And we recognize that there are men, persons, who have devoted their lives to the studies of economic and financial questions and all other questions relating to those factors which make up the national economy of our country, and that Dr. Burns and his associates will make sacrifices, whoever the others are; they will have a lot of headaches, and they will make a lot of sacrifices in public service, we all understand that; but this is an important matter, and certainly the present situation leaves the 1946 act a dead-letter statute unless we give it the power to carry out through the council; no question about that, and this is the plan that is before us. We have to vote it up or down.

Mr. RILEY. That is right.

Mr. MCCORMACK. And the only concern I had was the spirit that might develop, and Dr. Burns has very wisely said that it depends mainly upon who the chairman is and the conduct of the council; and, of course, it also depends upon whether there are conflicts that involve consideration and whether the other members express themselves and make their views known.

Mr. RILEY. Well, I quite agree, Mr. McCormack, with your statement. They are representing the various segments of the body politic. We consider ourselves one of those segments, and that is one of the reasons we are taking an active interest in this on the affirmative side.

Mr. MCCORMACK. One of the reasons I had in asking questions about the advisory group, outside of Government agencies, is that I think they should be representative in order to get the collective viewpoint. Of course,

urse, it is not binding upon the chairman or the members, we know that, but it is very important and all views should be ascertained. Mr. RILEY. Well, we think sufficiently of it, Madam Chairman, that at the most recent meeting of the executive council of the American Federation of Labor they considered the situation to be of very great importance to their full membership, now totaling some 10 million members.

Mrs. CHURCH. Mr. Riley, do you happen to know whether the Congress of Industrial Organizations has even considered this plan?

Mr. RILEY. Really, I don't know. I haven't, really, any way to compare notes with them.

Mrs. CHURCH. I would like to ask this question, if I may. You remember in my questioning of Dr. Burns that I asked about the Advisory Board on Economic Growth and Stability, with which he is to be in close touch.

I would gather from what you say (and it is my own desire to have all segments represented), that you feel a plan that would encourage discussion with the economic advisers of various departments, such the Labor Department, would be of definite value?

as

Mr. RILEY. Oh, yes, obviously, as many pressures on the subject from as many departments as possible.

I would like to make a comment on something you and Dr. Burns discussed in the colloquy you engaged in a moment ago, about the divergent views and his attempting to get a common denominator in the whole thing. It is the views which make up this Republic, and I think that is all the more reason for there being a full collaboration and cooperation among the members of the council.

Mrs. CHURCH. I am sure you understand, Mr. Riley, that these plans which come down under the Reorganization Act cannot be changed; you either take them or leave them. If it were possible to amend, would you have any suggestions?

Mr. RILEY. Well, I think you really put your finger on the crux of the thing awhile ago-possibly Mr. McCormack brought that out-the full consultation. That seems to be the only thing, and I think that is largely a state of mind. I don't know too much about how you could legislate on that point.

Mr. MCCORMACK. I assume that is implied by the plan itself.
Mr. RILEY. Yes-not implicit, but implied.

Mrs. CHURCH. And you overwhelmingly, then, endorse it?

Mr. RILEY. Oh, yes, definitely. I haven't any comment to make on the plan. That is the crux of the statement, which I have attached to my own statement, issued by the executive council of the American Federation of Labor. They feel and have felt the necessity of assembling this council.

Mrs. CHURCH. I wonder if you would let me say informally and personally that I think it is a very fine sign that the American Federation of Labor has shown this interest.

Mr. RILEY. We have a great feeling of belonging, and I am sure you will hear from us right along.

Mr. MCCORMACK. Mr. Riley, as to the 1946 statute-
Mr. RILEY. The Employment Act.

Mr. MCCORMACK. Yes. That is a matter of vital importance to all of us, and it represents a great ideal that this council can contribute greatly toward obtaining in a practical way. I remember when the bill went before the Congress. I was majority leader at the time, and I led the fight for it, and we had quite a battle over some words, whether it should be full employment or maximum, and so forth. Mr. RILEY. I remember it at the time.

Mr. MCCORMACK. Yes. I didn't think the difference meant much, except, again, they were similar to the spirit of divergent views, and it really comes back to the operation of the law, which would have to

REORGANIZATION PLAN NO. 9 OF 1953

17

be through the work of the council, the recommendations, so the council, in my opinion, is the important vehicle, and without a council, for all practical purposes, the act is a dead-letter statute until there is a council appointed, some implementing machinery.

Mr. RILEY. That is exactly the way we talk about it.

Mr. MCCORMACK. Whether the council has three individuals or any other number.

Mr. RILEY. I see on the table here you have a copy of the full Employment Act of 1946, and I want to comment that it is contained in fewer than four full pages. It is a concise job, but it nevertheless has a great deal of substance in it.

Mr. MCCORMACK. Now, when we have the vehicle established, which is the council, another important thing is for the council to have the machinery by which to function. That means appropriations.

Mr. RILEY. Of course. That is the hardest.

Mr. MCCORMACK. It is apparent from the bill before the House that the appropriation, the estimate sent up, has been cut by a hundred thousand dollars, and to what extent that will interfere with the effective work of the council has been indicated briefly by Dr. Burns.

Mr. RILEY. That appropriation is carried in the pending omnibus bill, appropriations bill, and it is our purpose to follow the appropriation over to the other side with the request that they put a little more into it.

Mr. MCCORMACK. Well, based on experience, might I suggest that it is always important to try and have the necessary appropriation come out of the Appropriations Committee, because it is pretty difficult to put it back on the floor, and the real work is then in the committee, particularly the subcommittee, in following it up to protect it in the general committee before they report the bill out. I know that from experience.

Mr. RILEY. That is right.

Mr. MCCORMACK. I will just ask this question for the record. I am confident of what the answer will be, but again, for the record, I assume it is the determination of the American Federation of Labor to see that the necessary appropriations are made, to do everything possible that will enable this economic council to carry out the provisions of the 1946 Full Employment Act?

Mr. RILEY. We feel that if the economic council does not work perhaps our economic system won't work. We think it is sort of a watchword in this case to make it work.

Mr. MCCORMACK. It can play a very important part in this work, its consideration and recommendations and its guidance to the American people.

I think that is all.

Mrs. CHURCH. Thank you very much.
Mr. RILEY. Thank you.

Mrs. CHURCH. We have received a letter from Senator Flanders, Vice Chairman of the Joint Committee on Economic Report, in the last paragraph of which he says, "I am very strongly in favor of Reorganization Plan No. 9 and hope that its initiation will not be prevented."

Without objection, I would like to include that letter in the record. (Letter dated July 13, 1953, from Ralph E. Flanders, Vice Chairman of the Joint Committee on Economic Report, is as follows:)

CONGRESS OF THE UNITED STATES,
JOINT COMMITTEE ON THE ECONOMIC REPORT,
July 13, 1953.

Hon. MARGUERITE STITT CHURCH,

House Committee on Government Operations,

Washington, D. C.

DEAR MRS. CHURCH: Most unfortunately, two other commitments at this side of the Capitol make it impossible for me to attend hearing on Reorganization Plan No. 9 as I had hoped to do. I am therefore having to send you in this letter some of the thoughts I have in mind with relation to it.

There is in the first place a great necessity to keep going in an effective way the purposes for which the President's Economic Council and the Joint Committee on the Economic Report were first legislated. Every committee of Congress, almost every action of Congress, has some effect on the maintenance of employment and production in this country. It is extremely necessary, however, that there be 1 place in the administration and 1 place in the Congress in which the whole picture of the maintenance of production and employment is considered instead of having it taken into account piecemeal.

I am speaking principally, of course at this time, of the Economic Council. The Council is charged with viewing the effects of all the actions of Government in all the departments on the economic well-being of the people of the country. Its importance at this time cannot be overemphasized in view of our hope to pass in due time from a defense economy to an econoray of peacetime production.

The problems involved in this change are, and will be, very serious indeed and the future of the country and, in some respects, the future of the world depend on the successful solution of this problem. For this, the means provided in the administration is the Economic Council.

There is also very much indeed to be said in favor of the new form which the Reorganization Plan No. 9 gives to the Council. We have had in times past different members of that body appearing before congressional committees and, I doubt not before the President himself, with widely varying points of view. It is much preferable to have a Chairman who is solely responsible to the President and solely responsible for any congressional appearances that may be deemed advisable.

I am very strongly in favor of Reorganization Plan No. 9 and hope that its initiation will not be prevented.

Sincerely yours,

RALPH E. FLANDERS.

Mrs. CHURCH. In addition, I would like to say that we sent an invitation to Dr. Edwin G. Nourse, formerly the Chairman of the Council of Economic Advisers, to testify, and we asked, if he did not care to testify, whether he would like to submit a brief. He is in California, and we have not heard from him.

If an answer comes in, may it be included in the hearing?
Mr. MCCORMACK. Yes.

Mrs. ST. GEORGE. Yes.

Mrs. CHURCH. Representative Jesse Wolcott, Chairman of the Joint Committee on the Economic Report, was asked to testify, and he sent word that he could not appear at this time.

I think, if the two members will remain for a minute, perhaps we can take action immediately on House Resolution 263 and close the

matter.

Mr. MCCORMACK. Why not take it now?

Mrs. CHURCH. That is all right with me.

Mr. MCCORMACK. I move that the subcommittee recommend to the full committee the disapproval of House Resolution 263, which means an approval of the plan.

Mrs. ST. GEORGE. I second that motion.

Mrs. CHURCH. All those in favor signify by saying "Aye."
Opposed, "No."

The meeting is adjourned.

(Whereupon, at 11:01 a. m. the hearing was adjourned.)